UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10
Amendment
No. 11
Date
of Amendment No. 11: August 16, 2017
Date
of Amendment No. 10:
July 31,
2017
Date
of Amendment No. 9:
June 20,
2017
Date
of Amendment No. 8: April 14, 2017
Date
of Amendment No. 7: February 13, 2017
Date
of Amendment No. 6: February 1, 2017
Date
of Amendment No. 5: December 6, 2016
-
Date
of Amendment No. 4: November 2, 2016
Date
of Amendment No. 3: November 2, 2016
Date
of Amendment No. 2: October 18, 2016
Date
of Amendment No. 1: October 4, 2016
Date
of Original Filing: September 30, 2016
General
Form for Registration of Securities
Pursuant
to Section 12(b) or (g) of the Securities Exchange Act of 1934
ATI
MODULAR TECHNOLOGY CORP.
(Exact name of registrant as specified in its charter)
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Nevada
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81-3131497
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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c/o
Alton Perkins
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4700
Homewood Court, Suite 100, Raleigh, North Carolina
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27609
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrants
telephone number, including area code: (888) 406-2713
Send
all correspondence to:
Alton
Perkins
4700 Homewood Court
Suite
100
Raleigh,
North Carolina 27609
Telephone/Facsimile:
(888) 406-2713
Email: ap@atimodular.com
Copies
to
:
Anthony
R. Paesano
Paesano
Akkashian Apkarian, P.C.
7457
Franklin Road
Suite
200
Bloomfield
Hills, Michigan 48301
Telephone:
(248) 792-6886
Email:
apaesano@paalawfirm.com
Securities
to be registered under Section 12(b) of the Act: None
Securities
to be registered under Section 12(g) of the Exchange Act:
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Title
of each class to be
so registered
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Name
of Exchange on which each
class is to be registered
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Common
Stock, $.0001
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N/A
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Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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(Do
not check if a smaller reporting company)
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We
are filing this General Form for Registration of Securities on Form 10 to register our common stock, par value $0.0001 per share
(the Common Stock), pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Unless otherwise
noted, referenced in this registration statement to ATI Modular or the Company, or pronouns such as, we, our or us refers to ATI
Modular Technology Corp. Once this registration statement is deemed effective, we will be subject to the requirements of Regulation
13A under the Exchange Act, which will require us to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing
registration statements pursuant to Section 12(g) of the Exchange Act.
EXPLANATORY
NOTE
On
September 30, 2016, the Company filed its registration information on Form 10. The Company has since responded to comments
provided by the Securities and Exchange Commission (“SEC”), resulting in nine (9) prior amendments to date.
These amendments also outlined changes in the Company’s articles of incorporation and agreements entered into by the Company.
This
Tenth Amendment to the Company’s Form 10 updates the Company’s financial information and addresses the questions raised
in SECs comment letter dated June 28, 2017. As referenced herein, the term Form 10 shall refer to the Company’s Tenth
Amendment to its Form 10 Information.
FORWARD
LOOKING STATEMENTS
Special
Note Regarding Forward-Looking Statements
Information
included or incorporated by reference in this registration statement on Form 10 contains forward-looking statements. All forward-looking
statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future
performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only
predictions and speak only as of the date hereof. Forward-looking statements may contain the words believes, project, expects,
anticipates, estimates, forecasts, intends, strategy, plan, may, will, would, will be, will continue, will likely result, and
similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally, statements relating
to implementation of business strategy, future financial performance, acquisition strategies, capital raising transactions, performance
of contractual obligations, and similar statements may contain forward-looking statements. In evaluating such statements, prospective
investors and shareholders should carefully review various risks and uncertainties identified in this Report, including the matters
set forth under the captions Risk Factors and in the Company’s other SEC filings. These risks and uncertainties could cause
the Company’s actual results to differ materially from those indicated in the forward-looking statements. The Company disclaims
any obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.
Although
forward-looking statements in this registration statement on Form 10 reflect the good faith judgment of our management, such statements
can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject
to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes
include, without limitation, those specifically addressed under the heading Risk Factors Related to Our Business below, as well
as those discussed elsewhere in this Form 10. Readers are urged not to place undue reliance on these forward-looking statements,
which speak only as of the date of this Form 10. We file reports with the Securities and Exchange Commission (“SEC”).
You can read and copy any materials we file with the SEC at the SECs Public Reference Room, 100 F. Street, NE, Washington, D.C.
20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, including us.
We
disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this registration statement on Form 10. Readers are urged to carefully review and consider the various
disclosures made throughout the entirety of this Form 10, which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations and prospects.
Item
1. Description of Business.
(a)
General Development of Business
We
are an operating company engaged in the development and the exporting of modular energy efficient technology and processes that
allow government and private enterprises in China to use US-based methods for creating modular spaces, facilities, and properties.
We are in the business of all aspects of modular construction, including but not limited to, (a) the furtherance of modular construction
technology, education and development in developed and undeveloped countries, (b) acquisition and/or installation of construction
equipment, materials, furnishings, adware, insulation, flooring, roofing, wiring, plumbing, heating and air conditioning, and
landscaping, and (c) other businesses directly or tangentially related to these lines of services, including assisting businesses
and entrepreneurs in securing naming, licensing or promotional rights, driving internet and media traffic, increasing visibility
of product and name recognition, and other services. As with any business plan that is aspirational in nature, there is no assurance
we will be able to accomplish all of our objectives or that we will be able to meet our financing needs to accomplish our objectives.
We believe that we are a shell company, as defined under Rule 12b-2 of the Exchange Act. Our CIK number is 0001697426, and we
have selected December 31 as our fiscal year.
In
China, the modular construction industry is new and in its very early stages. There are only three other competitors, and those
competitors are based in China. None of the competitors are from the United States. We believe that it is recognized that United
States modular technology is more advanced than our Chinese counterparts, and the technology is recognized as the gold standard.
The construction industry in China, as a whole, has a mandate to immediately start developing modular technology with cities and
provinces developing modular construction plans and targets to construct modular in both the public as well as private sectors.
Most communities have milestones and are creating official policies on modular construction with the actual percentage of production
mandated by particular target dates.
In
our view, our position is strong. We have been sought out by three separate governments in China to assist their communities in
developing their modular industry based upon United States technology. We have experience in the construction sector in China
and the United States, and thus we believe we have the leverage in assembling experts in the modular industry to assist in delivery
of goods, services, equipment, technology, and know-how all under the moniker of Made in the USA.
We
are concluding registering our subsidiary in China and shortly expect to announce the physical location of our offices in China
as well as our plant and other operating facilities. Our principal executive offices are located at 4700 Homewood Court, Suite
100 in Raleigh, North Carolina. We are registered as a foreign business entity in the State of North Carolina. We lease the office
space from Yilaime Corporation, a Nevada corporation doing business in North Carolina, and a related party to the Company, as
set forth below.
The
Company was incorporated on January 2, 1969 as United Gold & Silver Co. (“UGS”). On February 17, 1971, UGS merged
with Lucky Irish Silver, Inc., a Montana corporation, and Deep Creek Mines, Inc., a Washington corporation, in which the surviving
entity’s name remained USG. On November 29, 1999, USG merged with Auto America, Inc., (“Auto America”), a Delaware
corporation, through the filing of Articles of Merger resulting in the surviving entity changing its name from USG to Auto America.
From 2002 to 2007, the State of Washington automatically filed numerous Certificates of Administrative Dissolutions for Auto America
for failure to file annual reports. On May 14, 2007, Auto America filed its final Application of Reinstatement resulting in restoring
the Company to good standing. Also, on May 14, 2007, Auto America filed Amended Articles of Incorporation changing its name to
Charter Equities, Inc. (“Charter Equities”). Charter Equities converted to an Arizona corporation on January 23, 2008.
Shortly thereafter, the Company converted to Nevada corporation and changed its name to Global Recycle Energy, Inc. We amended
our articles of incorporation on June 27, 2016, changing our name to ATI Modular Technology Corp.
(b)
Description of Registrants Plan of Operation
As
of the filing of this Registration Statement, we are in the first quarter of our fiscal year. Our focus at this time is on performing
our duties and obligations under a series of pending operational agreements, discussed below.
As
set forth below, the Company intends on relying on other businesses controlled by our sole director and officer, and beneficial
owner of the majority shares of common stock in the Company Alton Perkins, in implementing its business plan.
Mr.
Perkins is the control person of Yilaime Corporation, AmericaTowne and AXP Holding Corporation. At this time, the purpose of the
Company is to service the construction and related technology needs of AmericaTowne under AmericaTowne’s agreements with
the Shexian County Investment Promotion Bureau in developing an AmericaTowne community in the Hanwang mountains in Shexian, China.
The Company also intends on supporting these services in other AmericaTowne ventures at the invitation of the Xiamen Longyan City
Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency in developing an AmericaTowne Community and
an International School in Longyan County China.
The
related export services rendered to the Company in the implementation of its business plan cannot be provided by AmericaTowne
or through the AmericaTowne relationship. In order to avoid conflicts of interest, Mr. Perkins is of the opinion that there must
be a separate and distinct agreement between, in this case, the Company and AXP Holding Corporation. Furthermore, although other
similar IC-DISC entities exist, the Company is able to obtain better terms and conditions from AXP Holding Corporation in light
of Mr. Perkins control of AXP Holding Corporation.
AmericaTowne’s
Board of Directors determined that operating and controlling a separate but related entity focused on the development and the
exporting of modular energy efficient technology and processes for government and private enterprises in China would be more prudent
from a risk mitigation and operational standpoint than providing these services under the AmericaTowne business plan. Furthermore,
the intent of the Company is to expand its services and relationships to other similar endeavors in projects not related to AmericaTowne,
thus the need to maintain and operate a separate entity.
Cooperative
Agreement AmericaTowne, Inc. and Shexian County Investment Promotion Bureau
On
June 21, 2016, AmericaTowne, the controlling shareholder of the Company by virtue of its majority ownership of common stock in
the Company, entered into a Cooperative Agreement with the Shexian County Investment Promotion Bureau (the “Shexian County
Bureau”) out of Shexian, China (hereinafter, the “AT/Shexian Cooperative Agreement”). The AT/Shexian Cooperative
Agreement relates to the construction of an AmericaTowne location in advancing tourism in the Hanwang mountains.
Under
the terms of the AT/Shexian Cooperative Agreement, AmericaTowne and the Shexian County Bureau have agreed to a strategic partnership
wherein the Shexian County Bureau intends to invest local resources to AmericaTowne for construction of an AmericaTowne community.
In consideration, AmericaTowne intends on investing funds towards the development of the AmericaTowne community. AmericaTowne
will be obligated to bear any and all applicable taxes and the projected investment by AmericaTowne into the development of the
AmericaTowne community is estimated to be $30,000,000. It is anticipated that the definitive agreement will set forth a detailed
projection and proforma associated with the use of funds. There is no guarantee that AmericaTowne will be able to raise this capital
in the event a definitive agreement is executed. Furthermore, AmericaTowne’s ability to raise the necessary capital and
to perform obligations under any definitive agreement might be materially affected in the event the Company is not able to perform
any of its obligations under any future definitive agreement with the Shexian County Bureau.
Cooperative
Agreement ATI Modular and Shexian County Investment Promotion Bureau
The
Company is controlled by AmericaTowne by virtue of the AmericaTowne’s majority ownership of common stock. On June 21, 2016,
the Company agreed to participate with the Shexian County Bureau in building local modular construction, researching technology
and intelligent systems related thereto, and servicing the full lifecycle of modular construction in the locale through the execution
of the Cooperative Agreement (the “ATI Modular/Shexian Cooperative Agreement”).
Pursuant
to future negotiations and more definitive agreements, ATI Modular has agreed to purchase the requisite equipment and technology
in performing under the ATI Modular/Shexian Cooperative Agreement. In consideration for the services provided by ATI Modular,
the Shexian County Bureau has agreed to be responsible for providing factories and land, and other resources and manpower in developing
the modular construction. The Company has also agreed to exercise its best efforts in raising approximately $30,000,000 in furthering
the parties’ collective interests under the ATI Modular/Shexian Cooperative Agreement. These funds would be allocated towards
different operating costs than the funds necessary for AmericaTowne to perform under the AT/Shexian Cooperative Agreement. It
is anticipated that the definitive agreement will set forth a detailed projection and proforma associated with the use of funds.
The Company and the Shexian County Bureau have agreed to continue to cooperate in good faith in executing and further agreements
needed in furthering their respective objectives. However, notwithstanding this intent, the Company’s ability to perform
might be materially affected in the event AmericaTowne is not able to meet its obligations in furthering any future definitive
agreement with the Shexian County Bureau.
Investment
and Cooperation Agreement for ATI Modular Green Building Manufacturing Project (Jiangnan)
On
September 8, 2016, the Company entered into the Investment and Cooperation Agreement for ATI Modular Green Building Manufacturing
Project (“Jiangnan Agreement”) with the Jiangnan Industry Zone in Anhui Province (“Jiangnan”). Under the
Jiangnan Agreement, the Company agreed, among other things, to manufacture and install modular buildings, and provide research
into the development of green building module manufacturing. The Jiangnan Agreement was not a definitive agreement. Rather, it
memorialized the parties’ future intent as to the subject matter therein.
On
December 28, 2016, the Company and Jiangnan entered into the American ATI Modular Technology Company Project Investment Agreement
(the “Investment Agreement”), which superseded the Jiangnan Agreement. Under the Investment Agreement, Jiangnan and
the Company agreed to the construction of the Company’s green, modular building and related technology under the project
name Modular Plant Production Base. The Investment Agreement calls for the Company will rent buildings, factories and rental houses
from Jiangnan, or its related-party - Jiangnan Construction & Development Co., Ltd. (“Jiangnan Construction”),
with a total acreage of approximately 244,776 square meters (approximately 2,634,747 square feet) for purposes of advancing the
Company’s modular construction, technology and research, and with a chosen location within this area for the Company’s
global company offices. The Company will retain its offices in the United States. In the event the Company does not occupy the
rented facilities in one-year, Jiangnan may place other tenants in the buildings for unrelated projects. The rental rate is as
follows per square meter, per month: (a) 9 Chinese Yuan (approximately $1.29 USD) for single-storied factory buildings, (b) 7
Chinese Yuan (approximately $1.01 USD) for multi-storied factory buildings, (c) 6 Chinese Yuan (approximately $.86 USD) for two-storied
buildings, (d) 5 Chinese Yuan (approximately $.75 USD) for three-storied buildings and public rental, and (e) 10 Chinese Yuan
(approximately $1.38 USD) for commercial housing. The first twenty-seven months is rent free. Pursuant to the Investment Agreement,
the lease term for the property the Company will utilize will be ten (10) years. The Company intends on entering into a formal
lease agreement with Jiangnan, however said lease has not been finalized. The Company will finalize the separate lease agreement
once it completes the foreign entity registration process.
