Item 5.06 Change in Shell Company Status
UBI Blockchain Internet, LTD ("the Company"
or "UBI") ceased to be shell company on March 17, 2017, as a result of new management, a recent change in corporate ownership,
and the Company pursing new business opportunities. The Company now has three directors, two corporate officers and nine employees.
Further, the Company, through its new management now has better access to the capital markets to raise funding for the Company.
The Company is engaged in the developing business technologies of applying blockchain and internet of things. Based on this business
activity, m
anagement 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.
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.
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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
UBI’s business
encompasses the research and application in the 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.
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.
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.
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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.
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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.
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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.
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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.
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Our Strategy
Our 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. 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:
1. 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.
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2. We Believe 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.
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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 United States and abroad 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.
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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.
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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.
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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.
Risks Related to Our Business
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. Our likelihood of success must be considered in light of
the problems, expenses, difficulties, complications, and delays frequently encountered in connection with selling audio housing
systems 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 preferred and 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 CONCER. THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A
GOING CONCERN.
The financial statements included with our
Annual Report for the year ended August 31, 2016 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 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.
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We plan to seek additional funds through private
placements of our preferred and 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 year end for August 31, 2016. For the period from inception (August 26, 2010) through the year end for August 31, 2016,
we experienced an operating net loss 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.
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.
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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.
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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.
16
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.
17
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
.
Risks Related to Our Reliance on Third
Parties
We
will depend on third-parties to market in international markets.
We will depend on a number of third parties
to market and sell internationally. We may not be able to successfully identify marketing and distribution partners and even if
we do, such parties may not be able to successfully market and sell and may not devote sufficient time and resources to support
the marketing and selling efforts that enable the product to develop, achieve or sustain market acceptance. Any of these factors
could reduce our revenue from affected international markets, increase our costs in those markets or damage our reputation. In
addition, if we are unable to attract additional international distributors, our international revenue may not grow.
18
Risks Related to Being a Public Company
Our
management team has no experience managing a public company.
Most members of our management team have no
experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex
laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public
company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous
scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our
senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect
our business, financial condition, and operating results.
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 PREFERRED AND 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.
19
Failure to provide effective internal controls
may cause investors to lose confidence in our financial reporting and may negatively affect the price of our preferred and 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.
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. Our executive officers have employment agreements; however, 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.
20
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.
21
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.
22
UBI
Blockchain Internet LTD, a hong Kong Company controls 99.8% OF THE TOTAL VOTING POWER OF OUR CAPITAL that will allow them to control
the Company.
As of April 10, 2017, UBI Blockchain Internet
Ltd., a Hong Kong Company controls approximately 99.8% 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.
23
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.
Properties
Our Hong Kong offices
are located in unit 03, level 9, Core F, Smart Space, Block 3, Hong Kong Cyberport, 100 Cyberport Road, Hong Kong, and our US mailing
address is:
8250 W. Charleston Blvd, Suite 110, Las Vegas, NV 89117. Our U. S. telephone number is: (702) 544-0195.
The Company does not own any properties, but
currently leases office space at two locations in Qianhai of China, and London.
24
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-BB, 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 December 31, 2016, there were approximately
one hundred forty (140) holders of record of our Common Stock.
25
(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.
(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.
26
Results of Operations for the year ended
August 31, 2016 versus the year ended August 31, 2015 and for the Quarter ending November 30, 2016.
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 three month period ended November 30, 2016, the Company had total operating expenses of $75,869,
as compared to total operating expenses of $13,256 for the same period in 2015. The increase operating expenses were a result of
$25,000 in consulting fees and $31,369 in professional fees.
Other income and expenses
On October 15, 2014, as part of an Irrevocable
Asset and Liability Exchange Agreement (the “Agreement”) Mr. James Lusk (the largest debtor of JA Energy and its former
CEO) agreed to transfer as of March 31, 2014, all assets and liabilities from JA Energy to the Subsidiary to the extent legally
assignable. During the year ended August 31, 2015 an asset with a book value of $9,340, net of depreciation, and liabilities totaling
$628,210 were transferred to Peak Energy Holdings. This transfer resulted in other income of $618,870 for the year ended August
31, 2015.
On October 27, 2014 the Company entered into
an agreement with two former employees, one of whom was a former director of the Company, whereby all parties agreed to release
and hold harmless from any liabilities that existed prior to the date of the agreement. The result of this agreement was the forgiveness
of this debt by the former employees of $38,186 in compensation owed to the employees which was recognized as other income during
the year ended August 31, 2015. Also, during the year ended August 31, 2015 the company recognized a gain of $21,122 related to
the forgiveness of two other payables. As a result, the Company recognized a gain of $59,308 related to the forgiveness of accounts
payable.
For the year ended August 31, 2015 the company
recognized interest expense of $5,833 related to Notes Payable to the Company’s former CEO.
For year ended August 31, 2016 the Company
had no other income or expense.
Net loss
Based on the foregoing the Company had a net
loss of $13,079 for the year ended August 31, 2016 compared to income of $639,397 for the same period in 2015. For the three month
period ended November 30, 2016 the Company had a net loss of $75,297 as compared to a net loss of $13,256 for the same period last
year.
27
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
The Company has an accumulated deficit since
inception of $4,554,259. 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.
In October 2016, there was a change in control 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 August 31, 2016, the Company had no assets
but had current liabilities of $146,602.
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.
28
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.
29
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 and Director
|
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 a great deal of management
experience to UBI. He has been Chairman of Hong Kong Silver Union Group Co., Ltd., since May, 2009. He is also a limited partner
of Shenzhen Zhu Mao Investment Enterprise since July, 2015.
Chan Cheung, Director, Chief Financial Officer
and Corporate Secretary
Mr. Chan Cheung brings to the management team
over 30 years of financial and accounting experience in banking, finance, and management, before 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
Mr. Jun Min has worked in the position of manager
at Sanleyuan Group, in Hong Kong since 1993. He has a BA Degree from Zhongyang Broadcast TV University.
30
Cosimo J. Patti,
Director
Mr. Cosimo Patti brings
to the Company over 50-years in the financial services industry, where is worked in a variety of senior level positions.
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.
Section 16(a) Beneficial Ownership Reporting
Compliance