IWEB, Inc. (OTCMKTS:IWBB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement | ||
| Section 2 Financial Information | ||
| Item 2.01 | Completion of Acquisition or Disposition of Assets | |
| Digiwork Business | ||
| Risk Factors | ||
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Managements Discussions and Analysis of Financial Condition and Result of Operations |
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| Executive Compensation | ||
| Certain Relationships and Related Transactions | ||
| Legal Proceedings | ||
| Section 3 Securities and Trading Markets | ||
| Item 3.02 | Unregistered Sales of Equity Securities | |
| Description of Securities | ||
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Market Price and Dividends on Common Equity and Related Stockholder Matters |
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Security Ownership of Certain Beneficial Owners and Management |
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| Section 5 Corporate Governance and Management | ||
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of CertainOfficers; Compensatory Arrangements of Certain Officers |
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| Item 5.06 | Corporate Governance | |
| Indemnification of Officers and Directors | ||
| Section 9 Financial Statements and Exhibits | ||
| Item 9.01 | Financial Statements and Exhibits |
SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K (Current Report) filed by IWEB,
Inc. (the Company) with the Securities and Exchange Commission
(the SEC) contains or may contain forward looking statements and
information that are based upon beliefs of, and information
currently available to, management; as well as estimates and
assumptions made by management. When used in this report, the
words anticipate, believe, estimate, expect, future, intend, plan
or the negative of these terms and similar expressions as they
relate to the Company or management, identify forward looking
statements. Such statements reflect the current view of the
Company with respect to future events and are subject to risks,
uncertainties, assumptions and other factors (including the risks
contained in the section of this report entitled Risk Factors)
relating to the Companys industry, operations and results of
operations and any businesses that may be acquired by the
Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove
incorrect, actual results may differ significantly from those
anticipated, believed, estimated, expected, intended or planned.
Although the Company believes that the expectations reflected in
the forward looking statements are reasonable, the Company cannot
guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the
securities laws of the United States, the Company does not intend
to update any of the forward looking statements to conform these
statements to actual results. The following discussion should be
read in conjunction with the financial statements and the related
notes that are filed herein.
SECTION 1 REGISTRANTS BUSINESS AND
OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE
AGREEMENT
On May 15, 2017, we entered into a share exchange agreement (the
Share Exchange Agreement) with Enigma Technology
International Corporation, a British Virgin Islands company,
(Enigma BVI), and all the shareholders of Enigma BVI, namely,
Ratanaphon Wongnapachant, Chanikarn Lertchawalitanon, and S-Mark
Co. Ltd. (each a Shareholder and collectively the Shareholders),
to acquire all the issued and outstanding capital stock of Enigma
BVI in exchange for the issuance to the Shareholders of an
aggregate of 63,000,000 restricted shares of our common stock
(the Reverse Merger) delivered on the Closing
Date of the Reverse Merger (the Closing Shares).
The Reverse Merger will close on May 15, 2017. Immediately after
the closing of the Reverse Merger, we will have a total of
75,000,000 issued and outstanding shares of common stock,
63,000,000 of which are held by the Shareholders. As a result of
the Reverse Merger, Enigma BVI is now our wholly-owned subsidiary
of the Company. Effective upon closing of the Reverse Merger, Wai
Hok Fung resigned as the Chairman of the Board of the Directors
(the Board) and Chief Executive Officer
(CEO) of the Company and Mr. Ratanaphon
Wongnapachant was appointed as the Chairman and a director of the
Board and as CEO of the Company. In addition, Ms. Wai Lung Yee
and Mr. Cheng Kim Sing resigned as directors of the Board and Mr.
Bodin Kasemset was appointed as a new director of the Board. Mr.
Cheng continues to serve as the Chief Financial Officer
(CFO), Secretary and Treasurer of the Company
and Mr. Wai continues to serve as a board member and the
President of the Company. There were no disagreements between Ms.
Wai, Mr. Cheng and the Company.
In connection with the transactions contemplated by the Share
Exchange Agreement, the Company and Mr. Wai entered into a
Repurchase Agreement, dated May 14, 2017, to which the Company
purchased 39,495,000 shares of the Companys common stock (the
Repurchase Shares) from Mr. Wai for a total
purchase price of $1.00, effective immediately prior to the
consummation of the Share Exchange Agreement. The Repurchase
Shares were held as treasury shares and issued to the
Shareholders to the Share Exchange Agreement.
The Shareholders are not U.S. Persons (as that term is defined in
Regulation S of the Securities Act of 1933) and they acquired our
shares in the Reverse Merger outside of the United States. In
issuing these securities to the Shareholders, we claim an
exemption from the registration requirements of the Securities
Act of 1933, as amended (the Act) for the
offering of the shares of our common stock to them to Regulation
S promulgated thereunder since, among other things, the offer or
sale was made in an offshore transaction and no directed selling
efforts were made in the United States by the issuer, a
distributor, any of their respective affiliates, or any person
acting on behalf of any of the foregoing. In addition, each
recipient of the shares certified that he/it is not a U.S. person
and is not acquiring the securities for the account or benefit of
any U.S. person and agreed to resell such securities only in
accordance with the provisions of Regulation S, to registration
under the Act, or to an available exemption from registration;
and agreed not to engage in hedging transactions with regard to
such securities unless in compliance with the Act.
SECTION 2 FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF
ASSETS
As described in Item 1.01 above, on May 15, 2017, we acquired all
the issued and outstanding shares of Enigma BVI to the Share
Exchange Agreement and Enigma BVI became our wholly owned
subsidiary. The acquisition was accounted for as a
recapitalization effected by a share exchange, wherein Enigma BVI
is considered the acquirer for accounting and financial reporting
purposes. The assets and liabilities of Enigma BVI have been
brought forward at their book value and no goodwill has been
recognized. As a result of the acquisition of all the issued and
outstanding shares of Enigma BVI, we have now assumed Enigma BVIs
business operations as our own.
BUSINESS
Historical Development
We were incorporated in the State of Nevada on February 17, 2015.
We are an IT services company that currently designs web sites
for clients, manages advertising campaigns and is in the process
of developing and becoming a provider of better search engine
optimization (SEO) software and techniques to smaller clients.
The primary operations of the business are providing high impact
internet marketing strategies to internet-based businesses and
people seeking to create websites. We also intend to develop
services that will seek to place customers website in search
engine rankings for selected keywords that describe the product
or service offered by the customer. This is a highly technical
strategy that involves the use of algorithms for relevant
content. We currently provide customers with the web application
development services for many different computing needs. The
focus of these services is the development of websites using
different types of technology templates such as: HTML, Word
Press, Web templates and Joomla.
On December 12, 2016, 49,995,000 shares of the common stock of
the Company, representing 97.08% of the Companys then issued and
outstanding shares of common stock, were sold by Dmitriy
Kolyvayko in a private transaction to Mr. Wai Hok Fung (the
Transaction) for an aggregate purchase price of $380,000. In
connection with the Transaction, Mr. Kolyvayko released the
Company from certain liabilities and obligations arising out of
his service as a director and officer of the Company.
As a startup company, the Company had limited operating revenues
through December 31, 2016. The revenue was generated from clients
payments for the performance of website development services. The
Company is currently devoting substantially all of its present
time to the performance of work for, and development of a
potential joint project with, Unusual Concepts, a Norwegian
corporation.
Enigma Technology International Corporation (Enigma BVI) is a
holding company incorporated under the laws of British Virgin
Islands on February 22, 2017. Enigma BVI conducts its business
through its variable interest entity, Digiwork (Thailand) Co.,
Ltd. (Digiwork or VIE), a company incorporated in Thailand on
November 24, 2016 with registered capital of Thai Baht (THB)
5,000,000. Digiwork is an operating vehicle which is a joint
venture company by two Thai shareholders and one Korean
shareholder. Digiwork Korea, a 100% wholly owned subsidiary of
the Korean shareholder of Enigma BVI, S-Mark Co., Ltd. which is a
listed company in Korea, provides licenses of various coding
technologies to Digiwork for the operation in seven countries:
Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab Emirates
and Qatar.
In the first quarter of 2017, Digiwork signed two service
contracts with two entities for coding services. Deposits of
THB3.6 million have been received as of March 31, 2017 and the
initial phase of the services has been completed as of May 15,
2017.
The following diagram illustrates our current corporate
structure:
Contractual Arrangements with Digiwork (Thailand) Co.,
Ltd.
Due to legal restrictions in Thailand on foreign ownership of
Thai corporations, we currently conduct the coding business
through Digiwork, which we effectively control through a series
of contractual arrangements. These contractual arrangements allow
us to:
| exercise effective control over Digiwork; |
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receive substantially all of the economic benefits of Digiwork; and |
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have an exclusive option to purchase all or part of the equity interests in Digiwork, when and to the extent permitted by Thai law. |
As a result of these contractual arrangements, we have become the
primary beneficiary of Digiwork, and we treat Digiwork as our
variable interest entity under U.S. GAAP. We have consolidated
the financial results of Digiwork in our consolidated financial
statements in accordance with U.S. GAAP.
The following is a simplified illustration of the ownership
structure and contractual arrangements that we have in place for
Digiwork and a summary of the currently effective contractual
arrangements by and among Enigma Technology International
Corporation, our consolidated variable interest entity, Digiwork
(Thailand) Co., Ltd., and the shareholders of Digiwork (Thailand)
Co., Ltd.
to an Exclusive Technology Consulting and Service Agreement,
dated as of May 15, 2017, Enigma BVI agreed to act as the
exclusive consultant of Digiwork and provide technology
consulting and services to Digiwork. In exchange, Digiwork agreed
to pay Enigma BVI a technology consulting and services fee, the
amount of which is decided by Enigma BVI on the basis of the work
performed and commercial value of the services and the fee amount
to be equivalent to the amount of net profit before tax of
Digiwork on quarterly basis, provided that the minimum amount of
which will be no less than THB30,000 (approximately USD $841) per
quarter. Without the prior written consent of Enigma BVI,
Digiwork may not accept the same or similar technology consulting
and services provided by any third party during the term of the
agreement. All the benefits and interests generated from the
agreement, including but not limited to intellectual property
rights, know-how and trade secrets, will be Enigma BVIs sole and
exclusive rights. The term of this agreement will expire on May
15, 2027 and may be extended unilaterally by Enigma BVI with
Enigma BVI’s written confirmation prior to the expiration date.
Digiwork cannot terminate the agreement early unless Enigma BVI
commits fraud, gross negligence or illegal acts, or becomes
bankrupt or winds up;
to an Exclusive Purchase Option Agreement, dated as of May 15,
2017, the shareholders of Digiwork granted to Enigma BVI and any
party designated by Enigma BVI the exclusive right to purchase at
any time during the term of this agreement all or part of the
equity interests in Digiwork, or the Equity Interests, at a
purchase price equal to the registered capital paid by the
shareholder of Digiwork for the Equity Interests, or, in the
event that applicable law requires an appraisal of the Equity
Interests, the lowest price permitted under applicable law;
to powers of attorney executed by each of the shareholders of
Digiwork, such shareholders irrevocably authorized any person
appointed by Enigma BVI to exercise all shareholder rights,
including but not limited to voting on their behalf on all
matters requiring approval of Digiworks shareholders, disposing
of all or part of the shareholder’s equity interest in Digiwork,
and electing, appointing or removing directors and executive
officers. The person designated by Enigma BVI is entitled to
dispose of dividends and profits on the equity interest subject
to the instructions of the shareholder. Each power of attorney
will remain in force for so long as the shareholder remains a
shareholder of Digiwork. Each shareholder has waived all the
rights which have been authorized to Enigma BVIs designated
person under each power of attorney;
to equity pledge agreements, each of the shareholders of Digiwork
pledged all of the Equity Interests to Enigma BVI to secure the
full and complete performance of the obligations and liabilities
on the part of Digiwork and each of its shareholders under this
and the above contractual arrangements. If Digiwork or the
shareholders of Digiwork breach their contractual obligations
under these agreements, then Enigma BVI, as pledgee, will have
the right to dispose of the pledged Equity Interests. The
shareholders of Digiwork agree that, during the term of the
equity pledge agreements, they will not dispose of the pledged
equity interests or create or allow any encumbrance on the
pledged equity interests, and they also agree that Enigma BVIs
rights relating to the equity pledge should not be prejudiced by
the legal actions of the shareholders, their successors or their
designees. During the term of the equity pledge, Enigma BVI has
the right to receive all of the dividends and profits distributed
on the pledged equity. The equity pledge agreements will
terminate on the second anniversary of the date when Digiwork and
the shareholders of Digiwork have completed all their obligations
under the contractual agreements described above.
