Genufood Energy Enzymes Corp. - Quarter Report: 2012 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File Number: 333-171784

GENUFOOD ENERGY ENZYMES CORP.

(Exact name of registrant as specified in its charter)

(713) 353-8834

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o      Accelerated filer o     Non-accelerated filer o    Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    o     No   þ

APPLICABLE ONLY TO CORPORATE ISSUERS

As of August 17, 2012 the registrant had 393,308,472 shares of common stock outstanding.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.

ITEM 4.  CONTROL AND PROCEDURES

ITEM 4T.  CONTROL AND PROCEDURES.

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

ITEM 5.  OTHER INFORMATION.

ITEM 6.  EXHIBITS.

PART I - FINANCIAL INFORMATION

The accompanying notes are an integral part of these condensed consolidated financial statements

The accompanying notes are an integral part of these condensed consolidated financial statements

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements

The accompanying notes are an integral part of these condensed consolidated financial statements

GENUFOOD ENERGY ENZYMES CORP

 (A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 1- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Operations

GenuFood Energy Enzymes Corp., USA (the “Company” or “GEEC”) was incorporated under the laws of the State of Nevada on June 21, 2010.  GEEC is a start-up company and its main focus is to promote market, distribute and export a range of enzyme products for human and animal consumption manufactured in the Unites States for the Asian and ASEAN markets.  The Company is the owner of the following trademarks, ProCellax and ProAnilax.  These trademarks and GEEC as a trademark have been filed with the United States Patent and Trademark Office under Class 005.  Similarly, these trademarks have been filed in the jurisdiction of China (PRC), Hong Kong, Macau, Taiwan, Thailand, Malaysia, Singapore and Sri Lanka.

The Company’s objective is to commence marketing and distribution of American range of enzyme products for human and animal consumption to sole country distributors, wholesalers, dealers and retailers, as well as to the general public following the Company’s Multi-Level Marketing – Franchise Investor Dealer Related (MLM-FIDR) concept, to begin with, in Taiwan, and then to China, Hong Kong, Macau, Thailand, Malaysia, Singapore and Sri Lanka.

On May 24, 2011, GEEC Internet Sales (Private) Limited (“GEECIS”), a wholly owned subsidiary of GEEC, was established in the Democratic Socialist Republic of Sri Lanka.  GEECIS is established primarily to be responsible for GEEC’s internet sales worldwide.

On February 13, 2012 the Company invested and incorporated a wholly owned subsidiary company, GEEC Enzymes (S) Pte Ltd in Singapore with a view to be the Sole Country Distributor for ProCellax and ProAnilax in Singapore.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant inter-company accounts and transactions have been eliminated in consolidation.

The Company is in its development stage with no significant revenues.  The Company’s initial operations include organization, capital formation, target markets identification and developing marketing plans.  

The Company’s fiscal year end is September 30.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with US GAAP and pursuant to the rules of the SEC. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted.  The Company believes that the presentations and disclosures herein are adequate for a fair presentation.  The unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the interim periods presented.  These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Form S-1/A6 filed with the United States Securities and Exchange Commission on February 2, 2012.  The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

Development Stage Activities

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with ASC 915-10-05, Development Stage Entities.  A development - stage company is one in which planned principal operations have not commenced or, if its operations have commenced, but there have been no significant revenues.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  

 Revenue Recognition

Our revenues are generated from sales of enzyme products under our private label.

For sales of enzyme products under our private label – the Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and reduces it for the amount of estimated future doubtful accounts.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the products have been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Foreign Currency Translation and Transactions

The reporting and functional currency of GEEC is the United States Dollar (“U.S. dollar”).  The functional currency of GEECIS, a wholly owned subsidiary of GEEC, is the Sri Lanka Rupee (“LKR”).  The functional currency of GEEC Enzymes (S) Pte Ltd in Singapore, a wholly owned subsidiary of GEEC, is the Singapore Dollar (“SGD”).

