UBI BLOCKCHAIN INTERNET, LTD. (OTCBB:UBIA) Files An 8-K Change in Shell Company Status
Item 5.06 Change in Shell Company Status
UBI Blockchain Internet, LTD (the Company or UBI) ceased to be
shell company on March 17, 2017, as a result of new management, a
recent change in corporate ownership, and the Company pursing new
business opportunities. The Company now has three directors, two
corporate officers and nine employees. Further, the Company,
through its new management now has better access to the capital
markets to raise funding for the Company. The Company is engaged
in the developing business technologies of applying blockchain
and internet of things. Based on this business activity,
management has determined that we are not a shell corporation as
that term is defined in Rule 405 of the Securities Act and Rule
12b-2 of the Exchange Act.
FORM 10 INFORMATION
Business
This provides an overview of the Company’s business pursuits.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements. To the extent that any statements made in this report
contain information that is not historical, these statements are
essentially forward-looking. Forward-looking statements can be
identified by the use of words such as expects, plans, will, may,
anticipates, believes, should, intends, estimates, and other
words of similar meaning. These statements are subject to risks
and uncertainties that cannot be predicted or quantified and,
consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such
risks and uncertainties include, without limitation, our ability
to raise additional capital to finance our activities; the
effectiveness, profitability and marketability of our products;
legal and regulatory risks; the future trading of our common
stock; our ability to operate as a public company; our ability to
protect our proprietary information; general economic and
business conditions; the volatility of our operating results and
financial condition; our ability to attract or retain qualified
senior management personnel and research and development staff;
and other risks detailed from time to time in our filings with
the Securities and Exchange Commission (the SEC), or otherwise.
Information regarding market and industry information contained
in this report is included based on information available to us
that we believe is accurate. It is generally based on industry
and other publications that are not produced for purposes of
securities offerings or economic analysis. Forecasts and other
forward-looking information obtained from these sources are
subject to the same qualifications and the additional
uncertainties accompanying any estimates of future market size,
revenue and market acceptance of products and services
Business Description
UBIs business encompasses the research and application in the
blockchain technology with a focus on the Internet of things
(IoT) covering areas of food and drugs, healthcare, just to name
a few. The Company will leverage the stock market to build a new
business technology platform, specialized in the safety and
freshness keeping of food and drugs within the context of micro
and macro environment of the human life.
UBI plans to set up teams, that are dedicated to blockchain
application and research, application of the internet of things,
IT and data analytics in order to achieve its business goals.
An internet of things is defined as: the internetworking of
physical devices, vehicles (also referred to as connected devices
and smart devices), buildings, and other items embedded with
electronics, software, sensors, actuators, and network
connectivity that enable these objects to collect and exchange
data. The IoT allows objects to be sensed and/or controlled
remotely across existing network infrastructure, creating
opportunities for more direct integration of the physical world
into computer-based systems, and resulting in improved
efficiency, accuracy and economic benefit. Blockchain, originally
block chain, is defined as: a distributed
database that maintains a continuously-growing list of ordered
records called blocks. Each block contains a timestamp
and a link to a previous block. By design, blockchains are
resistant to modification of the data – once recorded, the data
in a block cannot be altered retroactively. The Company plans to
develop and specialize in the design, development, promotion and
sales of blockchain technology and internet of things.
Industry Trends
Recent advances in streamlining video, monitoring sensors,
high-speed broadband internet, introducing wireless standards
(such as Bluetooth low-power) and other technologies have brought
about the emergence of virtual transactions and investment plans
that individuals and businesses can base on their spending habits
to measure data that monitoring equipment and applications to
receive real-time feedback and to fit a wide range of personal
and corporate preferences for reliability at home.
Blockchain techniques have shown considerable adaptability in
recent years, as various market sectors have sought to find ways
of incorporating capabilities into their operations. While most
of the focus has so far been on financial services industry, this
has begun to change. For example, the use of blockchain
technology to support digital electronic payments to counter
counterfeit drugs in the pharmaceutical industry. The
adaptability of blockchain to a large number of applications has
been one of the driving forces of the technology’s growing
interest in past few years. As solution for organization and
ledger needs, the most recent market for blockchain technology is
pharmaceutical industry.
The use blockchain technology and internet of things is being
employed to address universal healthcare industry regarding food
and drug safety and labor relations management. At present,
management believes that there exists confusion of Chinese
medicine industry including fake drugs, bad medicine serious
phenomenon, no regulated production, no guaranteed efficacy of
traditional Chinese medicine. The excessive use of antibiotics,
poison capsules incidents, vaccine cases ginkgo leaf, licorice
tablets and other major drug cases, have seriously affected
people’s physical and mental health. Therefore, food and drug
safety relates to vital interests of millions of people’s social
problems. From current safety issues of food and drug, we see
scientific and exact drug management issues.
Management believes that the blockchain technology and internet
of things promote industrial information and emergence of
possible technological solutions. Through integration of
blockchain technology for the core of internet of things to
establish a seamless industrial chain so as to achieve food and
drug safety control and enterprise relations management. Internet
of Things is the extension and continuation of internet. IoT can
increase the ubiquity of the internet by integrating every object
for interaction via radio frequency identification (RFID)
devices, infrared sensors, global positioning systems, laser
scanners and other information sensing equipment, which leads to
a highly distributed network of devices communicating with human
beings as well as other devices. IoT is opening opportunities for
a large number of novel applications that promise to improve
quality of lives. In recent years, IoT has connected with
blockchain, exchange and communication for intelligent
identification, location, tracking, monitoring and management of
a network. This technology is still in its infancy.
A universal healthcare system covers all citizens seeking to
achieve efficiencies by integrating the basic functions of
healthcare delivery, health insurance, distribution of healthy
food and drug safety and labor relations management. Based on the
full integration of internet of things with blockchain
technology, this technology can change old systems. Blockchain
technology is a distributed database that maintains a
continuously-growing list of records called blocks. Each block
contains a timestamp and a link to a previous block. The data in
a block cannot be altered retrospectively. Blockchain has
characteristics such as decentrality, openness and transparency,
autonomy, security of information that cannot be tampered with,
and anonymity, these features can strengthen solution to drug and
food safety issues, as well as getting more meaningful solution
to enterprise labor relations management.
Blockchain technology-based applications
Management plans to focus its business in the integrated wellness
industry, which providing procedures for safety and effectiveness
in food and drugs, but also preventing counterfeit or fake food
and drugs. With the advancement of the blockchain technology, we
can trace a food or drug product all the way up to its original
source within the context of the internet of things.
We are in the early stages of blockchain technology, which can
store decentralized and distributed software ledger with complete
transaction history. Blockchain technology has a wide range of
potential applications, in addition to financial, real estate,
back office systems and stock trading applications. Blockchain is
a distributed ledger agreement that allows projects or
transactions to be transparently registered and is first
developed for use in a variety of industries to offer a wide
range of services including banking, stock trading, real estate
and even global diamond sales. More and more financial giants
join blockchain technology applications and research and
development, including IBM, Microsoft, Intel, Blockstream and
Thompson Reuters, to further accelerate blockchain technology as
a maturity and development system. Management believes the
investments in the field of blockchain are growing. Due to
maturity and safety of blockchain technology, it can play a role
in many fields, and management believes its application field and
development potential offer a growth opportunity for the Company.
The five features of blockchain include: de-centralization,
openness, autonomy, non-tampering and anonymity. These features
make blockchain an advantage in science and finance. Blockchain
technology is a decentralized, distributed ledger that allows
each transaction to be recorded and verified by network, which
means that they do not need a central regulator such as a bank or
financial institution. Transactions are also anonymous and
theoretically real-time, although recent network over-saturation
has led to this problem. The block-based distributed accounting
technology, combined with its artificial intelligence and
internet of things technologies, makes it possible for billions
of smart technologies to connect to internet for greater
security, allowing virtual time travel and allowing regulators to
return to the point at which the problem occurred. One of
potential application of this technology is the creation of
registers based on blockchain of IoT devices, and the use of
artificial intelligence programs to perform automated intelligent
diagnostics and more advanced functions, which can ultimately
lead engineers and regulators to virtualize clock backwards. At
the same time, blockchain technology can reduce audit costs;
reduce distrust of central node, so that flow of financial assets
is more transparent and convenient. In fact, current blockchain
technology is indeed application of digital electronic payments
to blockchain transition extension from financial sector
gradually to IoT and other non-financial areas which will trigger
more and greater industrial restructuring and revolution. It is
our time to enter real power blockchain technology.
The central concept and future development of blockchain are
trends of things fit, leading gradual self-government of things.
Blockchain technology is a good solution: infrastructure
investment, high maintenance costs and data security issues.
Blockchain technology support IoT which is an extension and more
advanced stage of internet. Blockchain technology research and
application will make IoT networking shine. Blockchain’s
point-to-point communication platform gives a subtle solution.
Blockchain technology creates a shared, distributed, digital book
between network nodes to record transactions, rather than storing
them on a central server. Thus eliminating the need for central
verification. It provides a way to create a consensus network
without having trust a single node, and data store does not need
to be stored in a central server, but by sharing it to all nodes
in the network.
Internet of Things (IoT) is about creating digital
representations of real-world objects. It is a phenomenon that
draws on rapid developments within IT, ICT and telecommunications
to spark insights and to help companies create entirely new types
of services and business areas. Management believes that the
Internet of Things will be the next technology to promote the
rapid development of the world’s important productive forces.
Health Care Business Focus
Management believes that the global IoT in healthcare market is
growing at a significant growth rate, due to increasing demand
for advanced healthcare information system, and growing
prevalence of chronic and life>
The IoT applications in healthcare, such as telemedicine,
medication management, clinical operations and workflow
management, inpatient monitoring, helps in compiling services
related to diagnosis, treatment, care, and rehabilitation. They
improve communication between patients and healthcare providers,
in order to reduce medication errors, and provide better
coordinated care.
Blockchain technology supports IoT which is an extension and more
advanced stage of internet. Blockchain’s point-to-point
communication platform problem, gives a subtle solution.
Blockchain technology creates a shared, distributed, digital book
between network nodes to record transactions, rather than storing
them on a central server. Thus eliminating need for central
verification. It provides a way to create a consensus network
without having to trust a single node, and data store does not
need to be stored in a central server, but by sharing it to all
nodes in network. Blockchain technology can also help solve
medical field of data privacy and other issues, such as custody
of electronic medical records, safe storage of genetic data, drug
security and so on.
The Market Opportunity
The Company is in the early stages of blockchain technology,
which can store decentralized and distributed software ledger
with complete transaction history. Blockchain technology has a
wide range of potential applications, in addition to financial,
real estate, and back office systems. Blockchain can be utlized
as a distributed ledger agreement that allows projects or
transactions to be transparently registered and can be used in a
variety of industries to offer a wide range of services including
banking, stock trading, real estate and even global diamond
sales.
Blockchain technology can play a role in many fields. Blockcchain
transactions are theoretically real-time. The block-based
distributed accounting technology, combined with its artificial
intelligence and internet of things technologies, makes it
possible for countless of smart technologies to connect to
internet for greater security, allowing technicians to return to
the point at which the problem occurred. One of potential
applications of this technology is the creation of registers
based on blockchain of IoT devices, and the use of artificial
intelligence programs to perform automated intelligent
diagnostics and more advanced functions, which can ultimately
lead engineers and technicians to virtualize clock backwards. At
the same time, blockchain technology can reduce audit costs;
reduce distrust of central node, so that flow of financial assets
is more transparent and convenient. In fact, current blockchain
technology is indeed application of digital electronic payments
to block chain transition extension from financial sector
gradually to IoT and other non-financial areas which will trigger
more and greater industrial restructuring and revolution.
The internet of things is based on computer science, including
network, electronics, radio frequency, induction, wireless,
artificial intelligence, bar code, cloud computing, automation,
embedded technology as an integrated technology. Internet of
things is called the third wave of the world information industry
revolution, after computer revolution, and the second internet
revolution. Management believes that within 10 years, internet of
things will be widely used in intelligent medicine, intelligent
transportation, environmental protection, government work, public
safety, safety home, intelligent home appliance, industrial
monitoring, elderly care, personal health, intelligent building,
green agriculture and breeding, surveillance, imaging, computers,
mobile phones and other fields.
Blockchain technology is a good solution for: infrastructure
investment, high maintenance costs and data security issues.
Blockchain technology supports IoT which is an extension and more
advanced stage of internet. Blockchain technology research and
application will make IoT networking more efficient. Blockchain
technology creates a shared, distributed, digital book between
network nodes to record transactions, rather than storing them on
a central server. This eliminates the need for central
verification. It provides a way to create a consensus network
without having to trust a single node, and data store does not
need to be stored in a central server, but by sharing it to all
nodes in network. Blockchain technology can also solve medical
field of data privacy and other issues, such as custody of
electronic medical records, safe storage of genetic data, and
drug security.
Our Strategy
Our strategy is to make UBI the premier online investment and
communication platform in key markets in China, and later on we
may expand into Europe and North America. To achieve this goal,
we intend to do the following:
Introducing innovative products
We plan to develop commercially applicable blockchain based
payment and other functions, such as product tracking. We aim at
satisfaction of user experience, covering the consumption after
sales.