In the opinion of MVP International Law Office Associates Co.,
Ltd, our Thailand legal counsel:
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the ownership structure of our variable interest entity in Thailand does not and will not violate any applicable Thailand law, regulation, or rule currently in effect; and |
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the contractual arrangements among Enigma BVI, Digiwork, and the shareholders of Digiwork governed by Thailand laws are valid, binding and enforceable in accordance with their terms and applicable Thailand laws, rules, and regulations currently in effect, and will not violate any applicable Thailand law, regulation, or rule currently in effect. |
However, we have been further advised by our Thailand legal
counsel, MVP International Law Office Associates Co., Ltd, that
there are substantial uncertainties regarding the interpretation
and application of current and future Thai laws, rules and
regulations. Accordingly, the Thailand regulatory authorities
may, in the future, take a view that is contrary to the opinion
of our Thai legal counsel. We have been further advised by our
Thai legal counsel that if the Thai government finds that the
agreements that establish the structure for operating our coding
business do not comply with Thailand government restrictions on
foreign investment in the aforesaid business we engage in, we
could be subject to severe penalties including being prohibited
from continuing operations. See Risk Factors Risks Related to Our
Corporate Structure.
Business Strategy
Digiwork was set up to a joint business agreement among its
shareholders (JBA) on August 4, 2016, as amended and restated on
March 31, 2017. to the JBA, Digiwork is obligated to pay a total
of $10,000,000 to a shareholder of Digiwork, namely Digiwork Co.,
Ltd. (Digiwork Korea, a 100% wholly owned subsidiary of a 40%
shareholder of the Company). As the consideration for such
payments, Digiwork Korea agrees to provide research and
development services to Digiwork for a period of five years
commencing from March 31, 2017. Digiwork currently has 20 full
time employees, among which 12 are technicians and 8 are
administrative staffs.
Digiwork Korea also agrees to provide/grant Digiwork full and
exclusive licenses of any new launches, developments,
improvements and any other intellectual property rights so
developed by Digiwork Korea. The territories for such licenses
are Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab
Emirates and Qatar.
Digiwork was authorized by Digiwork Korea to be an official
licensee and distributor of its technology exclusively in
Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab Emirates
and Qatar, and the authorization covers all four categories of
Digiwork Koreas coding technology: image, audio, web and security
coding. This technology enables governments and enterprises
around the world to give digital identities to media and objects
that computers can sense and recognize, and to which they can
react.
Digiwork is a technology development and services provider
specializing in coding services in various industries and
markets. Digiwork enables enterprises to give invisible digital
identities to media and objects that various computer devices can
sense and recognize and to which they can react. Our coding
technology provides the means to infuse persistent digital
information, perceptible only to computers and digital devices,
into all forms of media content. Our coding technology permits
computers and digital devices including smartphones, tablets,
industrial scanners and other computer interfaces to quickly
identify relevant data from vast amounts of media content. We
focus on four coding technologies:
Image coding technology,
Audio coding technology,
Web coding technology, and
Security coding technology
Image Coding Technology
Digiworks image coding technology encrypts important information
to be printed invisibly, which can only be scanned and perceived
by using Digiwork application. By using the existing printing
method, this technology does not require any special paper or
ink, which means no extra cost. This technology can also bring
innovation to information transfer and security solutions. Our
customers can put more than 10 kinds of codes on 1 sheet of A4
paper and by placing encrypted codes; various type of information
including linked address of the website can be coded in any
promotional items like banner, paper, and pictures and the
information can be freely changed.
Audio Coding Technology
Digiworks Sound Recognition Technology has opened a new
technological prospect. This new innovative technology puts
digital code to sound within audible range to provide information
through sound. Digiworks sound recognition technology clearly
distinguishes itself from existing technology that transfers
information using high and low frequency. Our technology inserts
information to audible frequency, which means wider application
and high practicality. Information can be provided quickly and,
unlike other sound recognition system, it is undisturbed by
surrounding noise. Therefore, it can be applied in areas that are
close to ones life>
Web Coding Technology
Digiworks web coding is applicable to webpage and TV screens. Our
technology can make ticket reservation and other event activities
easier and more convenient. It also makes it possible to
participate in surveys while watching the news and other TV
programs, enabling the viewers to easily and quickly partake at
the comfort of their own home. Digiworks technologies connect
mobile devices to IoT (Internet of Things) at zero cost, and
grant access to big data through the gathering of consumer scan
statistics.
Security Coding Technology
The image scanning technology with security by Digiwork can
certify the authenticity of products. Unlike QR code, Digiworks
image scanning technology cannot be replicated, and by adding
security, we have created the safest and surest technology that
is also widely applicable. Going beyond documents, it can be
applied to any printable objects such as glass and plastic to
provide information and certify authenticity. Consumers can make
safe purchases by using the app to scan the product packaging or
the coded image on the product logo, or using the sound
recognition system to confirm the authenticity of the store. Our
security code technology can protect companies from counterfeit
products and enable consumers to buy certified products quickly
and conveniently.
As of now there are no competing technologies existing in our
authorized territories, however, old technologies like QR code
remains as our primary competitor. We need to convince customers
that our technology is more advanced and will replace QR code in
the near future.
We provide tailor-made coding technological solutions to various
commercial entities in different markets. Our technologies enable
companies to give digital identity or information through various
media like music, movies, television broadcasts, images and
printed materials. The wide range application of the above four
technologies can provide improved media rights, asset management,
reduce piracy and counterfeiting losses, improve marketing
programs, permit more efficient and effective distribution of
valuable media content and enhance consumer experiences.
RISK FACTORS
You should carefully consider the risks described below
together with all of the other information included in this
report before making an investment decision with regard to the
Companys securities. The statements contained in, or incorporated
herein, that are not historic facts are forward looking
statements that are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in
or implied by forward looking statements. The risks and
uncertainties described below are not the only risks and
uncertainties facing us. Additional risks not currently known to
us or that we currently believe are immaterial may also impair
our operating results, financial condition, and liquidity. Our
business is also subject to general risks and uncertainties that
affect many other companies. For purposes of this section,
references to our business include the business of our
wholly-owned subsidiary and VIE. The risks discussed below are
not presented in order of importance or probability of
occurrence.
Risks Related to Our Business
We have a history of losses and we may not achieve or sustain
profitability, particularly if we were to lose large
contracts.
Digiwork is newly formed on November 24, 2016. As of December 31,
2016, there was no revenue generated from the operation and the
company is still in developing stage. In the first quarter of
2017, Digiwork signed two service contracts with two entities for
coding services. Deposits of THB3.6 million have been received as
of March 31, 2017 and the initial phase of the services has been
completed as of May 15, 2017.. Digiwork has incurred net losses
from inception. Digiwork’s accumulated deficit was $112,405 as
of December 31, 2016. Although we anticipate that Digiwork will
be a profitable company, in order to achieve sustained
profitability we will need to generate revenue from coding
techolnogies. Achieving sustained profitability will depend upon
a variety of factors, including the extent to which we may be
required to increase the size of our workforce in order to
execute our business strategy and capitalize on new
opportunities. In addition, we will evaluate our strategy and
market opportunities on an ongoing basis and will adjust our
approach to market conditions from time to time. Finally, various
adverse developments, including the loss of contracts or cost
overruns on our existing contracts, could have a negative effect
on our revenue or our margins. Accordingly, increases in our
expenses may not be offset by revenue generated and as a result
we may not be able to achieve or sustain profitability.
Our independent registered auditors have expressed
substantial doubt about our ability to continue as a going
concern.
Our audited financial statements included in this report include
an explanatory paragraph that indicates that they were prepared
assuming that we would continue as a going concern. As discussed
in Note 3 to the financial statements included with this report,
we had accumulated deficit from net losses as of December31,
2016. These conditions raise substantial doubt about our ability
to continue as a going concern. The ability to continue as a
going concern is dependent upon generating profitable operations
in the future and/or obtaining the necessary financing to meet
our obligations and repay our liabilities arising from normal
business operations when they become due. There can be no
assurance that we will be successful in its plans described above
or in attracting equity or alternative financing on acceptable
terms, or if at all. These consolidated financial statements do
not include any adjustments to the recoverability and
classification of recorded asset amounts and classification of
liabilities that might be necessary should we be unable to
continue as a going concern.
The majority of our revenue is subject to commercial
contracts and development of new markets that may involve
unpredictable delays and other unexpected changes, which might
limit our actual revenue in any given quarter or year.
We will derive substantial portions of our revenue from
commercial contracts tied to development schedules or development
of new markets, which could shift for months, quarters or years
as the needs of our customers and the markets in which they
participate change. Commercial customers also face budget
pressures that introduce added uncertainty. Any shift in
development schedules, the markets in which we participate, or
customer procurement processes, which are outside our control and
may not be predictable, could result in delays in bookings
forecasted for any particular period, could affect the
predictability of our quarterly and annual results, and might
limit our actual revenue in any given quarter or year, resulting
in reduced and less predictable revenue and adversely affecting
profitability.
The market for our products is highly competitive and
alternative technologies or larger companies may undermine, limit
or eliminate the market for our products’ technologies, which
would decrease our revenue and profits.
The markets in which we compete for business are intensely
competitive and rapidly evolving. We expect competition to
continue from both existing competitors and new market entrants.
We face competition from other companies and from alternative
technologies. Because the market solutions based on our
technologies are still in an early stage of development, we also
may face competition from unexpected sources.
Alternative technologies that may directly or indirectly compete
with particular applications of our watermarking technologies
include:
Encryptionsecuring data during distribution using a secret code
so it cannot be accessed except by authorized users;
Containersinserting a media object in an encrypted wrapper, which
prevents the media object from being duplicated and is used for
content distribution and transaction management;
DataGlyphsa slightly visible modification of the characteristics
of an image or document that is machine-readable;
Scrambled Indiciaan optical refraction-based data-hiding
technique that is inserted into an image and can be read with a
lens;
Traditional anti-counterfeiting technologiesa number of solutions
used by many enterprises (and that compete for budgetary outlays)
designed to deter counterfeiting, including traditional barcode,
QR code, laser printing etc;
Radio frequency tagsembedding a chip that emits a signal when in
close proximity with a receiver, which is being used in photo
identification credentials, labels and tags;
Internet technologiesnumerous existing and potential Internet
access and search methods are competitive with Digiwork
(Thailand);
Digital fingerprints and a metric, or metrics, computed solely
from a source image or audio or video track, that can be used to
identify an image or track, or authenticate the image or track;
Smart cardsbadges and cards including a semiconductor memory and
/or processor used for authentication and related purposes; and
Bar codes or QR codesdata-carrying codes, typically visible in
nature (but may be invisible if printed in ultraviolet- or
infrared responsive inks).
In the competitive environment in which we operate, product
generation, development and marketing processes relating to
technology are uncertain and complex, requiring accurate
prediction of demand as well as successful management of various
development risks inherent in technology development. In light of
these dependencies, it is possible that failure to successfully
accommodate future changes in technologies related to our
technologies could have a long-term effect on our growth and
results of operations.
New developments are expected to continue, and we do not assure
you that discoveries by others, including current and potential
competitors, will not render our services and products
noncompetitive. Moreover, because of rapid technological changes,
we may be required to expend greater amounts of time and money
than anticipated to develop new products and services, which in
turn may require greater revenue streams from these products and
services to cover developmental costs. Many of the companies that
compete with us for some of our business, as well as other
companies with whom we may compete in the future, are larger and
may have greater technical, financial, marketing, and political
resources than we do. These resources could enable these
companies to initiate severe price cuts or take other measures in
an effort to gain market share or otherwise impede our progress.
We do not assure you that we will be able to compete successfully
against current or future participants in our market or against
alternative technologies, or that the competitive pressures we
face will not decrease our revenue and profits in the future.
We depend on our management and key employees for our future
success. If we are not able to retain, hire or integrate these
employees, we may not be able to meet our commitments.
Our success depends to a significant extent on the performance
and continued service of our management and our intellectual
property team. The loss of the services of any of these employees
could limit our growth or undermine customer relationships.
Due to the high level of technical expertise that our industry
requires, our ability to successfully develop, market, sell,
license and support our products, services, and intellectual
property depends to a significant degree upon the continued
contributions of our key personnel in engineering, sales,
marketing, operations, legal and licensing, many of whom would be
difficult to replace. We believe our future success will depend
in large part upon our ability to retain our current key
employees and our ability to attract, integrate and retain these
personnel in the future. It may not be practical for us to match
the compensation some of our employees could garner at other
employment. In addition, we may encounter difficulties in hiring
and retaining employees because of concerns related to our
financial performance. These circumstances may have a negative
effect on the market price of our common stock, and employees and
prospective employees may factor in the uncertainties relating to
our stability and the value of any equity-based incentives in
their decisions regarding employment opportunities and decide to
leave our employ. Moreover, our business is based in large part
on patented technology, which is unique and not generally known.