For financial reporting purposes, the financial statements of the Company’s Sri Lanka subsidiary, which are prepared using the LKR, are translated into the Company’s reporting currency, the U.S. dollar.  Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.0075 as of June 30, 2012.  Revenue and expenses are translated using average exchange rates prevailing during each reporting period.  The 0.0083 average exchange rate was used to translate revenues and expenses for the reporting period ended June 30, 2012.  Stockholders’ equity is translated at historical exchange rates.  Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity.

For financial reporting purposes, the financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD, are translated into the Company’s reporting currency, the U.S. dollar.  Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.7862 as of June 30, 2012.  Revenue and expenses are translated using average exchange rates prevailing during each reporting period.  The 0.7912 average exchange rate was used to translate revenues and expenses for the reporting period ended June 30, 2012.  Stockholders’ equity is translated at historical exchange rates.  Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions.  The resulting exchange differences are included in the statements of operations.

No representation is made that the LKR or SGD amounts could have been, or could be converted into U.S. dollar at the above rates.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.  The Company places the majority of its cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.  As of June 30, 2012, the Company had $562,377 cash in banks, $504,029 of which with one financial institution, which is $254,029 in excess of FDIC limit.  The Company mitigates this concentration of credit risk by monitoring the credit worthiness of financial institutions and its customers. 

In October 2008, the Federal government temporarily increased the FDIC insured limits up to a maximum of $250,000 per depositor until January 1, 2014, after which time the insured limits will return to $100,000.

Beneficial Conversion Features

From time to time, the Company may issue convertible debt that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features.  A beneficial conversion feature exists on the date a convertible liability is issued when the fair value of the underlying common stock to which the liability is convertible into is in excess of the face value of the liability.  In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a discount on the liability with a corresponding amount to additional paid in capital.  The debt discount is amortized to interest expense over the term of the liability using the effective interest method.  In cases where the liability relates to amounts owed for direct offering costs of an equity offering, the discount is charged to additional paid in capital with amortization.

Inventories

The Company’s inventories include enzyme products, packaging and labeling materials.  Inventories are stated at the lower of cost or market value.  Cost is determined using the first-in, first-out (“FIFO”) method.  As of June 30, 2012 and September 30, 2011, the Company had inventory balances of $2,681 and $2,681, respectively, which was comprised solely of packaging and labeling materials.

Enzyme products are typically shipped from manufacturer directly to our customer, with the Company never taking title to the enzymes products prior to shipment.  All related shipping costs are expensed when incurred.

Intangible Assets

The Company’s intangible assets consist primarily of trademarks, which are carried at amortized cost.  The company capitalizes filing and legal fees related to the trademark registration.  All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval (see Note 5-Trademarks).

The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.  The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets.  If these estimates change in the future, the Company may be required to record impairment charges for these assets.  As of June 30, 2012 and September 30, 2011, no impairment was recorded.

Security Deposit Asset

The security deposit is a refundable deposit, lodged with the Sampath Bank, for a facility to receive internet sales funds.  In the event this facility was not obtained and instructions have been given to the Bank to refund the deposit.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Customer Deposit

The customer deposit represents money received by the Company in advance and will not be recognized as revenue until the products are shipped to the customer.  As of June 30, 2012 and September 30, 2011, the Company recorded customer deposits of $60,600 and $60,600, respectively.

Property, Plant and Equipment

Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation.  Gains or losses on disposals are recorded in the year of disposal.  The cost of improvements that extend the life of property, plant, and equipment are capitalized.  These capitalized costs may include structural improvements, equipment, and fixtures.  All ordinary repair and maintenance costs are expensed as incurred.

The Company’s PP&E as of June 30, 2012 and September 30, 2011 consisted of computer equipment and software with useful lives of five and three years, respectively.  Depreciation is computed using the straight line method over the estimated useful lives.

Fair Value of Financial Instruments.

FASB ASC Topic 825 – Financial Instruments requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments.  The Company's financial instruments consist primarily of cash, prepaid expenses, customer deposit, accounts payable and some other current liabilities.  The Company believes that the carrying values of these financial instruments approximate their fair value due to the short-term nature of these items.

