Item
2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
The
Sale and Purchase Agreement and Related Transactions
:
Liu
Jun is the president, secretary and a director of Asia Equity Exchange Group, Inc.(AEEX). He is also a director of Yinfu International
Enterprise Limited, which is the wholly owned subsidiary of Asia Equity Exchange Group Company Ltd. (AEEGCL). He is familiar with
the equity investment and financial information service platform, which is operated by AEEGCL. Mr. Liu was also a former business
associate of the three primary affiliates of AEEGCL. Ma Ning, Wang Zhong and Qi Jian. Based on his relationship with these individuals
and his knowledge of the AEEGCL business platform, he decided to proceed with the acquisition. Following his appointment as president
of AEEX, he negotiated with and completed the acquisition of AEEGCL. No third parties, brokers or agents played any role in arranging
or facilitating the transactions and no benefits of any description were given to any third parties.
On
July 6, 2015, in anticipation of the reverse merger between the Company and AEEGCL, Liu Jun resigned as a director of AEEGCL and
was appointed as the president, secretary and a director of AEEX and Mr. Peng Tao was appoint as a director of AEEX. Additionally,
as part of the proposed reverse merge, on July 22, 2015, the Company filed an Amendment to its articles of Incorporation with
the Nevada Secretary of State changing its name from I In The Sky to Asia Equity Exchange Group. Being familiar with the platform
and recognizing its value and prospect, he proposed acquisition in order to improve the operation of the Company and bring more
benefits for the Company’s shareholders, and it is finally accepted by up to 93.8% shareholders of the Company in the shareholder
resolution. On April 12, 2016, the Company completed the acquisition of AEEGCL. With reference to the Company’s prior business,
the manufacture and marketing of low cost GPS tracking devices and software to businesses and families, the Company found that
sufficient capital was not available.
Execution
of the Agreement was the first stage of the planned acquisition. Pursuant to the Agreement, closing was to occur on January 31,
2016. Closing was contingent upon an audit of the shares and assets of AEEGCL. All shares issued pursuant to the Agreement were
held in escrow and deemed to be in the full control of the Company until the closing. By agreement of the parties, the closing
was initially delayed until March 31, 2016, and has been further delayed until April 12, 2016.
As
of April 12, 2016 the parties have now satisfied all of the closing conditions and we completed the terms of the Agreement. With
the filing of this report, the closing is now considered completed, and all shares issued pursuant to the Agreement have been
delivered to AEEGCL. This constituted a change of control and reverse merger.
As
a result of the closing, the Company has terminated its previous business plan, and we are now pursuing the historical business
of AEEGCL. AEEGLC is an international equity service platform designed to provide equity investment financing information services
to enterprises in the countries and regions of Asia.
Identity
of the Persons Acquiring Control
As
of April 12, 2016, the date of the closing, all assets of AEEGCL and shares and documents required pursuant to the Agreement were
delivered to the Company and the 1,000,000,000 shares were delivered out of escrow to the following entities in the amounts and
percentages set opposite their names.
Blue
Tech Holding Limited
|
700,000,000
Common Shares
|
61.08%
|
Ma
Ning (Beneficial Owner)
Room
1504, No.11,
Sheng
Shi Hua Cheng,
Yinzhou
District, Ningbo
Zhejiang,
China
|
|
|
Honest
Billion Investment Limited
|
200,000,000
Common Shares
|
17.45%
|
Wang
Zhong, (Beneficial Owner)
No.
1701, Building E,
Fu
Tong Hao Wang Jiao
Central,
BaoAn District, Shenzhen,
Guangdong,
China
|
|
|
Qi
Jian
|
100,000,000
Common Shares
|
8.7%
|
Unit
B, 5/F, CKK Commercial Centre
289
Hennessy Road
Wanchai
Hong Kong
This
constituted a change of control of the Company.
|
|
|
Form
10 Information
Prior
to the closing of the Agreement, the Company had nominal operations. We were deemed a “shell company,” as defined
in Rule 12b-2 of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder (“Exchange
Act”), and are filing in light of the lack of operations prior to the completion of the Agreement. With the resulting change
in our business, we are voluntarily providing the information as is required pursuant to Item 2.01(f) of Form 8-K as if we were
filing a general form for registration of securities on Form 10 under the Exchange Act for our common stock, which is the only
class of our securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation
of the Agreement.
Description
of Business
Asia
Equities Exchange Group, Inc. was incorporated in the State of Nevada on July 15, 2013, under the name “I In The Sky, Inc.”
to manufacture and market low cost GPS tracking devices and software to businesses and families. We no longer pursue opportunities
related to GPS positioning. Our name change to Asia Equity Exchange Group, Inc. was filed with the state of Nevada on July 22,
2015.
We
have a fiscal year end of December 31. The business office is located at Unit B, 5/F., CKK Commercial Centre, 289 Hennessy Road,
Wanchai, Hong Kong and the telephone number is 852-2845 2281.
Prior
to the date of this filing, the Company was a “shell company” within the meaning of Rule 405, promulgated pursuant
to the Securities Act, because we had nominal assets and operations. Accordingly, the ability of holders of our common stock to
re-sell their shares may be limited by applicable regulations. Specifically, Rule 144 would not be available for the resale of
restricted securities by our stockholders until we have complied with the requirements of Rule 144(i).
Following
the April 12, 2016 closing under the Agreement to acquire 100% of the shares and assets of Asia Equity Exchange Group Company
Ltd., dated November 30, 2015, the Company will no longer be designated as a shell company.
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2013 (the “JOBS Act”)
and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.
Current
Business
Effective
November 30, 2015, AEEX executed an Agreement to acquire 100% of the shares and assets of AEEGCL, a company incorporated under
the laws of Samoa. AEEGCL is an international equity assistance and information service platform designed to provide listing assistance
services, equity investment financing information and public relationship services to enterprises in the countries and regions
of Asia.
Pursuant
to the Agreement, the Company agreed to issue one billion (1,000,000,000) restricted common shares of the Company to the owners
of AEEGCL
Currently
twelve client companies are listed with us, and an additional forty companies are in the process of preparing the necessary documents
for listing with us. All companies currently listed with us so far are located in China, as are the additional companies in the
listing process.
Our
listing services refers to companies wanting to join our equity investment and financing information dissemination platform. Medium
and small-sized enterprises in Asia can apply to list with us, but our current focus is on helping companies in China, which seek
financing and increased public awareness of what they offer. Our services for companies that list with us relate primarily to
markets and regulatory structures in China, but we plan to offer our services in other Asian countries where we can assist with
a company’s public and investor awareness and investor relationship needs and with their financing needs. Where we can,
we will assist companies by finding appropriate legal representation as well as accounting services. We do not work with companies
planning to become SEC reporting companies or that want to begin trading on U.S. markets. We feel there are numerous US-based
law firms and American consulting services that are better equipped to deal with those services.
In
order to be taken on as a client, we conduct a strict due diligence of the potential client’s business, its history and
management. Clients must disclose audited financial statements and legal opinions in accordance with international standards issued
by a professional third party institution. They are also required to conform to strict standards for discloser of information
after listing, which helps to facilitate their connections to international capital markets.
Client
Qualifications
:
To be a qualified applicant for listing with AEEX, a potential client must:
1.
Be established and validly existing pursuant to relevant laws and regulations in a country or region in Asia;
2.
Demonstrate that they have a good business reputation and operating performance, and comply with professional ethics;
3.
Have an experienced quality and stable management team and operation;
4.
Have a sustainable operating project with the expectation of a good return on investment;
5.
Have not breached any law or regulation in a material respect, or have received any administrative penalty from a regulatory body
or other department in the past twenty four months;
6.
Acknowledge and comply with relevant rules of the AEEX, and pay fees relating to our client enterprise listing services;
7.
Pass a professional qualification review conducted by AEEX, and pay fees relating to such review.
It
is important to note that AEEX is not now nor does it intend to be a trading market or provide quotations services for its clients.
It is a platform designed solely for equity investment information and financing information services. It facilitates connections
and negotiations between investors and project management. AEEX assists investors seeking investment opportunities and companies
seeking international investment.
Since
August 2015, we have carried out a number of roadshows in various cities such as Shenyang, Dalian, Faku, Shanghai, Hangzhou, Fuzhou
and Shenzhen, which have extended our influence and enhanced our brand recognition. We plan to continue our all-round roadshows
at regional, national and international levels to further increase awareness of our brand and advance our business development.
Many
small and medium sized enterprises throughout Asia seek to take advantages of the potential offered by becoming a publicly traded
company. Greater public awareness, and the corresponding increased ability to have access to financing through international investment
channels can make the transition from private to public company status a means by which a company can create real growth.
However,
many enterprises may not be familiar with public company listing requirements and financing methods overseas. Management of these
small to medium-sized companies find the rules and regulations difficult to comprehend, may consider the intricacies and potential
costs too difficult to overcome, and are unable to realize the full potential of their enterprise.
In
addition, the jurisdictions into which these companies might want to move may speak different languages and will have different
securities laws and legal requirements.
To
assist these enterprises, we have developed a program to seek out and engage local personnel with legal, regulatory and language
expertise in those jurisdictions. We work to identify qualified personnel through a careful vetting and due diligence process.