New employees require substantial training, involving significant
resources and management attention. Competition for experienced
personnel in our business can be intense. If we do not succeed in
attracting new, qualified personnel or in integrating, retaining
and motivating our current personnel, our growth and ability to
deliver products and services that our customers require may be
hampered. Although our employees generally have executed
agreements containing non-competition clauses, we do not assure
you that a court would enforce all of the terms of these clauses
or the clauses generally. If these clauses were not fully
enforced, our employees could be able to freely join our
competitors. Although we generally attempt to control access to
and distribution of our proprietary information by our employees,
we do not assure you that the confidential nature of our
proprietary information will be maintained in the course of such
future employment. Any of these events could have a material
adverse effect on our financial and business prospects.
If leading companies in our industry or standard-setting
bodies or institutions downplay, minimize, or reject the use of
our technologies, deployment may be slowed and we may be unable
to achieve revenue growth, particularly in the media and
entertainment sectors.
Many of our business endeavors, such as our development of
intellectual property in support of audio and video copy-control
applications, can be impeded or frustrated by larger, more
influential companies or by standard-setting bodies or
institutions downplaying, minimizing or rejecting the value or
use of our other technologies. A negative position by these
companies, bodies or institutions, if taken, may result in
obstacles for us that we would be incapable of overcoming and may
block or impede the adoption of digital coding, particularly in
the media and entertainment market. In addition, potential
customers in the media and entertainment industry may delay or
reject initiatives that relate to deployment of our technologies.
Such a development would make the achievement of our business
objectives in this market difficult or impossible.
If we are unable to respond to regulatory or industry
standards effectively, or if we are unable to develop and
integrate new technologies effectively, our growth and the
development of our products and services could be delayed or
limited.
Our future success will depend in part on our ability to enhance
and improve the responsiveness, functionality and features of our
products and services, and those of our business partners, in
accordance with regulatory or industry standards. Our ability to
remain competitive will depend in part on our ability to
influence and respond to emerging industry and governmental
standards in a timely and cost-effective manner. If we are unable
to influence these or other standards or respond to such
standards effectively, our growth and the development of certain
products and services could be delayed or limited.
Our market is characterized by new and evolving technologies. The
success of our business will depend on our ability to develop and
integrate new technologies effectively and address the
increasingly sophisticated technological needs of our customers
in a timely and cost effective manner. Our ability to remain
competitive will depend in part on our ability to:
|
enhance and improve the responsiveness, functionality and other features of the products and services we offer or plan to offer; |
| continue to develop our technical expertise; and |
|
develop and introduce new services, applications and technologies to meet changing customer needs and preferences and to integrate new technologies. |
We cannot assure you that we will be successful in responding to
these technological and industry challenges in a timely and
cost-effective manner. If we are unable to develop or integrate
new technologies effectively or respond to these changing needs,
our margins could decrease, and our release of new products and
services and the deployment of our coding technology could be
adversely affected.
We may need to retain additional employees or contract labor
in the future in order to take advantage of new business
opportunities arising from increased demand, which could impede
our ability to achieve or sustain profitability.
We have staffed our company with the intent of achieving and
sustaining profitability. Our current staffing levels could
affect our ability to respond to increased demand for our
services. In addition, to meet any increased demand and take
advantage of new business opportunities in the future, we may
need to increase our workforce through additional employees or
contract labor, which would increase our costs. If we experience
such an increase in costs, we may not succeed in achieving or
sustaining profitability.
We are dependent on the licenses granted by our Korean joint
venture partner and their RD efforts, and our future growth will
depend to some extent on our successful implementation of our
technology in solutions provided by our Korean joint venture
party, S-Mark Co Ltd.
Our business and strategy rely substantially on deployment of our
technologies licensed and research and development provided by
our Korean joint venture party, S-Mark Co Ltd because the coding
technologies are owned by Digiwork Korea, a 100% owned subsidiary
of S-Mark Co Ltd. Although Digiwork Korea agrees to provide
existing coding technologies to Digiwork to the executed Amended
and Restated Joint Business Agreement, S-Mark Co Ltd. and
Digiwork Korea may not provide or even may not be able to develop
any new or updated coding technologies to Digiwork, which could
harm our business and competitive position and make us lost in
competition environment.
Any delay or failure to pay RD fees to Digiwork Korea could
adversely affect our profitability and slow our growth.
to the Joint Business Agreement, we are obligated to pay a total
of $10,000,000 to Digiwork Korea on or before December 31, 2017
although the final $5.9 million payment will be not be due until
Digiwork accumulates enough profit for such payment. As the
consideration for such payments, Digiwork Korea agrees to provide
research and development services to Digiwork for a period of
five years commencing from March 31, 2017. As of December 31,
2016, we had a cash balance of less than $1,000. Our ability to
pay Digiwork Korea is dependent on improving our profitability,
additional debt financing, loans from existing directors and
shareholders and private placements of capital stock for
additional funding. However, we cannot assure you that we will be
able to obtain short-term financing, or that sources of such
financing, if any, will continue to be available, and if
available, that they will be on terms favorable to us. Any delay
or failure to pay Digiwork Korea may adversely affect our RD
efforts which in turn affect our profitability and slow our
growth.
The loss of international customers or the failure to find
new international customers could adversely affect our
profitability and slow our growth.
We believe that revenue from sales of products and services to
commercial customers outside the Thailand could represent a
growing percentage of our total revenue in the future. to the
Amended and Restated Joint Business Agreement, Digiwork may
launch the coding technologies services in seven countries,
Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab Emirates
and Qatar. International sales and services are subject to a
number of risks that can adversely affect our sales of products
and services to customers outside of Thailand, including the
following:
changes in foreign government regulations and security
requirements;
export license requirements, tariffs and taxes;
trade barriers;
difficulty in protecting intellectual property;
difficulty in collecting accounts receivable;
currency fluctuations;
longer payment cycles than those for customers in Thailand;
difficulty in managing foreign operations; and
political and economic instability.
We do not have an extensive operational infrastructure for
international business. We generally depend on local or
international business partners and subcontractors for
performance of substantial portions of our business. These
factors may result in greater risk of performance problems or of
reduced profitability with respect to our international programs
in these markets. In addition, if foreign customers terminate or
delay the implementation of our products and services, it may be
difficult for us to recover our potential losses.
We are exposed to currency exchange fluctuations and do not
engage in foreign currency hedging transactions. We may in the
future choose to limit our exposure by the purchase of forward
foreign exchange contracts, collared options, currency swap
agreements or through similar hedging strategies. No currency
hedging strategy, however, can fully protect against
exchange-related losses.
We are planning to establish local technology supporting team in
different countries for promoting the coding services in domestic
market and also provide technical support there. However, such
local teams in different countries may significantly increase our
operating costs and may have negative impact on our profits.
The terms and conditions of our contracts could subject us to
damages, losses and other expenses if we fail to meet delivery
and other performance requirements.
Our service contracts typically include provisions imposing (i)
development, delivery and installation schedules and milestones,
(ii) customer acceptance and testing requirements and (iii) other
performance requirements. To the extent these provisions involve
performance over extended periods of time, risks of noncompliance
may increase. Companies operating in these industries often
experience delays in system implementation, timely acceptance of
programs, concerns regarding program performance and other
contractual disputes. Any failure to meet contractual milestones
or other performance requirements as promised, or to successfully
resolve customer disputes, could result in us incurring liability
for damages, as well as increased costs, lower margins, or
compensatory obligations in addition to other losses, such as
harm to our reputation. Any unexpected increases in costs to meet
our contractual obligations or any other requirements necessary
to address claims and damages with regard to our customer
contracts could have a material adverse effect on our business
and financial results.
Our products could have unknown defects or errors, which may
give rise to claims against us, divert application of our
resources from other purposes or increase our project
implementation and support costs.
Products and services as complex as those we offer or develop may
contain undetected defects or errors. Furthermore, we anticipate
providing complex implementation, integration, customization,
consulting and other technical services in connection with the
implementation and ongoing maintenance of our products and
services. Despite testing, defects or errors in our products and
services may occur, which could result in delays in the
development and implementation of products and systems, inability
to meet customer requirements or expectations in a timely manner,
loss of revenue or market share, increased implementation and
support costs, failure to achieve market acceptance, diversion of
development resources, injury to our reputation, increased
insurance costs, increased service and warranty costs and
warranty or breach of contract claims. Although we attempt to
reduce the risk of losses resulting from warranty or breach of
contract claims through warranty disclaimers and liability
limitation clauses in our sales agreements when we can, these
contractual provisions are sometimes not included and may not be
enforceable in every instance. If a court refuses to enforce the
liability-limiting provisions of our contracts for any reason, or
if liabilities arose that were not contractually limited or
adequately covered by insurance, the expense associated with
defending these actions or paying the resultant claims could be
significant.
The security systems used in our product and service
offerings may be circumvented or sabotaged by third parties,
which could result in the disclosure of sensitive information or
private personal information or cause other business
interruptions that could damage our reputation and disrupt our
business.
Our business relies on computers and other information
technologies, both internal and at customer locations. The
protective measures that we use may not prevent security
breaches, and failure to prevent security breaches may disrupt
our business, damage our reputation, and expose us to litigation
and liability. A party who is able to circumvent security
measures could misappropriate sensitive or proprietary
information or materials or cause interruptions or otherwise
damage our products, services and reputation, and the property of
our customers. If unintended parties obtain sensitive data and
information, or create bugs or viruses or otherwise sabotage the
functionality of our systems, we may receive negative publicity,
incur liability to our customers or lose the confidence of our
customers, any of which may cause the termination or modification
of our contracts. Further, our insurance coverage may be
insufficient to cover losses and liabilities that may result from
these events.
In addition, we may be required to expend significant capital and
other resources to protect ourselves against the threat of
security breaches or to alleviate problems caused by these
breaches. Any protection or remedial measures may not be
available at a reasonable price or at all, or may not be entirely
effective if commenced.
We are subject to risks encountered by companies developing
and relying upon new technologies, products and services for
substantial amounts of their growth or revenue.
Our business and prospects must be considered in light of the
risks and uncertainties to which companies with new and rapidly
evolving technologies, products and services are exposed. These
risks include the following:
we may be unable to develop sources of new revenue or sustainable
growth in revenue because our current and anticipated
technologies, products and services may be inadequate or may be
unable to attract or retain customers;
the intense competition and rapid technological change in our
industry could adversely affect the market’s acceptance of our
existing and new products and services; and
we may be unable to develop and maintain new technologies upon
which our existing and new products and services are dependent in
order for our products and services to be sustainable and
competitive and in order for us to expand our revenue and
business.
Some of our key technologies and solutions are in the development
stage. Consequently, products incorporating these technologies
and solutions are undergoing technological change and are in the
early stage of introduction in the marketplace. Delays in the
adoption of these products or adverse competitive developments
may result in delays in the development of new revenue sources or
the growth in our revenue. In addition, we may be required to
incur unanticipated expenditures if product changes or
improvements are required. Additionally, new industry standards
might redefine the products that we are able to sell, especially
if these products are only in the prototype stage of development.
If product changes or improvements are required, success in
marketing these products by us and achieving profitability from
these products could be delayed or halted. We also may be
required to fund any changes or improvements out of operating
income, which could adversely affect our profitability.
We may not be able to protect adequately our intellectual
property, and we may be subject to infringement claims and other
litigation, which could adversely affect our business.
Our success depends in part on our licensed technologies. To
protect our intellectual property portfolio, we rely on a
combination of trademark and trade secret rights, confidentiality
procedures and licensing arrangements. Unlicensed copying and use
of our intellectual property or infringement of our intellectual
property rights result in the loss of revenue to us.
We face risks associated with our intellectual property rights,
including the potential need from time to time to engage in
significant legal proceedings to enforce our intellectual
property rights, the possibility that the validity or
enforceability of our intellectual property rights may be denied,
and the possibility that third parties will be able to compete
against us without infringing our intellectual property rights.
Budgetary concerns may cause us not to file, or continue,
litigation against known infringers of our intellectual property
rights, or may cause us not to file for, or pursue, intellectual
property protection for all of our inventive technologies in
jurisdictions where they may have value. Some governmental
entities that might infringe our intellectual property rights may
enjoy sovereign immunity from such claims. If we fail to protect
our intellectual property rights and proprietary technologies
adequately, if there are changes in applicable laws that are
adverse to our interests, or if we become involved in litigation
relating to our intellectual property rights and proprietary
technologies or relating to the intellectual property rights of
others, our business could be seriously harmed because the value
ascribed to our intellectual property could diminish and result
in a lower stock price or we may incur significant costs in
bringing legal proceedings against third parties who are
infringing our intellectual property rights.