Create brand awareness and drive sales of our
products and services in key markets
We intend to target our marketing efforts to create global
awareness of our brand and drive sales of our products and
services in the key markets of China.
Employ professional investment professionals,
academics, university professors and communication
professionals
We plan to employ investment professionals, academics, university
professors and communication professionals from around the world
to develop technologies applications to human beings.
Coordinate with strategic partners in each of the
target markets for marketing and distribution
We believe that international markets represent a significant
growth opportunity for us and we intend to expand sales of our
products and services globally through selected retailers and
strategic partnerships. We plan to work with key partners in the
target markets to provide marketing and distribution expertise
and assistance. Although it may be challenging to gain market
acceptance in these markets, we believe the assistance of such
experts will expedite the process.
Competitive Strengths
We believe that the following strengths position us to build our
business model:
1. Building a Creative Commercial Platform through
Independent Design and
Development
We plan to make an integrated platform that incorporates the
blockchain technology, internet of things, and a stock market.
This platform when built, will support blockchain based payment,
the convenience of internet of things, with the speed, safety,
and convenience not yet experienced. We plan to establish a brand
name of Global UBI for our products.
2. We Believe We Have Good Relations in Chinas Healthcare
Industry
In China, we believe that our management has good relations in
the field of integrated health industry for scientific research
and development, raw material production base and other
industrial chains. Our management is also familiar with the
international pharmaceutical market and the food market. We
believe that technology is the top productive force. The
effective combination of blockchain technology and Internet of
Things technology which exclude all possible human factors, its
centralization, transparency and chain cannot be tampered with,
traceability, etc. can solve the drug and food safety issues.
Target Market
At present, fake drugs are common in China, as there exists
little regulation of production, and no guaranteed efficacy of
traditional Chinese medicine. There has been an excessive use of
antibiotics, poison capsules incidents, vaccine cases ginkgo
leaf, licorice tablets and other major drug cases, seriously
affecting people’s physical and mental health. Therefore, food
and drug safety is related to the vital interests of millions of
people in China.
Sources of Income and Pricing
We plan to use application of information technology (IT),
blockchain technology and IoT technology that permeate virtually
all aspects of corporate and social activity, effective
combination of food and drugs safety and management of labor
relations. The products and services enabled by it have had a
major impact to the healthcare industry. As we look to the
future, emerging technologies raise new trend in security, law
enforcement, privacy, safety in food and drug of healthcare
industry.
Sales and Marketing
The Company plans to place an emphasis on social media for the
marketing and advancement of blockchian, internet of things, and
technological innovation platform as well as the traditional
health application, food and drug production process chain for
more transparent transactions. The Company plans to implement
original sources of procurement advantages, and preferred
overseas products. For the domestic high-end consumers, we
provide more efficient, convenient and affordable imports of
quality goods.
Management believes Chinese consumersare more likely to consider
buying a product if they see it mentioned on a social-media site
and more likely to purchase a product or service if a friend or
acquaintance recommends it on a social-media site.
Chinese consumers rely heavily upon peer-to-peer recommendations
over general mass advertising. In general, the Chinese populace
is skeptical of information from news sources and advertising and
rely more on word-of-mouth from friends, family, and key opinion
leaders, many of whom share information on social media.
While messaging and sharing photos is as popular in China as in
other regions, one aspect of usage in the country stands out:
social media has a greater influence on purchasing decisions for
consumers in China than for those anywhere else in the world. Due
to the widespread use of social media in China, the Company will
focus its marketing efforts on this medium. The Company will be
present with its own social media site on the largest Chinese
social media platforms. Sale of products and services will take
place on the portal. With regards to North America and European
Market, we anticipate employing a similar strategy. Our most
important profit and revenue will come from our development of
drugs, food safety software, and system platform technology to
promote sales and transfer technology. These software
technologies and platform technologies will be widely used in
health industry businesses and regulatory agencies.
Manufacturing
The Company does not at this time engage in any manufacturing but
may engage in manufacturing of products to be sold on the
Company’s website in the future.
Government Regulation
We are or may become subject to a variety of laws and regulations
in the United States and abroad that involve matters central to
our business, including laws and regulations regarding privacy,
data protection, data security, data retention, consumer
protection, advertising, electronic commerce, intellectual
property, manufacturing, anti-bribery and anti-corruption, and
economic or other trade prohibitions or sanctions. These laws and
regulations are continuously evolving and developing. The scope
and interpretation of the laws that are or may be applicable to
us are often uncertain and may be conflicting, particularly with
respect to foreign laws.
In particular, there are numerous U.S. federal, state, and local
laws and regulations and foreign laws and regulations regarding
privacy and the collection, sharing, use, processing, disclosure,
and protection of personal information and other user data, the
scope of which is changing, subject to differing interpretations,
and may be inconsistent among different jurisdictions. We strive
to comply with all applicable laws, policies, legal obligations,
and industry codes of conduct relating to privacy, data security,
and data protection. However, given that the scope,
interpretation, and application of these laws and regulations are
often uncertain and may be conflicting, it is possible that these
obligations may be interpreted and applied in a manner that is
inconsistent from one jurisdiction to another and may conflict
with other rules or our practices. Any failure or perceived
failure to comply with our privacy or security policies or
privacy-related legal obligations by us or third-party
service-providers or the failure or perceived failure by
third-party apps, with which our users choose to share their
data, to comply with their privacy policies or privacy-related
legal obligations as they relate to the data shared with them, or
any compromise of security that results in the unauthorized
release or transfer of personally identifiable information or
other user data, may result in governmental enforcement actions,
litigation, or negative publicity, and could have an adverse
effect on our brand and operating results.
We plan to develop solutions to ensure that data transfers from
the E.U. provide adequate protections to comply with the E.U.
Data Protection Directive. If we fail to develop such alternative
data transfer solutions, one or more national data protection
authorities in the European Union could bring enforcement actions
seeking to prohibit or suspend our data transfers to the U.S. and
we could also face additional legal liability, fines, negative
publicity, and resulting loss of business.
Governments are continuing to focus on privacy and data security
and it is possible that new privacy or data security laws will be
passed or existing laws will be amended in a way that is material
to our business. Any significant change to applicable laws,
regulations, or industry practices regarding our users’ data
could require us to modify our services and features, possibly in
a material manner, and may limit our ability to develop new
products, services, and features. Although we have made efforts
to design our policies, procedures, and systems to comply with
the current requirements of applicable state, federal, and
foreign laws, changes to applicable laws and regulations in this
area could subject us to additional regulation and oversight, any
of which could significantly increase our operating costs.
The labeling, distribution, importation, marketing, and sale of
our products are subject to extensive regulation by various U.S.
state and federal and foreign agencies, including the CPSC,
Federal Trade Commission, Food and Drug Administration, or FDA,
Federal Communications Commission, and state attorneys general,
as well as by various other federal, state, provincial, local,
and international regulatory authorities in the countries in
which our products and services are distributed or sold. If we
fail to comply with any of these regulations, we could become
subject to enforcement actions or the imposition of significant
monetary fines, other penalties, or claims, which could harm our
operating results or our ability to conduct our business.
The global nature of our business operations also create various
domestic and foreign regulatory challenges and subject us to laws
and regulations such as the U.S. Foreign Corrupt Practices Act,
or FCPA, the U.K. Bribery Act, and similar anti-bribery and
anti-corruption laws in other jurisdictions, and our products are
also subject to U.S. export controls, including the U.S.
Department of Commerce’s Export Administration Regulations and
various economic and trade sanctions regulations established by
the Treasury Department’s Office of Foreign Assets Controls. If
we become liable under these laws or regulations, we may be
forced to implement new measures to reduce our exposure to this
liability. This may require us to expend substantial resources or
to discontinue certain products or services, which would
negatively affect our business, financial condition, and
operating results. In addition, the increased attention focused
upon liability issues as a result of lawsuits, regulatory
proceedings, and legislative proposals could harm our brand or
otherwise impact the growth of our business. Any costs incurred
as a result of compliance or other liabilities under these laws
or regulations could harm our business and operating results.
Employees
We have 11 full-time employees. Within our workforce, 4 employees
are engaged in product development and 7 employees are engaged in
business development, finance, human resources, facilities,
information technology and general management and administration.
We expect the number of employees to rise to more than 25 by the
end of December, 2017. We have no collective bargaining
agreements with our employees and we have not experienced any
work stoppages. We consider our relationship with our employees
to be good.
Risk Factors
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below, together
with all of the other information included in this report, before
making an investment decision. If any of the following risks
actually occurs, our business, financial condition or results of
operations could suffer. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment. You should read the section entitled Special Note
Regarding Forward Looking Statements above for a discussion of
what types of statements are forward-looking statements, as well
as the significance of such statements in the context of this
report.
Risks Related to Our Business
WE HAVE LIMITED HISTORICAL FINANCIAL INFORMATION UPON
WHICH YOU MAY EVALUATE OUR PERFORMANCE.
We have a limited operating history and we are subject to all
risks inherent in a developing business enterprise. Our
likelihood of success must be considered in light of the
problems, expenses, difficulties, complications, and delays
frequently encountered in connection with selling audio housing
systems and the competitive environment in which we operate. You
should consider, among other factors, our prospects for success
in light of the risks and uncertainties encountered by companies
that, like us, are in their early stages of research. We may not
be able to successfully address these risks and uncertainties or
successfully implement our operating and acquisition strategies.
If we fail to do so, it could materially harm our business to the
point of having to cease operations and could impair the value of
our preferred and common stock to the point that the investors
may lose their entire investment. Even if we accomplish these
objectives, we may not be able to generate positive cash flows or
profits that we anticipate in the future.
OUR AUDITORS HAVE MADE REFERENCE TO THE SUBSTANTIAL DOUBT
AS TO OUR ABILITY TO CONTINUE AS A GOING CONCER. THERE IS NO
ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A GOING
CONCERN.
The financial statements included with our Annual Report for the
year ended August 31, 2016 have been prepared assuming that we
will continue as a going concern. Our auditors have made
reference to the substantial doubt as to our ability to continue
as a going concern in their audit report on our audited financial
statements for the year ended August 31, 2016. Because the
Company has been issued an opinion by its auditors that
substantial doubt exists as to whether the Company can continue
as a going concern, it may be more difficult for the Company to
attract investors. Since our auditors have raised a substantial
doubt about our ability to continue as a going concern, this
typically results greater difficulty to obtain loans than
businesses that do not have a qualified auditors opinion.
Additionally, any loans we might obtain may be on less
advantageous terms. Our future is dependent upon our ability to
obtain financing and upon future profitable operations from our
business.
We plan to seek additional funds through private placements of
our preferred and common stock. You may be investing in a company
that will not have the funds necessary to continue to deploy its
business strategies. If we are not able to achieve sufficient
revenues or find financing to cover our expenses, then we likely
will be forced to cease operations and investors will likely lose
their entire investment.
WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT
ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE TO US.
We have prepared audited financial statements for the year end
for August 31, 2016. For the period from inception (August 26,
2010) through the year end for August 31, 2016, we experienced an
operating net loss of $ 4,554,259. Our ability to continue to
operate as a going concern is fully dependent upon the Company
obtaining sufficient financing to continue its development and
operational activities. The ability to achieve profitable
operations is in direct correlation to our ability to generate
revenues or raise sufficient financing. It is important to note
that even if the appropriate financing is received, there is no
guarantee that we will ever be able to operate profitably or
derive any significant revenues from its operation. If we run out
of cash reserves, we would be forced to cease operations.
No assurance can be given that the Company will obtain access to
capital markets in the future or that financing, adequate to
satisfy the cash requirements of implementing our business
strategies, will be available on acceptable terms. The inability
of the Company to gain access to capital markets or obtain
acceptable financing could have a material adverse effect upon
the results of its operations and upon its financial conditions.
THE NATURE OF OUR OPERATIONS ARE HIGHLY
SPECULATIVE.
The success of our plan of operation will depend to a great
extent on the operations, financial condition and management. Our
business concept revolves around developing IoT, e-blockchain,
and other technologies. Our business model is not yet established
in the industry and we will have to convince our customers to use
our products and services.
Management believes that we will be successful in marketing our
services, but there can be no assurance that we will be able to
attract sufficient consumers to achieve profitability or even
generate anything but minimal revenues. If our services are not
accepted by consumers, we will fail.
WE MAY NOT BE ABLE TO COMPETE WITH OTHER COMPANIES, SOME
OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE.
We do not have the resources to compete with larger providers of
these similar services at this time. With the limited, if not
minimal, resources the Company has available, the Company may
experience great difficulties in building a customer base.
Competition from existing and future competitors could result in
the Companys inability to secure any new customers. This
competition from other entities with greater resources and
reputations may result in the Companys failure to maintain or
expand its business as the Company may never be able to
successfully execute its business plan. Further, we cannot be
assured that it will be able to compete successfully against
present or future competitors or that the competitive pressure it
may face will not force the Company to cease operations.
We may be unable to gain any significant market
acceptance for our products and services or establish a
significant market presence.