As defined in FASB ASC Topic No. 820 – 10 (formerly SFAS 157-Fair Value Measurements), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  FASB ASC Topic No. 820 – 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements.  The statement requires fair value measurements be classified and disclosed in one of the following categories:

As required by FASB ASC Topic No. 820 – 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company had no instruments re-measured to fair value on a recurring or non-recurring basis as of June 30, 2012 or September 30, 2011.

Net Earnings (Loss) Per Share

Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period.  Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.  In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.  For the nine months ended June 30, 2012 and 2011, the company didn't have any potentially dilutive securities.

Stock-Based Compensation

The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services.  Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

For the nine months ended June 30, 2012 and 2011, the Company did not record any stock-based compensation to employees or non-employees.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes.  Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.  The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.

Recently Issued and Newly Adopted Accounting Pronouncements

The Company does not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows.

 GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 3 – GOING CONCERN

The Company is a development stage company and has incurred a cumulative net loss since inception of $770,804.  As of June 30, 2012, the Company had a positive working capital of $544,578, which, however, might be insufficient to finance the Company's business plan for the next twelve months.  Due to the start-up nature, the Company expects to incur additional losses in the immediate future.  To date, the Company’s cash flow requirements have been primarily met through proceeds received from sales of common stock.  The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and attain profitable operations.

Management’s plan includes obtaining additional funds by increasing revenues and equity financing through the participation of its country sole distributors, wholesalers, dealers and retailers in the Multi-Level Marketing – Franchise Investor Dealer Related (MLM-FIDR) concept; however there is no assurance of additional funding being available.  These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment (PP&E) as of June 30, 2012 and September 30, 2011 consisted solely of the computer equipment and software with useful life of 5 and 3 years, respectively.  Balances for the PP&E as of June 30, 2012 and September 30, 2011 were as follows:

Depreciation expense for the nine months ended June 30, 2012 and 2011 was $553 and $131, respectively.

NOTE 5 – TRADEMARKS

The Company filed applications for trademarks on three of its products in their target markets: the United States, Singapore, Thailand, Hong Kong, Taiwan, Macau, Sri Lanka and Malaysia.  As of June 30, 2012, the registration for all three products was completed in the United States, Hong Kong, Taiwan and Macau, and still pending in other target markets.  As of June 30, 2012 and September 30, 2011, the Company capitalized trademark costs of $31,183 and $25,821, respectively.  Accumulated amortization at June 30, 2012 and September 30, 2011 was $2,005 and $0, respectively.  During the nine months ended June 30, 2012 and 2011, the Company recorded trademark amortization expense of $2,005 and $0.  All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval.

NOTE 6 – COMMON STOCK

The total number of shares of capital stock, which the Company shall have authority to issue, is 500,000,000.  These shares consist of one class of 500,000,000 shares designated as common stock at $0.001 par value (“Common Stock”).

Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders’ meetings for all purposes, including the election of directors.  The Common Stock does not have cumulative voting rights.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 6 – COMMON STOCK (continued)

Unless there are prior arrangements made and agreed by the Company in writing, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for, or purchase, or receive any part of any new or additional issue of shares of stock of any class, or of any securities convertible into shares of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of a dividend.

On July 6, 2010, 150,000,000 shares were issued to a consultant for services directly related to the S-1 registration and offering.  These shares were valued at $0.25 per share and recorded as a reduction to additional paid- in capital due to it being an offering cost of the future S-1 offering.  As a result of this transaction, additional paid in capital was reduced for the value of the shares equal to $37,500,000.  This reduction was offset by recording an increase to common stock according to the par value of the shares issued equal to $150,000, and increasing additional paid in capital by $37,350,000.  Due to the offsetting entries to additional paid in capital from the transaction, the net effect on equity was a reduction to additional paid in capital for $150,000 and an increase to the value of common stock for $150,000.  In addition to this share issuance, the Company issued an additional 50,000,000 shares to the consultant for offering costs.  The 50,000,000 additional shares were issued to convert the $50,000 payable owed to the consulting company (see Note 7).  Through June 30, 2012, the Company paid a total of $345,000 cash to this consultant for offering costs.  As of June 30, 2012 and September 30, 2011, nothing additional is owed to the consultant.