The
initial deposit of 330,000 Chinese Yuan (approximately $48,000 USD) is due upon the Company’s registration as a foreign
entity with the Chinese government. This amount may be applied to the Company’s rental obligations. The Company has agreed
to further capitalize the operation with 396,000,000 Chinese Yuan (approximately $57,000,000 USD) with 79,200,000 Chinese Yuan
(approximately $11,000,000 USD) by December 31, 2017.
The
capitalization under the Investment Agreement is, in part, the Company’s responsibility. However, the Company and Jiangnan
have agreed to certain provisions to mitigate against financing risks, including, but not limited to: (a) access upon request
by the Company to local bank loans in the Anhui Province and United States Exim Bank, (b) equity fund insertion up to $3,000,000
USD, and (c) contribution by Jiangnan up to $2,900,000 upon meeting conditions in the Investment Agreement.
The
Company’s majority and controlling shareholder, ATI, has no financial obligations under the Investment Agreement. However,
ATIs director, officer and control person by virtue of his beneficial ownership of more than 51% of the issued and outstanding
shares of common stock is Alton Perkins. Mr. Perkins is also the beneficial owner of the controlling interest in the Company by
virtue of his ownership in ATI, and he is the Company’s sole director and officer. As a result, Mr. Perkins might elect
to vote ATIs shares, or exercise his rights as the sole member of the Board of Directors of ATI, to loan funds from AmericaTowne
to the Company to satisfy the capital requirements under the Investment Agreement. If this occurred, the loaned funds would become
a related-party debt to the Company. There are no current plans or intentions by Mr. Perkins to facilitate such a loan.
Investment
and Cooperation Agreement for ATI Modular Green Building Manufacturing Project (Yongan)
On
September 9, 2016, the Company entered into the Investment and Cooperation Agreement for ATI Modular Green Building Manufacturing
Project with the Yongan government in the Fujian province (the “Yongan Agreement”). Under the Yongan Agreement, similar
to the Jiangnan Agreement, the Company has agreed to manufacture and install modular buildings, and provide research into the
development of green building module manufacturing. The Company has agreed to provide appropriate technology and intelligent systems
in providing modular building lifecycle services. The location of the planned project is Yongan city in the Fujian province, China.
The parties have projected a cost of $30,000,000.
The
Company has agreed to grant the Yongan government audit, access, supervision, inspection and other rights. The Yongan government
has agreed to coordinate any and all necessary services in securing benefits associated with the Company being a foreign investment
enterprise, including but not limited to, providing the site for the manufacturing facility, tax relief, access to financing and
a Project Headquarter for the Company, which is defined in the Yongan Agreement.
The
Yongan Agreement is not a definitive agreement; rather, it is a memorialization of the parties’ future intent as to the
subject matter therein. The Company’s business plans and objectives could be impaired in the event the parties do not reach
a definitive agreement. The Company is responsible for financing and providing any necessary facilities inside any factory plant.
There is no guarantee that the Company can secure such financing or develop the necessary facilities.
Sales
and Support Services Agreement (Yilaime Corporation)
On
June 27, 2016, we entered into a Sales and Support Services Agreement with Yilaime Corporation, a Nevada corporation (“Yilaime”).
Yilaime is the holder of the majority of issued and outstanding shares of common stock in AmericaTowne, Inc. (“ATI”),
a Delaware corporation and fully-reporting company with the United States Securities and Exchange Commission. Mr. Perkins is also
the Trustee of the Alton & Xiang Mei Lin Perkins Family Trust (“Perkins Trust”) and the AXP Nevada Asset Protection
Trust 1 (“AXP”), which holds 5,100,367 and 120,000 shares, respectively, of the issued and outstanding common stock
in ATI. Mr. Perkins is the beneficial owner of 20,674,484 shares of ATI, which equals 90.11% of issued and outstanding shares.
Mr. Perkins is the beneficial owner of the majority and controlling interest in the Company through his direct holdings, and beneficial
holdings through Yilaime, AXP and the Perkins Trust. ATI, Perkins Trust and Mr. Perkins beneficially own 110,117,593 shares, or
86%, of the Company’s common stock.
Under
the Services Agreement, Yilaime will provide the Company with marketing, sales, and support services in the Company’s pursuit
of modular business in China in exchange for a commission equal to ten percent (10%) of the gross amount of monies procured for
the Company through Yilaime’s services. In consideration of the right to receive this commission, Yilaime has agreed to
pay the Company a quarterly fee of $250,000. The Services Agreement is set to expire on June 10, 2020.
Yilaime
is obligated to provide support services only in a manner that is deemed commercially acceptable by Yilaime and Yilaime has the
sole right to determine the means, manner and method by which services will be provided and at the time and location of its choosing.
Furthermore, as the control person of Yilaime, Mr. Perkins might make decisions he deems are in the best interests of Yilaime,
which might be to the detriment of the goals and objectives of the Company.
Modular
Construction & Technology Services Agreement (AmericaTowne)
On
June 28, 2016, we entered into a Modular Construction & Technology Services Agreement (the “Modular Services Agreement”)
with AmericaTowne Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). The impetus behind the Modular Services Agreement was the Company’s Cooperative
Agreement with the Shexian County Government, China. Under the Cooperative Agreement, ATI and the Shexian County Bureau have agreed
to a partnership in furthering the development of an AmericaTowne community in the Hanwang mountains, Shexian, China. In addition,
ATI, at the invitation of the Xiamen Longyan City Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning
Agency plan to pursue the development of an AmericaTowne Community and an International School in Longyan County China.
Under
the Modular Services Agreement, ATI Modular shall provide the
research, development, training
and modular technology in a manner deemed commercially acceptable by ATI based on its commercially reasonable requirements, plans
and specifications, which shall be agreed upon in advance of any substantial and material construction.
ATI will pay the
Company a quarterly fee of $125,000 per quarter. The initial fee under the Modular Services Agreement with AmericaTowne was recorded
as a related-party receivable upon its execution. The Services Agreement is set to expire on June 10, 2020, absent early termination
for breach thereof by either party. ATI retains an option to extend the term under its sole discretion until June 10, 2025 by
providing written notice to the Company by March 10, 2019.
Interest
Charge Domestic International Sales Agreement (AXP Holding Corporation)
On
June 29, 2016, we entered into an IC-DISC Service Provider Agreement with AXP Holding Corporation, a Nevada corporation (“AXP
Holding”) and related party to the Company through Mr. Perkins control of AXP Holding. AXP Holding is an Interest Charge
- Domestic International Sales Corporation, or IC-DISC. AXP IC-DISC tax-exempt status was authorized and approved by the United
States Department of the Treasury, Internal Revenue Service. As an IC-DISC, AXP Holding may, under certain conditions, act as
a sister corporation to entities and provide services to assist a company in obtaining lower tax rates on export income. In addition
to the export tax savings provided by AXP, AXP can provide an additional array of services including promoting the Company’s
export activities, purchasing receivables from the Company at a discount through a factoring relationship, and providing the Company
with working capital loans.
The
term under the IC-DISC Service Provider Agreement is set to expire on December 6, 2019, absent early termination for breach thereof
by either party. AXP retains the right to extend the term, exercising its sole discretion, to December 6, 2024 by providing written
notice to the Company by November 6, 2019. AXP has agreed to a non-compete and non-circumvent in providing the services under
the IC-DISC Service Provider Agreement.
The
Company has agreed to pay AXP a commission fee up to the greater of 50% of the Company’s export net income or 4% of the
Company’s export gross receipts. The Company will determine the exact amount and the method of payment of the commission
fee. The commission fee shall be paid at the option of the Company periodically throughout the year, but no later than December
31 on annual basis. If there is no commission fee due to no export sales, the Company will pay AXP an export service fee of $50,000.
The export service fee, if any, is due on or before December 31 on an annual basis.
In
addition, for referring businesses from the Company’s Export Platform or Community, AXP agrees to pay the Company 25% of
each Sales Export Service Fee charged and received as an IC-DISC Commission from each Exporter or Licensee resulting from participating
in the Export Platform or Community. This fee is called a Group Export Consulting Fee in the IC-DISC Service Provider Agreement,
and is due no later than fifteen business days after receipt from the Exporter or Licensee, but no later than December 31 on an
annual basis. For illustrative purposes, if AXP receives and or charges an Exporter 50% of its net export sales as a commission,
and that value is $100,000, AXP would owe the Company 25%, or $25,000. Furthermore, during the term, the Company shall pay AXP
a flat fee of $5,000 per transaction for purchasing receivables from the Company, plus an interest rate for such factoring at
the prime rate plus one-percent.
The
Company is in the early stages of its operations, and many of its plans and objectives are aspirational in nature, and thus might
never come to fruition. At this time, the Company plans to retain engineering and architectural firms based in the United States
who have extensive experience in developing modular structures in the United States, China and other foreign locations based on
market demand, which has not been thoroughly researched to date. The Company has been focused on obtaining quotes, negotiating
formal engagements and researching all aspects of the modular construction industry. While the infrastructure is still in the
developmental stage, the Company is confident that it has the experience, or access to those with experience, in the modular construction
field.
The
Company plans on engaging in onsite placement and delivery of modular structures. Mr. Perkins has extensive experience in operating
business in China. One of the reasons that Mr. Perkins was sought out and invited to participate in developing the modular industry
in China is that he was the co-chairman of a construction company in China - Yilaime Foreign Partnership in Henghsui China. His
experience with Yilaime Foreign Partnership allows ATI Modular to call on local companies in China as well as modular companies
and experts in the United States to help provide on-site services. Yilaime Foreign Partnership is not a related party to the Company,
ATI, Yilaime or AXP.
In
addition, the Company recently joined the Modular Building Institute in Charlottesville, Virginia. In September of 2016, Mr. Perkins
attended the Institute’s annual exposition in order to line up available suppliers, and experts in the modular construction
field.
We
intend on offering support services in all phases of modular construction. Our approach will be to focus on exporting United States
based technology, services and equipment, and general know-how. Exporters in our related company, AmericaTowne, are experienced
in the modular field and we plan on allowing those experienced exporters to participate in various levels of our program.
The
Company currently does not have a principal supplier of raw materials. The Company has identified potential sources of raw materials
in the United States through its membership in the Modular Building Institute. One of our primary challenges will be pricing the
source of raw materials and delivery to China. We are also looking to potential raw material sources in China.
To
operate within China, the Company requires approval of government officials in China. In both cases where the Company has signed
Cooperative Agreements (and in the case of the Shexian Agreement), and at the invitation of the local government, we have the
approval to register and conduct business.
Employees
The
Company currently has two full-time employees.
Emerging
Growth Company
We
are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest
of:
(a)
the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount
is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
(b)
the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities
of the issuer pursuant to an effective IPO registration statement;
(c)
the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt;
or
(d)
the date on which such issuer is deemed to be a large accelerated filer, as defined in section 240.12b-2 of title 17, Code of
Federal Regulations, or any successor thereto.
As
an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information
in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting.
This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the
registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal
control structure and procedures for financial reporting.
As
an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require
the shareholder approval of executive compensation and golden parachutes. We have elected to use the extended transition period
for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption
of new or revised accounting standards that have different effective dates for public and private companies until those standards
apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply
with public company effective dates.
Going
Concern
Our
auditor has expressed substantial doubt about your ability to continue as a going concern. Our net loss after provision for income
tax is $3,693, and we do not have sufficient revenue to cover any further losses that may occur.
As
a shell company, the Company and its shareholders are subject to certain consequences, challenges and risks. All of the presently
outstanding shares of common stock are restricted securities as defined under Rule 144 promulgated under the Securities Act and
may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has
adopted final rules amending Rule 144 which became effective on February 15, 2008. These final rules may be found at: www.sec.gov/rules/final/2007/33-8869.pdf.
Pursuant
to the new Rule 144, one year must elapse from the time a shell company, as defined in Rule 405, ceases to be shell company and
files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form
10 information is equivalent to information that a company would be required to file if it were registering a class of securities
on Form 10 under the Securities and Exchange Act of 1934 (the “Exchange Act”).
Under
the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell
company or an Issuer that has at any time previously a reporting or non-reporting shell company as defined in Rule 405, can only
be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting
or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required
to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period
that the Issuer was required to file such reports and materials), other than Form 8-K reports and (4) at least one year has elapsed
from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not
a shell company.
At
the present time, the Company is classified as a shell company as defined in Rule 12b-2 of the Exchange Act. As such, all restricted
securities presently held by the affiliates or control persons of the Company may not be resold in reliance on Rule 144 until:
(1) the Company files Form 10 information with the SEC when it ceases to be a shell company; (2) the Company has filed all reports
as required by Section 13 and 15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the
time the Company files the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell
company.
There
can be no assurance that we will ever meet these conditions and any purchases of our shares are subject to these restrictions
on resale. A purchase of our shares may never be available for resale as we cannot be assured we will ever lose our shell company
status.
Item
1A. Risk Factors.
As
a smaller reporting company, we are not required to provide the information required by this item.
Item
2. Financial Information.
Management’s
Discussion and Analysis of Financial Condition and Results of Operation.
You
should read the following discussion of our financial condition and results of operations together with the audited financial
statements and the notes to the audited financial statements included in this Registration Statement on Form 10. This discussion
contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from
those anticipated in these forward-looking statements.
We
qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on
exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
-
have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
-
comply
with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an
auditor discussion and analysis);
-
submit
certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;"
and
-
disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
of the CEO's compensation to median employee compensation.
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
The
Company is in the early stages of its operations, and many of its plans and objectives are aspirational in nature, and thus
might never come to fruition. At this time, the Company plans to retain engineering and architectural firms based in the
United States who have extensive experience in developing modular structures in the United States, China and other foreign
locations based on market demand, which has not been thoroughly researched to date. The Company has been focused on obtaining
quotes, negotiating formal engagements and researching all aspects of the modular
construction industry. While the
infrastructure is still in the developmental stage, the Company is confident that it has the experience, or access to those
with experience, in the modular construction field.
The
Company plans on engaging in onsite placement and delivery of modular structures. Mr. Perkins has extensive experience in operating
business in China. One of the reasons that Mr. Perkins was sought out and invited to participate in developing the modular industry
in China is that he was the co-chairman of a construction company in China - Yilaime Foreign Partnership in Henghsui China. His
experience with Yilaime Foreign Partnership allows ATI Modular to call on local companies in China as well as modular companies
and experts in the United States to help provide on-site services. Yilaime Foreign Partnership is not a related party to the Company,
ATI, Yilaime or AXP.