Our
multi-task service platform serves as a means not only for assisting these companies to secure public company listing and enhanced
means of achieving financing overseas, but also assist overseas individual and institutional investors seeking quality equity
investment. AEEX also provides registration, supervision and management services.
To
accomplish these goals on behalf of our clients, we have established a number of corporate tools. These include:
Listing
Planning and Evaluation:
1.
We conduct comprehensive evaluation of a client’s prospects, including its assets and liabilities, financial position, management,
development prospect and business model;
2.
We offer assistance in reorganizing and standardizing the company’s business, work to optimize its business model and procedures,
and help the client integrate its resources to highlight the value of the company;
3.
We help to reorganize the corporate structure and assist the company to build a management team for going public based on the
actual conditions of the company;
4.
We assess and recommend qualified lawyers, auditors, investment banks and other institutions which can provide the client with
pre-listing services.
We
also ensure that we are in regular and efficient communication with all our clients who are planning to become a public company,
or have already become public, and make certain that they have received the consulting services they need.
Where
necessary, we will meet with clients on critical issues in public listing, or help them become familiar with important regulations
in the securities markets and assist them in meeting the standards for going public. We also make sure that clients are updated
with regulatory and legal changes.
Listing
Solutions:
We provide clients planning for a public listing with consulting services, which include models for reference and
examples of successful cases. We also use our resources and experience to help clients to connect directly with the corresponding
securities regulatory commission.
Assistance
with Negotiation and Implementation:
With our advantages in resources and information, we assist clients with key negotiations
with different parties and help them to deal with various issues and problems before and after their public listing.
Funding
Initiation:
We use our resources to help clients who plan to go public, but face funding shortages to connect with venture
capital, banks or other financial institutions that can provide potential assistance in their financing needs.
Client
Equity Securitization Reform:
We help to confirm the equity position of companies planning for going public, and provide assistance
for them in working with qualified accounting and law firms to determine the share capital structure, stock par value and holding
percentages of shareholders, and, where necessary, help clients to build a new equity structure in accordance with requirements
of the relevant securities regulatory commission with whom the client is dealing.
Restructuring
Consultancy:
We work with qualified lawyers and auditing firms to help reorganize the client’s business model, procedures
and organizational structure in order to maximize the client’s value and ensure that its public listing needs and requirements
are met.
Route
Design:
We plan and design the proper procedures and methods for going public on behalf of our clients based on their assets,
financial position, operations and other conditions.
Team
Establishment:
In accordance with the conditions of the clients and requirements by the relevant securities regulatory commission,
we assist the clients to establish an organizational structure and a management team best suited for going public.
“Headhunting”
Services:
We work with headhunting companies, i.e. companies that provide employment or recruiting services to find the most
qualified managers and professionals to meet the specific needs of our clients.
Follow-up
Service
: We provide clients with continuous consultancy and following-up services throughout the entire public listing process,
from planning and preparation to success in becoming a public company.
Merger
and Acquisition Planning:
A major feature of our service is overall merger and acquisition planning and assistance with listing
on international main boards of various countries, assistance with the preparation and execution of overseas initial public offering
efforts and main board listing through public shell companies by means of reverse merger.
One
useful tool in the transition from private to public company is the reverse merger or reverse takeover.
In
a reverse merger, the shareholders of a private company acquire a majority of the shares of a “shell company”. The
shell company is a public company that does not have an active business operation or significant assets. The shell company is
then merged with the private company. This makes the public company registration process less time consuming and potentially less
expensive. To finalize the reverse merger, the private company trades shares with the public shell in exchange for the shell company’s
stock, and the private enterprise becomes a public company.
With
numerous jurisdictions with which to deal, these mergers can be difficult. For small private companies, extra-jurisdictional government
regulations and laws governing mergers are often difficult to understand, and without careful planning, there is a high failure
rate with companies conducting mergers and acquisitions. Careful planning and pre-merger research is vital. Many companies starting
out do not have the experience or resources to do the research necessary to complete a successful merger and to see a successful
entity emerge from the process.
Among
other requirements for a successful merger is detailed advance evaluation of the merger target, and the evaluation of the merger
organization and its business plan. Clients will also need experienced assistance to develop strategies as they move beyond the
merger process. Assistance with post-merger or post-acquisition organization, negotiations and planning are also important elements
in determining the client’s success or failure. AEEX has designed a program specifically tailored to address those issues
for companies seeking to go public by means of a merger.
Assistance
with Public Company Corporate Management:
Among the services provided by AEEX on behalf of its clients are those corporate
services that are fundamental to a company’s survival and success. These include:
1.
Assistance with and the preparation of all internal corporate documents, including corporate resolutions, minutes, changes and
amendments to corporate documents as required;
2.
Assistance with and the preparation of required legal and regulatory documents, including, but not limited to disclosure statements
and agreements, subscription agreements, federal, state and regulatory filings, such registration statement(s), as required;
3.
Assistance with the preparation of all required responses resulting from the filing of any of the aforesaid documents, and the
preparation or assistance with the preparation of any and all required amendments to the aforesaid documents;
4.
Guidance for the proper maintenance of all required legal and regulatory filings related to the foregoing documents;
5.
Direct and continuous liaison with corporate attorneys, accountants and auditors on behalf of the enterprise;
6.
Assisting the client with the proper maintenance of all company files.
Resource
Matching:
As we move forward in our business and increase our client base, we plan to establish long-term cooperation with
a number of qualified accounting firms, law firms, investment banks, venture capital and other relevant institutions.
Developing
Public Awareness:
We will work to develop public awareness for clients through an in-house publication, by creating and producing
road-shows for clients and by developing publicity materials as part of an ongoing commitment to help our client to achieve success
.
Markets
Our
market will include small and medium-sized enterprises (“SME”) in Asia, enterprises with financial requirements, enterprises
seeking to increase public awareness and enterprises planning to expand their business internationally.
Competition
There
is a similar equity financing platform in China, the ‘National Equities Exchange and Quotations’ (NEEQ, www.neeq.cc).
It is managed by the Chinese Government and has considerable support from the government itself. NEEQ has been in operation since
September 2012, and currently services more than 5,000 listed companies. While its services are limited to mainland China, there
is no assurance that other countries or groups will not initiate similar services to compete directly with AEEX.
Additionally,
the online equity information industry we are entering is intensely competitive. Large companies may preempt the field if they
view opportunities that have sufficient financial rewards to enter the market. We are a relatively late entry into a mature market
for most online information services. There can be no assurance that we will be able to develop a profitable niche in this market.
While we intend to find niche products and services relying on previously unexploited services, there can be no assurance that
we will be successful in this endeavor.
Please
note also that the National Equities Exchange and Quotations in China is a financial service platform which deals with both equity
information services as well as equity trading. While we offer information services for clients, we are not involved with equity
trading and we are not an equity trading market and it is important to note that AEEX is not now nor does it intend to be a trading
market or provide quotations services for its clients. It is a platform designed solely for equity investment information and
financing information services. It facilitates connections and negotiations between investors and project management. AEEX assists
investors seeking investment opportunities and companies seeking international investment.
Seasonality
The
nature of our products and services does not appear to be affected by seasonal variations.
Government
Regulations
Through AEEGCL and its Chinese subsidiaries,
we are providing consulting services to our clients. Our platform is designed to provide information of equity investment and
financing to medium and small-sized enterprises in Asia. Upon becoming member clients, we assist these enterprises to distribute
information about themselves, their project status, financial status and equity structure information and use our platform to
attract individual investors and investment institutions worldwide. Our business goal is to develop business partners not only
in China but throughout Asia. However, at present we have only12 business partners all of which are located in China. These partners
include legal consulting and accounting firms which are also responsible for seeking out and identifying suitable business enterprise
clients and to help these potential clients to understand what we offer and to assist these clients to register as members of
our platform. As we move forward we will seek business partners and clients throughout Asia.
Our
business is mainly conducted by our China-based subsidiary, Yinfu Guotai Investment Consultant (Shenzhen) Co., Ltd (“Yinfu
Guotai”). Yinfu Guotai provides training courses for our business partners to help them understand our platform and provides
management and business consultancy for our Chinese business clients. Such services are within the scope of Yinfu Guotai’s
business license and is permitted by Chinese laws. We established Yinfu Guotai due to our expectation that most of the business
will originate in China and, as such, we are required to have a Chinese entity to conduct business in China.
The
business scope of Yinfu Guotai registered and recorded with the Chinese government as required during incorporation of Yinfu Guotai
includes: engaging in investment consulting, enterprise management consulting, economic information consulting, corporate image
planning and the research and development, import and export service of electronic products, computer software and hardware products.
As a foreign-invested company in China, Yinfu Guotai is subject to government regulations on foreign investment and business operation.
