Item
5.06 Change in Shell Company Status
Based
on the acquisition of Shenzhen Nova E-commerce, Ltd., UBI Blockchain Internet, LTD ceased to be shell company. UBI Blockchain
Internet, LTD is engaged in the developing business technologies of applying blockchain and internet of things. Based on these
business activities, and the acquisition of NOVA, management has determined that we are not a shell corporation as that term is
defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
Please
note, that on March 17, 2017, the Company filed a Current Report on Form 8-K, under Item 506 to remove its shell status. Management
based its decision to remove the shell status as a result of new management, a change in corporate ownership, and that the Company
was pursing new business opportunities, and the fact that Company employed nine employees at the time of the shell status removal.
Further, the new management believed it had better access to the capital markets to raise funding for the Company.
A
Comment Letter from the SEC, dated June 5, 2017, took exception to the removal of the shell status on March 17, 2017. In their
Comment Letter, they stated that “it appears that you were a shell company immediately before the acquisition of Shenzhen
Nova E-commerce, Ltd.” It is for this reason, management has decided to remove the shell status now that the acquisition
of NOVA has officially taken place.
FORM
10 INFORMATION
Business
This
provides an overview of the Company’s business pursuits.
Forward-Looking
Statements
This
Current Report on Form 8-K contains forward-looking statements. To the extent that any statements made in this report contain
information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified
by the use of words such as “expects”, “plans”, “will”, “may,” “anticipates”,
“believes”, “should”, “intends”, “estimates”, and other words of similar meaning.
These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results
may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include,
without limitation, our ability to raise additional capital to finance our activities; the effectiveness, profitability and marketability
of our products; legal and regulatory risks; the future trading of our common stock; our ability to operate as a public company;
our ability to protect our proprietary information; general economic and business conditions; the volatility of our operating
results and financial condition; our ability to attract or retain qualified senior management personnel and research and development
staff; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”),
or otherwise.
Information
regarding market and industry information contained in this report is included based on information available to us that we believe
is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings
or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications
and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and
services
Business
Description
Company
History
The
Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was
incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated
October 31, 2007, and, at the time of spin off was listed on the Over-the- Counter Bulletin Board.
From
August 2010 to May 2014 the Company was in the business of designing a suite of modular, self-contained, fully automated, climate
controlled units for distributed production of energy. While some of these products were proven to be technologically viable,
none were ever developed to the point where they were ready for introduction to the marketplace.
On
or about September 30, 2014, the Board of Directors approved the formation of a new company called Peak Energy Holdings, a Nevada
corporation, where each shareholder in the Company received one share of common of Peak Energy Holdings for each share of common
stock owned in the Company and one share of preferred stock of Peak Energy for each share of preferred share owned in the Company.
As part of the transaction, the Company spun-off all of its assets and liabilities into Peak Energy. Further, the spin-off subsidiary
operated as an independent entity separate entity from the Company with new management operating the current core business of
Peak Energy for the benefit of the original stockholders. The effect of this action allowed the Company to explore new business
opportunities without the burden of the assets and liabilities on the corporate books.
On
November 21, 2016, the Company changed its corporate name to UBI Blockchain Internet, LTD, and changed the state of incorporation
from the State of Nevada to the State of Delaware pursuant to a plan of conversion in connection with which the Company adopted
a new certificate of incorporation under the laws of the State of Delaware.
The
Company recently acquired 100% ownership of Shenzhen Nova E-commerce, Ltd., a private Shenzhen Chinese corporation in exchange
for 25,000,000 unregistered restricted Class C common shares. In April, 2017 Shenzhen Nova E-commerce began its operations of
an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household goods,
digital and luxury products.
UBI
Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet
of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry,
by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs.
With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source
within the context of the internet of things to the final consumer.
Overview
UBI’s
business encompasses the research and application of blockchain technology with a focus on the Internet of Things (“IoT”)
covering areas of food and drugs, healthcare, just to name a few. The Company will leverage the stock market to build a new business
technology platform, specialized in the safety and freshness keeping of food and drugs within the context of micro and macro environment
of the human life. The Company has no revenues, has yet to develop any products for sale and has no customers at this time.
UBI
plans to set up teams, that are dedicated to blockchain application and research, application of the internet of things, IT and
data analytics in order to achieve its business goals.
An
Internet of Things is defined as: the internetworking of physical devices, vehicles (also referred to as “connected devices”
and “smart devices”), buildings, and other items embedded with electronics, software, sensors, actuators, and network
connectivity that enable these objects to collect and exchange data. The IoT allows objects to be sensed and/or controlled remotely
across existing network infrastructure, creating opportunities for more direct integration of the physical world into computer-based
systems, and resulting in improved efficiency, accuracy and economic benefit. Blockchain, originally block chain, is defined as
:
a distributed database that maintains a continuously-growing list of ordered records called
blocks
. Each block contains
a timestamp and a link to a previous block. By design, blockchains are resistant to modification of the data - once recorded,
the data in a block cannot be altered retroactively. The Company plans to develop and specialize in the design, development, promotion
and sales of blockchain technology and internet of things.
Our
Chinese language website is:
www.globalubi.com
The website is referenced herewith for informational purposes only, it is
not part of this Current Report.
Industry
Trends
Recent
advances in streamlining video, monitoring sensors, high-speed broadband internet, introducing wireless standards (such as Bluetooth
low-power) and other technologies have brought about the emergence of virtual transactions and investment plans that individuals
and businesses can base on their spending habits to measure data that monitoring equipment and applications to receive real-time
feedback and to fit a wide range of personal and corporate preferences for reliability at home.
Blockchain
techniques have shown considerable adaptability in recent years, as various market sectors have sought to find ways of incorporating
capabilities into their operations. While most of the focus has so far been on financial services industry, this has begun to
change. For example, the use of blockchain technology to support digital electronic payments to counter counterfeit drugs in the
pharmaceutical industry. The adaptability of blockchain to a large number of applications has been one of the driving forces of
the technology’s growing interest in past few years. As solution for organization and ledger needs, the most recent market
for blockchain technology is pharmaceutical industry.
The
use blockchain technology and internet of things is being employed to address universal healthcare industry regarding food and
drug safety and labor relations management. At present, management believes that there exists confusion of Chinese medicine industry
including fake drugs, bad medicine serious phenomenon, no regulated production, no guaranteed efficacy of traditional Chinese
medicine. The excessive use of antibiotics, poison capsules incidents, vaccine cases ginkgo leaf, licorice tablets and other major
drug cases, have seriously affected people’s physical and mental health. Therefore, food and drug safety relates to vital
interests of millions of people’s social problems. From current safety issues of food and drug, we see scientific and exact
drug management issues.
Management
believes that the blockchain technology and internet of things promote industrial information and emergence of possible technological
solutions. Through integration of blockchain technology for the core of internet of things to establish a seamless industrial
chain so as to achieve food and drug safety control and enterprise relations management. Internet of Things is the extension and
continuation of internet. IoT can increase the ubiquity of the internet by integrating every object for interaction via radio
frequency identification (RFID) devices, infrared sensors, global positioning systems, laser scanners and other information sensing
equipment, which leads to a highly distributed network of devices communicating with human beings as well as other devices. IoT
is opening opportunities for a large number of novel applications that promise to improve quality of lives. In recent years, IoT
has connected with blockchain, exchange and communication for intelligent identification, location, tracking, monitoring and management
of a network. This technology is still in its infancy.
A
universal healthcare system covers all citizens seeking to achieve efficiencies by integrating the basic functions of healthcare
delivery, health insurance, distribution of healthy food and drug safety and labor relations management. Based on the full integration
of internet of things with blockchain technology, this technology can change old systems. Blockchain technology is a distributed
database that maintains a continuously-growing list of records called blocks. Each block contains a timestamp and a link to a
previous block. The data in a block cannot be altered retrospectively. Blockchain has characteristics such as decentrality, openness
and transparency, autonomy, security of information that cannot be tampered with, and anonymity, these features can strengthen
solution to drug and food safety issues, as well as getting more meaningful solution to enterprise labor relations management.