In
addition, the Company recently joined the Modular Building Institute in Charlottesville, Virginia. In September of 2016, Mr. Perkins
attended the Institute’s annual exposition in order to line up available suppliers, and experts in the modular construction
field.
We
intend on offering support services in all phases of modular construction. Our approach will be to focus on exporting United States
based technology, services and equipment, and general know-how. Exporters in our related company, AmericaTowne, are experienced
in the modular field and we plan on allowing those experienced exporters to participate in various levels of our program.
The
Company currently does not have a principal supplier of raw materials. The Company has identified potential sources of raw materials
in the United States through its membership in the Modular Building Institute. One of our primary challenges will be pricing the
source of raw materials and delivery to China. We are also looking to potential raw material sources in China.
To
operate within China, the Company requires approval of government officials in China. In both cases where the Company has signed
Cooperative Agreements (and in the case of the Shexian Agreement), and at the invitation of the local government, we have the
approval to register and conduct business.
Fiscal
Year
Our
fiscal year ends December 31.
Results
of Operations for the Six Months Ended June, 2017 and 2016
Our
operating results for the six months ended June 30, 2017 and 2016 are summarized as follows:
|
|
Six
Months Ended
|
|
|
June
30, 2017
|
|
June
30, 2016
|
Revenue
|
|
$
|
250,000
|
|
|
$
|
125,000
|
|
Cost
of Revenues
|
|
$
|
|
|
|
$
|
|
|
Operating
Expenses
|
|
$
|
204,404
|
|
|
|
27,902
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
38,757
|
|
|
$
|
100,957
|
|
Revenues
During
the second quarter of 2017, the Company generated revenue of $250,000. The Company's revenues came from related parties for services
rendered $250,000 for the service rights agreement with AmericaTowne. We can make no assurances that we will find commercial success-
in any of our revenue producing contracts. Our revenues, thus far, rely entirely on related parties. We are a new company and
thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to
our business as we began operations in the second quarter of 2016.
Operating
Expenses
Our
expenses for the first six months ended June 30, 2017 and 2016 are outlined in the table below:
|
|
Six
Months Ended
|
|
|
June
30, 2017
|
|
June
30, 2016
|
General
and Administrative
|
|
$
|
204,404
|
|
|
$
|
27,902
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
$
|
204,404
|
|
|
$
|
27,902
|
|
Our
operating expenses are largely attributable to administrative expenses related to our reporting requirements as a public company
and implementation of our business plan.
Net
Income
As
a result of our operations, the Company reported net income before tax obligations of $38,757 for the second quarter of 2017.
Liquidity
and Capital Resources
Working
Capital
|
|
June
30, 2017
|
|
December
31, 2016
|
Current
Total Assets
|
|
$
|
1,122,039
|
|
|
$
|
712,793
|
|
Current
Total Liabilities
|
|
$
|
830,143
|
|
|
$
|
534,086
|
|
|
|
|
|
|
|
|
|
|
Working
Capital
|
|
$
|
291,896
|
|
|
$
|
178,707
|
|
Cash
Flow
|
|
Six
Months Ended
|
|
|
June
30, 2017
|
|
June
30, 2016
|
Net
Cash Provided by Operating Activities
|
|
$
|
98,539
|
|
|
$
|
4,156
|
|
Net
Cash Used in Investing Activities
|
|
$
|
861
|
|
|
$
|
4,156
|
|
Nat
Cash Provided by Financing Activities
|
|
$
|
22,499
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Increase/Decrease
in Cash
|
|
$
|
120,178
|
|
|
$
|
-
|
|
Cash
Used in Operating Activities
We
have $98,539 and $4,156 net cash used in operating activities for the six months ended June 30, 2017 and 2016, respectively. The
increase is mainly due to increase in deferred revenue.
Cash
Used in Investing Activities
For
the six months ended June 30, 2017 and 2016, we spent $861 and $4,156 on purchasing fixed assets, respectively.
Cash
Provided by Financing Activities
We
received $22,499 from issuance of stock for the six months ended June 30, 2017.
Results
of Operations through December 31, 2016
Our
operating results are summarized as follows:
|
|
For
the Six Months Ended
|
|
For
the Years Ended
|
|
|
December
31
|
|
June
30
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
250,000
|
|
|
|
|
|
|
$
|
125,000
|
|
|
|
|
|
Operating
Expenses
|
|
$
|
352,510
|
|
|
$
|
4,650
|
|
|
$
|
132,552
|
|
|
$
|
3,859
|
|
Net
Income (Loss)
|
|
$
|
102,510
|
|
|
($
|
4,650
|
)
|
|
($
|
7,552
|
)
|
|
($
|
3,859
|
)
|
Pursuant
to the Company's Service Agreements, the Company recognized $250,000 with AmericaTowne for the six months ended December 31, 2016.
For six months ended December 31, 2016 and 2015, there was no cost of revenues.
We
can make no assurances that we will find commercial success in any of our revenue producing contracts. We are a new company and
thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to
our business as we began operations in the first quarter of 2016.
The
Company discloses that all revenues recorded and reflected in this annual report are related to service agreements with related
parties. Specifically, the Company has entered into agreements with AmericaTowne as described above and incorporated herein by
reference. The Company is controlled by one of its related parties, AmericaTowne, by virtue of AmericaTowne holding a majority
of the Company’s issued and outstanding restricted common stock.
Operating
Expenses
Our
operating expenses are largely attributable to office, rent and professional fees related to our reporting requirements as a public
company and implementation of our business plan. For the six months ended December 31, 2016 our operating expenses were $352,510,
while the operating expenses for the years ending June 30, 2016 and June 30, 2015 were $132,552 and $3,859, respectively.
Net
Income
As
a result of our operations, for the six months ended December 31, 2016, the Company reported net income after provision for income
tax of $102,510. Compared to the years ended June 30, 2016 and June 30, 2015, our net income was ($3,693) and ($3,859), respectively.
The increase in our net income is due to starting our business plan and generating revenues from related parties in relation to
services provided pursuant to certain contracts, as explained above.
Liquidity
and Capital Resources
Working
Capital
|
|
December
31
|
|
June
30
|
|
June
30
|
|
|
2016
|
|
2016
|
|
2015
|
|
|
(Restated)
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
712,793
|
|
|
|
137,991
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
534,085
|
|
|
$
|
49,699
|
|
|
$
|
3,859
|
|
Working
Capital (Deficit)
|
|
$
|
178,708
|
|
|
$
|
88,292
|
|
|
$
|
(3,859
|
)
|
On
December 31, 2016, June 30, 2016 and June 30, 2015, we have working capital (deficit) of $178,708, $88,292 and ($3,859), respectively.
This increase in working capital is due to implementing our initial business plans.
Cash
Flow
|
|
For
the Six Months Ended
|
|
For
the Year Ended
|
|
|
December
31
|
|
June
30
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
$
|
(48,243
|
)
|
|
|
|
|
|
$
|
4,156
|
|
|
|
|
|
Cash
used in investing activities
|
|
$
|
2,540
|
|
|
|
|
|
|
$
|
4,156
|
|
|
|
|
|
Cash
provided by financing activities
|
|
$
|
145,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in cash
|
|
$
|
94,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Provided by (Used in) Operating Activities
Compared
to prior periods, the increase in cash used in operating activities for the six months ended December 31, 2016 is mainly due to
increase in accounts receivable.
Cash
Used in Investing Activities
We
spent $2,540 on fixed assets for the six months ended December 31, 2016, as compared to $4,156, $0 for the years ended June 30,
2016 and June 30, 2015, and $0 for the six months ended December 31, 2015.
Cash
Provided by Financing Activities
Compared
to prior periods, the increase in cash provided by financing activities for the six months ended December 31, 2016 is due to proceeds
from issuance of common stock.
As
of December 31, 2016, the Company had enough cash including receivables to operate its business at the current level for the next
twelve months, but insufficient cash to achieve our business goals and initiatives set forth above. To address the cash situation,
the Company continues to manage its cash accounts and receivables closely.
To
date, we have been able to meet all our account payable obligations within a five to ten-day window. If required, we can extend
this window to improve our cash flow position. Additionally, we have a plan to increase sales. There is no assurance that we will
be able to maintain this level of operations.
The
success of our business plan beyond the next twelve months is contingent upon us growing our business, keeping costs down, increasing
revenue and obtaining additional equity and/or debt financing. We intend to fund operations through our pro-active efforts to
monitor receivables, and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures,
working capital, or other cash requirements. We do have a commitment from Chizhou government to provide cash infusions and or
loan guarantees as we complete our operations in China. Other than Chizhou, we do not have any formal commitments or arrangements
for the sales of stock or the advancement or loan of funds at this time. There is no assurance that such additional financing
will be available to us on acceptable terms, or at all or that our receivable plan will be effective in the future.
Plan
of Operation and Cash Requirements
The
Company anticipates that its expenses over the next twelve months will be approximately $5,000,000 as described in the table below.
These estimates may change significantly depending on the nature of our business activities and our ability to raise capital from
our shareholders or other sources.
Description
|
Potential
Completion Date
|
Estimated
Expenses $
|
Initial
Plant and Operations Set-up
|
12
months
|
250,000
|
Salaries
|
12
months
|
300,000
|
Utility
expenses
|
12
months
|
50,000
|
Investor
relations costs
|
12
months
|
50,000
|
Marketing
expenses
|
12
months
|
100,000
|
Professional
fees
|
12
months
|
150,000
|
Other
administrative expenses
|
12
months
|
100,000
|
Equipment
Purchases
|
12
months
|
4,000,000
|
Total
|
|
5,000,000
|
Our
other administrative expenses for the year will consist primarily of transfer agent fees, bank and interest charges and general
office expenses. The professional fees are related to our regulatory filings throughout the year and include legal, accounting
and auditing fees. The equipment purchases and plant set-up are related to the materially definitive agreement with Jiangnan.
Based
on our planned expenditures, we will require approximately $5,000,000 to proceed with our business plan over the next twelve months.
If we secure less than the full amount of financing that we require, we will not be able to carry
out
our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial
resources.
We
intend to raise the balance of our cash requirements for the next twelve months pursuant to our agreement with Jiangnan by accessing
upon request bank loans, bank guarantees and equity funding. Additionally, we may have private placements, shareholder loans or
possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising
enough money through such efforts, we may review other financing possibilities such as bank loans. At this time, other than our
agreement with Jiangnan we do not have a commitment from any third-party to provide us with financing. There is no assurance that
any financing will be available to us or if available, on terms that will be acceptable to us.
Even
though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for
funding our operations, as we do not have sufficient tangible assets to secure any such financing. We anticipate that any additional
funding will be in the form of equity financing from the sale of our common stock. At the close of 2016, we are considering financing
arrangements for our common stock. However, the arrangements are not final and we cannot provide any assurance that we will be
able to raise sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing,
we may be forced to abandon our business plan.
Off-Balance
Sheet Arrangements
We
have not entered into 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 and would be considered material to investors.
Item
3. Properties.
We
currently do not own any properties. We rent office space and equipment from Yilaime for $2,500 per month. The Company currently
has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in,
persons primarily engaged in real estate activities.
Item
4. Security Ownership of Certain Beneficial Owners and Management
The
following table sets forth the ownership of our common stock by each person known by us to be the beneficial owner of more than
5% of our outstanding common stock as a group as of December 31, 2016. There are not any pending arrangements that may cause
a change in control. The information presented below has been presented in accordance with the rules of the SEC and is not necessarily
indicative of ownership for any other purpose.
A
person is deemed to be a beneficial owner of a security if that person has or shares the power to vote or direct the voting of
the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any
security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the
conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a
beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated
by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person
has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such
date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently,
the denominator used for calculating such percentage may be different for each beneficial owner.
Name
and Address
(1)
|
|
Amount
and Nature of
Beneficial Ownership
|
|
Percentage
of Class
(2)
|
|
|
Alton
Perkins
(3)
|
|
110,117,593
(4)
|
|
86.8%
|
|
|
|
|
|
|
_________________
|
|
|
(1)
|
The
address for the person named in the table above is c/o the Company.
|
|
|
|
|
|
|
(2)
|
Based
on 126,740,708 shares outstanding as of the date of this Registration Statement.
|
|
|
|
|
|
|
(3)
|
Alton
Perkins is Chief Executive Officer, Chief Financial Officer, Secretary and Director of the Company.
|
|
|
|
|
|
|
|
|
|
(4)
|
Individually,
and through Yilaime and Perkins Trust
|
|
|
|
|
|
|
|
|
This
table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has
sole or shared voting and investment power with respect to the shares indicated as beneficially owned.
Item
5. Directors and Executive Officers.
(a) Identification
of Directors and Executive Officers.
Our
officers and directors and additional information concerning them are as follows:
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Alton
Perkins
|
|
65
|
|
Chief
Executive, Secretary, Treasurer and Director
|
Alton
Perkins Sole Director and Officer
.
Mr.
Perkins has been the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary of the Company
since the change in control event on June 27, 2016. Mr. Perkins serves in these same capacities for ATI, Yilaime, Yilaime NC and
AXP Holding. Mr. Perkins is a former decorated Air Force Officer and Missile Launch Officer with 22 years of military service,
who graduated from the University of Southern Illinois with a B.S. in Business Administration and a M.B.A. from the University
of North Dakota. Between 1988 and 1997, he held CEO positions with start-up companies in the jet fuels, defense contracting, construction,
business consulting and development, and real estate industries. Between 1997 and 2009, Mr. Perkins served as the CEO and Chief
Technology Officer for internet, childcare operations, media, and realty development companies. From 2009 to the present, Mr.
Perkins has served as Chairman of Yilaime and its related entities ATI, Yilaime NC and AXP Holding. Mr. Perkins has expertise
in conducting business in China. Living and working in China studying Chinese consumer habits, working with Chinese entrepreneurs
and government agencies, he developed the AmericaTowne and AmericaStreet concepts.
Mr.
Perkins lived in China between September 1, 2010 and April 28, 2012. He worked for the Yilaime Foreign Invested Partnership
in Hengshui, China between September 19, 2010 and December 30, 2012. In addition to serving as Co-Chair of Yilaime Foreign
Invested Partnership in China, an entity focused on real estate development, he served as a chief consultant to a major
Chinese chemical company responsible for funding and technology transfer, and coordinated business with USA based auditors,
DOW Chemical and USA Exim Bank. In addition, Mr. Perkins is the recently appointed sole director and officer of ATI
Nationwide Holding Corp., f/k/a EXA, Inc., a Florida corporation (“ATI Nationwide”). The Company’s largest
shareholder ATI, closed on the purchase of the majority and controlling interest of ATI Nationwide on October 13, 2016. ATI
Nationwide is listed on the OTC:Pinks as ATIN. No Company funds were used to purchase ATIs interest in ATI
Nationwide.