Our growth strategy is substantially dependent upon our ability
to market our product successfully to prospective clients in the
target markets, which shall initially be China, Europe and the
United States. This requires that we heavily rely upon our
development and marketing partners in the target markets. Failure
to select the right development and marketing partners in the
target markets and other target markets will significantly delay
or prohibit our ability to develop the products and services,
market the products and gain market acceptance. Our products and
services may not achieve significant acceptance. Such acceptance,
if achieved, may not be sustained for any significant period of
time. Failure of our services to achieve or sustain market
acceptance could have a material adverse effect on our business,
financial conditions and the results of our operations.
If potential users within the target markets do not
widely adopt online or UBI fails to achieve and sustain
sufficient market acceptance, we will not generate sufficient
revenue and our growth prospects, financial condition and results
of operations could be harmed.
UBI may never gain significant acceptance in the marketplace and,
therefore, may never generate substantial revenue or allow us to
achieve or maintain profitability. Widespread adoption of virtual
and online training portals in the target markets depends on many
factors, including acceptance by users that such systems and
methods or other options. Our ability to achieve commercial
market acceptance for UBI or any other future products also
depends on the strength of our sales, marketing and distribution
organizations.
We may not be able to attract qualified professionals,
academics, university professors and communication professionals
from around the world, which will decrease the value of
technological innovation platform offering and may make it
difficult to differentiate UBI from other online services
providers.
Our strategy includes developing relationships with
professionals, academics, university professors and communication
professionals from around the world. If we are unable to
establish relationships with these professionals, academics,
university professors and communication professionals that UBI’s
technological innovation platform is not effective or that
alternative products are more effective, or if we encounter
difficulty promoting adoption or establishing UBI as a standard,
our ability to achieve market acceptance of UBI could be
significantly limited.
We may not be able to develop new products or enhance the
capabilities of UBI to keep pace with our industry’s rapidly
changing technology and customer requirements.
The industry for blockchain technology is characterized by rapid
technological changes, new product introductions, enhancements,
and evolving industry standards. Our business prospects depend on
our ability to develop new products and applications for our
technology in new markets that develop as a result of
technological and scientific advances, while improving the
performance and cost-effectiveness. New technologies, techniques
or products could emerge that might offer better combinations of
price and performance than UBI systems. The market for online or
virtual healthcare market is characterized by rapid innovation
and advancement in technology. It is important that we anticipate
changes in technology and market demand. If we do not
successfully innovate and introduce new technology into our
anticipated product lines or effectively manage the transitions
of our technology to new product offerings, our business,
financial condition and results of operations could be harmed.
Cyber security risks could adversely affect our business
and disrupt our operations.
The threats to network and data security are increasingly diverse
and sophisticated. Despite our efforts and processes to prevent
breaches, our devices, as well as our servers, computer systems,
and those of third parties that we use in our operations are
vulnerable to cyber security risks, including cyber attacks such
as viruses and worms, phishing attacks, denial-of-service
attacks, physical or electronic break-ins, employee theft or
misuse, and similar disruptions from unauthorized tampering with
our servers and computer systems or those of third parties that
we use in our operations, which could lead to interruptions,
delays, loss of critical data, and loss of consumer confidence.
In addition, we may be the target of email scams that attempt to
acquire sensitive information or company assets. Despite our
efforts to create security barriers to such threats, we may not
be able to entirely mitigate these risks. Any cyber attack that
attempts to obtain our data and assets, disrupt our service, or
otherwise access our systems, or those of third parties we use,
if successful, could adversely affect our business, operating
results, and financial condition, be expensive to remedy, and
damage our reputation.
Our financial performance is subject to risks associated
with changes in the value of the U.S. dollar versus local
currencies.
Our primary exposure to movements in foreign currency exchange
rates relates to non-U.S. dollar denominated sales and operating
expenses worldwide. Weakening of foreign currencies relative to
the U.S. dollar adversely affects the U.S. dollar value of our
foreign currency-denominated sales and earnings, and generally
leads us to raise international pricing, potentially reducing
demand for our products. In some circumstances, for competitive
or other reasons, we may decide not to raise local prices to
fully offset the strengthening of the U.S. dollar, or at all,
which would adversely affect the U.S. dollar value of our foreign
currency denominated sales and earnings. Conversely, a
strengthening of foreign currencies relative to the U.S. dollar,
while generally beneficial to our foreign currency-denominated
sales and earnings, could cause us to reduce international
pricing, incur losses on our foreign currency derivative
instruments, and incur increased operating expenses thereby
limiting any benefit. Additionally, strengthening of foreign
currencies may also increase our cost of product components
denominated in those currencies, thus adversely affecting gross
margins.
We do not use derivative instruments, such as foreign currency
forward and option contracts, to hedge certain exposures to
fluctuations in foreign currency exchange rates.
We may acquire other businesses, form joint ventures or
make investments in other companies or technologies that could
negatively affect our operating results, dilute our
stockholders’ ownership, increase our debt or cause us to incur
significant expense.
We may pursue acquisitions of businesses and assets. We also may
pursue strategic alliances and joint ventures that leverage our
proprietary technology and industry experience to expand our
offerings or distribution. We have no experience with acquiring
other companies and limited experience with forming strategic
partnerships. We may not be able to find suitable partners or
acquisition candidates, and we may not be able to complete such
transactions on favorable terms, if at all. If we make any
acquisitions, we may not be able to integrate these acquisitions
successfully into our existing business, and we could assume
unknown or contingent liabilities.
Any future acquisitions also could result in the incurrence of
debt, contingent liabilities or future write-offs of intangible
assets or goodwill, any of which could have a negative impact on
our cash flows, financial condition and results of operations.
Integration of an acquired company also may disrupt ongoing
operations and require management resources that we would
otherwise focus on developing our existing business. We may
experience losses related to investments in other companies,
which could harm our financial condition and results of
operations. We may not realize the anticipated benefits of any
acquisition, strategic alliance or joint venture.
Foreign acquisitions involve unique risks in addition to those
mentioned above, including those related to integration of
operations across different cultures and languages, currency
risks and the particular economic, political and regulatory risks
associated with specific countries.
To finance any acquisitions or joint ventures, we may choose to
issue shares of common stock as consideration, which could dilute
the ownership of our stockholders. Additional funds may not be
available on terms that are favorable to us, or at all. If the
price of our Common Stock is low or volatile, we may not be able
to acquire other companies or fund a joint venture project using
our stock as consideration.
Risks Related to Our Reliance on Third
Parties
We will depend on third-parties to market in
international markets.
We will depend on a number of third parties to market and sell
internationally. We may not be able to successfully identify
marketing and distribution partners and even if we do, such
parties may not be able to successfully market and sell and may
not devote sufficient time and resources to support the marketing
and selling efforts that enable the product to develop, achieve
or sustain market acceptance. Any of these factors could reduce
our revenue from affected international markets, increase our
costs in those markets or damage our reputation. In addition, if
we are unable to attract additional international distributors,
our international revenue may not grow.
Risks Related to Being a Public Company
Our management team has no experience managing a public
company.
Most members of our management team have no experience managing a
publicly-traded company, interacting with public company
investors, and complying with the increasingly complex laws
pertaining to public companies. Our management team may not
successfully or efficiently manage our transition to being a
public company subject to significant regulatory oversight and
reporting obligations under the federal securities laws and the
continuous scrutiny of securities analysts and investors. These
new obligations and constituents will require significant
attention from our senior management and could divert their
attention away from the day-to-day management of our business,
which could adversely affect our business, financial condition,
and operating results.
IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL
CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL
RESULTS OR PREVENT FRAUD AND AS A RESULT, INVESTORS MAY BE MISLED
AND LOSE CONFIDENCE IN OUR FINANCIAL REPORTING AND DISCLOSURES,
AND THE PRICE OF OUR PREFERRED AND COMMON STOCK MAY BE NEGATIVELY
AFFECTED.
The Sarbanes-Oxley Act of 2002 requires that we report annually
on the effectiveness of our internal control over financial
reporting. A significant deficiency means a deficiency or a
combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness yet
important enough to merit attention by those responsible for
oversight of the Company’s financial reporting. A material
weakness is a deficiency or a combination of deficiencies in
internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected
on a timely basis.
As of August 31, 2016, management assessed the effectiveness of
our internal control over financial reporting based on the
criteria for effective internal control over financial reporting.
The matters involving internal controls and procedures that our
management considered to be material weaknesses under the
standards of the Public Company Accounting Oversight Board were:
(1) lack of a functioning audit committee due to a lack of a
majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in
ineffective oversight in the establishment and monitoring of
required internal controls and procedures; and (2) inadequate
segregation of duties consistent with control objectives.
In addition, in connection with our on-going assessment of the
effectiveness of our internal control over financial reporting,
we may discover material weaknesses in our internal controls as
defined in standards established by the Public Company Accounting
Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that
a material misstatement of the annual or interim financial
statements will not be prevented or detected.
Failure to provide effective internal controls may cause
investors to lose confidence in our financial reporting and may
negatively affect the price of our preferred and common stock.
Moreover, effective internal controls are necessary to produce
accurate, reliable financial reports and to prevent fraud. If we
have deficiencies in our internal controls over financial
reporting, these deficiencies may negatively impact our business
and operations.
Risks Related to Administrative, Organizational and
Commercial Operations and Growth
The loss of our Chief Executive Officer or our inability
to attract and retain highly skilled developers and other
personnel could negatively impact our business.
Our success depends on the skills, experience and performance of
Tony, Liu, our Chief Executive Officer, and other key employees.
The individual and collective efforts of these employees will be
important as we continue to develop and as we expand our
commercial activities. The loss or incapacity of existing members
of our executive management team could negatively impact our
operations if we experience difficulties in hiring qualified
successors. Our executive officers have employment agreements;
however, the existence of an employment agreement does not
guarantee the retention of the executive officer for any period
of time.
Our use of open source software could negatively affect
our ability to sell our products and subject us to possible
litigation.
A portion of the technologies we use incorporates open source
software, and we may incorporate open source software in the
future. Such open source software is generally licensed by its
authors or other third parties under open source licenses. These
licenses may subject us to certain unfavorable conditions,
including requirements that we offer our products and services
that incorporate the open source software for no cost, that we
make publicly available source code for modifications or
derivative works we create based upon, incorporating, or using
the open source software, or that we license such modifications
or derivative works under the terms of the particular open source
license. Additionally, if a third-party software provider has
incorporated open source software into software that we license
from such provider, we could be required to disclose or provide
at no cost any of our source code that incorporates or is a
modification of such licensed software. If an author or other
third party that distributes open source software that we use or
license were to allege that we had not complied with the
conditions of the applicable license, we could be required to
incur significant legal expenses defending against such
allegations and could be subject to significant damages and
enjoined from the sale of our products and services that
contained the open source software. Any of the foregoing could
disrupt the distribution and sale of our products and services
and harm our business.
Risks Related to Intellectual Property
If we are unable to protect the confidentiality of our
trade secrets, our business and competitive position could be
harmed.
We plan to rely upon patents, trademarks, copyright and trade
secret protection, as well as non-disclosure agreements and
invention assignment agreements with our employees, consultants
and third parties, to protect our confidential and proprietary
information. Significant elements of our products and services
are based on unpatented trade secrets and know-how that are not
publicly disclosed. In addition to contractual measures, we try
to protect the confidential nature of our proprietary information
using physical and technological security measures. Such measures
may not, for example, in the case of misappropriation of a trade
secret by an employee or third party with authorized access,
provide adequate protection for our proprietary information. Our
security measures may not prevent an employee or consultant from
misappropriating our trade secrets and providing them to a
competitor, and recourse we take against such misconduct may not
provide an adequate remedy to protect our interests fully.
Enforcing a claim that a party illegally disclosed or
misappropriated a trade secret can be difficult, expensive and
time-consuming, and the outcome is unpredictable. In addition,
trade secrets may be independently developed by others in a
manner that could prevent legal recourse by us. If any of our
confidential or proprietary information, such as our trade
secrets, were to be disclosed or misappropriated, or if any such
information was independently developed by a competitor, our
competitive position could be harmed.
We may infringe the intellectual property rights of
others, which may prevent or delay our product development
efforts and stop us from commercializing or increase the costs of
commercializing our products.
Our commercial success depends significantly on our ability to
operate without infringing the patents and other intellectual
property rights of third parties. For example, there could be
issued patents of which we are not aware that our products
infringe. There also could be patents that we believe we do not
infringe, but that we may ultimately be found to infringe.
Moreover, patent applications are in some cases maintained in
secrecy until patents are issued. The publication of discoveries
in the scientific or patent literature frequently occurs
substantially later than the date on which the underlying
discoveries were made and patent applications were filed. Because
patents can take many years to issue, there may be currently
pending applications of which we are unaware that may later
result in issued patents that our products infringe. For example,
pending applications may exist that provide support or can be
amended to provide support for a claim that results in an issued
patent that our product infringes.
Our software is built upon open-sourced code and platforms.
Nevertheless, there is a risk a third party may assert that we
are employing their proprietary technology without authorization.