Blockchain
technology-based applications
Management
plans to focus its business in the integrated wellness industry, which providing procedures for safety and effectiveness in food
and drugs, but also preventing counterfeit or fake food and drugs. With the advancement of the blockchain technology, we can trace
a food or drug product all the way up to its original source within the context of the internet of things.
We
are in the early stages of blockchain technology, which can store decentralized and distributed software ledger with complete
transaction history. Blockchain technology has a wide range of potential applications, in addition to financial, real estate,
back office systems and stock trading applications. Blockchain is a distributed ledger agreement that allows projects or transactions
to be transparently registered and is first developed for use in a variety of industries to offer a wide range of services including
banking, stock trading, real estate and even global diamond sales. More and more financial giants join blockchain technology applications
and research and development, including IBM, Microsoft, Intel, Blockstream and Thompson Reuters, to further accelerate blockchain
technology as a maturity and development system. Management believes the investments in the field of blockchain are growing. Due
to maturity and safety of blockchain technology, it can play a role in many fields, and management believes its application field
and development potential offer a growth opportunity for the Company.
The
five features of blockchain include: de-centralization, openness, autonomy, non-tampering and anonymity. These features make blockchain
an advantage in science and finance. Blockchain technology is a decentralized, distributed ledger that allows each transaction
to be recorded and verified by network, which means that they do not need a central regulator such as a bank or financial institution.
Transactions are also anonymous and theoretically real-time, although recent network over-saturation has led to this problem.
The block-based distributed accounting technology, combined with its artificial intelligence and internet of things technologies,
makes it possible for billions of smart technologies to connect to internet for greater security, allowing virtual time travel
and allowing regulators to return to the point at which the problem occurred.
One
of potential application of this technology is the creation of registers based on blockchain of IoT devices, and the use of artificial
intelligence programs to perform automated intelligent diagnostics and more advanced functions, which can ultimately lead engineers
and regulators to virtualize clock backwards. At the same time, blockchain technology can reduce audit costs; reduce distrust
of central node, so that flow of financial assets is more transparent and convenient. In fact, current blockchain technology is
indeed application of digital electronic payments to “blockchain +” transition extension from financial sector gradually
to IoT and other non-financial areas which will trigger more and greater industrial restructuring and revolution. It is our time
to enter real power blockchain technology.
The
central concept and future development of blockchain are trends of things fit, leading gradual self-government of things. Blockchain
technology is a good solution: infrastructure investment, high maintenance costs and data security issues. Blockchain technology
support IoT which is an extension and more advanced stage of internet. Blockchain technology research and application will make
IoT networking shine. Blockchain’s point-to-point communication platform gives a subtle solution. Blockchain technology
creates a shared, distributed, digital book between network nodes to record transactions, rather than storing them on a central
server. Thus eliminating the need for central verification. It provides a way to create a consensus network without having trust
a single node, and data store does not need to be stored in a central server, but by sharing it to all nodes in the network.
Internet
of Things (IoT) is about creating digital representations of real-world objects. It is a phenomenon that draws on rapid developments
within IT, ICT and telecommunications to spark insights and to help companies create entirely new types of services and business
areas. Management believes that the Internet of Things will be the next technology to promote the rapid development of the world’s
important productive forces.
Health
Care Business Focus
Management
believes that the global IoT in healthcare market is growing at a significant growth rate, due to increasing demand for advanced
healthcare information system, and growing prevalence of chronic and lifestyle associated diseases.
The
IoT applications in healthcare, such as telemedicine, medication management, clinical operations and workflow management, inpatient
monitoring, helps in compiling services related to diagnosis, treatment, care, and rehabilitation. They improve communication
between patients and healthcare providers, in order to reduce medication errors, and provide better coordinated care.
Blockchain
technology supports IoT which is an extension and more advanced stage of internet. Blockchain’s point-to-point communication
platform problem, gives a subtle solution. Blockchain technology creates a shared, distributed, digital book between network nodes
to record transactions, rather than storing them on a central server. Thus eliminating need for central verification. It provides
a way to create a consensus network without having to trust a single node, and data store does not need to be stored in a central
server, but by sharing it to all nodes in network. Blockchain technology can also help solve medical field of data privacy and
other issues, such as custody of electronic medical records, safe storage of genetic data, drug security and so on.
The
Market Opportunity
The
Company is in the early stages of blockchain technology, which can store decentralized and distributed software ledger with complete
transaction history. Blockchain technology has a wide range of potential applications, in addition to financial, real estate,
and back office systems. Blockchain can be utlized as a distributed ledger agreement that allows projects or transactions to be
transparently registered and can be used in a variety of industries to offer a wide range of services including banking, stock
trading, real estate and even global diamond sales.
Blockchain
technology can play a role in many fields. Blockcchain transactions are theoretically real-time. The block-based distributed accounting
technology, combined with its artificial intelligence and internet of things technologies, makes it possible for countless of
smart technologies to connect to internet for greater security, allowing technicians to return to the point at which the problem
occurred. One of potential applications of this technology is the creation of registers based on blockchain of IoT devices, and
the use of artificial intelligence programs to perform automated intelligent diagnostics and more advanced functions, which can
ultimately lead engineers and technicians to virtualize clock backwards. At the same time, blockchain technology can reduce audit
costs; reduce distrust of central node, so that flow of financial assets is more transparent and convenient. In fact, current
blockchain technology is indeed application of digital electronic payments to “block chain +” transition extension
from financial sector gradually to IoT and other non-financial areas which will trigger more and greater industrial restructuring
and revolution.
The
internet of things is based on computer science, including network, electronics, radio frequency, induction, wireless, artificial
intelligence, bar code, cloud computing, automation, embedded technology as an integrated technology. Internet of things is called
the third wave of the world information industry revolution, after computer revolution, and the second internet revolution. Management
believes that within 10 years, internet of things will be widely used in intelligent medicine, intelligent transportation, environmental
protection, government work, public safety, safety home, intelligent home appliance, industrial monitoring, elderly care, personal
health, intelligent building, green agriculture and breeding, surveillance, imaging, computers, mobile phones and other fields.
Blockchain
technology is a good solution for: infrastructure investment, high maintenance costs and data security issues. Blockchain technology
supports IoT which is an extension and more advanced stage of internet. Blockchain technology research and application will make
IoT networking more efficient. Blockchain technology creates a shared, distributed, digital book between network nodes to record
transactions, rather than storing them on a central server. This eliminates the need for central verification. It provides a way
to create a consensus network without having to trust a single node, and data store does not need to be stored in a central server,
but by sharing it to all nodes in network. Blockchain technology can also solve medical field of data privacy and other issues,
such as custody of electronic medical records, safe storage of genetic data, and drug security.
Our
Strategy
Our
growth strategy is substantially dependent upon our ability to market our product successfully to prospective clients in the target
markets, which shall initially be China, Europe and the United States. This requires that we heavily rely upon our development
and marketing partners in the target markets. Failure to select the right development and marketing partners in the target markets
and other target markets will significantly delay or prohibit our ability to develop the products and services, market the products
and gain market acceptance. Our products and services may not achieve significant acceptance. Such acceptance, if achieved, may
not be sustained for any significant period of time. Failure of our services to achieve or sustain market acceptance could have
a material adverse effect on our business, financial conditions and the results of our operations.
It
is our management’s strategy is to make UBI the premier online investment and communication platform in key markets in China,
and later on we may expand into Europe and North America. There are no assurances that management will be able to successfully
execute this strategy. In an effort to achieve this goal, we intend to do the following:
●
Introducing innovative products
We
plan to develop commercially applicable blockchain based payment and other functions, such as product tracking. We aim at satisfaction
of user experience, covering the consumption after sales.
●
Create brand awareness and drive sales of our products and services in key markets
We
intend to target our marketing efforts to create global awareness of our brand and drive sales of our products and services in
the key markets of China.