Specifically, according to Article 14 of Law of the People's Republic on Foreign-capital Enterprises, all foreign-invested enterprises
should establish account books, conduct independent accounting, submit accounting reports and statements as required and accept
supervision by the financial and tax authorities. If an enterprise with foreign capital refuses to maintain account books in China,
the financial and tax authorities may impose a fine on it, and the industry and commerce administration authorities may order
it to suspend operations or may revoke its business license. In addition, China adopted a new Labor Contract Law, effective on
January 1, 2008, and issued its implementation rules, effective on September 18, 2008. The Labor Contract Law and related rules
and regulations impose more stringent requirements on our Chinese subsidiaries with regard to, among others, minimum wages, severance
payment and non-fixed-term employment contracts, time limits for probation periods, as well as the duration and the times that
an employee can be placed on a fixed-term employment contract. Furthermore, pursuant to company law of China, our Chinese subsidiaries
are required to allocate at least 10% of their annual after-tax profits determined in accordance with accounting standards and
regulations of China to a statutory general reserve fund until the amounts in said fund reaches 50% of their registered capital.
Other
than the required adherence to general business laws and regulatory disclosure as described above, our services do not appear
to be affected by any specific Chinese government regulations. However, this does not preclude the possibility that China will
institute regulations that will make it difficult or impossible for us to operate successfully, if at all, in China, and we would
have to focus our business on companies located outside China.
However,
it should also be noted that our business is operated by AEEGCL, a company incorporated in Samoa. No special license is required
for its operations in Samoa. Though most of its business currently comes from China, its Samoan operations are not subject to
regulations by the Chinese government.
Intellectual
Property
We
are in the process of registering our trademark in Hong Kong, China and in the United States. Our trademark registration has been
approved in Hong Kong. We expect to receive approval of our trademark registration in China and the US by the end of July 2016.
Research
and Development
Since
our inception, we have employed 20 technicians to develop our platform. It required three months to build the platform. The total
development cost for the platform was approximately RMB 600,000 (US$92,800).
Environmental
Matters
Our
operations are not subject to environmental laws, including any laws addressing air and water pollution and management of hazardous
substances and wastes and we do not anticipate capital expenditures for environmental control facilities.
Employees
As
of June 7, 2016, we have 10 full-time employees, of which 2 are in the administrative department, 2 in the listing service department,
2 the in finance department and 4 in our technological department. We will employ qualified staff from time to time to meet our
development needs.
Properties
Our
principal place of business and corporate offices are located at Unit B, 5/F., CKK Commercial Centre, 289 Hennessy Road, Wanchai,
Hong Kong and the telephone number is 852-2845 2281. Our President, Mr. Liu Jun, supplies our office space and telephone at no
cost to us.
Additional
Information
We
are required to file quarterly, annual and current reports. The Company files its reports electronically with the SEC. The SEC
maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding
issuers that file electronically with the SEC at http://www.sec.gov.
Historical
Background
Name
Change
On
July 8, 2015, the Board of Directors approved a change of our corporate name from I In The Sky, Inc., to Asia Equity Exchange
Group, Inc. The Certificate of Amendment to Articles of Incorporation changing our name was filed with the state of Nevada on
July 22, 2015.
Change
in Fiscal Year
Pursuant
to the approval of our Board of Directors on July 8, 2015, our fiscal year end has been changed from September 30 to December
31. We filed a transition report on form 10-Q for the transition period of October 1, 2015, to December 31, 2015. Beginning for
the fiscal year 2016, we will file our quarterly and annual reports with a fiscal year end of December 31, including audited statements
of income and cash flows for the transition period on form 10-K for 2016.
Change
in Authorized Capital and Stock Split
On
July 8, 2015, the Board of Directors approved an amendment to our Articles of Incorporation to increase our authorized number
of shares of common stock from 74,000,000 to 3,000,000,000. A majority of the holders of our common stock consented to the amendment
to our Articles of Incorporation. On July 22, 2015, we filed our Certificate of Amendment to Articles of Incorporation with the
state of Nevada, and the Certificate of Amendment is attached hereto as Exhibit 3.1.
On
July 8, 2015, the Board of Directors authorized a ten for one (10:1) forward stock split for shareholders of record as of July
10, 2015 (the “Forward Split”), to be effectuated upon the filing of our amended Articles of Incorporation. The amended
Articles of Incorporation were filed with the state of Nevada on July 22, 2015. Accordingly, the Registrant’s issued and
outstanding number of shares of common stock increased correspondingly from 14,600,000 to 146,000,000.
On
August 11, 2015, the Financial Industry Regulatory Authority (“FINRA”) approved the forward split of the common stock
and the name change to Asia Equity Exchange Group, Inc. On August 31, 2015, our trading symbol was changed from SYYF to AEEX.
As
a result of the Forward Split and name change, our CUSIP Number has changed to 04521X109.
As
a reporting company, we may pursue relationships with entities, which may have made progress developing the opportunities we seek
and which may be open to being acquired by a reporting company. Other than the acquisition of AEEGCL, no such entities have been
identified at the date hereof, nor have we entered into any discussions with any other parties about a joint venture or acquisition.
Any new acquisition or business opportunities that we may acquire will require additional financing. There can be no assurance,
however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company
requires additional financing and we are unable to acquire such funds, our business may fail.
Historically,
we were able to raise a limited amount of capital through the registered offering of our equity stock and through loans from our
president, Liu Jun, but we are uncertain about our continued ability to raise funds privately. If we are unable to secure adequate
capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail.
Our
officers and directors continue to provide their labor at no charge. We plan to hire up to 10 additional staff members during
the next 12 months of operation, and will also rely on the services of independent professionals for the auditing, evaluation
and legal requirements for our listing business.
RISK
FACTORS
Risks
Associated With Our Company
Our
independent auditors have issued an audit opinion for our company, which includes a statement describing our going concern status.
Our financial status creates a doubt whether we will be able to continue as a going concern.
Our
auditors have issued a going concern opinion regarding our company. This means there is substantial doubt we can continue as an
ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the
uncertainty regarding our ability to continue in business. As such we may have to cease operations and investors could lose part
or all of their investment in our company.
The
Company’s business plan is based on a relatively new model that may not be successful and the Company may not successfully
implement its business strategies
The
Company’s original content, which has not been examined or tested by the market. Products and services of the Company are
targeted at an emerging market and any potential increase in the Company’s revenues depends on the achievement of equity
financing by our current and future clients, the small and medium-sized enterprises in Asia, which is a new market in the region.
In addition, the Company cannot guarantee the full and successful implementation of our business strategies. To ensure the successful
reception of our products and services by a large number of SMEs in China, great efforts must to be made in promotion and business
partner development. However, the Company cannot guarantee successful promotion of our products and services and we may not be
able to realize our business goals.
The
Company may not be able to obtain sufficient business partners to effectively cover our targeted market
The
business model adopted by the Company is to promote our products and services through our business partners in targeted countries
and regions who are more familiar with the local markets and may be able to help us develop clients quickly. However, it takes
time to develop qualified business partners and those selected may not turn out to be the right business partners, which may have
a negative effect on the Company’s business development.
The
online equity information industry we are entering is highly competitive and there is no assurance that we will be successful
in developing our product and entering the market successfully.
The
online equity information industry we are entering is intensely competitive. Large companies may preempt the field if they view
opportunities that have sufficient financial rewards to enter the market. We are a relatively late entry into a mature market
for most online information services. There can be no assurance that we will be able to develop a profitable niche in this market.
While we intend to find niche products and services relying on previously unexploited services, there can be no assurance that
we will be successful in this endeavor.
China
is in a period of transformation, with a great number of SMEs facing industry upgrading and innovation which requires large amount
of funding. The Chinese government encourages SMEs to solve the lack of funds through equity financing. As a result, the National
Equities Exchange and Quotations (NEEQ) and regional equity transaction centers have experienced rapid development in the past
years. Though our products and services have advantages over those of NEEQ and regional equity transaction centers, these other
agencies may have already preempted the field and gained recognition among SMEs. The Company must work hard to narrow such gap
as quickly as possible and win the recognition by clients of our advantages and their acceptance of our products and services.
If we are unable to do so, we may be unable to gain a sufficient number of clients and our business may fail.
As
yet we have a limited number of clients or customers and we cannot guarantee we will ever have more. Even if we obtain additional
clients or customers, there is no assurance that we will make a profit.
We
have a limited number of clients or customers. We have identified additional potential clients, but we cannot guarantee we will
be able to bring them in as clients. Even if we obtain additional clients or customers for our services, there is no guarantee
that we will develop products and/or services that our clients/customers will want to purchase. If we are unable to attract enough
customers/clients to purchase services (and any products we may develop or sell) it will have a negative effect on our ability
to generate sufficient revenue from which we can operate or expand our business. The lack of sufficient revenues will have a negative
effect on the ability of the Company to continue operations and it could force the Company to cease operations.
The
Company provides services or will expand to provide services in a number of different jurisdictions with different legal, regulatory
and language requirements. This will require personnel with legal, regulatory and language expertise in those jurisdictions and
such personnel may not be readily available
.
The
Company provides services or will expand to provide services in a number of different countries. All of these jurisdictions may
speak different languages and have different securities laws and legal requirements, especially with respect to laws governing
reverse mergers. This will require the Company to seek out and engage local personnel with legal, regulatory and language expertise
in those jurisdictions. Identifying qualified personnel may be very difficult, and such personnel may not be readily available
or may be very expensive. Should the Company be unable to find properly trained and experienced personnel, the Company will be
unable to function in those jurisdiction causing costly gaps in the Company’s ability to provide its services.