If a court held that any third-party patents are valid,
enforceable and cover our products or their use, the holders of
any of these patents may be able to block our ability to
commercialize our products unless we obtained a license under the
applicable patents, or until the patents expire. We may not be
able to enter into licensing arrangements or make other
arrangements at a reasonable cost or on reasonable terms. Any
inability to secure licenses or alternative technology could
result in delays in the introduction of our products or lead to
prohibition of the manufacture or sale of products by us.
Risks Related to Ownership of Our Common
Stock
The price of our Common Stock may be volatile and may be
influenced by numerous factors, some of which are beyond our
control.
Factors that could cause volatility in the market price of our
Common Stock include, but are not limited to:
actual or anticipated fluctuations in our financial condition and
operating results;
actual or anticipated changes in our growth rate relative to our
competitors;
commercial success and market acceptance of UBI;
success of our competitors in discovering, developing or
commercializing products;
strategic transactions undertaken by us;
additions or departures of key personnel;
prevailing economic conditions;
disputes concerning our intellectual property or other
proprietary rights;
sales of our Common Stock by our officers, directors or
significant stockholders;
future sales or issuances of equity or debt securities by us;
business disruptions caused by earthquakes, tornadoes or other
natural disasters; and
issuance of new or changed securities analysts’ reports or
recommendations regarding us.
In addition, the stock markets in general have experienced
extreme volatility that has been often unrelated to the operating
performance of the issuer. These broad market fluctuations may
negatively impact the price or liquidity of our Common Stock. In
the past, when the price of a stock has been volatile, holders of
that stock have sometimes instituted securities class action
litigation against the issuer. If any of our stockholders were to
bring such a lawsuit against us, we could incur substantial costs
defending the lawsuit and the attention of our management would
be diverted from the operation of our business.
UBI Blockchain Internet LTD, a hong Kong Company controls
99.8% OF THE TOTAL VOTING POWER OF OUR CAPITAL that will allow
them to control the Company.
As of April 10, 2017, UBI Blockchain Internet Ltd., a Hong Kong
Company controls approximately 99.8% of the total voting power of
our outstanding capital stock. As a result, UBI Blockchain
Internet Ltd. will have the ability to control substantially all
matters submitted to our stockholders for approval including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our Articles of Incorporation or bylaws; and
d) adoption of measures that could delay or prevent a change in
control or impede a merger, takeover or other business
combination involving us.
As a result of its ownership UBI Blockchain Internet LTD, the
Hong Kong company has the ability to influence all matters
requiring shareholder approval, including the election of
directors and approval of significant corporate transactions. In
addition, the future prospect of sales of significant amounts of
shares held by UBI Blockchain Internet LTD, the Hong Kong company
could affect the market price of our common stock if the
marketplace does not orderly adjust to the increase in shares in
the market and the value of your investment in the Company may
decrease. UBI Blockchain Internet LTD, the Hong Kong company’s
stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us,
which in turn could reduce our stock price or prevent our
stockholders from realizing a premium over our stock price
Our Common Stock is or may become subject to the penny
stock rules of the SEC and the trading market in the securities
is limited, which makes transactions in the stock cumbersome and
may reduce the value of an investment in the stock.
Rule 15g-9 under the Exchange Act establishes the definition of a
penny stock, for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (a) that a broker or dealer
approve a person’s account for transactions in penny stocks; and
(b) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny
stocks, the broker or dealer must: (a) obtain financial
information and investment experience objectives of the person
and (b) make a reasonable determination that the transactions in
penny stocks are suitable for that person and the person has
sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prescribed by the SEC
relating to the penny stock market, which, in highlight form: (a)
sets forth the basis on which the broker or dealer made the
suitability determination; and (b) confirms that the broker or
dealer received a signed, written agreement from the investor
prior to the transaction. Generally, brokers may be less willing
to execute transactions in securities subject to the penny stock
rules. If our Common Stock is or becomes subject to the penny
stock rules, it may be more difficult for investors to dispose of
our Common Stock and cause a decline in the market value of our
Common Stock.
Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading
and about the commissions payable to both the broker or dealer
and the registered representative, current quotations for the
securities and the rights and remedies available to an investor
in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the
limited market in penny stocks.
BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR
COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A
RETURN ON THEIR SHARES UNLESS THEY SELL THEM.
We intend to retain any future earnings to finance the
development and expansion of our business. We do not anticipate
paying any cash dividends on our common stock in the foreseeable
future. Unless we pay dividends, our stockholders will not be
able to receive a return on their shares unless they sell them.
There is no assurance that stockholders will be able to sell
shares when desired.
Properties
Our Hong Kong offices are located in unit 03, level 9, Core F,
Smart Space, Block 3, Hong Kong Cyberport, 100 Cyberport Road,
Hong Kong, and our US mailing address is: 8250 W. Charleston
Blvd, Suite 110, Las Vegas, NV 89117. Our U. S. telephone number
is: (702) 544-0195.
The Company does not own any properties, but currently leases
office space at two locations in Qianhai of China, and London.
Legal Proceedings
From time to time, we may become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of
business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters
may arise from time to time that may harm our
business.
We are not presently a party to any material litigation, nor to
the knowledge of management is any litigation threatened against
us, which may materially affect us.
Submission of Matters to a Vote of Security Holders
We did not submit any matters to a vote of our security holders
during the past fiscal year.
(a) Market Information
UBI Blockchain Internet, LTD, $0.001 par value, can be found on
the OTC-Bulletin Board under the symbol: UBIA. The Stock was
first cleared for quotation on September 22, 2011.
There has been limited trading of the Companys stock, since it
was listed on the OTC-BB, there are no assurances that a market
will ever develop for the Company’s stock.
The following table sets forth the range of high and low trading
price information for the common stock during the quarterly
periods indicated (as retroactively adjusted for the January 20,
2016 1 for 200 reverse stock split).
|
Year ended August 31, 2016 |
High | Low | |||||||||||||
| First Quarter | $ | 20.00 | $ | 10.02 | |||||||||||
| Second Quarter | $ | 10.02 | $ | 10.02 | |||||||||||
| Third Quarter | $ | 1.01 | $ | 0.56 | |||||||||||
| Fourth Quarter | $ | 0.53 | $ | 0.53 | |||||||||||
|
Year ended August 31, 2015 |
High | Low | |||||||||||||
| First Quarter | $ | 10.00 | $ | 10.00 | |||||||||||
| Second Quarter | $ | 100.00 | $ | 10.00 | |||||||||||
| Third Quarter | $ | 100.00 | $ | 10.00 | |||||||||||
| Fourth Quarter | $ | 10.00 | $ | 10.00 | |||||||||||
(b) Holders of Common Stock
As of December 31, 2016, there were approximately one hundred
forty (140) holders of record of our Common Stock.
(c) Dividends
In the future we intend to follow a policy of retaining earnings,
if any, to finance the growth of the business and do not
anticipate paying any cash dividends in the foreseeable future.
The declaration and payment of future dividends on the Common
Stock will be the sole discretion of board of directors and will
depend on our profitability and financial condition, capital
requirements, statutory and contractual restrictions, future
prospects and other factors deemed relevant.
(d) Securities Authorized for Issuance under Equity Compensation
Plans
There are no outstanding grants or rights or any equity plan in
place.
(e) Recent Sales of Unregistered Securities
On October 3, 2016 the Company issued 30,000,000 shares of
unregistered restricted Class A Common Stock, 6,000,000 shares of
unregistered restricted Class B Voting Common Stock, which
carries a voting weight equal to ten (10) Common Shares and
40,000,000 shares of unregistered restricted Class C Common Stock
to UBI Blockchain Internet, LTD (UBI), a Hong Kong company, in
exchange for $200,000. These shares were issued in reliance on
the exemption under Section 4(2) of the Securities Act of 1933,
as amended (the Act) and were issued under Regulation S to one
(1) foreign entity who attested it is an accredited investor who
is not a citizen nor a resident of the USA.
(f) Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the
years ended August 31, 2016 or August 31, 2015.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Overview of Current Operations
This section includes a number of forward-looking statements that
reflect our current views with respect to future events and
financial performance. Forward-looking statements are often
identified by words like believe, expect, estimate, anticipate,
intend, project and similar expressions, or words which, by their
nature, refer to future events. You should not place undue
certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ
materially from our predictions. The following discussion should
be read in conjunction with our financial statements, including
the notes thereto, appearing elsewhere in this Prospectus. The
discussion of results, causes and trends should not be construed
to imply any conclusion that these results or trends will
necessarily continue into the future.
Results of Operations for the year ended August 31, 2016
versus the year ended August 31, 2015 and for the Quarter ending
November 30, 2016.
Expenses
During the fiscal year ended August 31, 2016, the Company had
total operating expenses of $13,079, as compared to total
operating expenses of $32,948 for the same period in 2015, a
decrease of $19,869 or 60.3%. The decrease in expenses
represented decreases in general and administrative expenses from
the same period last year. For the three month period ended
November 30, 2016, the Company had total operating expenses of
$75,869, as compared to total operating expenses of $13,256 for
the same period in 2015. The increase operating expenses were a
result of $25,000 in consulting fees and $31,369 in professional
fees.
Other income and expenses
On October 15, 2014, as part of an Irrevocable Asset and
Liability Exchange Agreement (the Agreement) Mr. James Lusk (the
largest debtor of JA Energy and its former CEO) agreed to
transfer as of March 31, 2014, all assets and liabilities from JA
Energy to the Subsidiary to the extent legally assignable. During
the year ended August 31, 2015 an asset with a book value of
$9,340, net of depreciation, and liabilities totaling $628,210
were transferred to Peak Energy Holdings. This transfer resulted
in other income of $618,870 for the year ended August 31, 2015.
On October 27, 2014 the Company entered into an agreement with
two former employees, one of whom was a former director of the
Company, whereby all parties agreed to release and hold harmless
from any liabilities that existed prior to the date of the
agreement. The result of this agreement was the forgiveness of
this debt by the former employees of $38,186 in compensation owed
to the employees which was recognized as other income during the
year ended August 31, 2015. Also, during the year ended August
31, 2015 the company recognized a gain of $21,122 related to the
forgiveness of two other payables. As a result, the Company
recognized a gain of $59,308 related to the forgiveness of
accounts payable.
For the year ended August 31, 2015 the company recognized
interest expense of $5,833 related to Notes Payable to the
Companys former CEO.
For year ended August 31, 2016 the Company had no other income or
expense.
Net loss
Based on the foregoing the Company had a net loss of $13,079 for
the year ended August 31, 2016 compared to income of $639,397 for
the same period in 2015. For the three month period ended
November 30, 2016 the Company had a net loss of $75,297 as
compared to a net loss of $13,256 for the same period last year.
Plan of Operation
Management does not believe that the Company will be able to
generate any significant profit during the coming year. The
Company’s need for capital may change dramatically if it can
generate additional revenues from its operations. There are no
assurances additional capital will be available to the Company on
acceptable terms.
Future funding could result in potentially dilutive issuances of
equity securities, the incurrence of debt, contingent liabilities
and/or amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the
Company’s business, results of operations and financial
condition. Any future acquisitions of other businesses,
technologies, services or product(s) might require the Company to
obtain additional equity or debt financing, which might not be
available on terms favorable to the Company, or at all, and such
financing, if available, might be dilutive.
Going Concern
The Company has an accumulated deficit since inception of
$4,554,259. The Company has not generated any meaningful revenues
to date, and its ability to continue as a going concern is
contingent upon the successful completion of additional financing
arrangements and its ability to achieve and maintain profitable
operations. Management plans to raise equity capital to finance
the operating and capital requirements of the Company. In October
2016, there was a change in control of the Company.
These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from
the outcome of this uncertainty.
Liquidity and Capital Resources
As of August 31, 2016, the Company had no assets but had current
liabilities of $146,602.
The Company has limited financial resources available, which has
had an adverse impact on the Company’s liquidity, activities and
operations. These limitations have adversely affected the
Company’s ability to obtain certain projects and pursue
additional business. The ability to raise necessary financing
will depend on many factors, including the nature and prospects
of any business to be acquired and the economic and market
conditions prevailing at the time financing is sought. No
assurances can be given that any necessary financing can be
obtained on terms favorable to the Company, or at all.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results or operations, liquidity, capital expenditures
or capital resources that is material to investors.
New Accounting Standards
Management has evaluated recently issued accounting
pronouncements through August 31, 2016 and concluded that they
will not have a material effect on future financial statements.
Quantitative and Qualitative Disclosures about Market
Risk.
Not applicable.
Director, Executive Officer and Corporate Governance.
The following table sets forth certain information regarding our
current director and executive officer. Our executive officers
serve one-year terms. Set forth below are the names, ages and
present principal occupations or employment, and material
occupations, positions, offices or employments for the past five
years of our current director and executive officer.
| Name | Age | Position Offices Held |
| Tony Liu | Chairman of the Board and CEO | |
| Chan Cheung | CFO, Corporate Secretary and Director | |
| Jun Min | Director | |
| Cosimo J. Patti | Director |
All of the above Directors and Officers were appointed to their
positions on January 3, 2017.
Set forth below is a brief description of the background and
business experience of our officers and directors.
Tony Liu, Chairman of the Board and CEO.
Mr. Tony Liu brings a great deal of management experience to UBI.