●
Employ professional investment professionals, academics, university professors and communication professionals
We
plan to employ investment professionals, academics, university professors and communication professionals from around the world
to develop technologies applications to human beings.
●
Coordinate with strategic partners in each of the target markets for marketing and distribution
We
believe that international markets represent a significant growth opportunity for us and we intend to expand sales of our products
and services globally through selected retailers and strategic partnerships. We plan to work with key partners in the target markets
to provide marketing and distribution expertise and assistance. Although it may be challenging to gain market acceptance in these
markets, we believe the assistance of such experts will expedite the process.
Competitive
Strengths
We
believe that the following strengths position us to build our business model:
A.
Building a Creative Commercial Platform through Independent Design and Development
We
plan to make an integrated platform that incorporates the blockchain technology, internet of things, and a stock market. This
platform when built, will support blockchain based payment, the convenience of internet of things, with the speed, safety, and
convenience not yet experienced. We plan to establish a brand name of “Global UBI” for our products.
B.
Management Believes We Have Good Relations in China’s Healthcare Industry
In
China, we believe that our management has good relations in the field of integrated health industry for scientific research and
development, raw material production base and other industrial chains. Our management is also familiar with the international
pharmaceutical market and the food market. We believe that technology is the top productive force. The effective combination of
blockchain technology and Internet of Things technology which exclude all possible human factors, its centralization, transparency
and chain cannot be tampered with, traceability, etc. can solve the drug and food safety issues.
Target
Market
At
present, fake drugs are common in China, as there exists little regulation of production, and no guaranteed efficacy of traditional
Chinese medicine. There has been an excessive use of antibiotics, poison capsules incidents, vaccine cases ginkgo leaf, licorice
tablets and other major drug cases, seriously affecting people’s physical and mental health. Therefore, food and drug safety
is related to the vital interests of millions of people in China.
Sources
of Income and Pricing
We
plan to use application of information technology (IT), blockchain technology and IoT technology that permeate virtually all aspects
of corporate and social activity, effective combination of food and drugs safety and management of labor relations. The products
and services enabled by it have had a major impact to the healthcare industry. As we look to the future, emerging technologies
raise new trend in security, law enforcement, privacy, safety in food and drug of healthcare industry.
Sales
and Marketing
The
Company plans to place an emphasis on social media for the marketing and advancement of blockchian, internet of things, and technological
innovation platform as well as the traditional health application, food and drug production process chain for more transparent
transactions. The Company plans to implement original sources of procurement advantages, and preferred overseas products. For
the domestic high-end consumers, we provide more efficient, convenient and affordable imports of quality goods.
Management
believes Chinese consumers are more likely to consider buying a product if they see it mentioned on a social-media site and more
likely to purchase a product or service if a friend or acquaintance recommends it on a social-media site.
Chinese
consumers rely heavily upon peer-to-peer recommendations over general mass advertising. In general, the Chinese populace is skeptical
of information from news sources and advertising and rely more on word-of-mouth from friends, family, and key opinion leaders,
many of whom share information on social media.
While
messaging and sharing photos is as popular in China as in other regions, one aspect of usage in the country stands out: social
media has a greater influence on purchasing decisions for consumers in China than for those anywhere else in the world. Due to
the widespread use of social media in China, the Company will focus its marketing efforts on this medium. The Company will be
present with its own social media site on the largest Chinese social media platforms. Sale of products and services will take
place on the portal. With regards to North America and European Market, we anticipate employing a similar strategy. Our most important
profit and revenue will come from our development of drugs, food safety software, and system platform technology to promote sales
and transfer technology. These software technologies and platform technologies will be widely used in health industry businesses
and regulatory agencies.
Manufacturing
The
Company does not at this time engage in any manufacturing but may engage in manufacturing of products to be sold on the Company’s
website in the future.
Government
Regulation
We
are or may become subject to a variety of laws and regulations in the State of Delaware, where we are incorporated, the United
States and the People’s Republic of China (“PRC”) that involve matters central to our business, including laws
and regulations regarding privacy, data protection, data security, data retention, consumer protection, advertising, electronic
commerce, intellectual property, manufacturing, anti-bribery and anti-corruption, and economic or other trade prohibitions or
sanctions. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that
are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.
In
particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding
privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data,
the scope of which is changing, subject to differing interpretations, and may be inconsistent among different jurisdictions. We
strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data
security, and data protection. However, given that the scope, interpretation, and application of these laws and regulations are
often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that
is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived
failure to comply with our privacy or security policies or privacy-related legal obligations by us or third-party service-providers
or the failure or perceived failure by third-party apps, with which our users choose to share their data, to comply with their
privacy policies or privacy-related legal obligations as they relate to the data shared with them, or any compromise of security
that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in
governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand and operating
results.
We
plan to develop solutions to ensure that data transfers from the E.U. provide adequate protections to comply with the E.U. Data
Protection Directive. If we fail to develop such alternative data transfer solutions, one or more national data protection authorities
in the European Union could bring enforcement actions seeking to prohibit or suspend our data transfers to the U.S. and we could
also face additional legal liability, fines, negative publicity, and resulting loss of business.
Governments
are continuing to focus on privacy and data security and it is possible that new privacy or data security laws will be passed
or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations,
or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material
manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our
policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes
to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly
increase our operating costs.
The
labeling, distribution, importation, marketing, and sale of our products are subject to extensive regulation by various U.S. state
and federal and foreign agencies, including the CPSC, Federal Trade Commission, Food and Drug Administration, or FDA, Federal
Communications Commission, and state attorneys general, as well as by various other federal, state, provincial, local, and international
regulatory authorities in the countries in which our products and services are distributed or sold. If we fail to comply with
any of these regulations, we could become subject to enforcement actions or the imposition of significant monetary fines, other
penalties, or claims, which could harm our operating results or our ability to conduct our business.
The
global nature of our business operations also create various domestic and foreign regulatory challenges and subject us to laws
and regulations such as the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, and similar anti-bribery and anti-corruption
laws in other jurisdictions, and our products are also subject to U.S. export controls, including the U.S. Department of Commerce’s
Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s
Office of Foreign Assets Controls. If we become liable under these laws or regulations, we may be forced to implement new measures
to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products
or services, which would negatively affect our business, financial condition, and operating results. In addition, the increased
attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could harm
our brand or otherwise impact the growth of our business. Any costs incurred as a result of compliance or other liabilities under
these laws or regulations could harm our business and operating results.
PRC
Government Regulations
Because
our business and employees are located in the PRC, our business is also regulated by the national and local laws of the PRC. We
believe our conduct of business complies with existing PRC laws, rules and regulations.
General
Regulation of Businesses
We
believe we are in material compliance with all applicable labor and safety laws and regulations in the PRC, including the PRC
Labor Contract Law, the PRC Production Safety Law, the PRC Regulation for Insurance for Labor Injury, the PRC Unemployment Insurance
Law, the PRC Provisional Insurance Measures for Maternity of Employees, PRC Interim Provisions on Registration of Social Insurance,
PRC Interim Regulation on the Collection and Payment of Social Insurance Premiums and other related regulations, rules and provisions
issued by the relevant governmental authorities from time to time.
According
to the PRC Labor Contract Law, we are required to enter into labor contracts with our employees. We are required to pay no less
than local minimum wages to our employees. We are also required to provide employees with labor safety and sanitation conditions
meeting PRC government laws and regulations and carry out regular health examinations of our employees engaged in hazardous occupations.
Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative
and criminal liability in the case of serious violations. In addition, according to the PRC Social Insurance Law, employers like
our PRC subsidiaries in China must provide employees with welfare schemes covering pension insurance, unemployment insurance,
maternity insurance, work-related injury insurance, medical insurance, and housing funds.
Foreign
Currency Exchange
The
principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended
(2008). Under these Rules, RMB is freely convertible for current account items, such as trade and service-related foreign exchange
transactions, but not for capital account items, such as direct investment, loan or investment in securities outside China unless
the prior approval of, and/or registration with, the State Administration of Foreign Exchange of the People’s Republic of
China, or SAFE, or its local counterparts (as the case may be) is obtained.