On July 6, 2010, the Company received stock subscriptions from investors at various prices;

1.

58,000,000 shares of Common Stock sold to twelve stockholders, at a purchase price of $0.001 per share for cash received  of $58,000,

2.

113,000 shares of Common Stock sold to eleven stockholders at a price of $0.10 for cash received  of $11,300,

3.

106,672 shares of Common Stock sold to sixteen stockholders at a price of $0.15 per share for cash received  of $16,000,

4.

50,000 shares of Common Stock sold to two stockholders at a price of $0.20 per share for cash received  of $10,000,

5.

18,800 shares of Common Stock sold to eight stockholders at a price of $0.25 per share for cash received of $9,700. 

6.

20,000 shares were sold to directors for total consideration of $5,000 on August 9, 2010.

During 2011, pursuant to the terms of the Sole Distributorship Agreement dated October 11, 2010, the Company sold to Taiwan Cell Energy Enzymes Corporation (“TCEEC”) 125,000,000 shares of its common stock at price $0.008 per share for total proceeds of $1,000,000.  The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705.  The difference of $274,705 represented compensation to the distributor.

GENUFOOD ENERGY ENZYMES CORP

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 6 – COMMON STOCK (continued)

The Company considered a third party valuation report to assist with valuing the underlying share issuances associated with the Sole Distributorship Agreement using the weighted discounted cash flow method and discounted market multiple method.  The following values represent assumptions and key inputs to this model:

1.

Risk adjusted discount rate – 18.77%

2.

Long-Term growth rate – 12.30%

3.

Discount for lack of marketability – 53.14%

The specific value ascribed to the long term growth rate was based on the expectation of the Company’s consistent long term growth within the current target markets and calculated based on guidance from the Company’s valuation expert regarding industry results for long term growth within the industry.  The growth rate used was based on the median historical growth rate of 535 companies selling within emerging markets with businesses related to the following: Food Processing, Retail (Distribution); and Retail (Specialty Lines).  Since the Company believes that there is high demand for its products, it had no reason to think that the Company’s long term growth rate would be below industry benchmarks.  Given the Company’s inception stage of operations and strong market demand for its product, the Company believes that the 12.3% growth rate is reasonable and comparable to similar companies within the field.

In December of 2011 the Company’s distributor Taiwan Cell Energy Enzymes Corporation (“TCEEC”) agreed to contribute $279,705 related to subsequent valuations of the shares originally purchased by the distributor for $1,000,000.  The Company collected the full $279,705 during the period ended June 30, 2012. 

During the nine months ended June 30, 2011 the Company received a total of $5,400 of capital contributions from a related party, respectively.

During the three months ended June 30, 2012 the Company issued 3,479,000 shares to investors for cash received of $38,700 and $1,005,000 to be received on April 20, 2013 per the agreement.

NOTE 7 – RELATED PARTY TRANSACTIONS

On August 9, 2010, the Company sold 20,000 shares of common stock at $0.25 a share to its directors for total consideration of $5,000.

The CEO of the Company is the managing director of a consulting company, who provides consulting services for the Company.  In January 2011, the Company converted $50,000 owed to this consulting company into 50,000,000 shares of the Company’s common stock at the price of $0.001 per share.  The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering.  The Company issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs.  From inception through September 30, 2011, the Company issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs.  The Company also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.

During the year ended September 30, 2011, the Company received a total of $5,400 of contributions from a related party.

During the nine months ended June 30, 2012, the Company paid one of the directors of GEECIS $11,550 for IT consulting services.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 7 – RELATED PARTY TRANSACTIONS (continued)

During the nine months ended June 30, 2012, the Company reimbursed one of the directors of GEECIS $8,217 for rent and utilities in Sri Lanka.