He has been Chairman of Hong Kong Silver Union Group Co., Ltd.,
since May, 2009. He is also a limited partner of Shenzhen Zhu Mao
Investment Enterprise since July, 2015.
Chan Cheung, Director, Chief Financial Officer and Corporate
Secretary
Mr. Chan Cheung brings to the management team over 30 years of
financial and accounting experience in banking, finance, and
management, before joining the Company. Mr. Chan was CFO, Chief
Compliance Officer, and corporate secretary of Neo-Neon Holdings
Ltd. (1868.HK). He obtained a BS degree from Chinese University
of Hong Kong in 1983, he is member of the Hong Kong Institute of
Certified Public Accountants and Association of Chartered
Certified Accountants.
Jun Min, Director
Mr. Jun Min has worked in the position of manager at Sanleyuan
Group, in Hong Kong since 1993. He has a BA Degree from Zhongyang
Broadcast TV University.
Cosimo J. Patti, Director
Mr. Cosimo Patti brings to the Company over 50-years in the
financial services industry, where is worked in a variety of
senior level positions. Mr. Patti was the President and Chairman
of Technology Integration Group, Inc. D/B/A FSI Advisors Group, a
global Financial Services (Bulletin Board listed TING) consulting
organization from 1999 to 2005. In May 2009, Mr. Patti was
appointed to the Board of Directors of China XD Plastics Company
Limited (NASDAQ:CXDC), a company engaged in the development,
manufacturing, and distribution of modified plastics primarily
for use in automotive applications. In June 2007, Mr. Patti
joined the Board of Directors of Advanced Battery Technologies,
Inc. (NASDAQ:ABAT). He was the Director of Strategic Cross-border
Business with Cedel Bank from 1996 to 1999. Since 1986, Mr. Patti
has served as an appointed arbitrator to the New York Stock
Exchange and the National Association of Securities Dealers
adjudicating cases involving client disputes and improprieties.
Mr. Patti attended Brooklyn College.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the Exchange Act), requires our executive officer and director,
and persons who beneficially own more than ten percent of our
common stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers, directors
and greater than ten percent beneficial owners are required by
SEC regulations to furnish us with copies of all Section 16(a)
forms they file. Based upon a review of the copies of such forms
furnished to us and written representations from our executive
officer and director, we believe that as of the date of this
report they were not current in his 16(a) reports.
Board of Directors
Our board of directors currently consists of four members. Our
directors serve one-year terms.
Audit Committee
The company does not presently have an Audit Committee. No
qualified financial expert has been hired because the company is
too small to afford such expense.
Code of Ethics
We have not adopted a Code of Ethics for the Board and any
salaried employees.
Committees and Procedures
| (1) |
The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size. |
| (2) |
The view of the Board of Directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the Board and the Company are so small. |
| (3) |
The members of the Board who acts as nominating committee is not independent, to the definition of independence of a national securities exchange registered to section 6(a) of the Act (15 U.S.C. 78f(a)). |
| (4) |
The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders. |
| (5) |
The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company. |
| (6) |
The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations. |
| (7) |
There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background. |
| (8) |
The nominating committee’s process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board. |
Limitation of Liability of Directors
To the fullest extent permitted by Delaware law, no director of
the corporation shall be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director. Without limiting the effect of the preceding
sentence, if the Delaware General Corporation Law is hereafter
amended to authorize the further elimination or limitation of the
liability of a director, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Executive Compensation
The following table sets forth certain compensation information
for: (i) each person who served as the chief executive officer of
our company at any time during the years ended August 31, 2016
and 2015, regardless of compensation level, and (ii) each of our
other executive officers, other than the chief executive officer,
serving as an executive officer at any time during 2015-2016.
Compensation information is shown for fiscal years 2016 and 2015.
Compensation Table
| Year | Compen- | ||||||||||||||||||||||||
| Principal | Ending | Salary | Bonus | Awards | sation | Total | |||||||||||||||||||
| Name | Position | Aug 31, | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||
| Barry Hall | CEO/CFO/Director | ||||||||||||||||||||||||
|
Appointed: Aug 30, 2013 Resigned: Jan. 3, 2017 |
|||||||||||||||||||||||||
| Frank Arnone | Secretary/Director | ||||||||||||||||||||||||
|
Appointed: Apr 10, 2014 Resigned: Jan. 3, 2017 |
|||||||||||||||||||||||||
We do not have any long-term compensation plans or stock option
plans.
Stock Option Grants
We did not grant any stock options to the executive officer or
director from inception through the year ended August 31, 2017,
nor through the interim period ending April 10, 2017.
Outstanding Equity Awards
We did not have any outstanding equity awards as of the year
ended August 31, 2017, nor through the interim period ending
April 10, 2017.
Option Exercises
There were no options exercised by our named executive officers
in the year ended August 31, 2017, nor through the interim period
ending April 10, 2017.
Potential Payments Upon Termination or Change in Control
We have not entered into any compensatory plans or arrangements
with respect to our named executive officers, which would in any
way result in payments to such officers because of his/her
resignation, retirement, or other termination of employment with
us, or any change in control of, or a change in his/her
responsibilities following a change in control.
Director Compensation
We did not pay our directors any compensation during the fiscal
years ended August 31, 2016 and August 31, 2015.
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect
to the beneficial ownership of our common stock as of April 10,
2017, for: a) each stockholder known by us to be the beneficial
owner of more than 5% of our outstanding shares of Class A common
stock or Class B common stock; b) each of our directors; c) each
of our named executive officers; and d) all of our directors and
executive officers as a group. We have determined beneficial
ownership in accordance with the rules of the U. S. Securities
and Exchange Commission. Except as indicated by the footnotes
below, we believe, based on the information furnished to us, that
the persons and entities named in the following table have sole
voting and investment power with respect to all shares of Class A
common stock or Class B common stock that they beneficially own.
Applicable percentage ownership is based on 30,217,046 shares of
Class A common stock and 6,000,000 shares of Class B common stock
outstanding at April 10, 2017 for a total 36,217,045 common
shares. With the exception of Class B shares, that can convert on
a 1-for-1 basis for fully paid and nonassessable Class A Common
Stock, at the option of the holder at any time upon written
notice to the Company and its authorized transfer agent, we do
not have any outstanding options, warrants or other securities
exercisable for or convertible into shares of our common stock.
| Shares Beneficially Owned | % of Total Voting Power (1) | |||||||||||||||||||||||||||||||||||
| Class A Common | Class B Common | |||||||||||||||||||||||||||||||||||
| Name of Beneficial Owner | Shares | % | Voting Shares | % | ||||||||||||||||||||||||||||||||
| Named Executive Officers and Directors: | ||||||||||||||||||||||||||||||||||||
|
Tony Liu (2) Chairman of the Board CEO |
30,000,000 |
99.3% |
60,000,000 |
100% | 99.8% | |||||||||||||||||||||||||||||||
|
Chan Cheung (3) Director, CFO, Corporate Secretary |
0.0% | 0.0% | 0.0% | |||||||||||||||||||||||||||||||||
|
Jun Min Director |
0.0% | 0.0% | 0.0% | |||||||||||||||||||||||||||||||||
|
Cosimo J. Patti(4) Director |
0.0% | 0.0% | 0.0% | |||||||||||||||||||||||||||||||||
| All executive officers and directors as a group (4 persons) |
30,000,000 |
99.3% |
60,000,000 |
100% | 99.8% | |||||||||||||||||||||||||||||||
(1) Percentage of total voting power represents voting power with
respect to all shares of our Class A Common Stock (30,217,046
issued and outstanding) and Class B Voting stock (6,000,000
shares issued and outstanding), as a single class. The holder of
our Class B Voting Stock is entitled to ten votes per share, and
holders of our Class A Common Stock are entitled to one vote per
share. The 6,000,000 Class B shares have voting rights equal to
60,000,000 common shares. Percentage of Total Voting Power is
calculated based on an aggregate of 90,217,046 (30,217,046 Class
A Common 60,000,000 Class B Voting Common) shares issued and
outstanding.
2) Tony Liu Tony Liu is the beneficial owner who exercises the
sole voting and dispositive powers with respect to the shares
owned and has the ultimate voting control over the shares held in
the name of UBI Blockchain Internet, LTD, a Hong Kong Company,
Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong
Kong, People’s Republic of China. This entity owns 30,000,000
Class A Common shares, 6,000,000 Class B Voting Shares, where
each Class B share carries the vote of ten (10) Class A Shares,
and 40,000,000 non voting Class C Common Shares.
3) Chan Cheung owns 100,000 non voting Class C Common Shares.
4) Cosimo J. Patti owns 500,000 non voting Class C Common Shares.
We believe that all persons named have full voting and investment
power with respect to the shares indicated, unless otherwise
noted in the table. Under the rules of the Securities and
Exchange Commission, a person (or group of persons) is deemed to
be a beneficial owner of a security if he or she, directly or
indirectly, has or shares the power to vote or to direct the
voting of such security, or the power to dispose of or to direct
the disposition of such security. Accordingly, more than one
person may be deemed to be a beneficial owner of the same
security. A person is also deemed to be a beneficial owner of any
security, which that person has the right to acquire within 60
days, such as options or warrants to purchase our common stock.
Change of Control
On October 3, 2016, the Company issued 30,000,000 unregistered
restricted Class A Common Stock and 6,000,000 unregistered
restricted Class B Voting Stock, which carries a voting weight
equal to ten (10) Common Shares from its treasury to UBI
Blockchain Internet, LTD, a Hong Kong Company. As a result, UBI
Blockchain Internet, LTD now has the voting power of
approximately 99.8% of the Company’s stock.
Certain Relationships and Related Transactions, and
Director Independence.
Transactions with related persons, promoters and certain
control persons.
The Company’s largest shareholder is UBI Blockchain Internet,
LTD, a Hong Kong Company that has the voting power of
approximately 99.8% of the Company’s stock. This entity is
beneficially owned and controlled by Tony Liu, the new Chairman
of the Board and CEO of the Company.
Director Independence
As the Company is quoted on the OTC-QB and it is not subject to
any director independence requirements.
August, 31, 2016 and August 31, 2015 Audited Financials
|
UBI Blockchain Internet, Ltd. formerly known as JA Energy |
||||||||
| Balance Sheets | ||||||||
| (Audited) | ||||||||
| August 31, | August 31, | |||||||
| ASSETS | ||||||||
| Total assets | $ | – | $ | – | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 68,419 | $ | 68,275 | ||||
| Advances from stockholder | 26,981 | 14,046 | ||||||
| Bank overdraft | 1,202 | 1,202 | ||||||
| Note payable – related party | 50,000 | 50,000 | ||||||
| Total current liabilities | 146,602 | 133,523 | ||||||
| Total liabilities | 146,602 | 133,523 | ||||||
| Stockholders’ deficit | ||||||||
|
Preferred stock, $0.001 par value, 5,000,000 shares authorized 1,000,000 shares issued |
||||||||
|
and outstanding as of August 31, 2016 and August 31, 2015 |
1,000 | 1,000 | ||||||
|
Common stock, $0.001 par value, |
||||||||
|
70,000,000 shares authorized, 217,046 Shares issued and outstanding as of |
||||||||
| August 31, 2016 and August 31, 2015 | ||||||||
| Additional paid-in capital | 4,315,919 | 4,315,919 | ||||||
| Stock subscription payable | 90,521 | 90,521 | ||||||
| Accumulated deficit | (4,554,259) | (4,541,180) | ||||||
| Total stockholders’ deficit | (146,602) | (133,523) | ||||||
| Total liabilities and stockholders’ deficit | $ | – | $ | – | ||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
F-1a
|
UBI Blockchain Internet, Ltd. formerly known as JA Energy |
|||||||
| Statements of Operations | |||||||
| (Audited) | |||||||
| For the year | For the year | ||||||
| ended | ended | ||||||
| August 31, 2016 | August 31, 2015 | ||||||
| Operating expenses: | |||||||
| General and administrative | $ | 13,079 | $ | 32,948 | |||
| Total operating expenses | 13,079 | 32,948 | |||||
| Other income (expenses): | |||||||
|
Forgiveness of accounts payable |
– | 59,308 | |||||
|
Transfer of assets and liabilities to spin-off company (Note 4) |
618,870 | ||||||
| Interest expense | – | (5,833) | |||||
| Total other income (expenses) | – | 672,345 | |||||
| Net income (loss) | $ | (13,079) | $ | 639,397 | |||
| Basic earnings (loss) per share | $ | (0.06) | $ | 2.95 | |||
| Diluted earnings (loss) per share | $ | (0.06) | $ | 2.95 | |||
| Weighted average number of common | |||||||
| shares outstanding – basic | 217,046 | 217,046 | |||||
| Weighted average number of common | |||||||
| shares outstanding – diluted | 217,046 | 217,046 | |||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
F-2a
| UBI Blockchain Internet, Ltd., formerly known as JA Energy | ||||||||||||||||||
| Statements of Stockholders’ Deficit | ||||||||||||||||||
| (Audited) | ||||||||||||||||||
| Additional | Stock | |||||||||||||||||
| Preferred Stock | Common Stock | Paid in | Subscription | Accumulated | Stockholders’ | |||||||||||||
| Shares | Amount | Shares | Amount | Capital | Payable | Deficit | Deficit | |||||||||||
| BALANCE, AUGUST 31, 2014 | 100,000 | $1,000 | 217,046 | $217 | $4,315,919 | $90,521 | $(5,180,577) | $(772,920) | ||||||||||
| Net income | – | – | – | – | – | – | 639,397 | 639,397 | ||||||||||
| BALANCE, AUGUST 31, 2015 | 100,000 | 1,000 | 217,046 | 217 | 4,315,919 | 90,521 | (4,541,180) | (133,523) | ||||||||||
| Net loss | – | – | – | – | – | – | (13,079) | (13,079) | ||||||||||
| BALANCE, AUGUST 31, 2016 | 100,000 | $1,000 | 217,046 | $217 | $4,315,919 |
$90,521 |
$(4,554,259) |
$(146,602) |
||||||||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
||||||||||||||||||
F-3a
|
UBI Blockchain Internet, Ltd. formerly known as JA Energy |
||||||||
| Statements of Cash Flows | ||||||||
| (Audited) | ||||||||
| For the year | For the year | |||||||
| ended | ended | |||||||
| August 31, 2016 | August 31, 2015 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (13,079) | $ | 639,397 | ||||
| Adjustments to reconcile net income (loss) | ||||||||
| to net cash used by operating activities: | ||||||||
| Write-off of intangible assets | ||||||||
| spin-off, net (note 4) | – | (613,036) | ||||||
| Forgiveness of accounts payable | – | (59,308) | ||||||
| Depreciation expense | – | 599 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expense | 144 | 18,302 | ||||||
| Net cash used by operating activities | (12,935) | (14,046) | ||||||
| FINANCING ACTIVITIES | ||||||||
| Advances from stockholder | 12,935 | 14,046 | ||||||
| Net cash provided by financing activities | 12,935 | 14,046 | ||||||
| NET CHANGE IN CASH | – | – | ||||||
| CASH AND CASH EQUIVALENTS – | ||||||||
| BEGINNING OF PERIOD | – | – | ||||||
| END OF PERIOD | $ | – | $ | – | ||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
F-4a
UBI Blockchain Internet, Ltd., formerly known as JA
Energy
Notes to Financial Statements
Years Ended August 31, 2016 and 2015
NOTE 1 ABOUT THE COMPANY
The Company was organized August 26, 2010 (Date of Inception)
under the laws of the State of Nevada, as JA Energy. The Company
was incorporated as a subsidiary of Reshoot Production Company, a
Nevada corporation. Reshoot Production Company was incorporated
October 31, 2007, and, at the time of spin off was listed on the
Over-the- Counter Bulletin Board.