Our
business model will require the use and training of outside personnel, who may not be available to provide qualified services
when needed.
Our
business model requires relevant services from our business partners in other countries who will be selected in accordance with
certain standards and provided with training by the Company in all aspects of the Company’s business. However, their trainability,
professionalism and work ethic will vary and may not meet the strict requirements for our business. Additionally, outside personnel
may not be available when needed, which may reduce customer satisfaction and further affect the image and business development
of the Company. If we are unsuccessful in finding and training the required personnel, our business plan and ultimately our Company
will fail.
The
failure of our business partners to effectively promote the business may have a negative effect on our business development
Our
business partners are required to meet a large number of clients and educate them about all necessary aspects of the listing business.
To ensure that our clients, some of which may have poor management skills, can meet the listing standards, extra and long-term
efforts will have to be made by our business partners, some of whom may not do their utmost to promote the business. Lack of sufficient
effort by our business partners will negatively affect our business development and the Company might fail.
A
large amount of investment in promotion and business partner development at the early stage will affect our profits
The
Company is currently at the early stage of development and conducts business only in China. Though cooperative relationships have
been established with some business partners, it will still require significant effort to achieve full business coverage in China.
To promote our business and provide products and services for clients, we have made all-round and detailed promotional plans and
policies and will carry out a number of road shows at regional, national and international levels. We will also adopt preferential
policies for attracting business partners to advance our business. This will require a large amount of investment at the beginning
and may affect the Company’s profits. If the necessary expenses are too high, the Company might not have sufficient funds
to carry on its business and the Company will fail.
If
we are not able to increase and maintain our brand influence, we may face difficulties in attracting new business partners and
clients and may suffer damage to our business
The
Asia Equity Exchange brand is still being nurtured. We believe it is critical to increase and maintain our brand influence in
our development of clients and in attracting new business partners. Our major competitors have built well-known brands and continue
to increase their influence. Our failure to increase and maintain our brand influence for any reason may result in a material
adverse effect on our business, operating results and financial position.
The
fast growing and changing business environment may intensify our shortage of resources
We
plan to expand our business while developing customers and seeking market opportunities. Our limited operating, administrative
and financial resources may not support our planned development. As the number of our clients and business activities increase,
we will need to increase investment. We will need to improve the existing and implement new operating and financial systems, processes
and controls, and expand, train and manage a growing team of employees. In addition, management will need to maintain and strengthen
our relations with business partners. If we fail to effectively manage our development and expansion, our service quality may
decrease, our business may suffer damage and our operating results may be materially and adversely affected.
We
may be adversely affected due to the complicated and unclear regulatory system in the financial sector in which we operate
The
Chinese government strictly regulates the financial sector by setting out requirements for licenses and permits of foreign financial
investment. Since regulations and rules in the financial sectors are relatively new and continuously changing, how they should
be interpreted and exercised is extremely unclear. The interpretation and quotations of the current Chinese regulations and policies,
the position of China Securities Regulatory Commission and new regulations and policies that may become materially uncertain factors
in the legality of the current and future foreign investment and in the operation and management of Chinese equity financing,
including our business. Under some circumstances, our current and former services or business may be deemed to have violated Chinese
regulations, and we may be fined or penalized or our business and services may be terminated. This risk does not apply to our
Samoan operations, which are not subject to Chinese regulations.
General
risks associated with business operations in China
The
reversal of political and economic policies by the Chinese government may have a material adverse effect on the China’s
overall growth, which may result in the decrease in demand for our services and negatively affect our business and operating results
China’s
current economic slowdown may impair our ability to achieve growth and gains.
It
has been estimated that our financial performance will continue to be affected by China’s economic growth. China’s
growth in the past 30 years cannot guarantee its continuous growth at the current rate. When its growth slows down, the number
of companies meeting our listing standards may drop. Therefore, our income is closely associated with China’s uncertain
economy.
Due
to the fact that the Company’s assets and its management are located in China and Samoa, service of process, enforcing judgments
and bringing actions in Hong Kong and any other foreign jurisdictions, will be difficult
.
Our
primary asset is the equity investment and financing information platform, which is owned by AEEGCL, and AEEGCL is registered
in Samoa. The company has two directors and officers: Mr. Liu Jun is the president, CFO and a director, Mr. Peng Tao is the Chief
Technical Officer and a director. Both are Chinese citizens and both Liu Jun and Peng Tao reside in Shenzhen, China. Our executive
office is located in Hong Kong.
Due
to the fact that the Company’s assets and its management are located in China and Samoa, service of process, enforcing judgments
and bringing actions in Hong Kong and any other foreign jurisdictions will be difficult, especially for non-residents of those
jurisdictions. However, bringing actions and service of process against the Company itself is less of a problem as the Company
is a Nevada corporation with its resident agent located in Silver Springs, Nevada, USA. Enforcement of U.S judgments may be more
difficult against the Company, since its assets are located outside the United States, and the laws of foreign jurisdictions may
discourage the collection of such judgments.
Foreign
exchange fluctuation may cause damage to our business
We
accept the payment of listing service fees by companies in RMB, HK dollar or US dollar. Therefore, foreign exchange fluctuation
may generate uncertain influences on our business.
We
may not be able to obtain the required additional capital
We
believe that the current cash and cash equivalents, business income in cash and the amount of sales income are enough to cover
estimated cash needs in the immediate future. However, due to changes in the business environment and other future development,
including possible decisions to conduct investment or acquisition or mergers, we will need additional cash. If our resources are
not enough to meet the cash needs, we may issue additional shares or seek loans. Our ability to gain additional capital may be
determined by various uncertain factors, including our future financial position, operating results, cash flows, share prices
and cash in the international capital market. In addition, issuance of additional shares will result in dilution of shareholders’
equity. Borrowings may increase our burden of solvency and require business and financial undertakings, which may restrict our
business. We can neither guarantee that we will gain the above financial resources in a timely manner, nor in accordance with
our requirements, nor that we will gain those additional resources on acceptable terms and conditions nor that we are able to
gain any of those financial resources at all. If we are unable to do so our business may fail.
The
increase in our authorized capital may lead to significant dilution of our stock
On
July 22, 2015, we filed a Certificate of Amendment to our Articles of Incorporation with the state of Nevada increasing our authorized
number of shares of common stock from 74,000,000 to 3,000,000,000. This increased our authorized capital by a factor of 40.5.
Such an increase is significant and can result in significant dilution of the Company’s stock if we elect to issue shares,
for instance, to acquire other businesses or companies.
We
are dependent upon our current officers.
We
currently are managed by two officers, and we are entirely dependent upon them in order to conduct our operations. If they should
resign or be unable to carry out their respective duties, there will be no one to run AEEX. The Company has no Key Man insurance.
If our current officers are no longer able to serve as such and we are unable to find other persons to replace them, it will have
a negative effect on our ability to continue active business operations, and could result in investors losing some or all of their
investment in the Company.
Our
business depends on the continuous contribution by our officers and employees, loss of which may result in a severe impediment
to our business.
Our
success is dependent upon the continuous contribution by our officers, especially our founders. We rely on their expertise in
business operations including development of new products and services. The company has no Key Man insurance for our officers
to cover the loss if they should die or resign.
If
one or more of our officers cannot serve the Company or is not willing to do so, the Company may not be able to find alternatives
within a short time period or it may fail to find alternatives at all. This would result in a severe impediment to our business
and a have material adverse impact on our financial position and operating results. To continue as a viable operation, the Company
may have to employ and train replacement personnel at a higher cost.
In
addition, if our officers join our competitors or develop similar business in competition with our company, our business may also
be negatively impacted.
Our
future success also depends on our ability to attract and employ qualified long-term staff for management, technology, sales,
marketing and customer services. We have a great demand for qualified talent, but we may not be successful in attracting, employing,
enhancing and retaining the talent required for our success.
With
our limited history of operations, our potential to achieve gains and income has not been examined, therefore we are not able
to predict whether our future performance may conform to our and others’ expectations
We
consider that our future success is dependent upon our ability to substantially increase our business income, however, we have
a limited history of operations. Therefore, while assessing the Company’s prospects, we must take into consideration the
usual difficulties and other risks at this early stage of the Company’s development. This is particularly true in the emerging
and fast growing equity trading market of Asia. Such risks may be associated with our ability to achieve success in the following:
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to
gain income from our clients by charging listing service fees;
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to
attract small and medium-sized companies to list on AEEX
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to
maintain the existing and newly built strategic relations;
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to
effectively deal with competition;
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to
lessen influence from newly built strategic relations by our competitors;
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to
improve our brand influence and increase confidence of our clients;
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to
attract and employ qualified officers and staff;
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to
enrich our products and services.
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Our
controlling stockholders have significant influence over the Company.
As
of the date of this filing, three individuals collectively own 87.26 % of the outstanding common stock. As a result, they possess
significant influence over our affairs. Their stock ownership and relationships with members of our board of directors, of which
Mr. Liu Jun and Mr. Peng Tao are the only two, may have the effect of delaying or preventing a future change in control, impeding
a merger, consolidation, takeover or other business combination, or discouraging a potential acquirer from making a tender offer
or otherwise attempting to obtain control of the Company, which in turn could materially and adversely affect the market price
of our common stock.