Mr.
Perkins is subject to a Desist and Refrain Order dated March 21, 2008 (the “Order”) issued by the State of California’s
Business, Transportation and Housing Agency, Department of Corporations (the “Department”). In 2003, Mr. Perkins had
been the Chief Executive Officer of Sunburst Holding Corporation (“Sunburst”). The Department alleged that in May
of 2003, Sunburst and Mr. Perkins offered and sold securities through general solicitation to finance art-related activities.
The Department alleged that Sunburst and Mr. Perkins omitted material facts, and more specifically, that Mr. Perkins had pled
no contest to felony counts related to an indictment for fraudulent misappropriation of funds in a fiduciary capacity in Maryland,
and had received a five-year suspended sentence.
The
Department was of the opinion that investments offered and sold by Sunburst and Mr. Perkins constituted securities, which were
subject to qualification under the California law, and that the securities were offered without being qualified, and were not
exempt, in violation of California law. The Department ordered Sunburst and Mr. Perkins to desist and refrain from the further
offer or sale of securities in California unless and until qualification has been made under the law or unless exempt. The Department
also ordered that Sunburst and Mr. Perkins to desist and refrain from offering or selling or buying or offering to buy securities
in California, including but not limited to stock, by means of any written or oral communication which includes an untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading (discussed below). Mr. Perkins did not agree with the proposed order and filed a complaint
with the Department. Mr. Perkins complaint was based on the fact that the shares in question were subject to a Registration statement
filed by Sunburst and the shares were not required to be qualified and or authorized by the State of California since the shares
had been appropriately registered with the SEC.
Mr.
Perkins has been in compliance with the Order since issuance. The Order is not related in any manner with respect to the Company
or its related parties. To the extent the Order was entered (i.e. only copy available for inspection by management is an unsigned
version), there is no restriction on Mr. Perkins from engaging in an offering in California provided he complies with the appropriate
disclosures and laws. The Company is not aware of any similar orders in any other jurisdiction.
The
Company further discloses that the aforementioned Order references the failure of Mr. Perkins to disclose his eleven (11) pleas
of nolo contendere in the Circuit Court for Prince Georges County, Maryland, for fraudulent misappropriation by a fiduciary in
connection with a real estate transaction unrelated to the Company or its subsidiaries. On or about March 10, 2000, Mr. Perkins
had been arraigned on eleven counts of fraudulent misappropriation by a fiduciary. The alleged misappropriation occurred on or
about November 24, 1999 (i.e. the date set by the Court as the offense date). Mr. Perkins pled nolo contendere on August 31, 2000
without any admission or finding of guilt. Mr. Perkins was and had been given a five-year suspended sentence, which has since
expired. Mr. Perkins disclosed to the Company that he had subsequently obtained a judgment out of the Superior Court of Mecklenburg
County in North Carolina in the amount of $125,000 against an individual who defamed him and published false comments related
to his nolo contendere plea. The company further discloses that the state of Virginia Division of Securities conducted an investigation
into the matter. After careful review of the matter and applicable law, they concluded that no action was warranted and stated
that the matter is closed.
(b)
Significant Employees. None
(c)
Family Relationships. Mr. Perkins wife, Xiang Mei Lin Perkins, is a beneficiary under the Perkins Trust.
(d)
Involvement in Certain Legal Proceedings.
Except
as otherwise disclosed, no officer, director, or persons nominated for such positions, promoter or significant employee has been
involved in the last ten years in any of the following:
|
|
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 offenses);
|
|
|
|
|
|
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 involvement in any type of business, securities
or banking activities; and
|
|
|
|
|
|
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.
|
(e)
The Board of Directors acts as the Audit Committee and the Board has no separate committees. The Company has no qualified financial
expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate
financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual
for hire.
(f)
Code of Ethics. We do not currently have a code of ethics.
Prior
Blank Check Company Experience
Mr.
Perkins is the only member of management who has served as an officer or director of a prior blank check company.
Name
|
|
Filing
Date Registration
Statement
|
|
Operating
Status
|
|
SEC
File
Number
|
|
Pending
Business
Combinations
|
|
Additional
Information
|
|
|
|
|
|
|
|
|
|
|
|
AmericaTowne,
Inc.
|
|
May
12, 2015
|
|
Effective
November 5, 2015
|
|
000-55206
|
|
None
|
|
None
|
ATI
Nationwide Holding Corp.
|
|
N/A
|
|
Shell
Company
|
|
000-1591387
|
|
None
|
|
None
|
Mr.
Perkins beneficial ownership in ATI is set forth in this Registration Statement. ATI, formerly known as Alpine 5, Inc., filed
its Form 10-12G/A on June 13, 2014. ATI ceased to be a blank check company on March 3, 2015 upon the Commission having no further
comment on ATIs disclosures on Form 8-K, Item 5.06 (Change in Shell Status). ATI is publicly reporting with the Commission. ATI
is engaged in exporting and consulting in the exporting of American made goods, products and services to China and Africa through
strategic relationships in China and in the United States.
ATIs
aim is to provide upper and middle-income consumers in China with Made in The USA goods and services allowing customers to experience
the United States culture and lifestyle. In order to facilitate these objectives, ATI plans on creating a 50-plus acre plot consisting
of small businesses, hotel, villas, senior care facilities, a theme
park and performing arts
center all located on specific acreage in China depicting American lifestyle and the American experience. This is commonly referred
to by ATI as the AmericaTowne Community concept.
The
development of the AmericaTowne Community is aspirational in nature. There are barriers to entry that make it difficult for entrants
into the industry including, but not limited, to the socio-political environment in China. Although the Company provides different
types of services and intends on providing a variety of products through its contractual relationships, the key notable competitors
are China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN), and Xinyuan Real Estate Co., Ltd
(XIN), and IFM Investments Limited (CTC). As ATI develops its business model further, it expects additional competitors to service
and the competitive picture to become clearer.
ATI
is the majority and controlling shareholder of ATI Nationwide Holding Corp., a Florida corporation (“ATI Nationwide”).
ATI Nationwide is formerly known as EXA, Inc. ATI Nationwide recently had its Notice of Corporate Action with FINRA approved,
formally changing ATI Nationwide’s name and changing its symbol from EXAI to ATIN. ATI acquired the controlling interest
in ATI Nationwide through a private stock acquisition with Carson Holdings, LLC, a Utah limited liability company, and Joseph
C. Passalaqua, an individual, which closed on October, 7 2016. ATI Nationwide is a blank check company; however, through ATIs
performance under the Master Joint Venture and Operational Agreement with Nationwide Microfinance Limited, a Ghanaian corporation,
which has been disclosed by ATI on Form 8-K dated July 14, 2016, ATI Nationwide is in the process of taking necessary steps to
cease being a blank check company; however, there is no guarantee that it will be able to cease being a blank check company.
Item
6. Executive Compensation.
On
July 1, 2016, the Company entered into an Employment Agreement with Mr. Perkins to serve as the Company’s Chairman of the
Board, President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary (the “Employment Agreement”).
The term of the Employment Agreement is five years with successive one-year option terms. In consideration his services under
the Employment Agreement, the Company issued 10,000,000 shares of restricted common stock to Mr. Perkins designee the Perkins
Trust, which is allowed for under Section 3.2 of the Employment Agreement.
The
stock issuance is subject to certain lock-up provisions in the Employment Agreement, which are more thoroughly set forth in the
enclosed exhibit. Until the Company acquires additional capital, it is not anticipated that Mr. Perkins, or any future officer
or director will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf
of the Company. In addition to this issuance, the Company agreed to issue Mr. Perkins, or his authorized designee, an option to
purchase up to 5,000,000 shares of common stock of the Company per year at any time prior to the conclusion of the first year
of the Employment Agreement, i.e. prior to 365 days after execution of the Employment Agreement, at a price of 1.5% per share
of the closing price of the Company’s stock quoted on a major exchange or OTC Market one business day before purchase, and
annually thereafter for a total of 5 consecutive years. The shares purchased under this option are subject to all rights and lock-up
restrictions set forth in the Employment Agreement.
Mr.
Perkins, who is also a director, officer and control person of ATI, intends to devote very limited time to our affairs. Other
than as set forth above, the Company has no stock option, retirement, pension, or profit sharing programs for the benefit of directors,
officers or other employees, but our sole officer and director may recommend adoption of one or more such programs in the future.
The Company does not have a standing compensation committee or a committee performing similar functions, since the Board of Directors
has determined not to compensate the officer and director.
Item
7. Certain Relationships and Related Transactions, and Director Independence.
The
Company has not entered into, nor does it have plans to enter into, any related party transaction in excess of $120,000
since the beginning of its last year, i.e. since July 1, 2016. For those related party transactions entered into the
preceding fiscal year, i.e. prior to July 1, 2016, we incorporate those disclosures set forth in Item 1(b). For these
transactions, as disclosed above, Mr. Perkins has a direct and indirect material interest in our performance of those
related-party transactions by virtue of his beneficial, and controlling, ownership in ATI, Yilaime and AXP Holding. The
approximate dollar amount on an annual basis is: (a) Sales and Support Services Agreement with Yilaime is $1,000,000, (b)
Modular Construction & Technology Services Agreement with ATI is $500,000, and (c) IC-DISC Service Provider Agreement
with AXP Holding is a minimum of $50,000, and could exceed approximately $200,000 based on performance. Mr. Perkins
approximate dollar value of the amount of the related party transactions is $1,550,000, not accounting for profit or
loss.
We
do not have a policy or procedures in place for the review, approval or ratification of any related-party transaction, other than,
written consent in lieu of the meeting of the Board of Directors or shareholders, as the case may be, for the given transaction.
The related party transactions set forth in Item 1(b) were approved by the Board of Directors, but not approved pursuant to any
written policy or procedure. Our internal controls in the review, approval or ratification of related party transactions are not
sufficient. The Company has no disclosures regarding promoters since none have been used over the past five years. The Company’s
parent entity ATI, owns 86% of the common shares of the Company, and thus has control over the affairs of the Company.
Mr.
Perkins is involved in other business activities and may, in the future, become involved in other business opportunities. These
other businesses might be vendors or service providers to the Company, e.g. ATI, Yilaime and AXP Holding, or might take more of
Mr. Perkins time in providing director and officer services to the Company. Furthermore, a conflict of interest might arise if
Mr. Perkins other business activities coincide with an event of the Company. As a result, Mr. Perkins would have to evaluate and
act on a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for
resolution of any conflict of interest.
We
do not have director independence under Item 407(a) of Regulation S-K. Pursuant to Article XI of the Company’s Bylaws, no
contract or transaction shall be void or
voidable
if such contract or transaction
is
between
the corporation
and one
or
more of its Director or Officers, or between the corporation and any other corporation, partnership, association, or other organization
in which one or
more
of its Directors or Officers, are directors or officers, or
have a financial interest, when such Director or Officer is present at or participates in the meeting of the Board, or the
committee
of the shareholders which authorizes the contract or transaction or his, her or
their
votes are counted for
such purpose,
if:
(a) the
material
facts as to his, her or
t
heir
relationship
or interest and as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee and are noted in the
minutes
of
such meeting, and the Board or
committee
in
good
faith authorizes
the
c
ontract or transaction by the
affirmative
votes
of
a
majority of
the
disinterested
Directors,
even though the disinterested
Directors
be less than a
quorum;
or
(b) the
material
facts as to his, her or their relationship or relationships or interest
or interests and as to the contract or transaction are disclosed or are known
to
the
shareholders entitled to vote
thereon,
and
the
contract or transaction is specifically approved in
good
faith
by
vote
of the shareholders; or
(c) the
contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors,
a committee of the shareholders; or
(d) the
fact of the common directorship, office or financial interest is not disclosed or known to the Director or Officer at the time
the transaction is
brought
before the Board of Directors of the Corporation for such
action.
Such
interested Directors may be
counted
when
determining
the presence of a quorum at the Board of Directors' or
committee
meeting
authorizing
the
contract
or transaction.
Item
8. Legal Proceedings.
None.
Item
9. Market Price of and Dividends on the Registrants Common Equity and Related Stockholder Matters.
There
is no established public trading market for the Company’s common shares. Prior to June 27, 2016, the Company was incorporated
as Global Recycle Energy, Inc. (GREI). On June 27, 2016, the Company amended its Articles of Incorporation with the State of Nevada
to change the name of the Company to ATI Modular Technology Corporation. On June 12, 2017, FINRA approved the name change to ATI
Modular Technology Corp and symbol change to ATMO. The Company is subject to Alternative Reporting Standards. The range of high
and low bid information for the Company’s common shares for each full quarterly period within the two most recent fiscal
years, and any subsequent interim period for which financial statements are included, or as required under Article 3 of Regulation
S-X, is as follows:
|
7/1/15-9/30/15
|
10/1/15-12/31/15
|
1/1/16-3/31/16
|
4/1/16-6/30/16
|
7/1/16-9/30/16
|
10/1/16-12/31/16
|
1/1/17-3/31/17
|
4/1/17-6/30/17
|
High
|
0.3
|
0.14
|
0.44
|
0.4
|
9.74
|
8.95
|
9.39
|
8.25
|
Low
|
0.01
|
0.09
|
0.1
|
0.15
|
0.4
|
7.5
|
5.25
|
0.35
|
As
of September 26, 2016, there are approximately 172 record holders of our common stock with an aggregate of 126,075,716 shares
issued and outstanding. The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends
in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the
Company’s business. We have no securities authorized for issuance under any Equity Compensation Plans.
OTC
has discontinued the display of the Company’s quotes. The Company is currently listed by FINRA as a Caveat Emptor security
and public interest concern with the OTC. The potential reasons for this categorization are set forth at http://www.otcmarkets.com/stock/GREI/quote,
even though no specific reason has been stated by OTC.
Item
10. Recent Sales of Unregistered Securities.
Within
the past three years, the Company issued a total of 111,157,621 shares of unregistered securities. In 2016, the Company had issued
100,000,000 shares to Joseph Arcaro (“Arcaro”) for services rendered in the amount of $100,000. ATI subsequently purchased
these shares on June 2, 2016 in a private transaction without solicitation or through the use of a broker or intermediary. As
a condition of closing the Stock Purchase Agreement with Arcaro, Arcaro facilitated the cancellation of 500,000 shares of the
Company’s common stock previously issued in 2016 for rights under an oil lease. The Company has no further rights, title
or interest in the oil lease.