On September 30, 2014, the Board of Directors passed a resolution
to form a new company called Peak Energy Holdings (Peak) with
each shareholder in the Company receiving one share of common of
Peak for each share of common stock in the Company and one share
of preferred stock of Peak for each share of preferred share of
the Company.
On November 9, 2014, the Company entered into an Irrevocable
Asset and Liability Exchange Agreement (the Agreement). The
Agreement dealt with the dividend spin-off JA Energy’s wholly
owned subsidiary, Peak Energy Holdings. At the JA Energy annual
shareholder meeting, held on September 30, 2014, the shareholders
of the Company approved the transfer of all of the assets and
liabilities of the Parent into a wholly owned subsidiary. The
subsidiary had the same characteristics and number of authorized
and issued shares as the Parent, whereby all Preferred and Common
shareholders in the Parent received a pro-rata stock dividend in
the subsidiary that is equal to the number of shares they owned
in the Parent on a one-for-one (1:1) basis. The major
shareholders of the Company entered into a separate agreement
with regards to the dividend spin-off. They agreed to and put
into effect the following points upon the dividend spin-off of
the Peak Energy Holdings from JA Energy:
|
Mr. James Lusk (the largest debtor of UBI Blockchain Internet, Ltd., formerly known as JA Energy) transferred all assets and liabilities, as of March 31, 2014, from JA Energy to the Subsidiary to the extent legally assignable. |
|
Two of the major shareholders in JA Energy transferred all ownership of their Preferred and Common stock held in the subsidiary to Mr. James Lusk. |
|
Mr. James Lusk transferred all of the common stock ownership he owned and controlled in JA Energy to the major shareholders. |
|
Mr. James Lusk provided a notarized signed letter addressed to the Company and auditor that he agreed to transfer all assets and liabilities, as of March 31, 2014, from the Parent to the Subsidiary to the extent legally assignable. |
|
JA Energy warranted that any new liabilities incurred on the books of JA Energy after April 1, 2014 would not be transferred to the subsidiary. |
|
JA Energy represented and warranted that there were no liabilities, actual or contingent, created in the subsidiary. Prior to the effective time of the transfer, the subsidiary would have no assets nor liabilities. |
|
JA Energy warranted that since April 1, 2014, with the exception of the Preferred voting shares, no other shares were issued, awarded or pledged to be issued. The number of common shares issued and outstanding in JA Energy at March 31, 2014 were the same number of the shares issued at the date of transfer. |
|
Upon the completion of the transfer of assets and liabilities, shares were exchanged and the subsidiary was divested from JA Energy and now operates independent as a separate entity of JA Energy with its own management; |
F-5a
|
Mr. James Lusk took control of Peak Energy Holdings, independent of JA Energy. |
|
All Parties indemnified and held harmless the other Parties from and against any and all losses, damages, liabilities, resulting or arising from these transactions |
The Agreement did not affect any other shareholders in the
Company who maintained their share ownership of JA Energy, and
have pro-rata ownership in Peak Energy Holdings following the
dividend spin-off.
On November 21, 2016, the Company reincorporated in Delaware
under the name UBI Blockchain Internet LTD.
NOTE 2 – GOING CONCERN
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course
of business. The Company has an accumulated deficit since
inception of $4,506,809. The Company has not generated any
meaningful revenues to date, and its ability to continue as a
going concern is contingent upon the successful completion of
additional financing arrangements and its ability to achieve and
maintain profitable operations. Management plans to raise equity
capital to finance the operating and capital requirements of the
Company. In October 2016 (see Note 12), there was a change in
control of the Company.
These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from
the outcome of this uncertainty.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
The relevant accounting policies are listed below.
Basis of Accounting
The basis is United States generally accepted accounting
principles.
Earnings per Share.
The basic earnings (loss) per share is calculated by dividing the
Company’s net income (loss) available to common shareholders by
the weighted average number of common shares issued and
outstanding during the year. The diluted earnings (loss) per
share is calculated by dividing the Company’s net income (loss)
available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number
of shares outstanding is the basic weighted number of shares
adjusted as of the first of the year for any potentially dilutive
debt or equity.
Cash and Cash Equivalents
The Company considers all short-term investments with a maturity
of three months or less at the date of purchase to be cash and
cash equivalents.
Use of Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results
could differ from those estimates.
F-6a
Income Taxes
The provision for income taxes is the total of the current taxes
payable and the net of the change in the deferred income taxes.
Provision is made for the deferred income taxes where differences
exist between the period in which transactions affect current
taxable income and the period in which they enter into the
determination of net income in the financial statements.
Revenue recognition
The Company recognizes revenue from product sales once all the
following criteria for revenue recognition have been met:
pervasive evidence that an agreement exists; the services have
been rendered; the fee is fixed and determinable and not subject
to refund or adjustment; and collection of the amount due is
reasonably assured. For the periods presented, the Company had no
revenues.
Year end
The Company’s fiscal year-end is August 31.
Reverse Stock Split
All references to numbers of shares of our common stock and
per-share information in the accompanying financial statements
have been adjusted retroactively to reflect the Companys 1-for-
200 reverse stock split effected on January 20, 2016. The par
value was not adjusted as a result of the reverse stock split.
Recent Accounting Pronouncements
The Companys management has evaluated recently issued accounting
pronouncements through August 31, 2016 and concluded that they
will not have a material effect on future financial statements.
NOTE 4 TRANSFER OF ASSETS AND LIABILITIES TO PEAK ENERGY HOLDINGS
In accordance with the Agreement described in Note 1 to these
financial statements, during the year ended August 31, 2015
certain assets with a book value of $9,340, net of depreciation,
and liabilities totaling $628,210 were transferred to Peak Energy
Holdings. This transfer resulted in other income of $618,870. In
addition to the $628,210 liabilities transferred to Peak,
approximately $68,090 of additional liabilities as of March 31,
2014 not legally assignable to Peak without the consent of the
respective debtors were the responsibility of Peak under the
Agreement. As of August 31, 2016 and 2015, accounts payable and
accrued liabilities include liabilities that are the
responsibility of Peak totaling $57,451 and $57,451,
respectively. The Company will contest any request for payment of
any of these pre-Agreement liabilities.
NOTE 5 – STOCKHOLDERS DEFICIT
At August 31, 2016, the Company was authorized to issue
70,000,000 shares of its $0.001 par value common stock and
5,000,000 shares of its $0.001 par value preferred stock. On
November 21, 2016 (see Note 12), the Company changed its
authorized capital stock.
During the year ended August 31, 2012, the Company committed to
issue a total of approximately 1,390 shares of common stock to
various parties for services rendered or other consideration
valued at a total of $90,521 based on the prevailing trading
price of the Companys common stock at the dates of the respective
commitments. The related expenses were recorded in the year ended
August 31, 2012 but the shares have never been issued.
F-7a
NOTE 6 – RELATED PARTY TRANSACTIONS
On October 15, 2014, a total amount of $617,475 owed to the
former CEO was transferred to Peak Energy Holding, in accordance
with the agreement described in Note 1 to these financial
statements. Included in this amount were notes payable and
accrued interest of $605,980, unpaid consulting fees of $9,550
and advances of $1,945.
As of August 31, 2016, the Company was obligated to Mr. Mark
DeStefano (DeStefano) for a $50,000 note payable and $26,981 for
payments made on behalf of the Company. DeStefano had voting
control of the Company from June 2014 (see Note 8) to October 24,
2016 (see Note 12) through his ownership of the 1,000,000 shares
of Voting Preferred Stock issued and outstanding (equivalent to
50,000,000 votes).
NOTE 7 – PROVISION FOR INCOME TAXES
The Company accounts for income taxes under FASB Accounting
Standard Codification ASC 740 Income Taxes. ASC 740 requires use
of the liability method. ASC 740 provides that deferred tax
assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, referred to as
temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently enacted tax
rates applied to taxable income in the periods in which the
deferred tax assets and liabilities are expected to be settled or
realized.
As of August 31, 2016, the Company had net operating loss carry
forwards of approximately $1,021,745 that may be available to
reduce future years taxable income through 2035. Future tax
benefits which may arise as a result of these losses have not
been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred
tax asset relating to these tax loss carry-forwards. Net
operating losses will begin to expire in 2031.
Components of net deferred tax assets, including a valuation
allowance, are as follows at August 31, 2016 and August 31, 2015:
|
August 31, |
August 31, 2015 | |
| Deferred tax assets: | ||
| Net operating loss carry forward | $ 1,021,745 | $ 1,008,666 |
| Total deferred taxes | $ 357,611 | $ 353,033 |
| Less: valuation allowance | (357,611) | (353,033) |
| Net deferred tax assets | $ – | $ – |
The valuation allowance for deferred tax assets as of August 31,
2016 was $357,611, as compared to $353,033 as of August 31, 2015.
In assessing the recovery of the deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the
generation of future taxable income in the periods in which those
temporary differences become deductible. Management considers the
scheduled reversals of future deferred tax assets, projected
future taxable income, and tax planning strategies in making this
assessment. As a result, management determined it was more likely
than not the deferred tax assets would not be realized as of May
31, 2016 and May 31, 2015.
F-8a
The provision for income taxes differs from the amount computed
by applying the statutory federal income tax rate to income
before provision for income taxes. The sources and tax effects of
the differences are as follows:
| U.S federal statutory rate | 35.0% | |
| Valuation reserve | (35.0%) | |
| Total | 0.0 % |
Current United States income tax laws limit the amount of loss
available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount
available to offset future taxable income may be limited.
NOTE 8 – NOTES PAYABLE Related Party
On April 4, 2014, the Company issued a One-year Promissory Note
(the Note) in the amount of $50,000 to Mark DeStefano (DeStefano)
(see Note 6). The Note bore interest at 12% percent per annum
with interest due each month. In the event that interest was not
paid within three days from the time it was due, the Note was to
be considered in default and was to be fully due and payable.
Additional consideration for the Note included the Chief
Executive Officer of the Company giving the note holder his
voting proxy for all of the shares he held with the exception of
voting on a tender offer or a sale of the Companys assets. As of
May 8, 2014, the Note was in default.
On May 5, 2014, the Company issued a second One-Year Promissory
Note (the Second Note) in the amount of $20,000 to the same
stockholder noted above. The Second Note was issued with the
restriction that the funds be used specifically to pay the
Companys Patent Counsel for fees to finalize certain patent
filings and was secured by all patents, and patent applications
held by the Company. The Second Note was to bear interest at 12%
percent per annum with interest due each month. In the event that
interest was not paid within three days from the time it was due
the Second Note would be considered in default and would be fully
due and payable.