Three
shareholders hold a controlling interest in our stock. As a result, the ability of minority shareholders to influence our affairs
is extremely limited.
Three
shareholders own a controlling interest in our outstanding common stock. As a result, they have the ability to control all matters
submitted to the stockholders of AEEX for approval (including the election and removal of directors). A significant change to
the composition of our board could lead to a change in management and our business plan. Any such transition could lead to, among
other things, a decline in service levels, disruption in our operations and departures of key personnel, which could in turn harm
our business.
Moreover,
this concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger,
consolidation, takeover or other business combination involving us, or discouraging a potential acquirer from making a tender
offer or otherwise attempting to obtain control, which in turn could materially and adversely affect the market price of the common
stock.
Minority
shareholders of AEEX will be unable to affect the outcome of stockholder voting as long as the three shareholders retain a controlling
interest.
We
have only two directors, which limits our ability to establish effective independent corporate governance procedures and increases
the control of our President over operations and business decisions.
We
have only two directors, who are our principal executive officers and secretary. Accordingly, we cannot establish board committees
comprised of independent members to oversee functions like compensation or audit issues. In addition, a tie vote of board members
is decided in favor of the chairman, which gives him significant control over all corporate issues, including all major decisions
on operations and corporate matters such as approving business combinations.
Until
we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our
President’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities
and decisions, even if they are not in the best interests of minority shareholders.
Because
we are currently considered a “shell company” within the meaning of Rule 12B-2 pursuant to the Securities Exchange
Act of 1934, the ability of holders of our common stock to sell their shares may be limited by applicable regulations.
We
are currently considered a “shell company” as that term is defined in Rule 12b-2 pursuant to the Securities Exchange
Act of 1934, and Rule 405 pursuant to the Securities Act of 1933, in that we currently have nominal operations and assets other
than cash. Accordingly, the ability of holders of our common stock to sell their shares may be limited by applicable regulations.
As
a result of our current classification as a “shell company”, our investors are not allowed to rely on the “safe
harbor” provisions of Rule 144 promulgated pursuant to the Securities Act of 1933 so as not to be considered underwriters
in connection with the sale of securities until one year from the date that we cease to be a “shell company.” Additionally,
as a result of our classification a shell company, investors should consider shares of our common stock to be significantly risky
and illiquid investments.
Although
pursuant to this filing we are no longer to be considered a “shell company”, we can provide no assurance or guarantee
that we will not become a “shell company” in the future, and, accordingly, we can provide no assurance or guarantee
that there will be a liquid market for our shares. Accordingly, investors may not be able to sell our shares and lose their investments
in the Company.
Risks
Associated with Our Common Stock
Our
shares are defined as “penny stock.” The rules imposed on the sale of the shares may affect your ability to resell
any shares you may purchase, if at all.
The
Commission has adopted regulations which generally define a “penny stock” to be an equity security that has a market
price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. According
to rules of the Commission and the Securities and Exchange Act of 1934, our shares are defined as a “penny stock”.
The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers
who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with
spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer
must make a suitability determination for each purchaser and receive the purchaser’s written agreement prior to the sale.
In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or
purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated
persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability
of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may
purchase.
Market
for penny stock has suffered in recent years from patterns of fraud and abuse
Stockholders
should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include:
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Control
of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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Manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases;
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Boiler
room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
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Excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and,
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The
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequential investor losses.
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Our
management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in
a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
The occurrence of these patterns or practices could increase the volatility of our share price.
Our
controlling shareholders make corporate decisions that may differ from those that might be made our officers and directors.
Due
to the controlling amount of their share ownership in our Company, the controlling shareholders have a significant influence in
determining the outcome of all corporate transactions, including the power to prevent or cause a change in control. Their interests
may differ from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Shareholders
may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares
of our common stock.
We
have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to
satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common
stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized
(3,000,000,000) but unissued (1,854,000,000) shares of common stock. In addition, if a trading market develops for our common
stock, we may attempt to raise capital by selling shares, possibly at a discount to market. These actions will result in dilution
of the ownership interests of existing shareholders may further dilute common stock book value, and that dilution may be material.
Inability
and unlikelihood to pay dividends
To
date, we have not paid, nor do we intend to pay in the foreseeable future, dividends on our common stock, even if we become profitable.
Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions
to stockholders. Since we are not in a financial position to pay dividends on our common stock and future dividends are not presently
being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the
share price. The potential or likelihood of an increase in share price is questionable.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this
report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements
include, among others, those statements including the words “expects,” “anticipates,” “intends,”
“believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking
statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the
sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” You should carefully review the risks described in the Annual Report filed with this
report and in other documents we file with the Securities and Exchange Commission (“SEC”). You are cautioned not to
place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation
to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this
document.
Although we believe that the expectations
reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking statements.
All references in this report to the “Company,”
“AEEGCL,” “we,” “us,” or “our” are to Asia Equity Exchange Group Co., Ltd.
Corporate Overview
AEEGCL is a company incorporated in Samoa
on May 29, 2015. Its fiscal year end is December 31. The company’s administrative address is Unit B, 5/F., CKK Commercial
Centre, 289 Hennessy Road, Wanchai, Hong Kong and the telephone number is +852-2845 2281.
On July 2, 2015,
AEEGCL purchased 100% equity stake in Yinfu International Enterprise Ltd. (“Yinfu”, a private company incorporated
in Hong Kong), and hence the 100% equity stake in Yinfu Guotai Investment Consultant (Shenzhen) Co., Ltd. (“Yinfu Guotai”,
a private company incorporated in the People’s Republic of China, the “PRC”), which is a wholly owned subsidiary
of Yinfu. Yinfu and Yinfu Guotai provide consultancy services in investment and corporate management. Yinfu will attempt to open
the market and provide professional consultancy services to companies in the mainland PRC and Hong Kong, the PRC.
Yinfu Guotai is a registered wholly foreign
owned entity. Its parent company is Yinfu International Enterprise Limited. Currently, Yinfu Guotai provides management and business
consultancy for Chinese business. Such services are within the scope of its business license and permitted by Chinese laws.
The following is an organizational chart showing
the relationships between AEEX, AEEGCL, Yinfu and Yinfu Guotai as well as their jurisdictions and dates of incorporation:
The following discussion of our financial
condition and results of operations should be read in conjunction with our financial statements for the period from May 29, 2015
(date of incorporation) to December 31, 2015 (the “period”) and our unaudited interim financial statements for the
quarter ended March 31, 2016 (the “quarter”), together with notes thereto, which are included in this report.
Results of Operations
We have generated $242,512 revenues since
inception and have incurred $237,232 expenses and $1,982 other comprehensive loss in the period ended December 31, 2015. We have
generated no revenues and have incurred $182,505 expenses and $2,470 other comprehensive income in the quarter ended March 31,
2016.
The following table provides selected balance sheet data about
our company on December 31, 2015 and March 31, 2016.
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March 31, 2016
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|
December 31, 2015
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Cash
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|
$
|
68,305
|
|
|
$
|
22,655
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Total Assets
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|
$
|
126,368
|
|
|
$
|
78,439
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Total Liabilities
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|
$
|
303,105
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|
|
$
|
75,141
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Stockholders’ Equity (Deficit)
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$
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(176,737
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)
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$
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3,298
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The following summary of our results of operations
and other comprehensive income (loss), for the period ended December 31, 2015 and the quarter ended March 31, 2016.
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Three months ended
March 31, 2016
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Period from
May 29, 2015 to
December 31, 2015
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Revenue
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|
$
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-
|
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$
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242,512
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Cost of sales
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-
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(908
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)
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Gross profit
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-
|
|
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241,604
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Expenses
|
|
|
|
|
|
|
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General and administrative
|
|
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(186,619
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)
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|
(231,462
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)
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
(186,619
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)
|
|
|
10,142
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|
|
|
|
|
|
|
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Other income (loss)
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|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
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Income (loss) before provision for income taxes
|
|
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(186,619
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)
|
|
|
10,142
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|
|
|
|
|
|
|
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Provision for income taxes
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|
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4,114
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|
|
|
(4,862
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)
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
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|
$
|
(182,505
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)
|
|
$
|
5,280
|
|
|
|
|
|
|
|
|
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Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
Exchange differences on translating foreign operations
|
|
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2,470
|
|
|
|
(1,982
|
)
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period
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|
$
|
(180,035
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)
|
|
$
|
3,298
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per common share
|
|
$
|
(0.00
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)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
1,000,000,000
|
|
|
|
236,111,111
|
|
Revenues
Our company has generated $242,512 revenues
during the period ended December 31, 2015, from the provision of consultancy services in investment and corporate management.
Our company has generated no revenues for the quarter ended March 31, 2016.
Currently
we received our revenue in US Dollars, RMB and HK Dollars. In the future, if our business expands to other countries in Asia,
we may prefer to conduct business in US Dollars due to its stability and ease of use. Currently the currency settlement for our
business is located in Hong Kong, therefore Chinese foreign currency regulations are not applicable to us and as an international
financial center, Hong Kong has no limitation on foreign currency, and is trading is freely convertible among currencies. Our
shareholders can accept settlement in US Dollars. According to Company Law of China, our Chinese subsidiaries shall allocate at
least 10% of their annual after-tax profits determined in accordance with accounting standards and regulations of China to a statutory
general reserve fund until the amounts in said fund reaches 50% of their registered capital. These reserves are not distributable
as cash dividends.