In
2016, the Company issued 657,621 shares of common stock at the aggregate price of $.22 per share. Additionally, the Company issued
10,000,000 shares of common stock to the Perkins Trust as compensation for Alton Perkins, pursuant to his employment agreement.
In the six months ending June 30, 2017, the Company issued 7,371 shares of common stock at the average price of $3.05 per share.
For
all issuances, the Company relied on Section 4(2) of the Securities Act of 1933, as amended. We believe that Section 4(2) was
available because neither of the issuances involved underwriters, underwriting discounts or commissions; restrictive legends had
been placed on the certificates; no sales were made by general solicitation; and the issuances were made to an accredited investor
in consideration of a release of a debt obligation. As of the most recent practicable date, there are 126,740,708 shares of common
stock issued and outstanding.
Item
11. Description of Registrants Securities to be Registered
.
Common
Stock
The
Company has 500,000,000 shares of authorized common stock (CUSIP# 00215H 103), of which, as of the end of its fiscal year had
126,075,716 issued and outstanding. Of the amount of issued and outstanding, ATI owned a total of 100,000,000 shares as a result
of the closing of the Stock Purchase Agreement on June 6, 2016 with Arcaro, above.
Between
June 13, 2016 and September 13, 2016, Mr. Perkins purchased on the open market, as trustee of the Alton & Xiang Mei Lin Perkins
Family Trust (the “Perkins Trust”), with a tax identification number of 46-7513804, and individually, 15,964 shares
and 101,629 shares, respectively, of the Company’s common stock at the average per share price of $1.91 and $.89, respectively.
Perkins and Perkins Trust used personal funds for the purchase. The total number of shares issued and outstanding as of the date
of this Registration Statement equals 126,740,708. ATI, Perkins Trust and Perkins beneficially own 110,117,593 shares, or 86%,
of the Company’s common stock.
The
holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board
of directors; are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; do not have preemptive, subscription or conversion rights and there are no redemption
or sinking fund provisions or rights; and are entitled to one non-cumulative vote per share on all matters on which stockholders
may vote. All shares of common stock now outstanding are fully paid and non-assessable and are fully paid for and non-assessable.
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future
cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements
and financial position and our general economic condition. It is our intention not to pay any cash dividends in the foreseeable
future, but rather to reinvest earnings, if any, in our business operations. We refer you to our Articles of Incorporation, Bylaws
and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of
our securities.
Preferred
stock
We
do not have a class of preferred stock.
Anti-takeover
provisions
There
are no Nevada anti-takeover provisions that may have the effect of delaying or preventing a change in control.
Reports
We
will be required to file reports with the SEC under section 15(d) of the Securities Act and the reports will be filed electronically.
The reports we will be required to file are Forms 10-K, 10-Q, and 8-K. You may read copies of any materials we file
with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
Internet site that will contain copies of the reports we file electronically. The address for the Internet site is www.sec.gov.
Stock
Transfer Agent
The
Company’s Transfer Agent is Pacific Stock Transfer Co. (www.pacificstocktransfer.com) located at 6725 Via Austin Parkway,
Suite 300 in Las Vegas, Nevada 89119 (telephone number (800) 785-7782).
(b)
Debt Securities.
None
(c)
Other Securities to be Registered.
None
Item
12. Indemnification of Directors and Officers.
Section
78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify their officers and directors and further states
that the indemnification provided by Section 78.7502 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office;
thus, Section 78.7502 does not by itself limit the extent to which the Company may indemnify persons serving as its officers and
directors. At this time, neither the Company’s Articles of Incorporation nor its Bylaws provide indemnity.
The
Board of Directors of the Company may conclude that, to retain and attract talented and experienced individuals to serve as officers
and directors of the Company and to encourage such individuals to take the business risks necessary for the success of the Company,
it is necessary for the Company to contractually indemnify its officers and directors, and to assume for itself liability for
expenses and damages in connection with claims against such officers and directors in connection with their service to the Company,
and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company
and its stockholders.
We
believe that the future amendment to our Bylaws to include indemnification provisions might be necessary to attract and retain
qualified persons as directors and officers. Insofar as indemnification for liabilities arising under the Securities Act of 1933
may eventually be permitted under our Bylaws to directors, officers or persons controlling the Company pursuant to provisions
of the State of Nevada, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Item
13. Financial Statements and Supplementary Data.
We
set forth below a list of our audited financial statements included in this Registration Statement on Form 10. The financial statements
follow page 19 of this Registration Statement on Form 10.
Item
14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There
are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices
or financial statement disclosure.
Item
15. Financial Statements and Exhibits.
(a) Financial
Statements.
The
financial statements and related notes are included as part of this Registration Statement on Form 10 as indexed in the appendix
on page F-1 through F-6.
(b)
Exhibits.
|
|
|
Incorporated
by reference
|
|
Exhibit
|
Exhibit
Description
|
Filed
herewith
|
Form
|
Period
ending
|
Exhibit
|
Filing
date
|
|
3.1
|
Articles
of Incorporation
|
X
|
|
|
|
|
|
3.2
|
Amended
Articles of Incorporation - Increase in Shares
|
X
|
|
|
|
|
|
3.3
|
Amended
Articles of Incorporation - Name change
|
X
|
|
|
|
|
|
3.4
|
By-laws
|
X
|
|
|
|
|
|
4.1
|
Specimen
Stock Certificate
|
X
|
|
|
|
|
|
4.2
|
Stock
Purchase Agreement (Arcaro)
|
X
|
|
|
|
|
|
10.1
|
Cooperative
Agreement between ATI Modular and Shexian County Investment Promotion Bureau
|
X
|
|
|
|
|
|
10.2
|
Cooperative
Agreement between AmericaTowne and Shexian County Investment Promotion Bureau
|
X
|
|
|
|
|
|
10.3
|
Sales
and Support Services Agreement (Yilaime)
|
X
|
|
|
|
|
|
10.4
|
Modular
Construction & Technology Services Agreement (ATI)
|
X
|
|
|
|
|
|
10.5
|
IC-DISC
Service Provider Agreement (AXP Holding)
|
X
|
|
|
|
|
|
10.6
|
Investment
and Cooperation Agreement for ATI Modular Green Building Manufacturing Project, Yongan Agreement
|
X
|
|
|
|
|
|
10.7
|
Investment
and Cooperation Agreement for ATI Modular Green Building Manufacturing Project, Chizou Jiangnan Agreement
|
X
|
|
|
|
|
|
10.8
|
Employment
Agreement (Perkins)
|
X
|
|
|
|
|
|
10.9
|
Amendment
to Articles of Incorporation (Fiscal Year)
|
X
|
|
|
|
|
|
10.10
|
Amendment
to Articles of Incorporation (Authorized Shares)
|
X
|
|
|
|
|
|
10.11
|
Definitive
ATI Modular Agreement
|
X
|
|
|
|
|
|
23.1
|
Consent
of Independent Auditors
|
X
|
|
|
|
|
|
SIGNATURES
Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
Date:
August 16, 2017
|
|
ATI
MODULAR TECHNOLOGY CORP.
|
|
|
|
|
By:
|
/s/
Alton Perkins
|
|
|
Alton
Perkins, President, Secretary, and Treasurer
|
ATI
Modular Technology Corp
Balance Sheets
|
|
June
30
|
|
December
31
|
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
214,444
|
|
|
$
|
94,266
|
|
Accounts
receivable, net - related parties
|
|
|
793,418
|
|
|
|
458,755
|
|
Other
receivables - related parties
|
|
|
114,177
|
|
|
|
159,772
|
|
Total
Current Assets
|
|
|
1,122,039
|
|
|
|
712,793
|
|
|
|
|
|
|
|
|
|
|
Office
Equipment Furniture & Fixtures
|
|
|
4,349
|
|
|
|
6,280
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
1,126,388
|
|
|
$
|
719,073
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
68,917
|
|
|
$
|
209,699
|
|
Deposit
from customers
|
|
|
—
|
|
|
|
—
|
|
Deferred
Revenue
|
|
|
754,387
|
|
|
|
324,387
|
|
Income
tax payable
|
|
|
6,839
|
|
|
|
—
|
|
Total
Current Liabilities
|
|
|
830,143
|
|
|
|
534,086
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
830,143
|
|
|
|
534,086
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 500,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
126,740,708
and 126,733,337 shares issued and outstanding
|
|
|
126,741
|
|
|
|
126,733
|
|
Common
stock subscribed
|
|
|
1,000
|
|
|
|
982
|
|
Additional
paid in capital
|
|
|
896,318
|
|
|
|
833,363
|
|
Deferred
compensation
|
|
|
(400,000
|
)
|
|
|
(450,000
|
)
|
Receivable
for issuance of stock
|
|
|
(207,480
|
)
|
|
|
(167,000
|
)
|
Retained
Earnings
|
|
|
(120,334
|
)
|
|
|
(159,091
|
)
|
Total
stockholders' equity
|
|
|
296,245
|
|
|
|
184,987
|
|
Total
liabilities and stockholders' equity
|
|
$
|
1,126,388
|
|
|
$
|
719,073
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
ATI
Modular Technology Corp
|
Statements
of Operations
|
(Unaudited)
|
|
|
For
the three months ended
|
|
For
the six months ended
|
|
|
June
30
|
|
June
30
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
- related parties
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
125,000
|
|
Cost
of revenues - related parties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gross
profit
|
|
|
125,000
|
|
|
|
125,000
|
|
|
|
250,000
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
94,169
|
|
|
|
27,452
|
|
|
|
204,404
|
|
|
|
27,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from operation
|
|
|
30,831
|
|
|
|
97,548.00
|
|
|
|
45,596
|
|
|
|
97,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income
|
|
|
—
|
|
|
|
3,859
|
|
|
|
—
|
|
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from operation before taxes
|
|
|
30,831
|
|
|
|
101,407
|
|
|
|
45,596
|
|
|
|
100,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
4,624
|
|
|
|
—
|
|
|
|
6,839
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
26,207
|
|
|
$
|
101,407
|
|
|
$
|
38,757
|
|
|
$
|
100,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(Loss) per common share-basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
outstanding basic and diluted
|
|
|
126,740,708
|
|
|
|
116,075,716
|
|
|
|
126,739,461
|
|
|
|
116,075,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
ATI
Modular Technology Corp
|
Statements
of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
For the
Six Months Ended
|
|
|
June
30
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net
income (loss) of the period
|
|
$
|
38,757
|
|
|
$
|
100,957
|
|
Adjustments
to reconcile net loss from operations
|
|
|
|
|
|
|
|
|
Bad
debt expense
|
|
|
17,614
|
|
|
|
6,250
|
|
Depreciation
|
|
|
2,792
|
|
|
|
—
|
|
Shares
issued for services
|
|
|
—
|
|
|
|
—
|
|
Amortization
on deferred compensation
|
|
|
50,000
|
|
|
|
—
|
|
Changes
in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(352,276
|
)
|
|
|
(125,000
|
)
|
Other
receivables
|
|
|
45,596
|
|
|
|
—
|
|
Advances
to officers
|
|
|
—
|
|
|
|
(19,241
|
)
|
Accounts
payable and accrued expenses
|
|
|
(140,782
|
)
|
|
|
19,699
|
|
Due
to related parties
|
|
|
—
|
|
|
|
8,509
|
|
Deposit
from customers
|
|
|
—
|
|
|
|
30,000
|
|
Deferred
revenue
|
|
|
430,000
|
|
|
|
—
|
|
Income
tax payable
|
|
|
6,839
|
|
|
|
—
|
|
Net
cash provided by operating activities
|
|
|
98,539
|
|
|
|
4,156
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(861
|
)
|
|
|
(4,156
|
)
|
Net
cash used in investing activities
|
|
|
(861
|
)
|
|
|
(4,156
|
)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of stock
|
|
|
22,499
|
|
|
|
—
|
|
Net
cash provided by financing activities
|
|
|
22,499
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and equivalents
|
|
|
120,178
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash
and equivalents at beginning of the period
|
|
|
94,266
|
|
|
|
—
|
|
Cash
and equivalents at end of the period
|
|
$
|
214,444
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
—
|
|
|
$
|
—
|
|
Income
taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
ATI
Modular Technology Corp.
Notes to Financial Statements
(Unaudited)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
ATI
Modular Technology Corp., defined above and herein as the “Company” formerly Global Recycle Energy, Inc., was incorporated
under the laws of the State of Nevada on March 7, 2008. The Company is engaged in the development and the exporting of modular
energy efficient technology and processes that allow government and private enterprises in China to use US-based methods for creating
modular spaces, facilities, and properties. As with any business plan that is aspirational in nature, there is no assurance we
will be able to accomplish all our objective or that we will be able to meet our financing needs to accomplish our objectives.
The
Company is an operating company engaged in the development and the exporting of modular energy efficient and smart technology
and processes that allow government and private enterprises in China and elsewhere to use US-based methods for creating modular
spaces, facilities, and properties. The Company is in the business of all aspects of modular and smart construction, including
but not limited to, (a) the furtherance of modular and smart construction technology, education, development and production in
developed and undeveloped countries, (b) acquisition and/or installation of construction equipment, materials, furnishings, hardware,
insulation, flooring, roofing, wiring, plumbing, heating and air conditioning, and landscaping, and (c) other businesses directly
or tangentially related to these lines of services, including assisting businesses and entrepreneurs in securing naming, licensing
or promotional rights, driving internet and media traffic, increasing visibility of product and name recognition, and other services.
Our
principal executive offices are located at 4700 Homewood Court, Suite 100 in Raleigh, North Carolina. We are registered as a foreign
business entity in the State of North Carolina. We lease the office space from Yilaime Corporation, a Nevada corporation doing
business in North Carolina, and a related party to the Company, as set forth below. Our physical location for our operations in
China along with a manufacturing facility is Anhui Province Jiangnan Industrial Concentration Zone New Energy Industry Park A1,
A2, A5 Plant Chizhou City, Anhui Province, China. The Company has registering its wholly owned subsidiary Anhui Ao De Xin Modular
Building Technology Co. Ltd. in Jiangnan Industry Zone, Chizhou, China.
The
Company entered an Investment and Cooperation Agreement with the Jiangnan Industry Zone in Anhui Province, China dated September
8, 2016 (the “Jiangnan Cooperation Agreement”). On December 28, 2016, the Company entered the definitive agreement,
American ATI Modular Technology Company Project Investment Agreement (the “Investment Agreement”) with the Administrative
Committee, Jiangnan Industry Zone in Anhui Province. The Investment Agreement superseded the Jiangnan Cooperation Agreement. Under
the Investment Agreement, the Administrative Committee of Jiangnan Industrial Concentration Zone of Anhui Province (hereinafter,
“Jiangnan”) and the Company have agreed to the construction of the Company’s green, modular building and related
technology under the project name “Modular Plant Production Base.”