Pursuant
to the Foreign Currency Administration Rules, foreign invested enterprises, or FIEs, in China may purchase foreign currency without
the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing
these transactions. They may also retain foreign exchange (subject to a cap approved by SAFE) to satisfy foreign exchange liabilities
or to pay dividends. In addition, if a foreign company acquires a subsidiary in China, the acquired company will also become an
FIE. However, the relevant PRC government authorities may limit or eliminate the ability of FIEs to purchase and retain foreign
currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities
outside China are still subject to limitations and require approvals from, and/or registration with, SAFE.
Employees
We
have 10 full-time employees and we engage the services 44 non-employee contractors. Within our workforce, 4 employees are engaged
in product development and 6 employees are engaged in business development, finance, human resources, facilities, information
technology and general management and administration. We expect the number of full time employees to rise to more than 25 by the
end of December, 2017. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages.
We consider our relationship with our employees to be good.
Recent
Event
On
May 16, 2017, UBI acquired Shenzhen Nova E-commerce, Ltd., (“NOVA”) a private Shenzhen Chinese corporation. Under
the terms of the Agreement UBI acquired 100% ownership of Nova in exchange for 25,000,000 unregistered restricted Class C common
shares by UBI. On August 28, 2017, the transaction was approved by the Regulation Committee of Chinese government.
The
130 owners of NOVA will now receive Class C common shares, based on their pro-rata ownership of NOVA, since the transferred ownership
of NOVA has been completed. Following the acquisition and the licensee name change to UBI, NOVA will be a 100% owned subsidiary
of the Company.
About
Shenzhen Nova E-commerce, Ltd
Shenzhen
Nova E-commerce Ltd. (“NOVA”) was incorporated on May 26, 2016 and currently operates an online store in China selling
a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products.
Nova’s website became operational in April, 2017.
NOVA
is registered in Qianhai Free Trade Zone, China. Its business operation
is an e-commerce platform offering online retail service, via OYA Mall. From its inception on May 26, 2016 through April, 2017,
NOVA has been building its website and infrastructure.
Nova has commenced its operation in April 2017.
NOVA’s
Chinese language website is: www.oyamall.com. The website
is
operational, where customers can buy products, including food, non-prescription medicine, skin care products etc. offered on the
website. For the purpose of this Current Report and Form 10 Information, the website is not part of this Current Report, but referenced
for informational purposes.
DESCRIPTION
OF PROPERTY
The
Company owns no real property. Our administrative offices are located at: SmartSpace 3F, Level 9, Unit 908, 100 Cyberport Rd.,
Hong Kong, People’s Republic of China., telephone: (212) 372-8836. The Company has been using this Hong Kong office space
provided by UBI Blockchain Internet, LTD. (a Hong Kong Company) at no cost to the Company. UBI Hong Kong owns 30,000,000 shares
of the Company’s Class A common stock, 6,000,000 shares of the Company’s Class B common stock; and 40,000,000 shares
of the Company’s C common stock. UBI Hong Kong will not seek reimbursement for providing this administrative space.
Employees
We
have 11 full-time employees. Within our workforce, 4 employees are engaged in product development and 7 employees are engaged
in business development, finance, human resources, facilities, information technology and general management and administration.
We expect the number of employees to rise to more than 25 by the end of December, 2017. We have no collective bargaining agreements
with our employees and we have not experienced any work stoppages. We consider our relationship with our employees to be good.
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. If any of the following risks
actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our
common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special
Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements,
as well as the significance of such statements in the context of this report.
RISK
FACTORS RELATING TO OUR FINANCIAL CONDITION
WE
HAVE LIMITED HISTORICAL FINANCIAL INFORMATION UPON WHICH YOU MAY EVALUATE OUR PERFORMANCE.
We
have a limited operating history and we are subject to all risks inherent in a developing business enterprise. The Company has
no revenues and has yet to develop any products for sale.
Our
likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently
encountered in connection with the development of blockchain technology with a focus on the Internet of things covering areas
of food, drugs and healthcare and the competitive environment in which we operate. You should consider, among other factors, our
prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages
of research. We may not be able to successfully address these risks and uncertainties or successfully implement our operating
and acquisition strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations
and could impair the value of our common stock to the point that the investors may lose their entire investment. Even if we accomplish
these objectives, we may not be able to generate positive cash flows or profits that we anticipate in the future.
Our
auditors have made reference to the substantial doubt as to our ability to continue as a going concern,
THERE
IS NO ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our
financial statements included with this Current for the year ended August 31, 2016, and the nine months ended May 31, 2017, have
been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as
to our ability to continue as a going concern in their audit report on our audited financial statements for the year ended August
31, 2016. Because the Company has been issued an opinion by its auditors that substantial doubt exists as to whether the Company
can continue as a going concern, it may be more difficult for the Company to attract investors. Since our auditors have raised
a substantial doubt about our ability to continue as a going concern, this typically results in greater difficulty to obtain loans
than businesses that do not have a qualified auditors opinion. Additionally, any loans we might obtain may be on less advantageous
terms. Our future is dependent upon our ability to obtain financing and upon future profitable operations from our business. We
plan to seek additional funds through private placements of our common stock. You may be investing in a company that will not
have the funds necessary to continue to deploy its business strategies. If we are not able to achieve sufficient revenues or find
financing to cover our expenses, then we likely will be forced to cease operations and investors will likely lose their entire
investment.
WE
MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE TO US.
We
have prepared audited financial statements for the fiscal year ended August 31, 2016. For the period from inception (August 26,
2010) through the year end for August 31, 2016, we experienced an accumulated deficit of $4,554,259. Our ability to continue to
operate as a going concern is fully dependent upon the Company obtaining sufficient financing to continue its development and
operational activities. The ability to achieve profitable operations is in direct correlation to our ability to generate revenues
or raise sufficient financing. It is important to note that even if the appropriate financing is received, there is no guarantee
that we will ever be able to operate profitably or derive any significant revenues from its operation. If we run out of cash reserves,
we would be forced to cease operations.
No
assurance can be given that the Company will obtain access to capital markets in the future or that financing, adequate to satisfy
the cash requirements of implementing our business strategies, will be available on acceptable terms. The inability of the Company
to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of its
operations and upon its financial conditions.
BASED
ON OUR BURN RATE, IF we are unable to obtain additional funding our business will fail and our shares may be worthless.
We
have limited financial resources. As of May 31, 2017, we had no cash available, $3,000 in prepaid expenses and office equipment
valued at $6,045 and a current portion of prepaid stock-based salaries and consulting fees of $1,658,333 and Non-current portion
of prepaid stock-based salaries and consulting fees of $740,000 for total assets of $2,407,378. Our current burn rate is approximately
$220,000 per month.
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There is no assurance that we can raise funding or that we will have sufficient funds to repay any indebtedness, or that
we will not default on our debt obligations, jeopardizing our business viability. There can be no assurance that financing will
be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain additional financing, we will likely
be required to curtail our business plans and possibly cease our operations.
THE
NATURE OF OUR OPERATIONS ARE HIGHLY SPECULATIVE.
The
success of our plan of operation will depend to a great extent on the operations, financial condition and management. Our business
concept revolves around “developing IoT, e-blockchain, and other technologies.” Our business model is not yet established
in the industry and we will have to convince our customers to use our products and services.
Management
believes that we will be successful in marketing our services, but there can be no assurance that we will be able to attract sufficient
consumers to achieve profitability or even generate anything but minimal revenues. If our services are not accepted by consumers,
we will fail.
COMPANY
RISK FACTORS
Article
IX of our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum
for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us or our directors, officers or other stockholders.