On July 1, 2010, the Company entered into a Sole Export Marketing Agent Agreement with Origo Biochemical Technologies Inc. (“Origo”) to market Origo’s enzyme products for human consumption to Thailand.  Origo's President, Madam Wang Feng Peng, is the mother of Mr. Chen Yi Chou and Mr. Chen I Jen, two of the Company's former directors.  Mr. Chen I Jen is also the general manager of Origo.  The Sole Export Marketing Agent Agreement was signed for one year, subject to annual review by both parties.  The agreement wasn't renewed for a second term and was terminated early in February of 2011 due to Origo's breach to perform its part of the obligations.

On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte.  Ltd. (“Access Management Consulting”) for the marketing of the Company’s range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large.  The Company’s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of Access Management Consulting.

On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation (“TCEEC”) for marketing and distribution of the Company’s enzyme products in the Republic of China (Taiwan).  Mr. Chen Wen Hsu, one of the Company’s directors, has voting and investment control over TCEEC.  As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in the Company by subscribing to 125,000,000 shares of the Company’s common stock at a price of $0.008 per share, for total proceeds of $1 million.  The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705.  The difference of $274,705 represented compensation to the distributor.

During the year ended September 30, 2011, the Company recognized $120,558 in related party revenue from its customer TCEEC who is controlled by one of the Company’s directors Ken Wen Hsu.

During the nine months ended June 30, 2012, the Company collected $279,705 of contribution receivable of capital from its customer TCEEC who is controlled by the Company director Ken Wen Hsu.

On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd (AMCM) to provide bookkeeping services in replacement of Albeck Financial Services.  The Company’s President is also the Managing Director of AMCM.

As at June 30, 2012, and as at September 30, 2011 there were amounts due to related parties of $2,500 and $3,169 respectively.

NOTE 8 – INCOME TAXES

At June 30, 2012, the Company has available for federal income tax purposes a net operating loss carry forward from the year ended September 30, 2011, of approximately $253,170, that may be used to offset future taxable income.  The net operating loss carry forward expires beginning the year 2031.  The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized.  Based upon the change in ownership rules under section 382 of the Internal Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company’s net operating losses carry forwards may be significantly limited as to the amount of use in a particular years.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(UNAUDITED)

NOTE 8 – INCOME TAXES (continued)

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.  Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:

 NOTE 9 - COMMITMENTS

On September 21, 2010, the Company reached an agreement with Specialty Enzymes and Biochemicals Co. (BSC Biochemicals), USA (“SEB”) for supplying various types of enzyme product to the Company under the Company’s private label.  SEB has been in operation since 1957 and is the largest enzyme manufacturer and enzymes provider in the US.

On April 19, 2012, the Company agreed to sell Taiwan Cell Energy Enzymes Corporation (“TCEEC”) 6,521,000 common shares for $1,956,300.  The shares had not been issued as of June 30, 2012 and the cash is to be received on April 25, 2013.  Based on the shares not being issued and no cash being received as of June 30, 2012 no accounting for this transaction has occurred as of June 30, 2012.  In connection with the investment, the Company will pay Access Finance and Securities (NZ) Limited, a company owned by the Company’s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, a commission of 4.5% of the capital raised.

The Company leases a virtual office.  The original lease term was from July 14, 2010 through July 31, 2011, and was a subject to the annual renewal.  The lease was renewed for another year through July 14, 2012.

 NOTE 10 - SUBSEQUENT EVENTS

After June 30, 2012, the Company issued 6,521,000 shares to TCEEC for a subscription receivable of $1,956,300 to be paid on April 25, 2013.

ITEM 6.  Exhibits.

Exhibit Number	Exhibit Description
31.1	Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

GENUFOOD ENERGY ENZYMES CORP.

                         (REGISTRANT)                   

Date: August 20, 2012	By:	/s/ Yi Lung Lin
		Yi Lung Lin
	Title:	President and Chief Executive Officer

 

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