On June 6, 2014, the Company received notices that it was in
default of the two Promissory Notes described above. Rather than
default on the Notes the Company issued 1,000,000 shares of
$0.001 par value Voting Preferred Stock in exchange for Notes
Payable totaling $20,000 plus forgiveness of interest totaling
$1,900. Additionally, the Company agreed to designate with the
State of Nevada Secretary of State that each share of preferred
carries the voting power of 50 common shares. Finally, the
shareholder agreed to cancel the shares upon full payment of the
$50,000 Note, without accrued interest and the sale of five units
of the MDU.
In October 2016 (see Note 12), the $50,000 note payable was
satisfied.
NOTE 9 OTHER INCOME AND EXPENSE
As described in Note 4, during the year ended May 31, 2015 an
asset with a book value of $9,340, net of depreciation, and
liabilities totaling $628,210 were transferred to Peak Energy
Holdings. This transfer resulted in other income of $618,870.
On October 27, 2014 the Company entered into an agreement with
two former employees, one of whom was a former director of the
Company, whereby all parties agreed to release and hold harmless
from any liabilities that existed prior to the date of the
agreement. The result of this agreement was the forgiveness by
the former employees of $38,186 in compensation owed to the
employees.
F-9a
NOTE 10 REVERSE STOCK SPLIT
On January 20, 2016, the Company effected a 1-for-200 reverse
stock split of its outstanding common stock, par value $0.001 per
share (the Reverse Stock Split). As a result of the Reverse Stock
Split, each two hundred shares of the Companys Common Stock
issued and outstanding immediately prior to the Reverse Stock
Split were automatically combined into and became one share of
common stock. No fractional shares were issued as a result of the
Reverse Stock Split and any stockholder who otherwise would have
been entitled to receive fractional shares and received an
additional share. Also, as a result of the Reverse Stock Split,
the per share exercise price of, and the number of shares of
common stock underlying our warrants outstanding immediately
prior to the Reverse Stock Split were automatically
proportionally adjusted based on the 1-for-200 split ratio in
accordance with the terms of such warrants. Share and per-share
amounts of the Companys commons stock and warrants included
herein have been adjusted to give effect to the Reverse Stock
Split. The Reverse Stock Split did not alter the par value of the
Common Stock, $0.001 per share, or modify any voting rights or
other terms of the common stock.
NOTE 11 EXCERCISABLE WARRANTS
On March 1, 2011, the Company received $15,000 as a loan from a
non-related third party. The loan was unsecured, payable on
demand and non-interest bearing. Effective March 19, 2013, the
debt was exchanged for warrants to purchase up to 6,000 shares of
common $.001 par value stock at $200 per share after March 19,
2014 and before March 19, 2017.
NOTE 12 SUBSEQUENT EVENTS
On September 15, 2016, the Company, with the approval of the
Board of Directors agreed to issue (issued October 3, 2016)
30,000,000 shares of unregistered restricted Class A Common
Stock, 6,000,000 shares of unregistered restricted Class B Voting
Common Stock, which carries a voting weight equal to ten (10)
Common Shares and 40,000,000 shares of unregistered restricted
Class C Common Stock to UBI Blockchain Internet, LTD (UBI), a
Hong Kong company, in exchange for $200,000. These shares were
issued in reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the Act) and were issued
under Regulation S to one (1) foreign entity who attested it is
an accredited investor who is not a citizen nor a resident of the
USA.
On September 26, 2016, to NRS 78.1955, the Board of Directors
approved the filing of a Certificate of Designation with the
Nevada Secretary of State to designate Class A, B and C common
shares, par value $0.001. Concurrently with the filing of this
Certificate of Designation, all Common Stock issued and
outstanding shall become Class A Common Stock. Class B Common
Stock carries a voting weight equal to ten (10) Common Shares.
The Class B shares can be converted into fully paid and
non-assessable Common Shares, on a one-to-one basis, at the
option of the holder at any time upon written notice to the
Company and its authorized transfer agent. Class C Common Stock
has no voting rights. Upon the conversion or other exchange of
all outstanding shares of Class B Common Stock into or for shares
of Class A Common Stock, all shares of Class C Common Stock shall
be automatically, without further action by any holder thereof,
converted into an identical number of fully paid and
non-assessable shares of Class A Common Stock on the date fixed
therefor by the Board of Directors that is no less than sixty-one
days and no more than one hundred and eighty days following such
conversion or exchange.
to the September 15, 2016 change in control agreement, a
representative of UBI paid into an attorney trust account
$150,000 on September 14, 2016 and $67,500 on October 11, 2016,
for a total of $217,500. The $217,500 consisted of $200,000 for
the newly issued shares of Class A, Class B Voting, and Class C
Common Stock and $17,500 for the payment of specific expenses.
F-10a
In September and October 2016, a total of $175,557 was paid from
the attorney trust account to:
| Mark DeStefano (in satisfaction of the $50,000 | |||||||
| note payable and the $26,981 advances | |||||||
| payable at August 31, 2016, and for the | |||||||
|
retirement of the 1,000,000 shares of Voting Preferred DeStefano |
$ | 112,000 | |||||
| Finder for Finder’s Fee | 20,000 | ||||||
| Directors of the Company for services | 15,000 | ||||||
| Entity controlled by DeStefano for services | 10,000 | ||||||
| OTC Markets Group, Inc. for fees | 12,500 | ||||||
| Auditor for audit fees | 5,000 | ||||||
| Other | 1,057 | ||||||
| Total | $ | 175,557 |
On November 21, 2016, the Company reincorporated in Delaware
under the name UBI Blockchain Internet LTD. and increased the
number of authorized shares from 75,000,000 to 200,000,000 shares
consisting of 130,000,000 authorized shares of Class A Common
Stock, 6,000,000 authorized shares of Class B Common Stock and
64,000,000 authorized shares of Class C Common Stock.
F-11a
November 30, 2016 Reviewed Financials
|
UBI Blockchain Internet Ltd. (formerly JA Energy) |
||||||||
| Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| November 30, | August 31, | |||||||
| ASSETS | ||||||||
| Prepaid expenses | $ | 9,000 | $ | – | ||||
| Total assets | $ | 9,000 | $ | – | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 67,134 | $ | 68,419 | ||||
| Advances from stockholder | – | 26,981 | ||||||
| Bank overdraft | – | 1,202 | ||||||
| Note payable – related party | – | 50,000 | ||||||
| Total current liabilities | 67,134 | 146,602 | ||||||
| Total liabilities | 67,134 | 146,602 | ||||||
| Stockholders’ deficit | ||||||||
|
Preferred stock, $0.001 par value, 5,000,000 shares authorized 0 and 1,000,000 shares |
||||||||
| issued and outstanding as of November 30 | ||||||||
| 2016 and August 31, 2016, respectively | – | 1,000 | ||||||
| Class A common stock, $0.001 par value, | ||||||||
|
130,000,000 shares authorized, 30,217,046 and 217,046 shares issued and |
||||||||
|
outstanding as of November 30, 2016 and August 31, 2016 respectively |
30,217 | 217 | ||||||
| Class B Common stock, $0.001 par value, | ||||||||
|
6,000,000 shares authorized, 6,000,000 Shares issued and outstanding as of November 30, 2016 |
6,000 | – | ||||||
| Class C Common stock, $0.001 par value, | ||||||||
|
64,000,000 shares authorized, -0- shares issued and outstanding as of November 30, |
– | |||||||
| Additional paid-in capital | 4,444,684 | 4,315,919 | ||||||
| Stock subscription payable | 90,521 | 90,521 | ||||||
| Accumulated deficit | (4,629,556) | (4,554,259) | ||||||
| Total stockholders’ deficit | (58,134) | (146,602) | ||||||
| Total liabilities and stockholders’ deficit | 9,000 | $ | – | |||||
|
The accompanying notes are an integral part of these financial statements. |
F-1b
|
UBI Blockchain Internet Ltd. (formerly JA Energy) |
|||||||
| Statements of Operations | |||||||
| (Unaudited) | |||||||
| For the three months | For the three months | ||||||
| ended | ended | ||||||
| November 30, 2016 | November 30, 2015 | ||||||
| Operating expenses: | |||||||
| Professional fees | $ | 31,369 | $ | 6,293 | |||
|
Consulting fees paid to related parties |
25,000 | – | |||||
|
Other general and administrative |
19,500 | 6,963 | |||||
| Total operating expenses | 75,869 | 13,256 | |||||
| Other income (expenses): | |||||||
|
Gain on settlement of bank overdraft |
572 | – | |||||
| Total other income (expenses) | 572 | – | |||||
| Net income (loss) | $ | (75,297) | $ | (13,256) | |||
| Basic earning (loss) per share | $ | (0.00) | $ | (0.06) | |||
| Diluted earnings (loss) per share | $ | (0.00) | $ | (0.06) | |||
| Weighted average number of common | |||||||
| shares outstanding – basic | 30,464,249 | 217,046 | |||||
| Weighted average number of common | |||||||
| shares outstanding – diluted | 30,464,249 | 217,046 | |||||
|
The accompanying notes are an integral part of these financial statements. |
F-2b
|
UBI Blockchain Internet Ltd. (formerly JA Energy) |
|||||||||||||||
| Statements of Cash Flows | |||||||||||||||
| (Unaudited) | |||||||||||||||
| For the three months | For the three months | ||||||||||||||
| ended | ended | ||||||||||||||
| November 30, 2016 | November 30, 2015 | ||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||
| Net income (loss) | $ | (75,297) | $ | (13,256) | |||||||||||
| Adjustments to reconcile net income (loss) | |||||||||||||||
| to net cash used by operating activities: | |||||||||||||||
| Gain on settlement of bank overdraft | (572) | – | |||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Prepaid expenses | (9,000) | – | |||||||||||||
| Bank Overdraft | (630) | – | |||||||||||||
|
Accounts payable and accrued liabilities |
(1,285) | 11,256 | |||||||||||||
| Net cash used by operating activities | (86,784) | (2,000) | |||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||
| Advances from stockholder | 1,285 | 2,000 | |||||||||||||
| Repayment of advances from stockholder | (28,266) | – | |||||||||||||
| Repayment of note payable – related party | (50,000) | – | |||||||||||||
| Buyback of preferred stock | (33,735) | – | |||||||||||||
| Proceeds from sale of common stock | 180,000 | – | |||||||||||||
| Contributed capital | 17,500 | – | |||||||||||||
| Net cash provided by financing activities | 86,784 | 2,000 | |||||||||||||
| NET CHANGE IN CASH | – | – | |||||||||||||
| CASH AND CASH EQUIVALENTS – | |||||||||||||||
| BEGINNING OF PERIOD | – | – | |||||||||||||
| END OF PERIOD | $ | – | $ | – | |||||||||||
|
The accompanying notes are an integral part of these financial statements. |
|||||||||||||||
F-3b
UBI Blockchain Internet Ltd.
(Formerly JA Energy)
Notes to Financial Statements
Three Months Ended November 30, 2016 and 2015
(Unaudited)
NOTE 1 ABOUT THE COMPANY
The Company was organized August 26, 2010 (Date of Inception)
under the laws of the State of Nevada, as JA Energy. The Company
was incorporated as a subsidiary of Reshoot Production Company, a
Nevada corporation. Reshoot Production Company was incorporated
October 31, 2007, and, at the time of spin off was listed on the
Over-the- Counter Bulletin Board. On November 21, 2016 the
Company reincorporated in Delaware under the name UBI Blockchain
Internet Ltd.
On September 30, 2014, the Board of Directors passed a resolution
to form a new company called Peak Energy Holdings (Peak) with
each shareholder in the Company receiving one share of common of
Peak for each share of common stock in the Company and one share
of preferred stock of Peak for each share of preferred share of
the Company.
On November 9, 2014, JA Energy (the Company) entered into an
Irrevocable Asset and Liability Exchange Agreement (the
Agreement). The Agreement dealt with the dividend spin-off JA
Energy’s wholly owned subsidiary, Peak Energy Holdings. At the
JA Energy annual shareholder meeting, held on September 30, 2014,
the shareholders of the Company approved the transfer of all of
the assets and liabilities of the Parent into a wholly owned
subsidiary. The subsidiary had the same characteristics and
number of authorized and issued shares as the Parent, whereby all
Preferred and Common shareholders in the Parent received a
pro-rata stock dividend in the subsidiary that is equal to the
number of shares they owned in the Parent on a one-for-one (1:1)
basis. The major shareholders of the Company entered into a
separate agreement with regards to the dividend spin-off. They
agreed to and put into effect the following points upon the
dividend spin-off of the Peak Energy Holdings from JA Energy:
|
Mr. James Lusk (the largest debtor of JA Energy) transferred all assets and liabilities, as of March 31, 2014, from JA Energy to the Subsidiary to the extent legally assignable. |
|
Two of the major shareholders in JA Energy transferred all ownership of their Preferred and Common stock held in the subsidiary to Mr. James Lusk. |
|
Mr. James Lusk transferred all of the common stock ownership he owned and controlled in JA Energy to the major shareholders. |
|
Mr. James Lusk provided a notarized signed letter addressed to the Company and auditor that he agreed to transfer all assets and liabilities, as of March 31, 2014, from the Parent to the Subsidiary to the extent legally assignable. |
|
JA Energy warranted that any new liabilities incurred on the books of JA Energy after April 1, 2014 would not be transferred to the subsidiary. |
|
JA Energy represented and warranted that there were no liabilities, actual or contingent, created in the subsidiary. Prior to the effective time of the transfer, the subsidiary would have no assets nor liabilities. |
|
JA Energy warranted that since April 1, 2014, with the exception of the Preferred voting shares, no other shares were issued, awarded or pledged to be issued. The number of common shares issued and outstanding in JA Energy at March 31, 2014 were the same number of the shares issued at the date of transfer. |
F-4b
|
Upon the completion of the transfer of assets and liabilities, shares were exchanged and the subsidiary was divested from JA Energy and now operates independent as a separate entity of JA Energy with its own management; |
|
Mr. James Lusk took control of Peak Energy Holdings, independent of JA Energy. |
|
All Parties indemnified and held harmless the other Parties from and against any and all losses, damages, liabilities, resulting or arising from these transactions |
The Agreement did not affect any other shareholders in the
Company who maintained their share ownership of JA Energy, and
have pro-rata ownership in Peak Energy Holdings following the
dividend spin-off.