Article
IX of our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery
does not have jurisdiction, another state or federal court located in the State of Delaware) shall be the exclusive forum for:
(1) any derivative action or proceeding brought on behalf of the corporation, (2) any action asserting a claim of breach of a
fiduciary duty owed by, or other wrongdoing by, any director, officer, employee, agent
or stockholder
of the corporation
to the corporation or the corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision
of the General Corporation Law or the corporation’s Certificate of Incorporation or Bylaws, (4) any action to interpret,
apply, enforce or determine the validity of the corporation’s Certificate of Incorporation or Bylaws or (5) any action asserting
a claim governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction
over the indispensable parties named as defendants therein. This exclusive forum provision may limit a stockholder’s ability
to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other stockholders,
which may discourage such lawsuits against us and our directors, officers and other stockholders. Alternatively, if a court were
to find this provision in our Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could adversely affect our business, financial condition and results
of operations.
BECAUSE
OUR OPERATIONS ARE CONCENTRATED IN CHINA OUR STOCKHOLDERS WOULD FACE DIFFICULTY IN ENFORCING THEIR LEGAL RIGHTS UNDER UNITED STATES
SECURITIES LAWS.
Our
operations are concentrated in China and our stockholders would face difficulty in enforcing their legal rights under United States
securities laws in light of our management’s location outside of the United States. Legal protections and remedies available
to the company for certain harmful action taken against it will be pursued within the People’s Republic of China legal system,
which differs from the U.S. legal system in significant ways. Because the company conducts operations outside of the U.S. it is
difficult to pursue legal matters is subject to limitations imposed by other jurisdictions. It is limited ability for U.S. regulators’
to conduct investigations and inspections within China. There may be restrictions on the transfer of cash into and out of China,
as well as on the exchange of currency, which may constrain the company’s liquidity and impede its ability to use cash in
its operations.
U.S.
investors may experience difficulties in attempting to effect a service of process and enforce judgments based upon U.S. Federal
Securities Laws against our company and its non U.S. resident officers and directors.
We
are a Delaware corporation and, as such, we are subject to the jurisdiction of the State of Delaware and the United States courts
for purposes of any lawsuit, action or proceeding by investors herein. An investor would have the ability to effect service of
process in any action on the company within the United States. However, since Mr. Tony Liu, our CEO, Chan Cheung, our CFO and
two of our three directors reside outside the United States substantially all or a portion of the assets are located outside the
United States. As a result, it may not be possible for investors to:
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service of process within the United States against our non-U.S. resident officers or directors;
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Enforce
U.S. court judgments based upon the civil liability provisions of the U.S. federal securities laws against any of the above
referenced foreign persons in the United States;
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Enforce
in foreign courts U.S. court judgments based on the civil liability provisions of the U.S. federal securities laws against
the above foreign persons; and
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Bring
an original action in foreign courts to enforce liabilities based upon the U.S. federal securities laws against the above
foreign persons.
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WE
MAY NOT BE ABLE TO COMPETE WITH OTHER COMPANIES, SOME OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE.
We
do not have the resources to compete with larger providers of these similar services at this time. With the limited, if not minimal,
resources the Company has available, the Company may experience great difficulties in building a customer base. Competition from
existing and future competitors could result in the Company’s inability to secure any new customers. This competition from
other entities with greater resources and reputations may result in the Company’s failure to maintain or expand its business
as the Company may never be able to successfully execute its business plan. Further, we cannot be assured that it will be able
to compete successfully against present or future competitors or that the competitive pressure it may face will not force the
Company to cease operations.
We
may be unable to gain any significant market acceptance for our products and services or establish a significant market presence.
Our
growth strategy is substantially dependent upon our ability to market our product successfully to prospective clients in the target
markets, which shall initially be China, Europe and the United States. This requires that we heavily rely upon our development
and marketing partners in the target markets. Failure to select the right development and marketing partners in the target markets
and other target markets will significantly delay or prohibit our ability to develop the products and services, market the products
and gain market acceptance. Our products and services may not achieve significant acceptance. Such acceptance, if achieved, may
not be sustained for any significant period of time. Failure of our services to achieve or sustain market acceptance could have
a material adverse effect on our business, financial conditions and the results of our operations.
If
potential users within the target markets do not widely adopt online or UBI fails to achieve and sustain sufficient market acceptance,
we will not generate sufficient revenue and our growth prospects, financial condition and results of operations could be harmed.
UBI
may never gain significant acceptance in the marketplace and, therefore, may never generate substantial revenue or allow us to
achieve or maintain profitability. Widespread adoption of virtual and online training portals in the target markets depends on
many factors, including acceptance by users that such systems and methods or other options. Our ability to achieve commercial
market acceptance for UBI or any other future products also depends on the strength of our sales, marketing and distribution organizations.
We
may not be able to attract qualified professionals, academics, university professors and communication professionals from around
the world, which will decrease the value of technological innovation platform offering and may make it difficult to differentiate
UBI from other online services providers.
Our
strategy includes developing relationships with professionals, academics, university professors and communication professionals
from around the world. If we are unable to establish relationships with these professionals, academics, university professors
and communication professionals that UBI’s technological innovation platform is not effective or that alternative products
are more effective, or if we encounter difficulty promoting adoption or establishing UBI as a standard, our ability to achieve
market acceptance of UBI could be significantly limited.
We
may not be able to develop new products or enhance the capabilities of UBI to keep pace with our industry’s rapidly changing
technology and customer requirements.
The
industry for blockchain technology is characterized by rapid technological changes, new product introductions, enhancements, and
evolving industry standards. Our business prospects depend on our ability to develop new products and applications for our technology
in new markets that develop as a result of technological and scientific advances, while improving the performance and cost-effectiveness.
New technologies, techniques or products could emerge that might offer better combinations of price and performance than UBI systems.
The market for online or virtual healthcare market is characterized by rapid innovation and advancement in technology. It is important
that we anticipate changes in technology and market demand. If we do not successfully innovate and introduce new technology into
our anticipated product lines or effectively manage the transitions of our technology to new product offerings, our business,
financial condition and results of operations could be harmed.
Cyber
security risks could adversely affect our business and disrupt our operations.
The
threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to prevent
breaches, our devices, as well as our servers, computer systems, and those of third parties that we use in our operations are
vulnerable to cyber security risks, including cyber attacks such as viruses and worms, phishing attacks, denial-of-service attacks,
physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our servers
and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss
of critical data, and loss of consumer confidence.
In
addition, we may be the target of email scams that attempt to acquire sensitive information or company assets. Despite our efforts
to create security barriers to such threats, we may not be able to entirely mitigate these risks. Any cyber attack that attempts
to obtain our data and assets, disrupt our service, or otherwise access our systems, or those of third parties we use, if successful,
could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage our reputation.
Our
financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.
Our
primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses
worldwide. Weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign
currency-denominated sales and earnings, and generally leads us to raise international pricing, potentially reducing demand for
our products. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset
the strengthening of the U.S. dollar, or at all, which would adversely affect the U.S. dollar value of our foreign currency denominated
sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial
to our foreign currency-denominated sales and earnings, could cause us to reduce international pricing, incur losses on our foreign
currency derivative instruments, and incur increased operating expenses thereby limiting any benefit. Additionally, strengthening
of foreign currencies may also increase our cost of product components denominated in those currencies, thus adversely affecting
gross margins.
We
do not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations
in foreign currency exchange rates.
We
may acquire other businesses, form joint ventures or make investments in other companies or technologies that could negatively
affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.
We
may pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage our
proprietary technology and industry experience to expand our offerings or distribution. We have no experience with acquiring other
companies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisition
candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we
may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent
liabilities.
Any
future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets
or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration
of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing
our existing business. We may experience losses related to investments in other companies, which could harm our financial condition
and results of operations. We may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture.
Foreign
acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across
different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific
countries.
To
finance any acquisitions or joint ventures, we may choose to issue shares of common stock as consideration, which could dilute
the ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all. If the
price of our Common Stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using
our stock as consideration
.