Under
the Investment Agreement, the Company has agreed to manufacture and install modular buildings, and provide research into the development
of green building module manufacturing using US based technology. The Company has agreed to provide appropriate technology and
intelligent systems in providing modular building lifecycle services. In addition, to modular and smart technology, the Company
and Jiangnan has agreed to establish: 1) a modular development institute research and training center; 2) an entrepreneurial incubator;
3) an engineering technology research center; 4) an industrial design center; 5) a post-doctoral workstations and engineering
laboratories; and 6) an international student intern summer work program. Where possible the Company’s aim is to increase
US exports by using American based technology, equipment and services. (Strategy).
The
Company presented to Anhui Project to United States Ex-Im Bank, which provided a Letter of Interest in providing support for the
Project. Additionally, pursuant to its agreement with Chizhou government, Chizhou preliminarily agreed to provide support for
EX-IM funding either by a guarantee or local bank support. Although no loan application has been submitted management is under
the impression that subject to meeting Ex-Im Bank’s standard underwriting requirements, there is a possibility of loans,
and other funding including working capital and insurance. Going forward, we plan on working with Ex-Im to seek insurance and
funding for the Chizhou operations. There is no assurance that funding and or insurance will be obtained.
The
Company entered the Modular Services Agreement with AmericaTowne, a related party and the majority and controlling shareholder
of the Company, to support AmericaTowne’s obligations under the Shexian Agreement in designing, installing and manufacturing
American modular technology for use in all government and private buildings throughout Shexian County, and elsewhere in China.
The terms and conditions of the Modular Services Agreement with AmericaTowne and the Shexian Agreement are set forth above.
Also,
the Company has entered the Yongan and Shexian Agreements to pursue the development of business opportunities involving modular
technology and investments, and business development. While we plan to have robust operations in the United States and international
locations, we expect the bulk of our operations and revenue will come from China.
China's
economy and its government impact our revenues and operations. While the Company has an agreement in place with the government
of Jiangnan as well as the approval by government officials in Shexian and Yongan China to operate facilities there is no assurance
that we will operate the facilities successfully. Additionally, the Company will need government approval in other locations in
China to operate other aspects of our business plan. There is no assurance that we will be successful in obtaining approvals from
government entities in other locations to operate other aspects of our business plan. Finally, Mr. Perkins, as a control person
of each entity – AmericaTowne and the Company, might elect to forego certain obligations of AmericaTowne under other Corporative
Agreements currently in place or not enter more definitive agreements with Governments in China and elsewhere, which in turn,
could impact the Company’s ability to meet its business plan set forth herein.
NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
Basis
of Presentation
These
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
("U.S. GAAP”).
Interim
Financial Statements
These
interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information. They do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with
the Company's audited financial statements and notes thereto contained in its report on Form 10-K for the transition period ended
December 31, 2016.
The
financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that,
in the opinion of management, are necessary to present fairly the Company's financial position at June 30, 2017, and the results
of its operations and cash flows for the six months ended June 30, 2017. The results of operations for the period ended June 30,
2017 are not necessarily indicative of the results to be expected for future quarters or the full year.
Accounting
Method
The
Company's financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending
on December 31.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses
during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements
not misleading have been included. Actual results could differ from those estimates.
Financial
Instruments
The
carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses, interest payable
and short-term notes payable approximate fair value because of the immediate or short- term maturity of these financial instruments.
Cash
Equivalents
The
Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
Accounts
Receivable
Accounts'
receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable
uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current
status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are
written off through a charge to the allowance for bad debts and a credit to accounts receivable.
Our
bad debt policy is determined by the Company's periodic review of each account receivable for reasonable assurance of collection.
Factors considered are the customer's financial condition, past payment history if any, any conversations with the customer about
the customer's financial conditions and any other extenuating circumstances. Based upon the above factors the Company makes a
determination whether the receivable are reasonable.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash
equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.
However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository
institutions in which those deposits are held.
Property,
Plant, and Equipment
Property,
plant and equipment are initially recognized recorded at cost. Gains or losses on disposals are reflected as gain or loss in the
period of disposal. The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs
may include structural improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred.
Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
For
the six months ended June 30, 2017 and 2016 depreciation expense is $2,792 and $0, respectively.
Income
Taxes
Income
taxes
are
provided in
accordance
with Statement
of
Financial Accounting Standards ASC
740
Accounting
for Income Taxes. A
deferred
tax
asset
or
liability is recorded for all temporary differences
between
financial and tax
reporting and net operating loss
carry
forwards.
Deferred
tax expense (benefit) results from
the net
change during
the
year
of
deferred
tax
assets
and liabilities.
Deferred
tax
assets
are reduced
by
a
valuation allowance when, in
the
opinion
of
management, it is
more
likely
than
not
that some
portion of
all
the
deferred
tax
assets
will be
realized.
Deferred
tax
assets
and liabilities
are
adjusted for
the effects of
changes
in tax
laws
and
rates
on
the
date
of
enactment.
The
Company
was
established under
the
laws
of the
State of
Nevada
and is
subject to U.S.
federal
income tax and
Nevada
state
income tax, if any.
Deferred
income tax
assets
and liabilities are
computed
for differences between
the
financial statement and tax
bases
of
assets
and liabilities that will result in future taxable
or
deductible
amounts
and
are based
on
enacted
tax
laws
and
rates
applicable to
the
periods in which
the differences
are expected
to
affect
taxable income.
Valuation
allowances
are
established when
necessary
to reduce deferred income tax
assets
to
the amount
expected to
be
realized
.
Earnings
per Share
In
February 1997, the FASB issued ASC 260, "Earnings per Share", which specifies the computation, presentation and disclosure
requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 supersedes the provisions of
APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company
has adopted the provisions of ASC 260 effective (inception).
Basic
earnings or net loss per share amounts are computed by dividing the net income or loss by the weighted average number of common
shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the
Company.
At
June 30, 2017 and December 31, 2016, no potentially dilutive shares were outstanding.
Impact
of New Accounting Standards
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's
results of operations, financial position, or cash flow.
Revenue
Recognition
The
Company's revenue recognition policies comply with FASB ASC Topic 605. The Company follows paragraph 605-10-S99-1 of the FASB
Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable
and earned. The Company considers revenue realized or realizable and earned when all the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii)
the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The
Company does not provide unconditional right of return, price protection or any other concessions to its customers.
There
were no sales returns and allowances from inception to June 30, 2017.
NOTE
3. GOING CONCERN
The
Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable
to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The
Company is still in development stage and has not created sufficient revenue to cover any operating losses it may incur. Management's
plans include the raising of capital through the equity markets to fund future operations, seeking additional acquisitions, and
generating of revenue through our business. However, there can be no assurances the Company will be successful in its efforts
to secure additional equity financing and obtaining sufficient revenue producing contracts. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result
from this uncertainty.
NOTE
4. ACCOUNT RECEIVABLES – RELATED PARTIES
The
nature of the accounts receivable for June 30, 2017 in the amount of $835,177 are for modular construction and technology services
and utilization of anticipated modular construction technology by ATI pursuant to the Modular Construction & Technology Services
Agreement between ATI and the Company dated June 28, 2016 (hereinafter, the “ATI Services Agreement”) and for the
Sales and Support Services Agreement with Yilaime on June 27, 2016 (the “Yilaime Services Agreement”). On June 30,
2017, the Company's allowance for bad debt is $41,759 which provides a net receivable balance of $793,418.
Accounts
receivable consist of the following:
|
|
June
30
2017
|
|
Dec
31
2016
|
|
|
|
|
|
Accounts
receivable related parties
|
|
|
835,177
|
|
|
|
482,900
|
|
Less:
Allowance for doubtful accounts
|
|
|
(41,759
|
)
|
|
|
(24,145
|
)
|
Accounts
receivable, net
|
|
$
|
793,418
|
|
|
$
|
458,755
|
|
Bad
debt expense was $17,614 and $6,250 for the quarter ended June 30, 2017 and 2016, respectively.
NOTE
5. DEFERRED REVENUE
The
Company receives $250,000 quarterly fee from Yilaime for Sales and Support Services Agreement. In accordance with ASC 605-50-45,
the Company defers and recognizes as a reduction to the future costs for quarterly fee. For the six months June 30, 2017, $500,000
fee from exclusive agreement incurred; $754,387 is booked deferred revenue as current liability on June 30, 2017 and $70,000 went
against cost charged by Yilaime.
NOTE
6. SHAREHOLDER'S EQUITY
The
stockholders' equity section of the Company contains the following classes of capital stock as of June 30, 2017:
Common
stock, $ 0.001 par value: 500,000,000 shares authorized; 126,740,708 shares issued and outstanding;
Preferred
stock, none: 0 shares authorized; but not issued and outstanding.
NOTE
7. STOCK BASED COMPENSATION
The
Company entered into an employment lock-up agreement on July 1, 2016 with Alton Perkins to serve as the Chairman of the Board,
President, Chief Executive Officer, Chief Financial Officer and Secretary. The term of Mr. Perkins' agreement is five years with
the Company retaining an option to extend in one-year periods. In consideration for Mr. Perkins' services, the Company has agreed
to issue to his designee, the Alton & Xiang Mei Lin Perkins Family Trust, 10,000,000 shares of common stock. The Company may
elect in the future to include money compensation to Mr. Perkins or his designee for his services provided there is sufficient
cash flow.
For
the six months ended June 30, 2017, $50,000 of stock compensation was charged to operating expenses and $400,000 was recorded
as deferred compensation on June 30, 2017.
NOTE
8. RELATED PARTIES TRANSACTIONS
The
Company intends on relying on other businesses controlled by our sole director and officer, and beneficial owner of the majority
shares of common stock in the Company – Alton Perkins, in implementing its business plan.
Mr.
Perkins is the control person of Yilaime Corporation, AmericaTowne and AXP Holding Corporation. At this time, the purpose of the
Company is to service the construction and related technology needs of AmericaTowne under AmericaTowne’s agreements with
the Shexian County Investment Promotion Bureau in developing an AmericaTowne community in the Hanwang mountains in Shexian, China.
The Company also intends on supporting these services in other AmericaTowne ventures at the invitation of the Xiamen Longyan City
Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency in developing an AmericaTowne Community and
an International School in Longyan County China.
The
related export services rendered to the Company in the implementation of its business plan cannot be provided by AmericaTowne
or through the AmericaTowne relationship. In order to avoid conflicts of interest, Mr. Perkins is of the opinion that there must
be a separate and distinct agreement between, in this case, the Company and AXP Holding Corporation. Furthermore, although other
similar IC-DISC entities exist, the Company is able to obtain better terms and conditions from AXP Holding Corporation in light
of Mr. Perkins’ control of AXP Holding Corporation.
AmericaTowne’s
Board of Directors determined that operating and controlling a separate but related entity focused on the development and the
exporting of modular energy efficient technology and processes for government and private enterprises in China would be more prudent
from a risk mitigation and operational standpoint than providing these services under the AmericaTowne business plan. Furthermore,
the intent of the Company is to expand its services and relationships to other similar endeavors in projects not related to AmericaTowne,
thus the need to maintain and operate a separate entity.
Cooperative
Agreement (Shexian County Government, China)
The
Company’s majority and controlling shareholder – AmericaTowne, is a party under the Cooperative Agreement with the
Shexian County Investment Promotion Bureau (the “Shexian Agreement”). Under the Shexian Agreement, AmericaTowne and
the Shexian County Bureau have agreed to a partnership in furthering the development of an AmericaTowne community in the Hanwang
mountains. Although not definitive at this time, the parties have agreed that, in consideration for AmericaTowne’s investment
of approximately $30,000,000 into the development, plus any additional tax paid to the local government, where applicable, the
Shexian County Bureau will dedicate local resources, including land (which AmericaTowne
would
be required to obtain rights through local bid invitation), and participation with AmericaTowne in an agreed upon equity split
through a future definitive agreement.
The
Company will be providing construction and technology services to AmericaTowne in facilitating AmericaTowne’s obligations
under the Shexian Agreement. The Company’s ability to generate revenue under its agreement with AmericaTowne could be impaired
in the event AmericaTowne is not able to meet its obligations under the Shexian Agreement. Furthermore, Mr. Perkins, as a control
person of each entity, might elect to forego certain obligations of AmericaTowne under the Shexian Agreement or not enter into
a more definitive agreement with the Shexian County Bureau, which in turn, could impact the Company’s ability to meet its
business plan set forth herein.
Sales
and Support Services Agreement (Yilaime Corporation)
On
June 27, 2016, we entered into a Sales and Support Services Agreement with Yilaime Corporation, a Nevada corporation (“Yilaime”).
Yilaime is controlled by Alton Perkins, who is our sole director and officer. Yilaime, and another related-party – Yilaime
Corporation of NC, Inc. (“Yilaime NC”), are the holders of the majority of issued and outstanding shares of common
stock in AmericaTowne, Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). Mr. Perkins is also the Trustee of the Alton & Xiang Mei Lin Perkins Family
Trust (“Perkins Trust”) and the AXP Nevada Asset Protection Trust 1 (“AXP”), which holds 5,100,367 and
120,000 shares, respectively, of the issued and outstanding common stock in ATI. Mr. Perkins is the beneficial owner of 20,674,484
shares of ATI, which equals 90.11% of issued and outstanding shares. Mr. Perkins is the beneficial owner of the majority and controlling
interest in the Company through his direct holdings, and beneficial holdings through Yilaime, AXP and the Perkins Trust. ATI,
Perkins Trust and Mr. Perkins beneficially own 110,117,593 shares, or 86%, of the Company’s common stock.
Under
the Services Agreement, Yilaime will provide the Company with marketing, sales and support services in the Company’s pursuit
of ATI Modular business in China in consideration of a commission equal to 10% of the gross amount of monies procured for the
Company through Yilaime’s services. In consideration of the right to receive this commission, Yilaime has agreed to pay
the Company a quarterly fee of $250,000 starting on July 1, 2016. The Services Agreement is set to expire on June 10, 2020, absent
early termination for breach thereof by either party. Yilaime retains an option to extend the term under its sole discretion until
June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s exclusive
independent contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent
agreement.
Yilaime
is obligated to provide support services only in a manner that is deemed commercially acceptable by Yilaime and Yilaime has the
sole right to determine the means, manner and method by which services will be provided and at the time and location of its choosing.