Effective protection of intellectual property rights may be
unavailable or limited. Intellectual property protection
throughout the world is generally established on a
country-by-country basis. We do not assure you that the
protection of our proprietary rights will be adequate or that our
competitors will not independently develop similar technologies,
duplicate our services or design around any of our patents or
other intellectual property rights.
As more companies engage in business activities relating to
digital coding, and develop corresponding intellectual property
rights, it is increasingly likely that claims may arise which
assert that some of our products or services infringe upon other
parties’ intellectual property rights. These claims could
subject us to costly litigation, divert management resources and
result in the invalidation of our intellectual property rights.
These claims may require us to pay significant damages, cease
production of infringing products, terminate our use of
infringing technologies or develop non-infringing technologies.
In these circumstances, continued use of our technologies may
require that we acquire licenses to the additional intellectual
property that is the subject of the alleged infringement, and we
might not be able to obtain these licenses on commercially
reasonable terms or at all. Our use of protected technologies may
result in liability that threatens our continuing operation.
Some of our contracts include provisions regarding our
non-infringement of third-party intellectual property rights. As
deployment of our technology increases, and more companies enter
our markets, the likelihood of a third party lawsuit resulting
from these provisions increases. If an infringement arose in a
context governed by such a contract, we may have to refund to our
customer amounts already paid to us or pay significant damages,
or we may be sued by the party allegedly infringed upon.
Compliance with any such contract provisions may require that we
pursue litigation where our costs exceed our likely recovery.
As part of our confidentiality procedures, we generally enter
into non-disclosure agreements with our employees, directors,
consultants and corporate partners, and attempt to control access
to and distribution of our technologies, solutions, documentation
and other proprietary information. Despite these procedures,
third parties could copy or otherwise obtain and make
unauthorized use of our technologies, solutions or other
proprietary information or independently develop similar
technologies, solutions or information. The steps that we have
taken to prevent misappropriation of our solutions, technologies
or other proprietary information may not prevent their
misappropriation, particularly outside Thailand where laws or law
enforcement practices may not protect our proprietary rights as
fully as in Thailand.
We cannot assure that our internal controls and procedures
will succeed in achieving their stated goals under all potential
future conditions, regardless of how remote.
We have deployed significant resources to design, implement, and
maintain effective internal controls and procedures, including
disclosure controls and procedures. Although our internal
controls and procedures are designed to provide reasonable
assurance of achieving their objectives, the design of any system
of controls is based in part upon various assumptions about the
likelihood of future events, and we do not assure you that our
system will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. Any
failure to maintain adequate controls or to adequately implement
required new or improved controls could harm our operating
results or cause us to fail to meet our reporting obligations in
a timely and accurate manner.
If our revenue models and pricing structures relating to
products and services that are under development do not gain
market acceptance, the products and services may fail to attract
or retain customers and we may not be able to generate new or
sustain existing revenue.
Some of our business involves embedding digital watermarks in
traditional and digital media, including identification
documents, secure documents, audio, video and imagery. Our
revenue stream is based primarily on a combination of
development, consulting, subscription and license fees from
copyright protection, counterfeit deterrence and advertisement
applications. We have not fully developed revenue models for some
of our future digital coding applications. Because some of our
products and services are not yet well-established in the
marketplace, and because some of these products and services will
not directly displace existing solutions, we cannot be certain
that the pricing structure for these products and services will
gain market acceptance or be sustainable over time or that the
marketing for these products and services will be effective.
While we currently have no claims, litigation or regulatory
actions filed or pending by or against us, future claims,
litigation or enforcement actions could arise, and any obligation
to pay a judgment or damages could materially harm our business
or financial condition.
From time to time, Digiwork may be engaged in litigation and
incurred significant costs relating to these matters. The
inherent uncertainties of litigation, and the ultimate cost and
outcome of litigation cannot be predicted. We will carry director
and officer liability insurance and other insurance policies that
provide protection against various liabilities relating to claims
against us and our executive officers and directors up to
prescribed policy limits. If these policies do not adequately
cover expenses and liabilities relating to future lawsuits, our
financial condition could be materially harmed. In addition, if
this insurance coverage becomes unavailable to us or premiums
increase significantly in the future, it could make it more
difficult for us to retain and attract officers and directors and
could expose us to potentially self-funding certain future
liabilities ordinarily mitigated by director and officer
liability insurance.
Risks Relating to our VIE Structure
If the Thailand government deems that the contractual
arrangements in relation to our VIE do not comply with Thailand
regulatory restrictions on foreign investment in the relevant
industries, or if these regulations or the interpretation of
existing regulations change in the future, we could be subject to
severe penalties or be forced to relinquish our interests in
those operations.
Foreign ownership in Thailand is subject to restrictions under
current Thai laws and regulations. For example, foreign investors
are generally not allowed to own more than 50% of the equity
interests in a Thai company.
We are a U.S. company. To comply with Thai laws and regulations,
we conduct such business activities through Digiwork, a Thai VIE
of ours. Digiwork is 57% owned by Mr.Ratanaphon Wongnapachant,
our chairman and chief executive officer, 3% owned by
Ms.Chanikarn Lertchawalitanon, our director, and 40% owned by
S-Mark Co. Ltd. Mr. Ratanaphon Wongnapachant and Ms.Chanikarn
Lertchawalitanon are Thai citizens. We entered into a series of
contractual arrangements with of our VIE and its respective
shareholders, which enable us to:
| exercise effective control over our VIE; |
|
receive substantially all of the economic benefits of our VIE; and |
|
have an exclusive option to purchase all or part of the equity interests and assets in our VIE when and to the extent permitted by Thai law. |
Because of these contractual arrangements, we are the primary
beneficiary of our VIE and hence consolidate their financial
results as our VIE under U.S. GAAP. For a detailed discussion of
these contractual arrangements, see Section 2. Contractual
Arrangements with Digiwork (Thailand) Co., Ltd.
In the opinion of MVP International Law Office Associates Co.,
Ltd, our Thai legal counsel, (i)the ownership structure of our
VIE in Thailand does not result in any violation of Thai laws and
regulations currently in effect; and (ii)the contractual
arrangements between our subsidiary and VIE and their respective
shareholders governed by Thai law will not result in any
violation of Thai laws or regulations currently in effect.
However, we have been advised by our Thai legal counsel that
there are substantial uncertainties regarding the interpretation
and application of current and future Thai laws, regulations and
rules; accordingly, the Thai regulatory authorities may take a
view that is contrary to or otherwise different from the opinion
of our Thai legal counsel. If our ownership structure,
contractual arrangements and businesses of our VIE are found to
be in violation of any existing or future Thai laws or
regulations, or we fail to obtain the foresaid market entry
clearance, or our VIE fail to obtain or maintain any of the
required permits or approvals, the relevant Thai regulatory
authorities would have broad discretion to take action in dealing
with such violations or failures, including:
|
revoking the business licenses and/or operating licenses of such entities; |
|
shutting down our services or blocking our website, or discontinuing or placing restrictions or onerous conditions on our operation through any transactions between our subsidiary and VIE; |
|
imposing fines, confiscating the income from VIE, or imposing other requirements with which we or our VIE may not be able to comply; |
|
requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIE and deregistering the equity pledges of our VIE, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIE; or |
|
restricting or prohibiting our use of the proceeds of our offshore offerings to finance our business and operations in Thai. |
Any of these actions could cause significant disruption to our
business operations and severely damage our reputation, which
would in turn materially and adversely affect our business,
financial condition and results of operations. If any of these
occurrences results in our inability to direct the activities of
our VIE that most significantly impact its economic performance,
and/or our failure to receive the economic benefits from our VIE,
we may not be able to consolidate such entities in our
consolidated financial statements in accordance with U.S. GAAP.
We rely on contractual arrangements with our VIE and
its respective shareholders for a portion of our business
operations, which may not be as effective as direct ownership in
providing operational control.
We have relied and expect to continue to rely on contractual
arrangements with our VIE and their respective shareholders to
hold our business license in Thailand. For a description of these
contractual arrangements, see Section 2. Contractual Arrangements
with Digiwork (Thailand) Co., Ltd. These contractual arrangements
may not be as effective as direct ownership in providing us with
control over our VIE. For example, our VIE and its respective
shareholders could breach their contractual arrangements with us
by, among other things, failing to conduct their operations,
including maintaining our website and using the domain names and
trademarks, in an acceptable manner or taking other actions that
are detrimental to our interests.
If we had direct ownership of our VIE, we would be able to
exercise our rights as a shareholder to effect changes in the
board of directors of our VIE, which in turn could implement
changes, subject to any applicable fiduciary obligations, at the
management and operational level. However, under the current
contractual arrangements, we rely on the performance by our VIE
and its respective shareholders of their obligations under the
contracts to exercise control over our VIE. The shareholders of
our consolidated VIE may not act in the best interests of our
company or may not perform their obligations under these
contracts. Such risks exist throughout the period in which we
intend to operate our business through the contractual
arrangements with our VIE. If any dispute relating to these
contracts remains unresolved, we will have to enforce our rights
under these contracts through the operations of Thai law and
arbitration, litigation and other legal proceedings and therefore
will be subject to uncertainties in the Thai legal system.
Therefore, our contractual arrangements with our VIE may not be
as effective in ensuring our control over the relevant portion of
our business operations as direct ownership would be.
Any failure by our VIE or their shareholders to
perform their obligations under our contractual arrangements with
them would have a material and adverse effect on our
business.
If our VIE or their shareholders fail to perform their respective
obligations under the contractual arrangements, we may have to
incur substantial costs and expend additional resources to
enforce such arrangements. We may also have to rely on legal
remedies under Thai law, including seeking specific performance
or injunctive relief, and claiming damages, which we cannot
assure you will be effective under Thai law. For example, if the
respective shareholders of our VIE were to refuse to transfer
their equity interest in the VIE to us or our designee if we
exercise the purchase option to these contractual arrangements,
or if they were otherwise to act in bad faith toward us, then we
may have to take legal actions to compel them to perform their
contractual obligations.
All the agreements under our contractual arrangements are
governed by Thai law and provide for the resolution of disputes
through arbitration in Thailand. Accordingly, these contracts
would be interpreted in accordance with Thai law and any disputes
would be resolved in accordance with Thai legal procedures. The
legal system in the Thailand is not as developed as in some other
jurisdictions, such as the United States. As a result,
uncertainties in the Thai legal system could limit our ability to
enforce these contractual arrangements. Meanwhile, there are very
few precedents and little formal guidance as to how contractual
arrangements in the context of a variable interest entity should
be interpreted or enforced under Thai law. There remain
significant uncertainties regarding the ultimate outcome of such
arbitration should legal action become necessary. In addition,
under Thai law, rulings by arbitrators are final, parties cannot
appeal the arbitration results in courts, and if the losing
parties fail to carry out the arbitration awards within a
prescribed time limit, the prevailing parties may only enforce
the arbitration awards in Thai courts through arbitration award
recognition proceedings, which would require additional expenses
and delay. In the event we are unable to enforce these
contractual arrangements, or if we suffer significant delay or
other obstacles in the process of enforcing these contractual
arrangements, we may not be able to exert effective control over
our VIE, and our ability to conduct our business may be
negatively affected
The shareholders of our VIE may have potential
conflicts of interest with us, which may materially and adversely
affect our business and financial condition.
Mr.Ratanaphon Wongnapachant, Ms.Chanikarn Lertchawalitanon and
S-Mark Co., Ltd, are the shareholders of Digiwork, owning 57%, 3%
and 40% equity interest, respectively, in Digiwork. Mr.Ratanaphon
Wongnapachant is our chairman of board of directors and chief
executive officer, Ms.Chanikarn Lertchawalitanon is our director.
The shareholders of our VIE may have potential conflicts of
interest with us. These shareholders may breach, or cause our VIE
to breach, or refuse to renew, the existing contractual
arrangements we have with them and our VIE, which would have a
material and adverse effect on our ability to effectively control
our VIE and receive economic benefits from them. For example, the
shareholders may be able to cause our agreements with our VIE to
be performed in a manner adverse to us by, among other things,
failing to remit payments due under the contractual arrangements
to us on a timely basis. We cannot assure you that when conflicts
of interest arise, any or all of these shareholders will act in
the best interests of our company or such conflicts will be
resolved in our favor.