THERE
MAY BE A POSSIBLE INABILITY TO FIND SUITABLE EMPLOYEES.
In
order to implement our business plan, management recognizes that additional staff will be required. No assurances can be given
that we will be able to find suitable employees that can support our needs or that these employees can be hired on favorable terms.
We do not plan to hire any additional employees until our cash flows can justify the expense.
Risks
Related to Being a Public Company
IF
WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR
PREVENT FRAUD AND AS A RESULT, INVESTORS MAY BE MISLED AND LOSE CONFIDENCE IN OUR FINANCIAL REPORTING AND DISCLOSURES, AND THE
PRICE OF OUR COMMON STOCK MAY BE NEGATIVELY AFFECTED.
The
Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal control over financial reporting.
A “significant deficiency” means 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 the Company’s financial reporting. A “material weakness” is a deficiency or a combination of deficiencies
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the
annual or interim financial statements will not be prevented or detected on a timely basis.
As
of August 31, 2016, management assessed the effectiveness of our internal control over financial reporting based on the criteria
for effective internal control over financial reporting. The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a
functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on
our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and
procedures; and (2) inadequate segregation of duties consistent with control objectives.
In
addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we
may discover “material weaknesses” in our internal controls as defined in standards established by the Public Company
Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies,
that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will
not be prevented or detected.
Failure
to provide effective internal controls may cause investors to lose confidence in our financial reporting and may negatively affect
the price of our common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports
and to prevent fraud. If we have deficiencies in our internal controls over financial reporting, these deficiencies may negatively
impact our business and operations.
IN
THE FUTURE, WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY.
We
will incur legal, accounting and other expenses as a fully-reporting public company. Moreover, the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley Act”), as well as new rules subsequently implemented by the SEC, have imposed various new requirements
on public companies, including requiring changes in corporate governance practices. Moreover, these rules and regulations will
increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Although we have
not operated the business of UBI Blockchain as a public company, since JA Energy, the company’s predecessor, has been a
public company since 2010expect to incur approximately $25,000 of incremental operating expenses in 2017. We project that the
total incremental operating expenses of being a public company will be approximately $30,000 for 2018. The incremental costs are
estimates, and actual incremental expenses could be materially different from these estimates. Unless we can generate sufficient
revenues and profits, we
may not be able to absorb the costs of being a
public company.
As
a result of operating as a public company, our management will be required to devote substantial time to new compliance initiatives.
We
have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that
we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, and rules subsequently implemented
and yet to be implemented by the U. S. Securities and Exchange Commission have imposed and will impose various new requirements
on public companies. Our management and other personnel will need to devote a substantial amount of time to these new compliance
initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities
more time-consuming and costly. For example, we expect these new rules and regulations to make it more difficult and more expensive
for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same
or similar coverage.
In
addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting
and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal
control over financial reporting to allow management, as required by Section 404 of the Sarbanes-Oxley Act. Compliance will require
us to increase our general and administrative expense in order to pay added compliance personnel, outside legal counsel and consultants
to assist us in, among other things, external reporting, instituting and monitoring a more comprehensive compliance function and
board governance function, establishing and maintaining internal controls over financial reporting in accordance with Section
404 of the Sarbanes-Oxley Act, and preparing and distributing periodic public reports in compliance with our obligations under
the U.S. federal securities laws. We currently do not have an internal audit group, and we will evaluate the need to hire additional
accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we
are not able to comply with the requirements of Section 404 in a timely manner, the market price of our stock could decline.
Risks
Related to Administrative, Organizational and Commercial Operations and Growth
The
loss of our Chief Executive Officer or our inability to attract and retain highly skilled developers and other personnel could
negatively impact our business.
Our
success depends on the skills, experience and performance of Tony, Liu, our Chief Executive Officer, and other key employees.
The individual and collective efforts of these employees will be important as we continue to develop and as we expand our commercial
activities. The loss or incapacity of existing members of our executive management team could negatively impact our operations
if we experience difficulties in hiring qualified successors. We do not have any employment agreements in place for our executive
officers; the existence of an employment agreement does not guarantee the retention of the executive officer for any period of
time.
Our
use of “open source” software could negatively affect our ability to sell our products and subject us to possible
litigation.
A
portion of the technologies we use incorporates “open source” software, and we may incorporate open source software
in the future. Such open source software is generally licensed by its authors or other third parties under open source licenses.
These licenses may subject us to certain unfavorable conditions, including requirements that we offer our products and services
that incorporate the open source software for no cost, that we make publicly available source code for modifications or derivative
works we create based upon, incorporating, or using the open source software, or that we license such modifications or derivative
works under the terms of the particular open source license. Additionally, if a third-party software provider has incorporated
open source software into software that we license from such provider, we could be required to disclose or provide at no cost
any of our source code that incorporates or is a modification of such licensed software. If an author or other third party that
distributes open source software that we use or license were to allege that we had not complied with the conditions of the applicable
license, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant
damages and enjoined from the sale of our products and services that contained the open source software. Any of the foregoing
could disrupt the distribution and sale of our products and services and harm our business.
Risks
Related to Intellectual Property
If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.
We
plan to rely upon patents, trademarks, copyright and trade secret protection, as well as non-disclosure agreements and invention
assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information.
Significant elements of our products and services are based on unpatented trade secrets and know-how that are not publicly disclosed.
In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and
technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee
or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may
not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse
we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party
illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.
In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any
of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any
such information was independently developed by a competitor, our competitive position could be harmed.
We
may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us
from commercializing or increase the costs of commercializing our products.
Our
commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property
rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There
also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications
are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature
frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were
filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that
may later result in issued patents that our products infringe. For example, pending applications may exist that provide support
or can be amended to provide support for a claim that results in an issued patent that our product infringes.
Our
software is built upon open-sourced code and platforms. Nevertheless, there is a risk a third party may assert that we are employing
their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover
our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products
unless we obtained a license under the applicable patents, or until the patents expire. We may not be able to enter into licensing
arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative
technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products
by us.
Risks
Related to Ownership of Our Common Stock
The
price of our Common Stock may be volatile and may be influenced by numerous factors, some of which are beyond our control
.
Factors
that could cause volatility in the market price of our Common Stock include, but are not limited to:
●
actual or anticipated fluctuations
in our financial condition and operating results;
●
actual or anticipated changes
in our growth rate relative to our competitors;
●
commercial success and
market acceptance of UBI;
●
success of our competitors
in discovering, developing or commercializing products;
●
strategic transactions
undertaken by us;
●
additions or departures
of key personnel;
●
prevailing economic conditions;
●
disputes concerning our
intellectual property or other proprietary rights;
●
sales of our Common Stock
by our officers, directors or significant stockholders;
●
future sales or issuances
of equity or debt securities by us;
●
business disruptions caused
by earthquakes, tornadoes or other natural disasters; and
●
issuance of new or changed
securities analysts’ reports or recommendations regarding us.
In
addition, the stock markets in general have experienced extreme volatility that has been often unrelated to the operating performance
of the issuer. These broad market fluctuations may negatively impact the price or liquidity of our Common Stock. In the past,
when the price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation
against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending
the lawsuit and the attention of our management would be diverted from the operation of our business.
UBI
Blockchain Internet LTD, a hong Kong Company controls 99.2% OF THE TOTAL VOTING POWER OF OUR CAPITAL that will allow them to control
the Company.
As
of May 31, 2017, UBI Blockchain Internet LTD., a Hong Kong Company, beneficially owned by Tony Liu, our CEO, controls approximately
99.2% of the total voting power of our outstanding capital stock. As a result, UBI Blockchain Internet LTD. will have the ability
to control substantially all matters submitted to our stockholders for approval including:
a)
election of our board of directors;
b)
removal of any of our directors;
c)
amendment of our Articles of Incorporation or bylaws; and
d)
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination
involving us.