Furthermore, as the control person of Yilaime, Mr. Perkins might make decisions he deems are in the best interests of Yilaime,
which might be to the detriment of the goals and objectives of the Company.
Modular
Construction & Technology Services Agreement (AmericaTowne)
On
June 28, 2016, we entered into a Modular Construction & Technology Services Agreement (the “Modular Services Agreement”)
with AmericaTowne Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). The impetus behind the Modular Services Agreement was the Company’s Cooperative
Agreement with the Shexian County Government, China. Under the Cooperative Agreement, ATI and the Shexian County Bureau have agreed
to a partnership in furthering the development of an AmericaTowne community in the Hanwang mountains, Shexian, China. In addition,
ATI, at the invitation of the Xiamen Longyan City Chamber of Commerce,
Xiamen/Longyan China
and the Xiamen City Growth Planning Agency plan to pursue the development of an AmericaTowne Community and an International School
in Longyan County China.
Under
the Modular Services Agreement, ATI Modular shall provide the
research, development, training
and modular technology in a manner deemed commercially acceptable by ATI based on its commercially reasonable requirements, plans
and specifications, which shall be agreed upon in advance of any substantial and material construction.
ATI will pay the
Company a quarterly fee of $125,000 per quarter. The initial fee was paid upon signing the Modular Services Agreement. The Services
Agreement is set to expire on June 10, 2020, absent early termination for breach thereof by either party. ATI retains an option
to extend the term under its sole discretion until June 10, 2025 by providing written notice to the Company by March 10, 2019.
Yilaime has agreed to be the Company’s exclusive independent contractor in providing the services in the Services Agreement,
and has agreed to a non-compete and non-circumvent agreement.
Interest
Charge – Domestic International Sales Agreement (AXP Holding Corporation)
On
June 29, 2016, we entered into an IC-DISC Service Provider Agreement with AXP Holding Corporation, a Nevada corporation (“AXP
Holding”) and related party to the Company through Mr. Perkins control of AXP Holding. AXP Holding is an Interest Charge
- Domestic International Sales Corporation, or “IC-DISC”. AXP IC-DISC tax-exempt status was authorized and approved
by the United States Department of the Treasury, Internal Revenue Service. As an IC-DISC, AXP Holding may, under certain conditions,
act as a sister corporation to entities and provide services to assist a company in obtaining lower tax rates on export income.
In addition to the export tax savings provided by AXP, AXP can provide an additional array of services including promoting the
Company’s export activities, purchasing receivables from the Company at a discount through a factoring relationship, and
providing the Company with working capital loans.
The
term under the IC-DISC Service Provider Agreement is set to expire on December 6, 2019, absent early termination for breach thereof
by either party. AXP retains the right to extend the term, exercising its sole discretion, to December 6, 2024 by providing written
notice to the Company by November 6, 2019. AXP has agreed to a non-compete and non-circumvent in providing the services under
the IC-DISC Service Provider Agreement.
The
Company has agreed to pay AXP a commission fee up to the greater of 50% of the Company’s export net income or 4% of the
Company’s export gross receipts. The Company will determine the exact amount and the method of payment of the commission
fee. The commission fee shall be paid at the option of the Company periodically throughout the year, but no later than December
31 on annual basis. If there is no commission fee due to no export sales, the Company will pay AXP an export service fee of $50,000.
The export service fee, if any, is due on or before December 31 on an annual basis.
In
addition, for referring businesses from the Company’s “Export Platform” or “Community,” AXP agrees
to pay the Company 25% of each “Sales Export Service Fee” charged and received as an “IC-DISC Commission”
from each Exporter or Licensee resulting from participating in the Export Platform or Community. This fee is called a “Group
Export Consulting Fee” in the IC-DISC Service Provider Agreement, and is due no later than fifteen business days after receipt
from the Exporter or Licensee, but no later than December 31 on an annual basis. For illustrative purposes, if AXP receives and
or charges an Exporter 50% of its net export sales as a commission, and that value is $100,000, AXP would owe the Company 25%,
or $25,000. Furthermore, during the term, the Company shall pay AXP a flat fee of $5,000 per transaction for purchasing receivables
from the Company, plus an interest rate for such factoring at the prime rate plus one-percent.
The
Company recognizes and confirms the requirements in ACS 850-10-50-6 to disclose all related party transactions between the Company
and related party transactions and or relationships.
The
Company also leases office space from Yilaime for $2,500/month.
Pursuant
to ASC 850-10-50-6, the Company makes the following transaction disclosures for the six months ended or as of June 30, 2017:
For
Statement of Operations:
|
(a)
|
$250,000
in revenues for ATI Services Agreements with the Company;
|
|
(b)
|
$15,000
for general and administrative expenses for rent expenses the Company paid to Yilaime towards its lease agreement;
|
|
(c)
|
$45,597
of compensation expense for AXP Holding Corp charges for DISC.
|
|
(d)
|
$50,000
and $0 for general and administrative operating expenses recorded as stock compensation for respective employment agreements;
|
|
(e)
|
$3,477
for general and administrative expenses for commissions and fees
|
For
Balance Sheets on June 30, 2017 and December 31, 2016:
|
(a)
|
$192,364
and $60,088 net account receivables ATI owes to the Company;
|
|
(b)
|
$601,055
and $398,668 net account receivables Yilaime owes to the Company;
|
|
(c)
|
$114,177
and $159,772 prepayments to AXP Holding Corp;
|
|
(d)
|
$754,387
and $324,387 deferred revenue-Yilaime;
|
|
(e)
|
$63,717
and 198,000 as accounts payable to Anhui Ao De Xin Modular Construction Technology Co., Ltd.;
|
|
(f)
|
400,000
and 450,000 as deferred compensation pursuant to respective employment agreements.
|
NOTE
9. INCOME TAXES
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant
components of income tax expense for the six months ended June 30, 2017 and 2016 are as follows
|
|
|
|
|
|
|
For
the Six Months Ended
|
|
|
June
30, 2017
|
|
June
30, 2016
|
Current
tax expense
|
|
$
|
6,839
|
|
|
$
|
—
|
|
Deferred
tax expense
|
|
|
—
|
|
|
|
—
|
|
Tax
expense (benefit)
|
|
$
|
6,839
|
|
|
$
|
—
|
|
The
Company had $6,839 and $0 of income tax liability as of June 30, 2017 and December 31, 2016, respectively.
ATI
Modular Technology Corp.
(FKA Global Recycle Energy, Inc.)
FINANCIAL
STATEMENTS
As
of December 31, 2016 and 2015
And
For the Year Ended December 31, 2016 and 2015
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
ATI
Modular Technology Corp.
We
have audited the accompanying balance sheets of ATI Modular Technology Corp. as of December 31, 2016, June 30, 2016 and June 30,
2015 and the related statement of operations, stockholders’ equity, and cash flows for the six months ended December 31,
2016 and for each of the years in the two-year period ended June 30, 2016. ATI Modular Technology Corp.’s management is
responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ATI
Modular Technology Corp. as of December 31, 2016, June 30, 2016 and June 30, 2015, and the results of operations and cash flows
for the six months ended December 31, 2016 and for each of the years in the two-year period ended June 30, 2016 in conformity
with accounting principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, The Company is still in development stage and has not created sufficient revenue to cover
any operating losses it may incur, which raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans concerning this matter are also described in Note 3. The accompanying financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
As
discussed in Note 2 to the financial statements, the financial statements for the six months ended December 31, 2016 and for the
year ended June 30, 2016 have been restated to correct a misstatement.
/s/Yichien
Yeh, CPA
Yichien
Yeh, CPA
Oakland
Gardens, New York
July
16, 2017
ATI Modular Technology Corp
|
Balance Sheets
|
|
|
December 31
|
|
June 30
|
|
June 30
|
|
|
2016
|
|
2016
|
|
2015
|
|
|
(Restated)
|
|
(Restated)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
94,266
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts receivable, net - related parties
|
|
|
458,755
|
|
|
|
118,750
|
|
|
|
—
|
|
Other receivables - related parties
|
|
|
159,772
|
|
|
|
—
|
|
|
|
—
|
|
Advances to officers
|
|
|
—
|
|
|
|
19,241
|
|
|
|
—
|
|
Total Current Assets
|
|
|
712,793
|
|
|
|
137,991
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Equipment Furniture & Fixtures
|
|
|
6,280
|
|
|
|
4,156
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
719,073
|
|
|
$
|
142,147
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
209,699
|
|
|
$
|
19,699
|
|
|
$
|
3,859
|
|
Deposit from customers
|
|
|
—
|
|
|
|
30,000
|
|
|
|
—
|
|
Deferred Revenue
|
|
|
324,387
|
|
|
|
—
|
|
|
|
—
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total Current Liabilities
|
|
|
534,086
|
|
|
|
49,699
|
|
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
534,086
|
|
|
|
49,699
|
|
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock,$0.001 par value, 500,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
|
|
|
|
126,733,337, 116,075,716 and 16,075,716 shares issued and
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding, respectively.
|
|
|
126,733
|
|
|
|
116,076
|
|
|
|
16,076
|
|
Common stock subscribed
|
|
|
982
|
|
|
|
—
|
|
|
|
—
|
|
Additional paid in capital
|
|
|
833,363
|
|
|
|
32,953
|
|
|
|
32,953
|
|
Deferred compensation
|
|
|
(450,000
|
)
|
|
|
—
|
|
|
|
—
|
|
Receivable for issuance of stock
|
|
|
(167,000
|
)
|
|
|
—
|
|
|
|
—
|
|
Retained Earnings
|
|
|
(159,091
|
)
|
|
|
(56,581
|
)
|
|
|
(52,888
|
)
|
Total stockholders' equity
|
|
|
184,988
|
|
|
|
92,448
|
|
|
|
(3,859
|
)
|
Total liabilities and stockholders' equity
|
|
$
|
719,074
|
|
|
$
|
142,147
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements
|
ATI Modular Technology Corp
|
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
For the Years Ended
|
|
|
December 31
|
|
June 30
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Restated)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - related parties
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
$
|
125,000
|
|
|
$
|
—
|
|
Cost of revenues - related parties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gross profit
|
|
|
250,000
|
|
|
|
—
|
|
|
|
125,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
352,510
|
|
|
|
4,650
|
|
|
|
132,552
|
|
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from operation
|
|
|
(102,510
|
)
|
|
|
(4,650
|
)
|
|
|
(7,552
|
)
|
|
|
(3,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
—
|
|
|
|
—
|
|
|
|
3,859
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from operation before taxes
|
|
|
(102,510
|
)
|
|
|
(4,650
|
)
|
|
|
(3,693
|
)
|
|
|
(3,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(102,510
|
)
|
|
$
|
(4,650
|
)
|
|
$
|
(3,693
|
)
|
|
$
|
(3,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per common share-basic and diluted
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding basic and diluted
|
|
|
121,171,157
|
|
|
|
16,075,716
|
|
|
|
16,075,716
|
|
|
|
16,075,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements
|
ATI
Modular Technology Corp
Statements of Changes in Stockholders' Equity
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Additional
|
|
|
|
Receivable
|
|
|
|
|
|
|
Common Stock
|
|
Stock
|
|
Paid-In
|
|
Deferred
|
|
for Issuance
|
|
Retained
|
|
|
|
|
Shares
|
|
Amount
|
|
Sunscribed
|
|
Capital
|
|
Compensation
|
|
of Stock
|
|
Earnings
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2014
|
|
|
16,075,716
|
|
|
$
|
16,076
|
|
|
$
|
—
|
|
|
$
|
32,953
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(49,029
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended June 30, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,859
|
)
|
|
|
(3,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2015
|
|
|
16,075,716
|
|
|
$
|
16,076
|
|
|
$
|
—
|
|
|
$
|
32,953
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(52,888
|
)
|
|
$
|
(3,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
100,000,000
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended June 30, 2016
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,693
|
)
|
|
|
(3,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
|
116,075,716
|
|
|
$
|
116,076
|
|
|
$
|
—
|
|
|
$
|
32,953
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(56,581
|
)
|
|
$
|
92,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for proceeds
|
|
|
657,621
|
|
|
|
657
|
|
|
|
982
|
|
|
|
310,410
|
|
|
|
—
|
|
|
|
(167,000
|
)
|
|
|
—
|
|
|
|
145,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
10,000,000
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
490,000
|
|
|
|
(500,000
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Deferred Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period ended December 31, 2016
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(102,510
|
)
|
|
|
(102,510
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
|
|
126,733,337
|
|
|
$
|
126,733
|
|
|
$
|
982
|
|
|
$
|
833,363
|
|
|
$
|
(450,000
|
)
|
|
$
|
(167,000
|
)
|
|
$
|
(159,091
|
)
|
|
$
|
(184,987
|
)
|
See
Notes to Financial Statements
ATI
Modular Technology Corp
Statements of Cash Flows
|
|
For the Six Months Ended December 31
|
For the Year Ended
June 30
|
|
|
2016
|
|
2015
|
2016
|
|
2015
|
|
|
(Restated)
|
|
(Unaudited)
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss of the period
|
|
$
|
(102,510
|
)
|
|
$
|
(4,650
|
)
|
$
|
(3,693
|
)
|
|
|
(3,859
|
)
|
Adjustments to reconcile net loss from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad debt expense
|
|
|
17,895
|
|
|
|
—
|
|
|
6,250
|
|
|
|
—
|
|
Depreciation
|
|
|
416
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Shares issued for services
|
|
|
—
|
|
|
|
—
|
|
|
100,000
|
|
|
|
—
|
|
Amortization on deferred compensation
|
|
|
50,000
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(357,900
|
)
|
|
|
—
|
|
|
(125,000
|
)
|
|
|
—
|
|
Other receivables
|
|
|
(159,772
|
)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Advances to officers
|
|
|
19,241
|
|
|
|
—
|
|
|
(19,241
|
)
|
|
|
—
|
|
Accounts payable and accrued expenses
|
|
|
190,000
|
|
|
|
4,650
|
|
|
15,840
|
|
|
|
3,859
|
|
Deposit from customers
|
|
|
(30,000
|
)
|
|
|
—
|
|
|
30,000
|
|
|
|
—
|
|
Deferred Revenue
|
|
|
324,387
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Net cash used in operating activities
|
|
|
(48,243
|
)
|
|
|
—
|
|
|
4,156
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(2,540
|
)
|
|
|
—
|
|
|
(4,156
|
)
|
|
|
—
|
|
Net cash used in investing activities
|
|
|
(2,540
|
)
|
|
|
—
|
|
|
(4,156
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of stock
|
|
|
145,049
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
145,049
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and equivalents
|
|
|
94,266
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of the period
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Cash and equivalents at end of the period
|
|
$
|
94,266
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
See
Notes to Financial Statements
|
ATI
MODULAR TECHNOLOGY CORP
Notes to Financial Statements
NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
ATI
Modular Technology Corp., defined above and herein as the “Company” formerly Global Recycle Energy, Inc., was incorporated
under the laws of the State of Nevada on March 7, 2008. The Company is engaged in the development and the exporting of modular
energy efficient technology and processes that allow government and private enterprises in China to use US-based methods for creating
modular spaces, facilities, and properties. As with any business plan that is aspirational in nature, there is no assurance we
will be able to accomplish all our objective or that we will be able to meet our financing needs to accomplish our objectives.