Currently, we do not have any arrangements to address potential
conflicts of interest between the respective shareholders of our
VIE and our company. Each of Mr.Ratanaphon Wongnapachant and
Ms.Chanikarn Lertchawalitanon is also a director of our company.
We rely on Mr.Ratanaphon Wongnapachant and Ms.Chanikarn
Lertchawalitanon to abide by the laws of the U.S. and Thai, which
provide that directors owe a fiduciary duty to the company that
requires them to act in good faith and in what they believe to be
the best interests of the company and not to use their position
for personal gains. There is currently no specific and clear
guidance under Thai laws that address any conflict between Thai
laws and laws of U.S. in respect of any conflict relating to
corporate governance. If we cannot resolve any conflict of
interest or dispute between us and the shareholders of our VIE,
we would have to rely on legal proceedings, which could result in
disruption of our business and subject us to substantial
uncertainty as to the outcome of any such legal proceedings.
Contractual arrangements in relation to our VIE may
be subject to scrutiny by the Thai tax authorities and they may
determine that we or our Thai VIE owe additional taxes, which
could negatively affect our financial condition and the value of
your investment.
Under applicable Thai laws and regulations, arrangements and
transactions among related parties may be subject to audit or
challenge by the Thai tax authorities within ten years after the
taxable year when the transactions are conducted. We could face
material and adverse tax consequences if the Thai tax authorities
determine that the contractual arrangements between our
wholly-owned subsidiaries in Thailand, our VIE in Thailand, and
their respective shareholders were not entered into on an arms
length basis in such a way as to result in an impermissible
reduction in taxes under applicable Thai laws, rulesand
regulations, and adjust our VIE income in the form of a transfer
pricing adjustment. A transfer pricing adjustment could, among
other things, result in a reduction of expense deductions
recorded by our VIE for Thai tax purposes, which could in turn
increase their tax liabilities without reducing our subsidiaries
tax expenses. In addition, the Thai tax authorities may impose
late payment fees and other penalties on our VIE for the adjusted
but unpaid taxes according to the applicable regulations. Our
financial position could be materially and adversely affected if
our VIE tax liabilities increase or if they are required to pay
late payment fees and other penalties.
We may lose the ability to use and enjoy assets held
by our VIE that are material to the operation of our business if
the entities go bankrupt or become subject to dissolution or
liquidation proceedings.
As part of our contractual arrangements with our VIE, they hold
certain assets that are material to the operation of our
business. If our VIE goes bankrupt and all or part of its assets
become subject to liens or rights of third-party creditors, we
may be unable to continue some or all of our business activities,
which could materially and adversely affect our business,
financial condition and results of operations. Under the
contractual arrangements, our VIE may not, in any manner, sell,
transfer, mortgage or dispose of their assets or legal or
beneficial interests in the business without our prior consent.
If our VIE undergoes a voluntary or involuntary liquidation
proceeding, the independent third-party creditors may claim
rights to some or all of these assets, thereby hindering our
ability to operate our business, which could materially and
adversely affect our business, financial condition and results of
operations.
Risks Relating to Doing Business in Thailand
Our business operation is headquartered in Thailand. Accordingly,
our business, financial condition, results of operations and
prospects may be influenced to a significant degree by political,
economic and social conditions in Thailand generally and by
continued economic growth in Thailand as a whole.
Thai economy differs from the economies of most developed
countries in many respects, including the amount of government
involvement, level of development, growth rate, control of
foreign investment and allocation of resources. Thai government
has implemented various measures to encourage economic growth and
guide the allocation of resources. Some of these measures may
benefit the overall Thai economy, but may have a negative effect
on us. For example, our financial condition and results of
operations may be adversely affected by government control over
capital investments or changes in tax regulations.
Uncertainties in the interpretation and enforcement of Thai laws
and regulations could limit the legal protections available to
you and us. We may be adversely affected by the complexity,
uncertainties and changes in Thai regulations of IT businesses
and companies.
Fund Reservation in Thailand
The reform government of Thailand may issue laws or regulations
without the approval by parliament that might have a material
adverse impact on our financial and business prospects. For
example, in 2014, the reform government issued new laws and
regulations to section 44 exemption of the Constitution which
allowed the government to issue new laws without approval of the
parliament.The new law required all businesses in Thailand to
have a reservation fund that equals to 30% of the entitys annual
net profits. The change of law affected the whole business sector
in terms of dividend contributions and discouraged foreign
investments in Thailand.Due to sharp criticism from the foreigner
investors, the reform government withdrew the respective new laws
and regulations and removed such reservation fund requirement.
Tax collection in Thailand
In 2016, the reform government issued the amnesty for tax law
violations. However, the policy was subsequently changed in 180
degree and the government issued stricter tax collection policies
covering all companies and their accounts in order to collect
more revenues from the business sectors. The new policies impose
punishment not only on accountants and auditors as before but
also extended to company directors. The uncertain tax regulation
and enforcement increases our compliance cost and poses risks of
potential violation of tax laws in Thailand.
IT Laws in Thailand
The current IT laws in Thailand have been outdated and might not
be able to effectively protect our IT related intellectual
properties and licenses, and thus make them vulnerable to
imitation and infringements. Although the reform government is
now considering new laws and regulations that better protect
intellectual properties in Thailand, it might take time for such
rules and regulations to be implemented. Any possible
infringement of our intellectual properties could have a material
adverse effect on our business and financial results.
Natural disasters, epidemics, acts of terrorism and other
destabilizing developments could harm our business, financial
condition, and operating results.
Natural disasters, such as the October to November 2011 flooding
in Thailand, could severely disrupt our operations. These events,
over which we have little or no control, could cause a decrease
in demand for our services, make it difficult or impossible for
us to deliver products and services or require large expenditures
to repair or replace our facilities. Potential outbreaks of
infectious diseases in the countries in which we operate,
including Thailand, such as the H1N1 influenza virus, severe
acute respiratory syndrome (SARS) or bird flu could disrupt our
operations and reduce demand for our products and services. In
addition, increased international political instability,
evidenced by the threat or occurrence of terrorist attacks,
enhanced national security measures, conflicts in the Middle East
and Asia, strained international relations arising from these
conflicts and the related decline in consumer confidence and
economic weakness, may hinder our ability to do business. Any
escalation in these events or similar future events may disrupt
our operations and the operations of our customers. These events
have had, and may continue to have, an adverse impact on the
Thailand and world economy in general, and customer confidence
and spending in particular, which in turn could adversely affect
our total revenues and operating results.
Risks Related to Our Common Stock
The market price for our common stock is highly volatile and
subject to wide fluctuations in response to factors including the
following:
|
actual or anticipated fluctuations in our quarterly operating results, |
| announcements of new services by us or our competitors, |
| changes in financial estimates by securities analysts, |
| conditions in the information technology services market, |
|
changes in the economic performance or market valuations of other companies involved in the same industry, |
|
announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments, |
| additions or departures of key personnel, |
| potential litigation, or |
| conditions in the market. |
In addition, the securities markets from time to time experience
significant price and volume fluctuations that are not related to
the operating performance of particular companies. These market
fluctuations may also materially and adversely affect the market
price of our common stock.
Shareholders could experience substantial dilution.
We may issue additional shares of our capital stock to raise
additional cash for working capital. If we issue additional
shares of our capital stock, our shareholders will experience
dilution in their respective percentage ownership in the company.
We have no present intention to pay dividends.
We have not paid dividends or made other cash distributions on
our common stock, and we do not expect to declare or pay any
dividends in the foreseeable future. We intend to retain any
future earnings for working capital and to finance current
operations and expansion of our business.
A large portion of our common stock is controlled by a small
number of shareholders.
A large portion of our common stock is held by a small number of
shareholders. As a result, these shareholders are able to
influence the outcome of shareholder votes on various matters,
including the election of directors and extraordinary corporate
transactions including business combinations. In addition, the
occurrence of sales of a large number of shares of our common
stock, or the perception that these sales could occur, may affect
our stock price and could impair our ability to obtain capital
through an offering of equity securities. Furthermore, the
current ratios of ownership of our common stock reduce the public
float and liquidity of our common stock which can in turn affect
the market price of our common stock.
We may be subject to penny stock regulations.
The Securities and Exchange Commission, or SEC, has adopted rules
that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges, provided
that current price and volume information with respect to
transactions in such securities is provided by the exchange or
system). Penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those
rules, to deliver a standardized risk disclosure document
prepared by the SEC, which specifies information about penny
stocks and the nature and significance of risks of the penny
stock market. A broker-dealer must also provide the customer with
bid and offer quotations for the penny stock, the compensation of
the broker-dealer, and our sales person in the transaction, and
monthly account statements indicating the market value of each
penny stock held in the customers account. In addition, the penny
stock rules require that, prior to a transaction in a penny stock
not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchasers
written agreement to the transaction. These disclosure
requirements may have the effect of reducing the trading activity
in the secondary market for stock that becomes subject to those
penny stock rules. These additional sales practice and disclosure
requirements could impede the sale of our securities. Whenever
any of our securities become subject to the penny stock rules,
holders of those securities may have difficulty in selling those
securities.
If we fail to maintain effective internal controls over
financial reporting, then the price of our common stock may be
adversely affected.
Our internal control over financial reporting may have weaknesses
and conditions that could require correction or remediation, the
disclosure of which may have an adverse impact on the price of
our common stock. We are required to establish and maintain
appropriate internal controls over financial reporting. Failure
to establish those controls, or any failure of those controls
once established, could adversely affect our public disclosures
regarding our business, prospects, financial condition or results
of operations. In addition, managements assessment of internal
controls over financial reporting may identify weaknesses and
conditions that need to be addressed in our internal controls
over financial reporting or other matters that may raise concerns
for investors. Any actual or perceived weaknesses and conditions
that need to be addressed in our internal control over financial
reporting or disclosure of managements assessment of our internal
controls over financial reporting may have an adverse impact on
the price of our common stock.
We do not intend to pay dividends on our common stock in the
foreseeable future.
For the foreseeable future, we intend to retain any earnings to
finance the development of our business, and we do not anticipate
paying any cash dividends on our common stock. Any future
determination to pay dividends will be at the discretion of our
board of directors (the Board) and will be dependent upon
then-existing conditions, including our operating results and
financial condition, capital requirements, contractual
restrictions, business prospects and other factors that our Board
considers relevant. Accordingly, investors must rely on sales of
their common stock after price appreciation, which may never
occur, as the only way to realize a return on their investment.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of
operations and financial condition should be read in conjunction
with our financial statements and the notes to those financial
statements that are included as exhibits to this Current Report.
References in this Managements Discussion and Analysis of
Financial Condition and Results of Operations to the company, us,
we, our, and similar terms refer to IWeb, Inc., a Nevada
corporation. This discussion includes forward looking statements,
as that term is defined in the federal securities laws, based
upon current expectations that involve risks and uncertainties,
such as plans, objectives, expectations and intentions. Actual
results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result
of a number of factors. Words such as anticipate, estimate, plan,
continuing, ongoing, expect, believe, intend, may, will, should,
could, and similar expressions are used to identify
forward-looking statements.
We caution you that these statements are not guarantees of
future performance or events and are subject to a number of
uncertainties, risks and other influences, many of which are
beyond our control, which may influence the accuracy of the
statements and the projections upon which the statements are
based. Factors that may affect our results include, but are not
limited to, the risk factors elsewhere in this Current Report.
Any one or more of these uncertainties, risks and other
influences could materially affect our results of operations and
whether forward-looking statements made by us ultimately prove to
be accurate. Our actual results, performance and achievements
could differ materially from those expressed or implied in these
forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether
from new information, future events or otherwise.
We are primarily a holding company that, through our wholly-owned
subsidiary Enigma Technology International Corporation, a British
Virgin Islands company, (Enigma BVI) and contractually controlled
and managed company in Thailand, Digiwork (Thailand) Co., Ltd.
(Digiwork or VIE), is a technology development and services
provider specializing in coding service in various industries and
markets. Digiwork enables enterprises to give invisible digital
identities to media and objects that various computer devices can
sense and recognize and to which they can react. Our coding
technology provides the means to infuse persistent digital
information, perceptible only to computers and digital devices,
into all forms of media content. Our coding technology permits
computers and digital devices including smartphones, tablets,
industrial scanners and other computer interfaces to quickly
identify relevant data from vast amounts of media content. We
focus on four coding technologies:
| Image coding technology, |
| Audio coding technology, |
| Web coding technology, and |
| Security coding technology |
Due to Thailand legal restrictions on foreign ownership in
particular, we, similar to all other entities with
foreign-incorporated holding company structures operating in
Thailand, currently conduct the coding business through Digiwork,
which we effectively control through a series of contractual
arrangements. These contractual arrangements allow us to:
| exercise effective control over Digiwork; |
|
receive substantially all of the economic benefits of Digiwork; and |
|
have an exclusive option to purchase all or part of the equity interests in Digiwork when and to the extent permitted by Thailand law. |
Accordingly, we plan to continue operating our current business
in Thailand through our VIE, Digiwork. Digiwork did not earn any
revenue from its inception on November 24, 2016 to December 31,
2016. Our net loss for the period from November 24, 2016
(inception) to December31, 2016 was $112,405.