On September 15, 2016, the Company, with the approval of the
Board of Directors agreed to issue (issued October 7, 2016)
30,000,000 shares of unregistered restricted Class A Common
Stock, 6,000,000 shares of unregistered restricted Class B Voting
Common Stock, which carries a voting weight equal to ten (10)
Common Shares, and 40,000,000 shares of unregistered restricted
Class C Common Stock to UBI Blockchain Internet, LTD (UBI), a
Hong Kong company, in exchange for $200,000. On September 26,
2016, to NRS 78.1955, the Board of Directors approved the filing
of a Certificate of Designation with the Nevada Secretary of
State to designate Class A, B and C common shares, par value
$0.001. Concurrently with the filing of this Certificate of
Designation, all Common Stock issued and outstanding shall become
Class A Common Stock. Class B Common Stock carries a voting
weight equal to ten (10) Common Shares. The Class B shares can be
converted into fully paid and non-assessable Common Shares, on a
one-to-one basis, at the option of the holder at any time upon
written notice to the Company and its authorized transfer agent.
Class C Common Stock has no voting rights. Upon the conversion or
other exchange of all outstanding shares of Class B Common Stock
into or for shares of Class A Common Stock, all shares of Class C
Common Stock shall be automatically, without further action by
any holder thereof, converted into an identical number of fully
paid and non-assessable shares of Class A Common Stock on the
date fixed therefor by the Board of Directors that is no less
than sixty-one days and no more than one hundred and eighty days
following such conversion or exchange.
On October 7, 2016, the 30,000,000 Class A shares and 6,000,000
Class B shares were issued. On November 21, 2016, the Company
reincorporated in Delaware under the name UBI Blockchain Internet
LTD. and increased the number of authorized shares from
75,000,000 to 200,000,000 shares consisting of 130,000,000
authorized shares of Class A Common Stock, 6,000,000 authorized
shares of Class B Common Stock and 64,000,000 authorized shares
of Class C Common Stock. On December 9, 2016, 40,000,000 shares
of Class C shares were issued. All of the preceding shares were
issued in reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the Act) and were issued
under Regulation S to one (1) foreign entity who attested it is
an accredited investor who is not a citizen nor a resident of the
USA.
NOTE 2 – GOING CONCERN
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course
of business. The Company has an accumulated deficit since
inception of $4,629,556. The Company has not generated any
meaningful revenues to date, and its ability to continue as a
going concern is contingent upon the successful completion of
additional financing arrangements and its ability to achieve and
maintain profitable operations. Management plans to raise equity
capital to finance the operating and capital requirements of the
Company. As described above, there was a change in control of the
Company in October 2016.
F-5b
These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from
the outcome of this uncertainty.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
The relevant accounting policies are listed below.
Basis of Accounting
The basis is United States generally accepted accounting
principles.
Earnings per Share.
The basic earnings (loss) per share is calculated by dividing the
Company’s net income (loss) available to common shareholders by
the weighted average number of common shares issued and
outstanding during the year. The diluted earnings (loss) per
share is calculated by dividing the Company’s net income (loss)
available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number
of shares outstanding is the basic weighted number of shares
adjusted as of the first of the year for any potentially dilutive
debt or equity.
Cash and Cash Equivalents
The Company considers all short-term investments with a maturity
of three months or less at the date of purchase to be cash and
cash equivalents.
Use of Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results
could differ from those estimates.
Income Taxes
The provision for income taxes is the total of the current taxes
payable and the net of the change in the deferred income taxes.
Provision is made for the deferred income taxes where differences
exist between the period in which transactions affect current
taxable income and the period in which they enter into the
determination of net income in the financial statements.
Revenue recognition
The Company recognizes revenue from product sales once all the
following criteria for revenue recognition have been met:
pervasive evidence that an agreement exists; the services have
been rendered; the fee is fixed and determinable and not subject
to refund or adjustment; and collection of the amount due is
reasonably assured. For the periods presented, the Company had no
revenues.
Year end
The Company’s fiscal year-end is August 31.
Reverse Stock Split
All references to numbers of shares of our common stock and
per-share information in the accompanying financial statements
have been adjusted retroactively to reflect the Companys 1-for-
200 reverse stock split effected on January 20, 2016. The par
value was not adjusted as a result of the reverse stock split.
Recent Accounting Pronouncements
The Companys management has evaluated recently issued accounting
pronouncements through November 30, 2016 and concluded that they
will not have a material effect on future financial statements.
F-6b
NOTE 4 TRANSFER OF ASSETS AND LIABILITIES TO PEAK ENERGY HOLDINGS
In accordance with the Agreement described in Note 1 to these
financial statements, during the year ended August 31, 2015
certain assets with a book value of $9,340, net of depreciation,
and liabilities totaling $628,210 were transferred to Peak Energy
Holdings. This transfer resulted in other income of $618,870. In
addition to the $628,210 liabilities transferred to Peak,
approximately $68,090 of additional liabilities as of March 31,
2014 not legally assignable to Peak without the consent of the
respective debtors were the responsibility of Peak under the
Agreement. As of November 30, 2016 and August 31, 2015, accounts
payable and accrued liabilities include liabilities that are the
responsibility of Peak totaling $55,406 and $57,541,
respectively. The Company will contest any request for payment of
any of these pre-Agreement liabilities.
NOTE 5 – STOCKHOLDERS DEFICIT
The Company is authorized to issue 130,000,000 shares of its
$0.001 par value Class A common stock, 6,000,000 shares of its
$0.001 par value Class B common stock, 64,000,000 shares of its
$0.001 par value Class C common stock and 5,000,000 shares of its
$0.001 par value preferred stock.
to the September 15, 2016 change in control agreement, a
representative of UBI paid into an attorney trust account
$150,000 on September 14, 2016 and $67,500 on October 11, 2016,
for a total of $217,500. The $217,500 consisted of $200,000 for
the newly issued shares of Class A, Class B Voting, and Class C
Common Stock and $17,500 for the payment of specific expenses.
During the year ended August 31, 2012, the Company committed to
issue a total of approximately 1,390 shares of common stock to
various parties for services rendered or other consideration
valued at a total of $90,521 based on the prevailing trading
price of the Companys common stock at the dates of the respective
commitments. The related expenses were recorded in the year ended
August 31, 2012 but the shares have never been issued.
NOTE 6 – RELATED PARTY TRANSACTIONS
As described in Note 8, the Company was obligated to Mr. Mark
DeStefano (DeStefano) for a $50,000 note payable and $26,981 for
payments made on behalf of the Company. Subsequently, Mr.
DeStefano advanced $1,285 to the Company. During the three months
ended November 30, 2016 the Company satisfied these obligations.
DeStefano had voting control of the Company from June 2014 (see
Note 8) to October 24, 2016 (see Note 12) through his ownership
of the 1,000,000 shares of Voting Preferred Stock issued and
outstanding (equivalent to 50,000,000 votes).
For the three months ended November 30, 2016, consulting fees
paid to related parties consists of a total of $15,000 paid to
the two then directors of the Company and $10,000 paid to an
entity controlled by DeStefano.
NOTE 7 – PROVISION FOR INCOME TAXES
The Company accounts for income taxes under FASB Accounting
Standard Codification ASC 740 Income Taxes. ASC 740 requires use
of the liability method. ASC 740 provides that deferred tax
assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, referred to as
temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently enacted tax
rates applied to taxable income in the periods in which the
deferred tax assets and liabilities are expected to be settled or
realized.
As of November 30, 2016, the Company had net operating loss carry
forwards of approximately $1,097,042 that may be available to
reduce future years taxable income through 2036. Future tax
benefits which may arise as a result of these losses have not
been recognized in these financial statements as their
realization has not been determined likely to occur. Also, due to
the change in control, there are annual limitation on future net
operating loss carry forward deductions.
F-7b
NOTE 8 – NOTES PAYABLE Related Party
On April 4, 2014, the Company issued a One-year Promissory Note
(the Note) in the amount of $50,000 to Mark DeStefano (DeStefano)
(see Note 6). The Note bore interest at 12% percent per annum
with interest due each month. In the event that interest was not
paid within three days from the time it was due the Note was to
be considered in default and was to be fully due and payable.
Additional consideration for the Note included the Chief
Executive Officer of the Company giving the note holder his
voting proxy for all of the shares he held with the exception of
voting on a tender offer or a sale of the Companys assets. As of
May 8, 2014, the Note was in default.
On May 5, 2014, the Company issued a second One-Year Promissory
Note (the Second Note) in the amount of $20,000 to the same
stockholder noted above. The Second Note was issued with the
restriction that the funds be used specifically to pay the
Companys Patent Counsel for fees to finalize certain patent
filings and was secured by all patents, and patent applications
held by the Company. The Second Note was to bear interest at 12%
percent per annum with interest due each month. In the event that
interest was not paid within three days from the time it was due
the Second Note would be considered in default and would be fully
due and payable.
On June 6, 2014, the Company received notices that it was in
default of the two Promissory Notes described above. Rather than
default on the Notes the Company issued 1,000,000 shares of
$0.001 par value Voting Preferred Stock in exchange for Notes
Payable totaling $20,000 plus forgiveness of interest totaling
$1,900. Additionally, the Company agreed to designate with the
State of Nevada Secretary of State that each share of preferred
carries the voting power of 50 common shares. Finally, the
shareholder agreed to cancel the shares upon full payment of the
$50,000 Note, without accrued interest and the sale of five units
of the MDU.
In October 2016, the $50,000 note payable was satisfied.
NOTE 9 OTHER INCOME AND EXPENSE
During the three months ended November 30, 2016, the Company
settled a bank overdraft of $942 for $370. This settlement
resulted in income of $572.
NOTE 10 REVERSE STOCK SPLIT
On January 20, 2016, the Company effected a 1-for-200 reverse
stock split of its outstanding common stock, par value $0.001 per
share (the Reverse Stock Split). As a result of the Reverse Stock
Split, each two hundred shares of the Companys Common Stock
issued and outstanding immediately prior to the Reverse Stock
Split were automatically combined into and became one share of
common stock. No fractional shares were issued as a result of the
Reverse Stock Split and any stockholder who otherwise would have
been entitled to receive fractional shares received an additional
share. Also, as a result of the Reverse Stock Split, the per
share exercise price of, and the number of shares of common stock
underlying our warrants outstanding immediately prior to the
Reverse Stock Split were automatically proportionally adjusted
based on the 1-for-200 split ratio in accordance with the terms
of such warrants. Share and per-share amounts of the Companys
common stock and warrants included herein have been adjusted to
give effect to the Reverse Stock Split. The Reverse Stock Split
did not alter the par value of the Common Stock, $0.001 per
share, or modify any voting rights or other terms of the common
stock.
NOTE 11 EXCERCISABLE WARRANTS
On March 1, 2011, the Company received $15,000 as a loan from a
non-related third party. The loan was unsecured, payable on
demand and non-interest bearing. Effective March 19, 2013, the
debt was exchanged for warrants to purchase up to 6,000 shares of
common $.001 par value stock at $200 per share after March 19,
2014 and before March 19, 2017.
F-8b
About UBI BLOCKCHAIN INTERNET, LTD. (OTCBB:UBIA)
UBI Blockchain Internet, LTD., formerly JA Energy, is a shell company. The Company is engaged in developing a suite of products with a view of finding global energy solutions. The Company was in the business of designing modular, self-contained, fully automated, climate controlled units for distributed production of energy. The Company manufactures micro-production solutions that may be implemented in a range of contexts, from ethanol micro-production facilities to urban greenhouse gardens to third-world farming communities. The Company has not generated any revenues. UBI BLOCKCHAIN INTERNET, LTD. (OTCBB:UBIA) Recent Trading Information
UBI BLOCKCHAIN INTERNET, LTD. (OTCBB:UBIA) closed its last trading session 00.00 at 4.00 with 145 shares trading hands.