As
a result of its ownership UBI Blockchain Internet LTD, the Hong Kong company has the ability to influence all matters requiring
shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the
future prospect of sales of significant amounts of shares held by UBI Blockchain Internet LTD, the Hong Kong company could affect
the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the
value of your investment in the Company may decrease. UBI Blockchain Internet LTD, the Hong Kong company’s stock ownership
may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn
could reduce our stock price or prevent our stockholders from realizing a premium over our stock price
Our
Common Stock is or may become subject to the “penny stock” rules of the SEC and the trading market in the securities
is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
Rule
15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer
approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information
and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating
to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability
determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the
transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock”
rules. If our Common Stock is or becomes subject to the “penny stock” rules, it may be more difficult for investors
to dispose of our Common Stock and cause a decline in the market value of our Common Stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and
the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in
penny stocks.
BECAUSE
WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR
SHARES UNLESS THEY SELL THEM.
We
intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any
cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive
a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.
FUTURE
SALES OF SHARES BY EXISTING CONTROLLING STOCKHOLDERS COULD CAUSE OUR STOCK PRICE TO DECLINE, FURTHER, CERTAIN SHARES OF OUR COMMON
STOCK ARE RESTRICTED FROM IMMEDIATE RESALE.
If
our existing controlling stockholder sell, or indicate an intention to sell, substantial amounts of our common stock in the public
market, the trading price of our common stock could decline. As of May 31, 2017, we have 30,717,046 Class A Common Shares issued
and outstanding. There are 30,000,000 shares of Class A Common Stock, owned by our CEO. If in the future, he decides to sell his
shares or if it is perceived that they will be sold, to the extent permitted by the Rules 144 and 701 under the Securities Act,
the trading price of our common stock could decline.
We
have authorized and
unissued shares OF Series
A, B and C COMMON stock
that may be issued in the future, which would dilute your ownership in the Company.
Our
authorized capital stock currently consists of 2,000,000,000 shares of common stock, $0.001 par value per share. The Company’s
shares structure currently consists of 1,000,000,000 shares of Class A common stock, 500,000,000 shares of Class B common stock,
and 500,000,000 shares of Class C common stock. As of May 31, 2017 there are approximately 30,717,046 shares of our Class A Common
Stock issued and outstanding; 6,000,000 shares of our Class B Common Stock issued and outstanding; and 73,400,000 shares of our
Class B Common Stock issued and outstanding. The Board of Directors has a great deal of discretion, in the future, to issue more
shares in each Series, without shareholder approval. The issuance of more shares of any Series would dilute your ownership in
the Company, which would mean your percent of ownership in the Company would decrease.
HOLDERS
OF OUR COMMON STOCK HAVE A RISK OF POTENTIAL DILUTION IF WE ISSUE ADDITIONAL SHARES OF COMMON STOCK IN THE FUTURE.
Although
our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing
stockholders in connection with any future issuance of our common stock, the future issuance of additional shares of our common
stock would cause immediate, and potentially substantial, dilution to the net tangible book value of those shares of common stock
that are issued and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of our
issued and outstanding shares could have a material effect on the market value of the shares.
THE
PRICE OF OUR CLASS C COMMON STOCK OFFERED IN THE OFFERING HAS BEEN ARBITRARILY ESTABLISHED BY OUR MANAGEMENT.
The
offering price has been arbitrarily determined by our management and bears no relationship to assets, earnings, or any other valuation
criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this,
or at any price. This is especially the case if an investment in our company results in a stock price as determined by the market
less than our initial offering. In that case, shares in our company could be purchased in the open market below our initial offering
price. This would result in a loss of money for any investors in this offering.
WE
MAY HAVE DIFFICULTY IN MEETING THE QUALIFICATIONS FOR THE QUOTATION OF OUR CLASS C COMMON STOCK ON THE OTC-BULLETIN BOARD.
We
plan to identify a market maker to list our Class C common stock on the OTC-Bulletin Board after the share are registered. Based
on the small size of our Company and our minimal operations, we may have difficulty in meeting the qualifications for trading
our Class C common stock on the OTC-Bulletin Board and in finding a market maker willing to list quotations for our shares or
sponsor our Company for listing. There are no assurances that our Company’s Class C common stock will ever be quoted on
the OTC-Bulletin Board.
LOW-PRICED
STOCKS MAY AFFECT THE RESELL OF OUR SHARES.
Penny
Stock Regulation Broker-dealer practices in connection with transactions in “Penny Stocks” are regulated by certain
penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price
of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the
penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market
value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior
to a transaction in a penny stock; the broker-dealer must make a written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock
rules. If and when the Company’s securities become registered, the stock will likely have a trading price of less than $5.00
per share and will not be traded on any exchanges. Therefore, the Company’s stock may become subject to the penny stock
rules and investors may find it more difficult to sell their securities, should they desire to do so.
Legal
Proceedings
From
time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time
to time that may harm our
business.
We
are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against
us, which may materially affect us.
Submission
of Matters to a Vote of Security Holders
We
did not submit any matters to a vote of our security holders during the past fiscal year.
(a)
Market Information
UBI
Blockchain Internet, LTD, $0.001 par value, can be found on the OTC-Bulletin Board under the symbol: UBIA. The Stock was first
cleared for quotation on September 22, 2011.
There
has been limited trading of the Company’s stock, since it was listed on the OTC-QB, there are no assurances that a market
will ever develop for the Company’s stock.
The
following table sets forth the range of high and low trading price information for the common stock during the quarterly periods
indicated (as retroactively adjusted for the January 20, 2016 1 for 200 reverse stock split).
Year ended August
31, 2016
|
|
High
|
|
|
Low
|
|
First Quarter
|
|
$
|
20.00
|
|
|
$
|
10.02
|
|
Second Quarter
|
|
$
|
10.02
|
|
|
$
|
10.02
|
|
Third Quarter
|
|
$
|
1.01
|
|
|
$
|
0.56
|
|
Fourth Quarter
|
|
$
|
0.53
|
|
|
$
|
0.53
|
|
Year ended August
31, 2015
|
|
High
|
|
|
Low
|
|
First Quarter
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
Second Quarter
|
|
$
|
100.00
|
|
|
$
|
10.00
|
|
Third Quarter
|
|
$
|
100.00
|
|
|
$
|
10.00
|
|
Fourth Quarter
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
(b)
Holders of Common Stock
As
of May 31, 2017, there were approximately one hundred fifty (150) holders of record of our Common Stock.
(c)
Dividends
In
the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate
paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will
be the sole discretion of board of directors and will depend on our profitability and financial condition, capital requirements,
statutory and contractual restrictions, future prospects and other factors deemed relevant.
(d)
Securities Authorized for Issuance under Equity Compensation Plans
There
are no outstanding grants or rights or any equity plan in place.
(e)
Recent Sales of Unregistered Securities
On
October 3, 2016 the Company issued 30,000,000 shares of unregistered restricted Class A Common Stock, 6,000,000 shares of unregistered
restricted Class B Voting Common Stock, which carries a voting weight equal to ten (10) Common Shares and 40,000,000 shares of
unregistered restricted Class C Common Stock to UBI Blockchain Internet, LTD (“UBI”), a Hong Kong company, in exchange
for $200,000. These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended
(the “Act”) and were issued under Regulation S to one (1) foreign entity who attested it is an accredited investor
who is not a citizen nor a resident of the USA.
On
May 1, 2017, the Company issued 500,000 unregistered restricted Class A common shares, par value $0.001, of UBI Blockchain Internet,
Ltd., to a independent consultant. This shareholder received Class A common shares based on consulting services to be performed
for the Company. These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended
(the “Act”). The issuance of these shares by us did not involve a public offering.
The
Company did not engage in any form of general solicitation or general advertising in connection with this transaction. The Consultant
was afforded access to our management in connection with this transaction. The Consultant acquired these securities for service
compensation and not with a view toward distribution, acknowledging such intent to us. The Consultant understood the ramifications
of their actions. The shares of Class A common stock issued contained a legend restricting transferability absent registration
or applicable exemption.