In the first quarter of 2017, Digiwork signed two service
contracts with two entities for coding services. Deposits of
THB3.6 million have been received as of March 31, 2017 and the
initial phase of the services has been completed as of May 15,
2017.
Digiwork was set up to a joint business agreement among its
shareholders on August 4, 2016, as amended and restated on March
31, 2017 (JBA). to the JBA, Digiwork is obligated to pay a total
of $10,000,000 to a shareholder of Digiwork, namely Digiwork Co.,
Ltd. (Digiwork Korea, a 100% wholly owned subsidiary of a 40%
shareholder of the Company). As the consideration for such
payments, Digiwork Korea agrees to provide research and
development services to Digiwork for a period of five years
commencing from March 31, 2017.
Digiwork Korea also agrees to provide/grant Digiwork full and
exclusive licenses of any new launches, developments,
improvements and any other intellectual property rights developed
by Digiwork Korea and the territories for such licenses are in
Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab Emirates
and Qatar.
Digiwork was authorized by Digiwork Korea to be an official
licensee and distributor of its technology exclusively in
Thailand, Vietnam, Myanmar, Laos, Cambodia, United Arab Emirates
and Qatar, and the authorization covers all four categories of
Digiwork Koreas coding technology: image, audio, web and security
coding. This technology enables governments and enterprises
around the world to give digital identities to media and objects
that computers can sense and recognize, and to which they can
react.
Enigma BVIs Results of Operations
The following table sets forth key components of our results of
operations for the period from November 24 (inception) to
December 31, 2016:
| Revenues | $ | |||
| General and administrative expenses | (112,405 | ) | ||
| Loss before income tax | (112,405 | ) | ||
| Income tax | ||||
| Net loss | $ | (112,405 | ) |
Revenue. We did not earn any revenue
since our inception on November 24, 2016. We expect we will
commence to earn revenue and incur related costs in 2017. In the
first quarter of 2017, Digiwork signed two service contracts with
two entities for coding services. Deposits of THB3.6 million have
been received as of March 31, 2017 and the initial phase of the
services has been completed as of May 15, 2017.
General and administrative expenses.
Our general and administrative expenses for the period from
November 24 (inception) to December 31, 2016 were $112,405,
$75,931 of which was staff costs of our personnel in Thailand. We
expect our general and administrative expenses to increase when
we expand our operations in Thailand. Also, we will begin to
incur RD expenses on the RD services to be provided by Digiwork
Korea for a period of five years commencing from March 31, 2017.
Net loss. As a result of the above, we
recorded a net loss of $112,405 for the period ended December 31,
2016.
Enigma BVIs Liquidity and Capital Resources
| December 31, 2016 | ||||
| Cash and cash equivalents | $ | |||
| Total current assets | 100,586 | |||
| Total assets | 100,586 | |||
| Total liabilities | 69,299 | |||
| Accumulated deficit | (112,405 | ) | ||
| Total stockholders equity | $ | 31,287 |
Going Concern Uncertainties
During the period from inception to December 31, 2016, we
primarily relied upon the capital contributed by our shareholders
and the advances from a director of Digiwork, who is also one of
our major shareholders, to fund our operations. At December 31,
2016, we had an accumulated deficit of $112,405 and will require
additional financing to fund short-term cash needs. Our
continuation as a going concern is dependent upon improving our
profitability, and we may have to rely on additional debt
financing, loans from existing directors and shareholders and
private placements of capital stock for additional funding.
However, we cannot assure you that we will be able to obtain
short-term financing, or that sources of such financing, if any,
will continue to be available, and if available, that they will
be on terms favorable to us.
The following table provides detailed information about our net
cash flow for the period from November 24, 2016 (inception)
through December 31, 2016 presented in this report:
|
For the period from November 24, 2016 (inception)through December 31, 2016 |
||||
| Net cash used in operating activities | (212,405 | ) | ||
| Net cash provided by financing activities | 210,662 | |||
| Effect of exchange rate changes on cash | 2,329 | |||
| Net increase in cash, and cash at bank at the end of period | $ |
Operating Activities
Net cash used in operating activities was $212,405 for the period
ended December31, 2016, which was mainly due to our net loss of
$112,405 and prepayments for RD of $100,000.
Investing Activities
We did not generate or use any cash for investing activities for
the period ended December31, 2016.
Financing Activities
Net cash provided by financing for the period ended December31,
2016 was $210,662, $141,363 of which was proceeds from issuances
of common shares and $69,299 of which was advances from a
director and shareholder.
Contractual Commitments and Obligations
We had the following contractual obligations and commercial
commitments as of December31, 2016:
| Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Advance from a director | 69,299 | 69,299 | – | – | – | |||||||||||||||
| RD | 9,900,000 | 9,900,000 | – | – | – | |||||||||||||||
| TOTAL | 9,969,299 | 9,969,299 | – | – | – |
Digiwork was set up to a joint business agreement among its
shareholders (JBA) on August 4, 2016 and as amended and restated
on March 31, 2017. to the JBA, Digiwork is obligated to pay a
total of $10,000,000 to Digiwork Korea, a 100% wholly owned
subsidiary of a 40% shareholder of Digiwork. As the consideration
for such payments, Digiwork Korea agrees to provide research and
development services to Digiwork for a period of five years
commencing from March 31, 2017. As of December 31, 2016, an
amount of $100,000 had been paid to Digiwork Korea.
After December 31, 2016, we have entered into a lease for office
space located in Din Daeng Sub-District, Din Daeng District,
Bangkok, Thailand for the period from February 21, 2017 to
February 20, 2020. The office space lease amounts total Thai baht
127,120 ($3,564) per month.
Capital Expenditures
We did not incur any capital expenditures for the period from
November 24, 2016 (inception) to December 31, 2016.
Inflation
Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing
prices will materially affect our business in the foreseeable
future. However, our management will closely monitor price
changes in our industry and continually maintain effective cost
control in operations.
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 of operations, liquidity or capital
expenditures or capital resources that is material to an investor
in our securities.
Seasonality
Our operating results and operating cash flows historically have
not been subject to significant seasonal variations. This pattern
may change, however, as a result of new market opportunities or
new product introductions.
Critical Accounting Policies
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires our management to make assumptions, estimates and
judgments that affect the amounts reported, including the notes
thereto, and related disclosures of commitments and
contingencies, if any. We have identified certain accounting
policies that are significant to the preparation of our financial
statements. These accounting policies are important for an
understanding of our financial condition and results of
operation. Critical accounting policies are those that are most
important to the portrayal of our financial condition and results
of operations and require managements difficult, subjective, or
complex judgment, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are
particularly sensitive because of their significance to financial
statements and because of the possibility that future events
affecting the estimate may differ significantly from managements
current judgments. We believe the following critical accounting
policies involve the most significant estimates and judgments
used in the preparation of our financial statements:
Basis of Presentation
The financial statements have been prepared in accordance with
United States of America generally accepted accounting principles
(U.S. GAAP).
Use of Estimates
The preparation of the accompanying financial statements requires
management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues, costs and
expenses, and related disclosures. On an on-going basis, we
evaluate our estimates based on historical experience and on
various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions.
VIE Consolidation
Digiwork (Thailand) Co., Ltd. is wholly owned by Mr.Ratanaphon
Wongnapachant, Ms. Chanikarn Lertchawalitanon and S-Mark Co. Ltd.
(a KOSDAQ-listed corporation) as nominee shareholders. For the
consolidated VIE, management made evaluations of the
relationships between Enigma BVI and the VIE and the economic
benefit flow of contractual arrangements with the VIE. In
connection with such evaluation, management also took into
account the fact that, as a result of such contractual
arrangements, Enigma BVI controls the shareholders voting
interests in the VIE. As a result of such evaluation, management
concluded that Enigma BVI is the primary beneficiary of its VIE.
Owing to the Thailand legal restrictions on foreign ownership, we
currently conduct the coding business in Thailand through
Digiwork, which we effectively control through a series of
contractual arrangements. We consolidate in our financial
statements the VIE of which we are the primary beneficiary.
Recent Accounting Pronouncements
In May2014, the FASB issued ASU No.2014-09, Revenue from
Contracts with Customers (Topic 606). This guidance supersedes
current guidance on revenue recognition in Topic 605, Revenue
Recognition. In addition, there are disclosure requirements
related to the nature, amount, timing, and uncertainty of revenue
recognition. In August2015, the FASB issued ASU No.2015-14 to
defer the effective date of ASU No.2014-09 for all entities by
one year. For public business entities that follow U.S. GAAP, the
deferral results in the new revenue standard are being effective
for fiscal years, and interim periods within those fiscal years,
beginning after December15, 2017, with early adoption permitted
for interim and annual periods beginning after December15, 2016.
We will apply the new revenue standard beginning January1, 2018,
and will not early adopt. We are currently in the process of
analyzing our revenue streams in accordance with the new revenue
standard to determine the impact on our consolidated financial
statements.
In November2015, the FASB issued ASU No.2015-17,Income Taxes
(Topic 740): Balance Sheet Classification of Deferred Taxes,
which simplifies the presentation of deferred income taxes by
requiring deferred tax assets and liabilities to be classified as
noncurrent on the balance sheet. The amendments in this update
are effective for financial statements issued for annual periods
beginning after December15, 2016, and interim periods within
those annual periods. Early adoption is permitted. Additionally,
the new guidance may be applied either prospectively to all
deferred tax liabilities and assets or retrospectively to all
periods presented. We do not expect this standard to have a
material impact on our consolidated financial statements.
On January5, 2016, the FASB issued ASU 2016-01 (ASU 2016-01),
Recognition and Measurement of Financial Assets and Financial
Liabilities, which amends certain aspects of recognition,
measurement, presentation and disclosure of financial
instruments. This amendment requires all equity investments to be
measured at fair value, with changes in the fair value recognized
through net income (other than those accounted for under equity
method of accounting or those that result in consolidation of the
investee). This standard will be effective for fiscal years
beginning after December15, 2017, including interim periods
within those fiscal years. We do not expect this standard to have
a material impact on our consolidated financial statements.
On February25, 2016, the FASB issued ASU No.2016-02 (ASU
2016-02), Leases. ASU 2016-02 specifies the accounting for
leases. For operating leases, ASU 2016-02 requires a lessee to
recognize a right-of-use asset and a lease liability, initially
measured at the present value of the lease payments, in its
balance sheet. The standard also requires a lessee to recognize a
single lease cost, calculated so that the cost of the lease is
allocated over the lease term, on a generally straight-line
basis. In addition, this standard requires both lessees and
lessors to disclose certain key information about lease
transactions. ASU 2016-02 is effective for public companies for
annual reporting periods, and interim periods within those years,
beginning after December15, 2018. Early adoption is permitted. We
do not expect this standard to have a material impact on our
consolidated financial statements.
In June2016, the FASB issued Accounting Standards Update (ASU)
2016-13, Financial Instruments-Credit Losses (Topic 326), which
requires entities to measure all expected credit losses for
financial assets held at the reporting date based on historical
experience, current conditions, and reasonable and supportable
forecasts. This replaces the existing incurred loss model and is
applicable to the measurement of credit losses on financial
assets measured at amortized cost. This guidance is effective for
fiscal years, and interim periods within those fiscal years,
beginning after December15, 2019. Early application will be
permitted for all entities for fiscal years, and interim periods
within those fiscal years, beginning after December15, 2018. We
do not expect this standard to have a material impact on our
consolidated financial statements.
In August2016, the FASB issued Accounting Standards Update (ASU)
2016-15, Statement of Cash Flows Classification of Certain Cash
Receipts and Cash Payments, which clarifies the presentation and
classification of certain cash receipts and cash payments in the
statement of cash flows. This guidance is effective for financial
statements issued for fiscal years beginning after December15,
2017, and interim periods within those fiscal years. Early
adoption is permitted. We do not expect this standard to have a
material impact on our consolidated financial statements.