Operating expenses
For the period ended December 31, 2015, total
operating expenses were $232,370, which included cost of sales of $908 and general and administrative expenses of $231,462. For
the quarter ended March 31, 2016, total operating expenses were $186,619, which included general and administrative expenses only.
Net income (loss) and comprehensive income
(loss)
For the period ended December 31, 2015, our
company had net income of $5,280 and total comprehensive income of $3,298. For the quarter ended March 31, 2016, our company had
net loss of $182,505 and total comprehensive loss of $180,035.
Limited Operating History; Need for Additional
Capital
There is limited
historical financial information about us on which to base an evaluation of our performance. We cannot guarantee we will be successful
in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including
limited capital resources, a narrow client base, limited sources of revenue, and possible cost overruns due to the price and cost
increases in supplies and services.
Without additional funding, management believes
that we will not have sufficient funds to meet our obligations beyond one year after the date our consolidated financial statements
are issued. These conditions give rise to substantial doubt as to our ability to continue as a going concern.
We have been, and intend to continue, working
toward identifying and obtaining new sources of financing. To date we have been dependent on related parties for our source of
funding. No assurances can be given that we will be successful in obtaining additional financing in the future. Any future financing
that we may obtain may cause significant dilution to existing stockholders. Any debt financing or other financing of securities
senior to common stock that we are able to obtain will likely include financial and other covenants that will restrict our flexibility.
Any failure to comply with these covenants would have a negative impact on our business, prospects, financial condition, results
of operations and cash flows.
If adequate funds
are not available, we may be required to delay, scale back or eliminate portions of our operations or obtain funds through arrangements
with strategic partners or others that may require us to relinquish rights to certain of our assets. Accordingly, the inability
to obtain such financing could result in a significant loss of ownership and/or control of our assets and could also adversely
affect our ability to fund our continued operations and our expansion efforts.
Currently we spend
approximately $35,000 per month for basic operations. During the next 12 months, we expect to incur the same costs as the current
monthly expenses. However, as we work to expand our client base, we expect to incur significant research and development costs
and expenses will increase to meet increased demand. We will also need to hire additional employees in order to accommodate new
clients.
Liquidity and Capital Resources
Working Capital
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Current Assets
|
|
$
|
76,447
|
|
|
$
|
60,237
|
|
Current Liabilities
|
|
|
303,105
|
|
|
|
75,141
|
|
Working Capital Deficiency
|
|
$
|
(226,658
|
)
|
|
$
|
(14,904
|
)
|
Cash Flows
|
|
Three months ended
March 31, 2016
|
|
|
Period Ended
December 31, 2015
|
|
Cash Flows From (Used in) Operating Activities
|
|
$
|
(134,351
|
)
|
|
$
|
58,517
|
|
Cash Flows Used in Investing Activities
|
|
|
(33,323
|
)
|
|
|
(20,409
|
)
|
Cash Flows From (Used in) Financing Activities
|
|
|
209,683
|
|
|
|
(14,284
|
)
|
Effect of foreign exchange rate, net
|
|
|
3,641
|
|
|
|
(1,169
|
)
|
Net Increase in Cash During Period
|
|
$
|
45,650
|
|
|
$
|
22,655
|
|
Cash Flows From (Used In) Operating Activities
During the period ended December 31, 2015,
our company received $58,517 in cash from operating activities. Our company had net income of $10,142, which was increased by
a non-cash adjustment for deprecation of $2,207 and a net increase in change of operating assets and liabilities of $46,168.
During the quarter ended March 31, 2016, our
company used $134,351 in cash from operating activities. Our company had net loss of $186,619, which was decreased by non-cash
adjustments for depreciation and amortization of $907 and $261 respectively and a net increase in change of operating assets and
liabilities of $51,100.
Cash Flow Used in Investing Activities
During the period ended December 31, 2015,
our company used $20,409 in the purchases of property and equipment.
During the quarter ended March 31, 2016, our
company used $5,223 in the purchases of intangible assets, and $28,100 in the purchases of property and equipment.
Cash Flow From (Used in) Financing Activities
During the period ended December 31, 2015,
our company advanced $14,284 to a related party.
During the quarter ended March 31, 2016, our
company received $209,683 from the related party.
Critical Accounting
Policy and Estimates
We believe that the
following accounting policies are the most critical to aid you in fully understanding and evaluating this “Management’s
Discussion and Analysis of Financial Condition and Results of Operation.”
Use of Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of June
7, 2016, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to
be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers
as a group. To the best of our knowledge, except as otherwise indicated each person has sole voting and investment power with
respect to the shares of common stock except to the extent such power may be shared with a spouse. Beneficial ownership consists
of a direct interest in the shares of common stock, except as otherwise indicated.
Name
and Address of Beneficial Owner
(1)
|
|
Amount
and Nature of
Beneficial Ownership
|
|
|
Percentage
(2)
of Class
|
|
Liu Jun
Hao, Rong Chao Da Xia Block B
Room 609
Bao’an Zhong Xin Qu
Shenzhen
City 2021-1 China
|
|
|
44,660,000
(Direct)
|
|
|
|
3.9
Common
|
%
|
|
|
|
|
|
|
|
|
|
Peng Tao
Room 208, 5
th
Block, 19
FuGong Road,
FuTian District Shenzhen,
Guangdong, China
|
|
|
5,000,000
(Direct)
|
|
|
|
0.44
Common
|
%
|
|
|
|
|
|
|
|
|
|
Blue Tech Holding Limited
Ma Ning (Beneficial Owner)
Room 1504, No.11,
Sheng Shi
Hua Cheng,
Yinzhou District, Ningbo
Zhejiang, China
|
|
|
700,000,000
(Indirect)
|
|
|
|
61.08
Common
|
%
|
|
|
|
|
|
|
|
|
|
Honest Billion Investment Limited
Wang Zhong, (Beneficial Owner)
No. 1701, Building
E,
Fu Tong Hao Wang Jiao
Central, BaoAn District, Shenzhen,
Guangdong, China
|
|
|
200,000,000
(Indirect)
|
|
|
|
17.45
Common
|
%
|
|
|
|
|
|
|
|
|
|
Qi Jian
Unit B, 5/F, CKK Commercial Centre
289 Hennessy Road
Wanchai Hong Kong
|
|
|
100,000,000
(Direct)
|
|
|
|
8.7
Common
|
%
|
Directors and Executive Officers as a Group
(2 people)
|
|
|
49,660,000
|
|
|
|
4.34
|
%
|
|
(1)
|
The
persons named above may be deemed to be a “promoter” of the Company, within the meaning of such terms under the
Securities Act of 1933, as amended, by virtue of his direct holdings in the Company.
|
|
|
|
|
(2)
|
Based
on 1,146,000,000 shares issued and outstanding as of June 7, 2016.
|
Directors, Executive
Officers, Promoters and Control Persons
All directors of our company hold office until
the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our
company are appointed by the board of directors and hold office until their death, resignation or removal from office. The directors
and executive officers, their ages, positions held, and duration as such, are as follows:
The name, address, age and position of our
officers and directors is set forth below:
Name
and Address
|
|
Age
|
|
Position(s)
|
Liu Jun
Unit 1705,
Donfang Science & Technology
Mansion Nanshan District
Shenzhen, China
|
|
40
|
|
President,
Chief Executive Officer, Chief Financial Officer Secretary and Director Appointed July 6, 2015
President, Chief Executive Officer,
Chief Financial Officer Secretary and Director of AEEGCL
Appointed January 31, 2016
|
|
|
|
|
|
Peng
Tao
Unit 1705
Donfang Science & Technology
Mansion Nanshan District
Shenzhen, China
|
|
30
|
|
Treasurer,
and Director. Appointed July 6, 2015
|
Blue
Tech Holding Limited
Ma Ning (Beneficial Owner)
Room 1504, No.11,
Sheng Shi Hua Cheng,
Yinzhou District, Ningbo
Zhejiang, China
|
|
45
|
|
Control
Person
700,000,000 Common Shares (61.08%)
|
Honest
Billion Investment Limited
Wang Zhong, (Beneficial Owner)
No. 1701, Building E,
Fu Tong Hao Wang Jiao
Central, BaoAn District, Shenzhen,
Guangdong, China
|
|
30
|
|
Control
Person
200,000,000 Common Shares (17.45%)
|
|
|
|
|
|
Qi
Jian
Unit B, 5/F, CKK Commercial Centre
289 Hennessy Road
Wanchai Hong Kong
|
|
49
|
|
Control
Person
100,000,000 Common Shares (8.7%)
|
The officers and directors set forth herein
are our only officers, directors and control persons, as that term is defined in the rules and regulations promulgated under the
Securities and Exchange Act of 1933.
On July 6, 2015, the Board of Directors accepted
the resignations of Michael Staples as President, CEO, CFO and Treasurer, and Joel Tweeten as Secretary. Neither Mr. Staples nor
Mr. Tweeten has expressed a disagreement with the registrant, known to an executive officer of the registrant, as defined in 17
CFR 240.3b-7, on any matter relating to the registrant’s operations, policies or practices.