(f)
Issuer Purchases of Equity Securities
We
did not repurchase any of our equity securities during the years ended August 31, 2016 or August 31, 2015.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
Overview
of Current Operations
This
section includes a number of forward-looking statements that reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project
and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these
forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual
results to differ materially from our predictions. The following discussion should be read in conjunction with our financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. The discussion of results, causes and trends should not be
construed to imply any conclusion that these results or trends will necessarily continue into the future.
Results
of Operations for the year ended August 31, 2016 versus the year ended August 31, 2015 and for the Quarter ending May 31, 2017.
Expenses
During
the fiscal year ended August 31, 2016, the Company had total operating expenses of $13,079, as compared to total operating expenses
of $32,948 for the same period in 2015, a decrease of $19,869 or 60.3%. The decrease in expenses represented decreases in general
and administrative expenses from the same period last year. For the nine months ended May 31, 2017, the Company had total operating
expenses of $1,170,660 as compared to $35,854 in 2016. The 2017 operating expenses consisted of salaries of $370,270, consulting
fees of $665,834, legal and professional fees of $93,168 and other general and administrative expenses of $41,388.
Net
loss
For
the three months ended May 31, 2017, the Company had a net loss of $(668,669) or $(0.01) per share of Class A and Class C common
stock and compared to a loss of $(10,573) or $(0.05) per share of Class A and Class C common stock for the same period last year.
For
the nine months ended May 31, 2017, the Company had a net loss of $(1,123,085) or $(0.03) per share of Class A and Class C common
stock and compared to a loss of $(35,854) or $(0.17) per share of Class A and Class C common stock for the same period last year.
Plan
of Operation
Management
does not believe that the Company will be able to generate any significant profit during the coming year. The Company’s
need for capital may change dramatically if it can generate additional revenues from its operations. There are no assurances additional
capital will be available to the Company on acceptable terms.
Future
funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or
amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company’s
business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or
product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable
to the Company, or at all, and such financing, if available, might be dilutive.
Going
Concern
As
of May 31, 2017, the Company has an accumulated deficit since inception of $5,677,344. The Company has not generated any meaningful
revenues to date, and its ability to continue as a going concern is contingent upon the successful completion of additional financing
arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance
the operating and capital requirements of the Company.
These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification
of liabilities that might result from the outcome of this uncertainty.
Liquidity
and Capital Resources
As
of May 31, 2016, the Company had $1,661,333 in current assets but had current liabilities of $353,300.
The
Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities
and operations. These limitations have adversely affected the Company’s ability to obtain certain projects and pursue additional
business. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business
to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that
any necessary financing can be obtained on terms favorable to the Company, or at all.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital
resources that is material to investors.
New
Accounting Standards
Management
has evaluated recently issued accounting pronouncements through August 31, 2016 and concluded that they will not have a material
effect on future financial statements.
Quantitative
and Qualitative Disclosures about Market Risk.
Not
applicable.
Director,
Executive Officer and Corporate Governance.
The
following table sets forth certain information regarding our current director and executive officer. Our executive officers serve
one-year terms. Set forth below are the names, ages and present principal occupations or employment, and material occupations,
positions, offices or employments for the past five years of our current director and executive officer.
Name
|
|
Age
|
|
Position
& Offices Held
|
|
|
|
|
|
Tony
Liu
|
|
63
|
|
Chairman
of the Board and CEO
|
Chan
Cheung
|
|
60
|
|
CFO,
Corporate Secretary
|
Jun
Min
|
|
57
|
|
Director
|
Cosimo
J. Patti
|
|
66
|
|
Director
|
All
of the above Directors and Officers were appointed to their positions on January 3, 2017.
Set
forth below is a brief description of the background and business experience of our officers and directors.
Tony
Liu, Chairman of the Board and CEO.
Mr.
Tony Liu brings almost 50 years of management, extensive leadership, strategy, risk management and marketing experience to to
UBI. Mr. Liu served as a representative to the National People’s Congress in China, with his practical work experience in
the Chinese community for many years, He has been Chairman of Hong Kong Silver Union Group Co., Ltd., since May, 2009. From 2001
- 2014 he was Chairman and Chief Executive Officer of American Oriental Bioengineering, Inc., a pharmaceutical company that produced
and marketed prescription pharmaceutical products, over-the-counter pharmaceutical products and nutraceutical products
,
He
is also a limited partner of Shenzhen Zhu Mao Investment Enterprise since July, 2015.
Mr.
Liu graduated with a major in Communications & Commands from Wuhan Communication College in 1986 and studied Integrated Marketing
and Media at the University of Hong Kong in 2004. Mr. Liu studied in the Program of Sustainable Growth of Large Corporations sponsored
by the School of Engineering and the School of Business at Stanford University. Mr. Liu passed the dissertation for his Doctor
of Business Administration degree in September 2010 at Tarlac State University through a program jointly run by Beijing Normal
University and Tarlac State University. This program is accredited by The Philippines Department of Education and China Department
of Education.
Chan
Cheung, Chief Financial Officer and Corporate Secretary
Mr.
Chan Cheung is Certified Public Accountant who brings to the management team over 30 years of financial and accounting experience
in banking, finance, and management, before joining the Company. Prior to joining the Company, Mr. Chan was CFO, Chief Compliance
Officer, and corporate secretary of Neo-Neon Holdings Ltd. (1868.HK). He obtained a BS degree from Chinese University of Hong
Kong in 1983, he is member of the Hong Kong Institute of Certified Public Accountants and Association of Chartered Certified Accountants.
Jun
Min, Director
Jun
Min brings to the Company over 30 years of business experience in operations management, along with a vast amount of leadership,
consumer industry, marketing experience and knowledge of the consumer and pharmaceutical products industries in China. Mr. Min
worked at the Price Checking Department Bureau of Heilongjiang Province from 1987 to 1992. Subsequently, he worked for Three-
Happiness Bioengineering, Co. Ltd. from 1994. In November 2008, Mr. Min joined the board of directors of China Aoxing Pharmaceuticals
Co., Inc. (OTCBB:CAXG), a specialty pharmaceutical company specializing in research, development, manufacturing and distribution
of a variety of pain killers and pain-management products. Mr. Jun Min has worked in the position of manager at Sanleyuan Group,
in Hong Kong since 1993. From 2002 to 2014, he was Director and Vice President of American Oriental Bioengineering, Inc., a pharmaceutical
company that produced and marketed prescription pharmaceutical products. Mr. Min received a BA in Business Management from Zhongyang
Broadcast TV University in 1986.
Cosimo
J. Patti, Director
Mr.
Patti has over 50 years of business experience in managing corporate teams for both domestic and international operations, as
well as compliance and sales organizations. Mr. Patti brings risk management, and financial experience in delivering products
and services to consumers and businesses, he brings consumer and business insights, as well as a global perspective, to the Board.
From 2004 to 2014, Mr. Patti was an independent director of American Oriental Bioengineering, Inc., a pharmaceutical company that
produced and marketed prescription pharmaceutical products. Mr. Patti was the President and Chairman of Technology Integration
Group, Inc. D/B/A FSI Advisors Group, a global Financial Services (Bulletin Board listed TING) consulting organization from 1999
to 2005. In May 2009, Mr. Patti was appointed to the Board of Directors of China XD Plastics Company Limited (NASDAQ:CXDC), a
company engaged in the development, manufacturing, and distribution of modified plastics primarily for use in automotive applications.
In June 2007, Mr. Patti joined the Board of Directors of Advanced Battery Technologies, Inc. (NASDAQ:ABAT). He was the Director
of Strategic Cross-border Business with Cedel Bank from 1996 to 1999. Since 1986, Mr. Patti has served as an appointed arbitrator
to the New York Stock Exchange and the National Association of Securities Dealers adjudicating cases involving client disputes
and improprieties. Mr. Patti attended Brooklyn College from 1968 to 1970.
Section
16(a) Beneficial Ownership Reporting Compliance