In November2016, the FASB issued Accounting Standards Update
(ASU) No.2016-18, Statement of Cash Flows (Topic 230): Restricted
Cash. The guidance requires that a statement of cash flows
explain the change during the period in the total of cash, cash
equivalents, and amounts generally described as restricted cash
or restricted cash equivalents. Therefore, amounts generally
described as restricted cash and restricted cash equivalents
should be included with cash and cash equivalents when
reconciling the beginning-of-period and end-of-period total
amounts shown on the statement of cash flows. The standard is
effective for fiscal years beginning after December15, 2017, and
interim period within those fiscal years. Early adoption is
permitted, including adoption in an interim period. The standard
should be applied using a retrospective transition method to each
period presented. We do not expect this standard to have a
material impact on our consolidated financial statements.
In January2017, the FASB issued Accounting Standards Update (ASU)
No.2017-01, Business Combinations (Topic 805): Clarifying the
Definition of a Business, which clarifies the definition of a
business with the objective of adding guidance to assist entities
with evaluating whether transactions should be accounted for as
acquisitions or disposals of assets or businesses. The standard
is effective for fiscal years beginning after December15, 2017,
including interim periods within those fiscal years. Early
adoption is permitted. The standard should be applied
prospectively on or after the effective date. We do not expect
this standard to have a material impact on our consolidated
financial statements.
In January2017, the FASB issued Accounting Standards Update (ASU)
2017-04, Simplifying the Test for Goodwill Impairment. The
guidance removes Step 2 of the goodwill impairment test, which
requires a hypothetical purchase price allocation. A goodwill
impairment will now be the amount by which a reporting units
carrying value exceeds its fair value, not to exceed the carrying
amount of goodwill. The guidance should be adopted on a
prospective basis for the annual or any interim goodwill
impairment tests beginning after December15, 2019. Early adoption
is permitted for interim or annual goodwill impairment tests
performed on testing dates after January1, 2017. We do not expect
this standard to have a material impact on our consolidated
financial statements.
Properties
Our executive offices and our consolidated entity are located at
RS Tower Building, 8th Floor, Address No. 121/34, with
approximate area of 363.20 square meters, located on
Ratchadaphisek Road, Din Daeng Sub-District, Din Daeng District,
Bangkok, Thailand. We lease our facilities to a lease agreement
that will expire on February 20, 2020. We believe that all our
properties have been adequately maintained, are generally in good
condition, and are suitable and adequate for our business.
Changes in Control
There are no such arrangements known to the registrant other than
the transactions described herein.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The following sets forth the name and position of each of our
current executive officers and directors.
| Name | Age | Position | ServedFrom | |||
| Ratanaphon Wongnapachant | Chief Executive Officer, Chairman and Director | May, 2017 | ||||
| Wai Hok Fung | President and Director | December, 2016 | ||||
| Bodin Kasemset | Director | May, 2017 | ||||
| Cheng Kim Sing | Chief Financial Officer, Treasurer and Secretary | December, 2016 |
Director and Executive Officer Qualifications
Ratanaphon Wongnapachant was appointed
on May 15, 2017 as a director and the Chairman of the Board, and
as the Companys Chief Executive Officer. Mr. Wongnapachant has
served as the chief executive officer of Digiwork (Thailand) Co.,
Ltd. since 2016, and as the managing director of SWA. Capital Co.
Ltd. since 2014. He was previously the executive director of PAE
(Thailand) PLC, an engineering and construction company, from
2010 to 2014, and as its managing director from 2011 to 2014. Mr.
Wongnapachant received his bachelors degree in marketing research
from Seattle University in 2005 and his Executive MBA from the
SASIN Graduate Institute of Business Administration of
Chulalongkorn University in Bangkok, Thailand, in 2016. The Board
believes that Mr. Wongnapachants experience leading Digiwork
(Thailand) Co., Ltd. and other enterprises as a performance
executive will benefit the Company and make him a valuable member
of the Board and the Companys management team. Mr. Wongnapachant
was appointed as a member of the Board as a condition of the
consummation of the Share Exchange Agreement and the transactions
and documents contemplated thereby.
Wai Hok Fong has served as a director
of the Company since December, 2016. Mr. Wai also currently
serves as a director of SGOCO Group Ltd. (NASDAQ: SGOC), focusing
on display and computer products and energy saving products and
services. Mr. Wai has also served as a director of Wahfong
Industrial Development Co., Ltd., a manufacturing company located
in the PRC producing womens clothing, since 2002, and as a
director of Hebort International Limited, an exporter and
wholesaler of wine, cigarettes and other products, since 2006.
Mr. Wai provides consulting services from time to time to
companies exploring mining and energy projects internationally.
Mr. Wai received his high school certificate from the Jockey Club
TI-I College in Hong Kong in 1996, his Diploma of Account and
Finance from the Sydney Institute of Business and Technology in
1998, and his Bachelor of Account and Finance from Macquarie
University in Sydney, Australia, in 2002.
Dr. Bodin Kasemset was appointed on May
15, 2017, as a director of the Board and has served as an
innovation director with NXP Manufacturing Thailand Co. Ltd.,
Thailand since August 2011. He received his bachelors degree in
engineering from Chulalongkorn University in Bangkok, Thailand,
in 1997, his Master of Sciences degree from Technische
Universitaet Hamburg-Harburg, in 2001, his Doktor-Ingenieur
(Microsystems Technology) degree from Technische Universitaet
Hamburg-Harburg, in 2009, and his Executive MBA from the SASIN
Graduate Institute of Business Administration of Chulalongkorn
University, in Bangkok, Thailand, in 2016. The Board believes
that Dr. Kasemsets extensive technical expertise and knowledge
will benefit the Companys develop and operations and make him a
valuable member of the Board. Dr. Kasemset was appointed as a
member of the Board as a condition of the consummation of the
Share Exchange Agreement and the transactions and documents
contemplated thereby.
Cheng Kim Sing has served as the
Companys Chief Financial Officer, Treasurer and Secretary since
December, 2016, and previously served as a director on the Board.
Mr. Cheng previously served as the Finance Manager of Good View
Fruits Co. Ltd., a fruit manufacturer, distributor and retailer
based predominantly in Hong Kong, from December, 2008 to July,
2016. He served as the Assistant Manager of Wofoo Plastics Ltd.,
a plastic manufacturing company located in Hong Kong, from April,
2007 to September, 2008. Mr. Cheng has received and holds a
number of degrees and certifications, including but not limited
to his Master of Professional Accounting degree from Hong Kong
Polytechnic University in 2003, his Master of Accountancy degree
from Jinan University in China in 2004, his Master of Business
Administration degree from Hong Kong Baptist University in 2006
and his Master of Laws degree from Renmin University of China in
2010. Mr. Cheng is also a certified public accountant in the PRC
and Hong Kong, a certified information systems auditor, a
certified internal auditor and a certified fraud examiner in the
USA.
EXECUTIVE COMPENSATION
Executive Officer Compensation
| Name and Principal Position | Year | Salary | Stock Awards | All Other Compensation | Total | |||||||||||||||
|
Ratanaphon Wongnapachant, Chief Executive Officer, Chairman and Director (1) |
$ | 56,545 | $ | $ | $ | |||||||||||||||
| Wai Hok Fung, President and Director | $ | $ | $ | $ | ||||||||||||||||
|
Cheng Kim Sing, Chief Financial Officer, Treasurer and Secretary |
$ | $ | $ | $ |
| (1) |
On May 15, 2017, we acquired Enigma BVI in a reverse acquisition transaction that was structured as a share exchange. The annual, long term and other compensation shown in this table include the amounts that these officers received from Enigma BVI and/or its VIE prior to the consummation of the reverse acquisition. |
Compensation of Directors
Since our inception, no compensation has been paid to our
directors.
Employment Contracts
As of the date of this Current Report, we have no employment
agreements with our directors or executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Wai Hok Fung, our President, former Chief Executive Officer,
director and shareholder, has loaned to the Company an aggregate
amount of $27,680 as of March 31, 2017, which such loans are
interest free, unsecured and payable on demand.
LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and
claims in the ordinary course of business. We are not currently a
party to any material legal proceedings, and to our knowledge
none is threatened. There can be no assurance that future legal
proceedings arising in the ordinary course of business or
otherwise will not have a material adverse effect on our
financial position, results of operations or cash flows.
SECTION 3 SECURITIES AND TRADING MARKETS
ITEM 3.02 UNREGISTERED SALES OF EQUITY
SECURITIES
On May 15, 2017, in accordance with the terms of the Share
Exchange Agreement, the Company sold and issued 63,000,000 shares
of common stock to the stockholders of Enigma BVI in exchange for
all of their shares of Enigma BVI. All shares of the Company were
privately issued with a restrictive legend in reliance on the
exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933.
In connection with each of these isolated issuances of our
securities, we believe that each purchaser (i) was aware that the
securities had not been registered under federal securities laws,
(ii) acquired the securities for his/her/its own account for
investment purposes and not with a view to or for resale in
connection with any distribution for purpose of the federal
securities laws, (iii) understood that the securities would need
to be indefinitely held unless registered or an exemption from
registration applied to a proposed disposition and (iv) was aware
that the certificate representing the securities would bear a
legend restricting their transfer. We believe that, in light of
the foregoing, the sale of our securities to the respective
acquirers did not constitute the sale of an unregistered security
in violation of the federal securities laws and regulations by
reason of the exemptions provided under Sections 3(b) and 4(2) of
the Securities Act, and the rules and regulations promulgated
thereunder.
DESCRIPTION OF SECURITIES
Description of Common Stock
We are authorized to issue 75,000,000 shares of common stock, par
value $0.0001, of which 12,000,000 were issued and outstanding as
of May 14, 2017. All shares of common stock have equal rights and
privileges with respect to voting, liquidation and dividend
rights. Each share of common stock entitles the holder thereof
(i) to one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders, (ii) to
participate equally and to receive any and all such dividends as
may be declared by the Board out of funds legally available; and
(iii) to participate pro rata in any distribution of assets
available for distribution upon liquidation of the Company. Our
stockholders have no preemptive rights to acquire additional
shares of common stock or any other securities
Holders
We have 8 stockholders of record as of May 14, 2017.
Dividends
The holders of our common stock are entitled to receive pro rata
such dividends as our Board, from time to time, may declare out
of funds legally available therefor. The current policy of the
Board is to retain earnings, if any, for operations and growth.
Transfer Agent
Our independent stock transfer agent is Action Stock Transfer.
Their mailing address is 2469 E. Fort Union Blvd., Suite 214,
Salt Lake City, UT 84121, and their phone number is (801)
274-1088.
Market Information
Our common stock has cleared for quotation on the OTCQB
marketplace using the symbol IWBB since March 1, 2016. As of the
date of this report, there has not been any trading activity in
our common stock.
Our shares of common stock are subject to Section 15(g) and Rule
15g-9 of the Securities and Exchange Act, commonly referred to as
the penny stock rule. The rule defines penny stock to be any
equity security that has a market price less than $5.00 per
share, subject to certain exceptions. These rules may restrict
the ability of broker-dealers to trade or maintain a market in
our common stock and may affect the ability of stockholders to
sell their shares. Broker-dealers who sell penny stocks to
persons other than established customers and accredited investors
must make a special suitability determination for the purchase of
the security. Accredited investors, in general, include
individuals with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse, and
certain institutional investors. The rules require the
broker-dealer to receive the purchasers written consent to the
transaction prior to the purchase and require the broker-dealer
to deliver a risk disclosure document relating to the penny stock
prior to the first transaction. A broker-dealer also must
disclose the commissions payable to both the broker-dealer and
the registered representative, and current quotations for the
security. Finally, monthly statements must be sent to customers
disclosing recent price information for the penny stocks.