Additionally, on July 6, 2015, the Board of
Directors appointed Liu Jun as President, Chief Executive Officer, Chief Financial Officer, Secretary and as a Director. On July
6, 2015, the Board of Directors also appointed Peng Tao as Treasurer, Chief Technical Officer and as a Director. There have been
no transactions between Mr. Liu Jun and Mr. Peng Tao and the Company during the prior fiscal year which would be required to be
reported pursuant to Item 404(a) of Regulation S-K that have not already been reported on Form 10-K. There are no family relationships
between Mr. Liu Jun or Mr. Peng Tao and any director, executive officer, or person nominated or chosen by the Company to become
a director or executive officer.
Background of Officers and Directors
Liu Jun: President, Chief Executive
Officer, Chief Financial Officer, Secretary and Director
Mr. Liu Jun graduated from the Harbin Institute
of Technology Department of Applied Physics with a Bachelor’s degree and is a Distinguished Member of the Chinese Academy
of e-government experts.
Since March 2003 to the present, he has served
as a Director of the sub-center for the State Government Online Project Service Center in Shenzhen, and since August 2011 he has
also served as honorary vice president of Sichuan Vocational Institute of Media Culture and Media Department of visiting professors.
Mr. Liu Jun also currently serves on the Expert
Committee of E-commerce for several Universities and is Honorary Vice Headmaster and visiting professor in Shi Chuan Culture and
Media College.
From November 2014 to June 2015 he served
as President and sole director of Yinfu Gold Corporation, which is an internet financial company listed on the OTC Markets and
focuses on the peer-to-peer lending industry. Mr. Liu Jun was responsible for all aspects of the Company’s operations, management
and financing. He will continue to assist the Company as an honorary chairman.
From May 2008 to December 2009 he served as
Chairman and President of Morgan Networks one of the first online shopping centers in China. In December of 2008, Morgan Networks
launched a new service product: Morgan RTGS (Real Time Gross Settlement) system. It solved the problem of the delay in the settlement
of payments to each business party and promoted the efficiency of cash settlement. Mr. Liu Jun served as chairman and chief executive
at Morgan Network and was responsible for the company’s operations and management, as well as dealing directly with foreign
and institutional investors.
Beginning in December 2001, he funded and
founded a startup e-commerce company called the B2B.cn Group. Within six years it had developed into a company with twelve branches
and two thousand employees. In December 2007, it was acquired by the Softbank SAIF Investment Company. He was responsible for
all aspects of the company’s management, organization, planning and guidance.
In December 2000, he was appointed as head
of marketing at Alibaba Group. Alibaba was founded in 2000 and soon began to open branches around China. As market head, Liu Jun
opened Alibaba’s first branch offices in Southern China. He served in that position until December 2001.
In February 2000, Liu Jun was appointed as
the vice president of the Zhong Hua Unit Network, an information company providing various types of supply and demand information
for Chinese enterprises. Three months later in May 2000, he was promoted to President. He was responsible for the overall management
of the company’s operations, and China national markets. He served with the company until December 2000.
From January 1999 to February 2000, he was
the project manager and assistant to the president for the inauguration of the Dongli Group, one of China’s largest Internet
companies. His function was to assist the president with daily work management and internal and external coordination and supervision
of all projects.
Peng Tao: Treasurer and Director
Mr. Peng Tao received his Bachelor’s
Degree in Computer Science and Technology and Software Engineering from Hunan Institute of Science and Technology in October 2010.
From November 2014 to present, he has served
as the Chief Technical Officer of Yinfu Gold Corporation, which is an internet financial company listed on the OTC Markets and
focuses its business on peer-to-peer lending industry. Mr. Peng Tao was responsible for scientific and technological issues within
the Company.
From November 2010 to November 2014, he served
as Director of Technical Department of Shenzhen Shangyuan E-commerce Technology Co., Ltd. Mr. Peng Tao was responsible for software
development and department management.
It should be noted that Mr. Liu Jun served
as President and sole director of Yinfu Gold Corporation from November 2014 to June 2015 and Mr. Peng Tao has served as Chief
Technical Officer of Yinfu Gold Corporation since November 2014. Throughout the period of their tenure, Yinfu Gold Corporation
has had reporting obligations with the US Securities and Exchange Commission, but has been delinquent in filing its required reports.
Director Independence
We are not currently subject to listing requirements
of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors
be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a
majority of “independent directors.”
Family Relationships
There are no family relationships among our
Directors or executive officers.
Director or Officer Involvement in Certain
Legal Proceedings
None of our directors or executive officers
has been involved in any of the following events during the past ten years:
|
●
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
●
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
|
|
|
|
|
●
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business,
securities or banking activities; or
|
|
|
|
|
●
|
being
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
Board Committees
The Company currently has not established
any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and
one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further,
we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date,
other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs
all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us
to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board
and allocate responsibilities accordingly.
Audit Committee Financial Expert
We have no separate audit committee at this
time. The entire Board of Directors oversees our audits and auditing procedures. The Board of Directors has at this time not determined
whether any director is an “audit committee financial expert” within the meaning of Item 407(d)(5) for SEC regulation
S-K.
Code of Ethics
We have adopted a Code of Business Conduct
and Ethics that applies to, among other persons, members of our board of directors, our Company’s officers including our
President, Chief Executive Officer and Chief Financial Officer, employees, consultants and advisors. As adopted, our Code of Business
Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
|
1.
|
honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
|
|
|
|
|
2.
|
full,
fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the US Securities
and Exchange Commission and in other public communications made by us;
|
|
|
|
|
3.
|
compliance
with applicable governmental laws, rules and regulations;
|
|
|
|
|
4.
|
the
prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified
in the Code of Business Conduct and Ethics; and;
|
|
|
|
|
5.
|
accountability
for adherence to the Code of Business Conduct and Ethics.
|
Our Code of Business Conduct and Ethics requires,
among other things, that all of our company’s senior officers commit to timely, accurate and consistent disclosure of information;
that they maintain confidential information; and that they act with honesty and integrity.
In addition, our Code of Business Conduct
and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility for maintaining financial integrity
within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any senior
officer, who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by
witnessing the incident or being told of it, must report it to our Company. Any failure to report such inappropriate or irregular
conduct of others is to be treated as a severe disciplinary matter. It is against our Company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our company’s Code of Business Conduct and
Ethics by another.
Our Code of Business Conduct and Ethics has
been filed as Exhibit 14.2 to the Annual Report on Form 10-K for fiscal year ended September 30, 2015. We will provide a copy
of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Asia Equity Exchange
Group, Inc., Unit 1507, 15/F., Convention Plaza-Office Tower, 1 Harbor Road, Wanchai, Hong Kong.
Executive Compensation
The following tables set forth, for each of
the last two completed fiscal years of the Company, the total compensation awarded to, earned by or paid to any person who was
a principal executive officer during the preceding fiscal year and every other highest compensated executive officers earning
more than $100,000 during the last fiscal year (together, the “Named Executive Officers”). The tables set forth below
reflect the compensation of the Named Executive Officer
SUMMARY
COMPENSATION TABLE
|
Name
and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards ($)
|
|
Option
Awards ($)
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings ($)
|
|
All
Other Compensation (3) ($)
|
|
Total
($)
|
Michael
Staples
(1)
President, Chief
Executive Officer, Chief Financial Officer, Treasurer and Director
|
|
2015
2014
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
10,000
|
|
Nil
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel
Tweeten
(2)
Secretary and Director
|
|
2015
2014
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
Nil
|
|
Nil
1,000
|
|
Nil
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liu
Jun
(4)
President, Chief
Executive Officer, Chief Financial Officer and Director
|
|
2015
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peng
Tao
(5)
Treasurer and
Director
|
|
2015
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
(1)
|
Mr.
Staples was appointed as a Director on July 15, 2013 and as President, Chief Executive Officer, Chief Financial Officer, and
Treasurer of the company on July 17, 2013. Mr. Staples resigned as an officer and director on July 6, 2015.
|
|
|
|
|
(2)
|
Mr.
Tweeten was appointed as a Director on July 15, 2013 and as Secretary of the company on July 17, 2013. Mr. Tweeten resigned
from the positions of Secretary and director on July 6, 2015.
|
|
|
|
|
(3)
|
Mr.
Staples received 10,000,000 shares for compensation of $10,000 and Mr. Tweeten received 1,000,000 shares for compensation
of $1,000, as compensation for services rendered.
|
|
|
|
|
(4)
|
Mr.
Liu Jun was appointed President, Chief Executive Officer, Secretary and to the Board of Directors on July 6, 2015.
|
|
|
|
|
(5)
|
Mr.
Peng Tao was appointed Secretary and to the Board of Directors on July 6, 2015.
|
Narrative Disclosure to Summary Compensation
Table
Other than set out below, there are no arrangements
or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive
officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers,
except that share options may be granted at the discretion of our board of directors.
Stock Option Plan
Currently, we do not have a stock option plan
in favor of any director, officer, consultant or employee of our company.
Grants of Plan-Based Awards
To date, there have been no grants or plan-based
awards.
Outstanding Equity Awards
To date, there have been no outstanding equity
awards.
Option Exercises and Stock Vested
To date, there have been no options exercised
by our named officers.
Compensation of Directors
We do not have any agreements for compensating
our directors for their services in their capacity as directors.
Pension, Retirement or Similar Benefit
Plans
There are no arrangements or plans in which
we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock
options may be granted at the discretion of the board of directors or a committee thereof.
Employment Agreements
We have no formal employment agreements with
any of our employees, directors or officers.
Certain Relationships
and Related Transactions Certain Relationships and Related Transactions
SEC rules require us to disclose any transaction
or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct
or indirect material interest involving the lesser of $120,000.00 or one percent (1%) of the average of the Company’s total
assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director,
or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons.
On August 12, 2013,
10,000,000 shares of the Company’s common stock were issued to Michael Staples, at the time, an officer of the Company,
at the price of $0.001 per share for services valued at $10,000. On August 12, 2013, 1,000,000 shares of the Company’s common
stock were issued to Joel Tweeten, at the time, an officer and director of the Company, at a price of $0.001 per share for services
valued at $1,000.
Mr. Liu Jun, the
Company’s Chief Executive Officer, Chief Financial Officer Secretary and Director (and appointed as AEEGCL’s President,
Chief Executive Officer, Chief Financial Officer Secretary and Director on January 31, 2016) has advanced the Company a total
of $14,408 for operating expenses and owed to AEEGCL a total of $14,284 as at December 31, 2015. As at March 31, 2016, Mr. Liu
Jun has advanced the Company a total of $20,392 for operating expenses and settled the amount owed to AEEGCL and advanced AEEGCL
$195,399 for operating expenses.
Between August 30,
2015 and March 31, 2016, Mr. Liu Jun, the President of AEEX made cash advances to the Company totaling $20,392 at an interest
rate of 4.35% per year. Each advance was for a term of one year. The Agreements evidencing these advances have been filed as Exhibit
10.4 to the current Amendment 2 Form 8-K.
Since inception on July 15, 2013 through to
September 30, 2014, Mr. Staples advanced the Company $62,500 for operating expenses and received payments in return of those advances
of $21,638 resulting in a net advance of $40,862. These advances have been formalized by non-interest bearing demand notes. Mr.
Staples and Mr. Tweeten are founders and therefore may be considered promoters, as that term is defined in Rule 405 of Regulation
C.
None of our officers or directors has any
direct or indirect relationship to any additional current or proposed transactions.
Market Price of and
Dividends on Common Equity and Related Stockholder Matters
Market Information
Our company’s common stock is quoted
on the OTCBB under the symbol “AEEX”. Our stock was not eligible to trade until July 2, 2014. There is a public trading
market our common stock.
The following table sets forth the quarterly
high and low bid prices for the common stock from July 2, 2014, to March 31, 2016. The prices set forth below represent inter-dealer
quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.
|
|
High
|
|
|
Low
|
|
Quarter ended September 30, 2014
|
|
$
|
0.025
|
|
|
|
0.025
|
|
Quarter ended December 31, 2014
|
|
$
|
0.025
|
|
|
|
0.025
|
|
Quarter ended March 31, 2015
|
|
$
|
0.025
|
|
|
|
0.025
|
|
Quarter ended June 30, 2015
|
|
$
|
0.025
|
|
|
|
0.025
|
|
Quarter ended September 30, 2015
|
|
$
|
0.010
|
|
|
|
0.010
|
|
Quarter ended December 31, 2015
|
|
$
|
9.00
|
|
|
|
0.010
|
|
Quarter ended March 31, 2016
|
|
$
|
6.20
|
|
|
|
4.99
|
|
Holders
As June 7, 2016 there were 106 stockholders
of record, and an aggregate of 1,146,000,000 shares of our common stock was issued and outstanding.
Dividend Policy
We have not paid any cash dividends on our
common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to
retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be
determined from time to time by our board of directors.
Equity Compensation Plan Information
We do not have in effect any compensation
plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
Recent Sales of Unregistered Securities
We did not sell any equity securities which
were not registered under the Securities Act during the year ended December 31, 2015 and the quarter ended March 31, 2016, that
were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended
December 31, 2015, and any Form 10-Q subsequent to that date.
Purchase of Equity Securities by the Issuer
and Affiliated Purchasers
We have not purchased any of our shares of
common stock or other securities during our fourth quarter of our fiscal year ended September 30, 2015 or during the interim quarterly
period ended December 31, 2015 and March 31, 2016.
Description of Securities
The authorized capital stock of our company
consists of 3,000,000,000 shares of common stock, at $0.001 par value, and 1,000,000 shares of preferred stock, at $0.001 par
value.
Common Stock
Holders of common stock are entitled to one
vote for each share held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of
directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion
or redemption. Upon liquidation, dissolution or winding up of our company, the assets legally available for distribution to stockholders
are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding
payment of other claims of creditors. Each outstanding share of common stock is duly and validly issued, fully paid and non-assessable.
Preferred Stock
Shares of preferred stock may be issued from
time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by our
Board of Directors prior to the issuance of any shares thereof. Preferred stock will have such voting powers, full or limited,
or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class
or series of preferred stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares
thereof. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding
shares of our capital stock entitled to vote generally in the election of the directors, voting together as a single class, without
a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant
to any preferred stock designation.
While we do not currently have any plans for
the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common
stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any
shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines the specific rights
of the holders of the preferred stock; however, these effects may include:
i. Diluting the voting power of the common
stock;
ii. Impairing the liquidation rights of the
common stock; or
Delaying or preventing a change in control
of the Company without further action by the stockholders.
iii. Other than in connection with shares
of preferred stock (as explained above), which preferred stock is not currently designated nor contemplated by us, we do not believe
that any provision of our charter or By-Laws would delay, defer or prevent a change in control.
Transfer Agent
The transfer agent of our company’s
common stock is Transfer Online, Inc. at SE 512 Salmon Street, Portland OR 97214.
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 business.
We are currently not aware of any pending
legal proceedings to which we are a party or of which any of our properties or assets is the subject, nor are we aware of any
such proceedings that are contemplated by any civil entity, any regulatory agency or governmental authority.
INDEMNIFICATION OF
DIRECTORS AND OFFICERS
Nevada Corporation Law, our Articles of Incorporation
and Bylaws of the corporation, allow us to indemnify our officers and directors from certain liabilities and our Bylaws state
that we shall indemnify every (i) present or former director or officer of us, (ii) any person who while serving in any of the
capacities referred to in clause (i) served at our request as a director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors
or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) (each an “Indemnitee”).
Our Bylaws provide that we shall indemnify
an Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable
expenses actually incurred by the Indemnitee in connection with any proceeding in which he was, is or is threatened to be named
as defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole
or in part, of his serving or having served, or having been nominated or designated to serve, if it is determined that the Indemnitee
(a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his official capacity, that his conduct
was in our best interests and, in all other cases, that his conduct was at least not opposed to our best interests, and (c) in
the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that
in the event that an Indemnitee is found liable to us or is found liable on the basis that personal benefit was improperly received
by the Indemnitee, the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection
with the proceeding and (ii) shall not be made in respect of any proceeding in which the Indemnitee shall have been found liable
for willful or intentional misconduct in the performance of his duty to us.
Other than in the limited situation described
above, our Bylaws provide that no indemnification shall be made in respect to any proceeding in which such Indemnitee has been
(a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an
action taken in the Indemnitee’s official capacity, or (b) found liable to us. The termination of any proceeding by judgment,
order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee
did not meet the requirements set forth in clauses (a) or (b) above. An Indemnitee shall be deemed to have been found liable in
respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction
after exhaustion of all appeals therefrom. Reasonable expenses shall, include, without limitation, all court costs and all fees
and disbursements of attorneys for the Indemnitee. The indemnification provided shall be applicable whether or not negligence
or gross negligence of the Indemnitee is alleged or proven.
In addition to our Bylaws and our Articles
of Incorporation, we have entered into an Indemnification Agreement with each of our directors pursuant to which we will be obligated
to maintain liability insurance in favor of the directors serving the Company and its subsidiaries and affiliates. We will also
be required to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law
and our governing documents. We believe that entering into the contemplated agreements will help attract and retain highly competent
and qualified persons to serve the Company.
Other than discussed above, none of our Bylaws,
our Articles of Incorporation or any indemnification agreement with any director of the Company includes any specific indemnification
provisions for our officers or directors against liability under the Securities Act. Additionally, insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the United States SEC,
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 3.02: SHARES ISSUED IN CONNECTION
WITH THE SALE AND PURCHASE AGREEMENT
On April 12, 2016, pursuant to the terms of
the Agreement dated November 30, 2015, all of the shares of common stock of AEEGCL were exchanged for 1,000,000,000 restricted
shares of our Common Stock. This transaction was exempt from registration under Section 4(2) of the Securities Act as not involving
any public offering, and Regulation S of the 1933 Act. None of the securities were sold through an underwriter and, accordingly,
there were no underwriting discounts or commissions involved.
Each of these securities issuances took place
outside of the United States in private transactions to non-U.S. persons.