Dividend Policy
The Company has never declared or paid a cash dividend. Any
future decisions regarding dividends will be made by our Board,
which has complete discretion on whether to pay dividends. We
currently intend to retain and use any future earnings for the
development and expansion of our business and do not anticipate
paying any cash dividends in the foreseeable future. Even if our
Board decides to pay dividends, the form, frequency and amount
will depend upon our future operations and earnings, capital
requirements and surplus, general financial condition,
contractual restrictions and other factors that the Board may
deem relevant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As a result of the Share Exchange, the following tables set forth
the beneficial ownership of our outstanding common stock by our
management and each person or group known by us to own
beneficially more than 5% of our voting stock as of the date of
this Current Report. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Except as
indicated by footnote, the persons named in the table below have
sole voting power and investment power with respect to all shares
of common stock shown as beneficially owned by them. The
percentage of beneficial ownership is based on 75,000,000 shares
of common stock outstanding as of May 15, 2017. Except as
otherwise indicated, the address of each of the shareholders
listed below is: c/o IWeb, Inc., at 121/34, RS Tower, 8th Floor,
Ratchadaphisek Road, Din Daeng Sub-district, Din Daeng District,
Bangkok, Thailand.
| Name ofbeneficialowner | Numberofshares beneficiallyowned | Percent ofclass | ||||||
| Wai Hok Fung, President and Director | 10,500,000 | 14.0 | % | |||||
|
Ratanaphon Wongnapachant, President, Chief Executive Officer and Director |
35,910,000 | 47.9 | % | |||||
| Cheng Kim Sing, Chief Financial Officer, Secretary, Treasurer | – | – | ||||||
| Directors and executive officers as a group (3 people) | 46,410,000 | 61.9 | % | |||||
| S-Mark Co. Ltd. | 25,200,000 | 33.6 | % |
SECTION 4 MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL
STATEMENTS
ITEM 4.01 CHANGES IN REGISTRANTS CERTIFYING
ACCOUNTANTS
As previously disclosed, on April 24, 2017, our board of
directors approved the dismissal of KLJ Associates, LLP (KLJ) as
our independent registered public accounting firm, and approved
the appointment and engagement of Centurion ZD CPA Limited (CZD)
as our independent registered public accounting firm, effectively
immediately.
See our current report on Form8-K filed on April 28, 2017 for
more information.
SECTION 5 CORPORATE GOVERNANCE AND
MANAGEMENT
ITEM 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of
CertainOfficers; Compensatory Arrangements of
Certain Officers
On May 14, 2017, the Companys Board received letters of
resignation from Wai Lung Yee and Cheng Kim Sing from their
positions as directors of the Company, effective immediately
prior to the consummation of the transactions contemplated by the
Share Exchange Agreement. Ms. Wai and Mr. Cheng each indicated
that she or he was resigning for personal reasons, and not due to
a disagreement with the Company or the Board. Mr. Cheng has not
resigned his positions as the Companys Chief Financial Officer,
Treasurer and Secretary, and shall continue to serve the Company
in such positions. The Company also received the resignation of
Wai Hok Fung from his positions as Chairman of the Board and
Chief Executive Officer of the Company on May 14, 2017, effective
immediately prior to the consummation of the transactions
contemplated by the Share Exchange Agreement. Mr. Wai will
continue to serve as a director of the Board and the President of
the Company.
On May 14, 2017, the Board appointed Dr. Bodin Kasemset as a
member of the Board, effective immediately following the
consummation of the transactions contemplated by the Share
Exchange Agreement, to serve until his successor has been duly
elected and qualified. Since August 2011, Dr. Kasemset has served
as an innovation director with NXP Manufacturing Thailand Co.
Ltd., Thailand. He received his bachelors degree in engineering
from Chulalongkorn University in Bangkok, Thailand, in 1997, his
Master of Sciences degree from Technische Universitaet
Hamburg-Harburg, in 2001, his Doktor-Ingenieur (Microsystems
Technology) degree from Technische Universitaet Hamburg-Harburg,
in 2009, and his Executive MBA from the SASIN Graduate Institute
of Business Administration of Chulalongkorn University, in
Bangkok, Thailand, in 2016. The Board believes that Dr. Kasemsets
extensive technical expertise and knowledge will benefit the
Companys develop and operations and make him a valuable member of
the Board.
Also on May 14, 2017 the Board appointed Ratanaphon Wongnapachant
as a member and Chairman of the Board and as the Companys Chief
Executive Officer, effective immediately following the
consummation of the transactions contemplated by the Share
Exchange Agreement, to serve until his successor has been duly
elected and qualified. Mr. Wongnapachant has served as the chief
executive officer of Digiwork (Thailand) Co., Ltd. since 2016,
and as the managing director of SWA. Capital Co. Ltd. since 2014.
He was previously the executive director of PAE (Thailand) PLC,
an engineering and construction company, from 2010 to 2014, and
as its managing director from 2011 to 2014. Mr. Wongnapachant
received his bachelors degree in marketing research from Seattle
University in 2005 and his Executive MBA from the SASIN Graduate
Institute of Business Administration of Chulalongkorn University
in Bangkok, Thailand, in 2016. The Board believes that Mr.
Wongnapachants experience leading Digiwork (Thailand) Co., Ltd.
and other enterprises as a performance executive will benefit the
Company and make him a valuable member of the Board and the
Companys management team.
Each of Dr. Kasemset and Mr. Wongnapachant were appointed as
members of the Board as a condition of the consummation of the
Share Exchange Agreement and the transactions and documents
contemplated thereby. In addition, there are no family
relationships between Dr. Kasemset, Mr. Wongnapachant and any
director or executive officer of the Company.
Based on its investigation, the Board determined that Dr.
Kasemset is an independent directorunder Rule 10A-3 promulgated
under the Securities Exchange Act of 1934, as amended, and as
defined by NASDAQ Rule 5605(a)(2). The Board also determined
that, based on its review, Dr. Kasemset qualifies as a
Non-Employee Director as defined by Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and an outside
director under Section 162(m) of the Internal Revenue Code and
related regulations.
ITEM 5.04 CORPORATE GOVERNANCE
Directors and Executive Officers
Our directors and executive officers and their respective ages,
positions, term of office and biographical information are set
forth below. Our bylaws require at least two directors to serve
for a term of one year or until they are replaced by a qualified
director. Our executive officers are chosen by our board of
directors and serve at its discretion. There are no existing
family relationships between or among any of our executive
officers or directors.
| Name | Age | Position | ServedFrom | |||
| Ratanaphon Wongnapachant | Chief Executive Officer, Chairman and Director | May, 2017 | ||||
| Wai Hok Fung | President and Director | December, 2016 | ||||
| Bodin Kasemset | Director | May, 2017 |
Meetings and Committees of the Board of
Directors
IWeb did not hold formal meetings of the Board during the year
ended December 31, 2016. IWeb is a small reporting company with a
minimal number of directors and officers who have active roles in
our operations. As a result, we do not have a standing
compensation or nominating committee, nor do we have an audit
committee with an audit committee financial expert serving on
that committee. Our entire Board acts as our compensation,
nominating, and audit committee. As the Company grows we
anticipate that the Board will form separate compensation and
audit committees, with the audit committee including an audit
committee financial expert.
Board Leadership Structure and Role in Risk
Oversight
Our Board is primarily responsible for overseeing our risk
management processes. The Board receives and reviews periodic
reports from management, auditors, legal counsel and others, as
considered appropriate regarding our Companys assessment of
risks. Our Board is apprised of material risks by management and
the Board evaluates how these risks interrelate, how they affect
the Company, and how management addresses those risks. The Board
focuses on the most significant risks facing our Company and our
Companys general risk management strategy. While the Board
oversees our Company, the management of the Company and Digiwork
are responsible for day-to-day risk management processes. We
believe this division of responsibilities is the most effective
approach for addressing the risks facing our Company and that our
Board leadership structure supports this approach.
Board Diversity
While we do not have a formal policy on diversity, our Board
considers diversity to include the skill set, background,
reputation, type and length of business experience of our Board
members, as well as a particular nominees contributions to that
mix. Although there are many other factors, the Board seeks
individuals with industry knowledge and experience, senior
executive business experience, and legal and accounting skills.
Board Independence
At the Closing Date, two of the Companys current Directors are
not independent under the independence requirements of Rule 10A-3
promulgated under the Securities Exchange Act of 1934. This rule
defines persons as independent who are neither officers nor
employees of the company and have no relationships that, in the
opinion of the Board, would interfere with the exercise of
independent judgment in carrying out their responsibilities as
directors.
Code of Ethics
Since Enigma BVI has a small number of persons serving as
directors and executive officers, we have not adopted a code of
ethics for our principal executive and financial officers. Our
Board will revisit this issue in the future to determine if, and
when, adoption of a code of ethics is appropriate. In the
meantime, our management intends to promote honest and ethical
conduct, full and fair disclosure in our reports to the SEC, and
comply with applicable governmental laws and regulations.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Nevada Revised Statutes (NRS) Sections 78.7502 and 78.751 provide
us with the power to indemnify any of our directors, officers,
employees and agents. The person entitled to indemnification must
have conducted himself or herself in good faith, and must
reasonably believe that his or her conduct was in, or not opposed
to, our best interests. In a criminal action, the director,
officer, employee or agent must not have had reasonable cause to
believe that his conduct was unlawful.
Under NRS Section78.751, advances for expenses may be made by
agreement if the director or officer affirms in writing that he
or she has met the standards for indemnification and will
personally repay the expenses if it is determined that such
officer or director did not meet those standards.
Our bylaws do not eliminate or limit the liability of a director
for: (i)an act or omission which involves intentional misconduct,
fraud or a knowing violation of law; or (ii)the payment of
dividends in violation of NRS 78.300.
SECTION 9 FINANCIAL STATEMENTS AND
EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND
EXHIBITS
| (a) | Financial Statements of Business Acquired. |
|
Enigma BVIs audited financial statements for the period from November 24, 2016 (inception) to December 31, 2016 are attached to this Current Report as Exhibit 99.1. |
| (b) | Pro Forma Financial Information. |
|
Enigma BVIs unaudited pro forma condensed combined financial statements for the period from November 24, 2016 (inception) to December 31, 2016 are attached to this Current Report as Exhibit 99.2. |
| (d) | Exhibits. |
| Exhibit | ||
| No. | Description | |
| 2.1 |
Share Exchange Agreement between IWeb, Inc. and Enigma Technology International Corporation, dated May 15, 2017.* |
|
| 3.1 |
Articles of Incorporation of IWeb, Inc., by reference to Exhibit 3.1 to our Registration Statement on Form S-1 filed the SEC on July 24, 2015 (Reg. No. 333-205835). |
|
| 3.2 |
Bylaws of IWeb, Inc., incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-1 filed the SEC on July 24, 2015 (Reg. No. 333-205835), as amended by Amendment to Bylaws, incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on January 9, 2017. |
|
| 10.1 |
Repurchase Agreement between IWeb, Inc. and Wai Hok Fung, dated May 14, 2017.* |
|
| 10.2 |
Exclusive Technology Consulting and Service Agreement between Enigma Technology International Corporation and Digiwork (Thailand) Co., Ltd., dated May 15, 2017.* |
|
| 10.3 |
Equity Pledge Agreements by and among Enigma Technology International Corporation, S-Mark Co., Ltd. and DigiWork (Thailand) Co., Ltd., dated May 15, 2017* |
|
| 10.4 |
Equity Pledge Agreements by and among Enigma Technology International Corporation, Ratanaphon Wongnapachant and Digiwork (Thailand) Co., Ltd., dated May 15, 2017* |
|
| 10.5 |
Equity Pledge Agreements by and among Enigma Technology International Corporation, Chanikarn Lertchawalitanon and Digiwork (Thailand) Co., Ltd., dated May 15, 2017* |
|
| 10.6 |
Power of Attorney by Ratanaphon Wongnapachant dated May 15, 2017* |
|
| 10.7 |
Power of Attorney by Chanikarn Lertchawalitanon dated May 15, 2017* |
|
| 10.8 |
Power of Attorney by Chanikarn Lertchawalitanon dated May 15, 2017* |
|
| 10.9 |
Exclusive Purchase Option Agreement by and among Enigma Technology International Corporation, S-Mark Co., Ltd., Ratanaphon Wongnapachant, Chanikarn Lertchawalitanon and Digiwork (Thailand) Co., Ltd., dated May 15, 2017* |
|
| 99.1 |
Enigma BVI audited financial statements for the period from November 24, 2016 (inception) to December 31, 2016.* |
|
| 99.2 |
IWeb, Inc. unaudited pro forma condensed, combined financial statements for the period from November 24, 2016 (inception) to December 31, 2016.* |
|
| 99.3 |
Opinion Letter of MVP International Law Office Associates Co., Ltd., dated May 15, 2017.* |
*filed herewith.
About IWEB, Inc. (OTCMKTS:IWBB)
IWEB, Inc. is a development-stage company. The Company’s primary operations of the business will be engaged in providing Internet marketing strategies to Internet-based businesses and people seeking to create Websites. These services seek to place customers’ Website in search engine rankings for selected keywords that describe the product or service offered by the customer. The Company has developed its business plan, which includes completing its Website; building Websites for its clients; searching for clients in and out of the United States; communicating with old clients about references; business diversification, and working on electronic applications. The Company provides customers with the Web application development services for many different computing needs. The Company uses different types of templates, such as HyperText Markup Language (HTML), Word Press, MotoCMS HTML, OpenCart to Websites development. It also intends on providing search engine optimization services.