The
Company is an operating company engaged in the development and the exporting of modular energy efficient and smart technology
and processes that allow government and private enterprises in China and elsewhere to use US-based methods for creating modular
spaces, facilities, and properties. The Company is in the business of all aspects of modular and smart construction, including
but not limited to, (a) the furtherance of modular and smart construction technology, education, development and production in
developed and undeveloped countries, (b) acquisition and/or installation of construction equipment, materials, furnishings, hardware,
insulation, flooring, roofing, wiring, plumbing, heating and air conditioning, and landscaping, and (c) other businesses directly
or tangentially related to these lines of services, including assisting businesses and entrepreneurs in securing naming, licensing
or promotional rights, driving internet and media traffic, increasing visibility of product and name recognition, and other services.
Our
principal executive offices are located at 4700 Homewood Court, Suite 100 in Raleigh, North Carolina. We are registered as a foreign
business entity in the State of North Carolina. We lease the office space from Yilaime Corporation, a Nevada corporation doing
business in North Carolina, and a related party to the Company, as set forth below. Our physical location for our operations in
China along with a manufacturing facility is Jiangnan Industry Zone, Chizhou City, Anhui Province, China. In carrying out its
business plan the Company is in the process of registering its wholly owned subsidiary Anhui Ao De Xin Modular Building Technology
Co. Ltd. in Jiangnan Industry Zone, Chizhou, China.
The
Company entered an Investment and Cooperation Agreement with the Jiangnan Industry Zone in Anhui Province, China dated September
8, 2016 (the “Jiangnan Cooperation Agreement”). On December 28, 2016, the Company entered the definitive agreement,
American ATI Modular Technology Company Project Investment Agreement (the “Investment Agreement”) with the Administrative
Committee, Jiangnan Industry Zone in Anhui Province. The Investment Agreement superseded the Jiangnan Cooperation Agreement. Under
the Investment Agreement, the Administrative Committee of Jiangnan Industrial Concentration Zone of Anhui Province (hereinafter,
“Jiangnan”) and the Company have agreed to the construction of the Company’s green, modular building and related
technology under the project name “Modular Plant Production Base.”
Under
the Investment Agreement, the Company has agreed to manufacture and install modular buildings, and provide research into the development
of green building module manufacturing using US based technology. The Company has agreed to provide appropriate technology and
intelligent systems in providing modular building lifecycle services. In addition, to modular and smart technology, the Company
and Jiangnan has agreed to establish: 1) a modular development institute research and training center; 2) an entrepreneurial incubator;
3) an engineering technology research center; 4) an industrial design center; 5) a post-doctoral workstations and engineering
laboratories; and 6) an international student intern summer work program. Where possible the Company’s aim is to increase
US exports by using American based technology, equipment and services. (Strategy)
The
Company entered the Modular Services Agreement with AmericaTowne, a related party and the majority and controlling shareholder
of the Company, to support AmericaTowne’s obligations under the Shexian Agreement in designing, installing and manufacturing
American modular technology for use in all government and private buildings throughout Shexian County, and elsewhere in China.
The terms and conditions of the Modular Services Agreement with AmericaTowne and the Shexian Agreement are set forth above.
Also,
the Company has entered the Yongan and Shexian Agreements to pursue the development of business opportunities involving modular
technology and investments, and business development. While we plan to have robust operations in the United States and international
locations, we expect the bulk of our operations and revenue will come from China.
China's
economy and its government impact our revenues and operations. While the Company has an agreement in place with the government
of Jiangnan as well as the approval by government officials in Shexian and Yongan China to operate facilities there is no assurance
that we will operate the facilities successfully. Additionally, the Company will need government approval in other locations in
China to operate other aspects of our business plan. There is no assurance that we will be successful in obtaining approvals from
government entities in other locations to operate other aspects of our business plan. Finally, Mr. Perkins, as a control person
of each entity – AmericaTowne and the Company, might elect to forego certain obligations of AmericaTowne under other Corporative
Agreements currently in place or not enter more definitive agreements with Governments in China and elsewhere, which in turn,
could impact the Company’s ability to meet its business plan set forth herein.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
These
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
("U.S. GAAP").
On
May 9, 2017, the Company reported that it had reached a determination to restate its previously filed financial statements for
the six months ended December 31, 2016 and for the year ended June 30, 2016. The restatement had no effect on net income for the
six months ended December 31, 2016 and for the year ended June 30, 2016. The restatement relates to revoke application of pushdown
accounting in accordance with ASC 805-20-15-4.
On
July 1, 2017, the Company reported that it had reached a determination to restate its previously filed financial statements for
the six months ended December 31, 2016 and for the year ended June 30, 2016. The restatement decrease net income of $186,933 for
the six months ended December 31, 2016. For the year ended June 30, 2016, the restatement had no effect on net income. The restatement
relates to fees charged by Yilaime which will be recorded as a reduction of the cost of revenue when recognized in accordance
with ASC 605-50-45.
The
$110,938 adjustment made to Other receivables related party refers to AXP Holding Corporation and adjusts the IC-DISC fees charged.
Because of the adjustment of Yilaime quarterly fees are now recorded as a reduction in the cost of revenue when recognized no
DISC charges were due. Therefore, fees paid and now owed to the Company are recognized as Other receivables – related parties.
The
$175,613 is a reduction in the cost of revenue recognized for services performed by Yilaime on behalf of the Company. The services
resulted in the Company receiving an initial letter of interest from US ExIm Bank to provide either a direct loan and or guarantee
for equipment and services in support of the Company's, Investment and Cooperation Agreement with the City of Chizhou.
The
following summarizes the effects of restatement:
|
Previously
Reported
|
Adjustment
|
Restated
|
Goodwill:
|
|
|
|
12/31/2016
|
$206,992
|
(206,992)
|
$-
|
6/30/2016
|
$206,992
|
(206,992)
|
$-
|
Additional
paid in capital:
|
|
|
|
12/31/2016
|
$1,040,355
|
(206,992)
|
$833,363
|
6/30/2016
|
$239,945
|
(206,992)
|
$32,953
|
Deferred
Revenue:
|
|
|
|
12/31/2016
|
$-
|
324,387
|
$324,387
|
Income
tax payable:
|
|
|
|
12/31/2016
|
$26,516
|
(26,516)
|
$-
|
Other
receivables – related parties
|
|
|
|
12/31/2016
|
$48,834
|
110,938
|
$159,772
|
Revenue-related
parties:
|
|
|
|
12/31/2016
|
$750,000
|
(500,000)
|
$250,000
|
Cost
of revenues-related parties when recognized:
|
|
|
|
12/31/2016
|
$175,613
|
(175,613)
|
$-
|
General
and administrative expenses:
|
|
|
|
12/31/2016
|
$463,448
|
(110,938)
|
$352,510
|
Provision
for income taxes:
|
|
|
|
12/31/2016
|
$26,516
|
(26,516)
|
$-
|
Change
in Fiscal Year End
The
Company has filed its Form 8-K on January 31 of 2017 to change the Company's fiscal year end from June 30 to December 31. As a
result of this change, the Company is filing a Transition Report on Form 10-K for the six-month transition period ended December
31, 2016. References to any of the Company’s fiscal years mean the fiscal year ending December 31 of that calendar year.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. In the
opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included.
Actual results could differ from those estimates.
Financial
Instruments
The
carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses, interest payable
and short-term notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.
Cash
Equivalents
The
Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash
equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.
However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository
institutions in which those deposits are held.
Property,
Plant, and Equipment
Property,
plant and equipment are initially recognized recorded at cost. Gains or losses on disposals are reflected as gain or loss in the
period of disposal. The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs
may include structural improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred.
Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
For
the six month ended December 31, 2016 and 2015, depreciation expense is $416 is $0, respectively. For the years ended June 30,
2016 and 2015, depreciation expense is $0. For the years ended June 30, 2016 and 2015, the Company’s effective income tax
rate is 0% resulting from full provision of allowance valuation on deferred tax assets from the Company’s net loss.
Income
Taxes
Income
taxes are provided in accordance with Statement of Financial Accounting Standards ASC 740 Accounting for Income Taxes. A deferred
tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry
forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates on the date of enactment.
The
Company was established under the laws of the State of Nevada and is subject to U.S. federal income tax and Nevada state income
tax, if any. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established
when necessary to reduce deferred income tax assets to the amount expected to be realized.
For
the six months ended December 31, 2016 and for the years ended June 30, 2016 and 2015, the Company’s effective income tax
rate is 0% resulting from full provision of allowance valuation on deferred tax assets from the Company’s net loss.
Earnings
per Share
In
February 1997, the FASB issued ASC 260, "Earnings per Share", which specifies the computation, presentation and disclosure
requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 supersedes the provisions of
APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company
has adopted the provisions of ASC 260 effective (inception).
Basic
earnings and net loss per share amounts are computed by dividing the net income by the weighted average number of common shares
outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
Segment
Information
The
standard, "Disclosures about Segments of an Enterprise and Related Information", codified with ASC 280, requires certain
financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise.
The Company believes that it operates in business segment of marketing and sales in China while the Company's general administration
function is performed in the United States. On December 31, 2016, all assets and liabilities are located in the United States
where the income and expense has been incurred since inception to December 31, 2016.
Impact
of New Accounting Standards
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's
results of operations, financial position, or cash flow.
Revenue
Recognition
The
Company's revenue recognition policies comply with FASB ASC Topic 605. The Company follows paragraph 60510S991 of the FASB Accounting
Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned.
The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably assured.
The
Company does not provide unconditional right of return, price protection or any other concessions to its customers.
There
were no sales returns and allowances from inception to December 31, 2016.
In
the first step of the review process, we compare the estimated fair value of the reporting unit with its carrying value. If the
estimated fair value of the reporting unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value
of the reporting unit is less than its carrying amount, we proceed to the second step of the review process to calculate the implied
fair value of the reporting unit goodwill in order to determine whether any impairment is required. We calculate the implied fair
value of the reporting unit goodwill by allocating the estimated fair value of the reporting unit to all of the assets and liabilities
of the reporting unit as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting
unit’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss for that excess amount.
In allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit, we use
industry and market data, as well as knowledge of the industry and our past experiences.
We
base our calculation of the estimated fair value of a reporting unit on the income approach. For the income approach, we use internally
developed discounted cash flow models that include, among others, the following assumptions: projections of revenues and expenses
and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new
units; and estimated discount rates. We base these assumptions on our historical data and experience, third-party appraisals,
industry projections, micro and macro general economic condition projections, and our expectations.
We
have had no goodwill impairment charges for the six months ended December 31, 2016, the estimated fair value of each of our reporting
units exceeded its' respective carrying amount by more than 100 percent based on our models and assumptions.
NOTE
3. GOING CONCERN
The
Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable
to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The
Company is still in development stage and has not created sufficient revenue to cover any operating losses it may incur. Management's
plans include the raising of capital through the equity markets to fund future operations, seeking additional acquisitions, and
generating of revenue through our business. However, there can be no assurances the Company will be successful in its efforts
to secure additional equity financing and obtaining sufficient revenue producing contracts. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result
from this uncertainty.
NOTE
4. ACCOUNT RECEIVABLES – RELATED PARTIES
The
nature of the accounts receivable for December 31, 2016 in the amount of $63,250 are for modular construction and technology
services and utilization of anticipated modular construction technology by AmericaTowne pursuant to the Modular Construction
& Technology Services Agreement between AmericaTowne and the Company dated June 28, 2016 (hereinafter, the “ATI
Services Agreement”) and $419,650 for the Sales and Support Services Agreement with Yilaime on June 27, 2016 (the
“Yilaime
Services Agreement”). On December 31, 2016, the Company's allowance for bad debt is $24,145,
which provides a net receivable balance of $458,755.
The
nature of the accounts receivable for June 30, 2017 in the amount of $125,000 are for Modular Construction and Technology Services
and utilization of anticipated modular construction technology. The Company’s allowance for bad debt is $6,250, which provides
a net receivable balance of $118,750.
Accounts
receivable consist of the following:
|
31-Dec
|
30-June
|
30-June
|
|
2016
|
2016
|
2015
|
Accounts
receivable- related parties
|
482,900
|
125,000
|
0
|
Less:
Allowance for doubtful accounts
|
(24,145)
|
(6,250)
|
0
|
Accounts
receivable, net
|
458,755
|
118,750
|
0
|
Bad
debt expense was $17,895 and $0 for the six months ended December 31, 2016 and 2015, respectively. Bad debt expense was $6,250
and $0 for the fiscal year ended June 30, 2016 and for June 30, 2015 respectively.
Allowance
for bad debt policy
Our
bad debt policy is determined by the Company's periodic review of each account receivable for reasonable assurance of collection.
Factors considered are the exporter's financial condition, past payment history if any, any conversations with the exporter about
the exporter's financial conditions and any other extenuating circumstances. Based upon the above factors the Company makes a
determination whether the receivable is reasonable assured of collection. Based upon our review if required we adjust the allowance
for bad debt. As of December 31, 2016, June 30, 2016, and June 30, 2015, based upon our limited history, our allowance for bad
debt is just above bad debt we anticipate will be written off for the year.
NOTE
5. DEFERRED REVENUE
The
Company receives $250,000 quarterly fee from Yilaime for Sales and Support Services Agreement. In accordance with ASC 605-50-45,
the Company defers and recognizes as a reduction to the future costs for quarterly fee. For the six months December 31, 2016,
$500,000 fee from exclusive agreement incurred; $324,387 is booked deferred revenue as current liability on December 31, 2016
and $175,613 went against cost charged by Yilaime.
NOTE
6. SHAREHOLDER'S EQUITY
The
stockholders' equity section of the Company contains the following classes of capital stock:
Common
stock, $ 0.001 par value: 500,000,000 shares authorized; 126,733,337, 116,075,716 and 16,075,716 shares issued and outstanding
as of December 31, 2016, June 31, 2016 and June 30, 2015, respectively; Preferred stock, none: 0 shares authorized; but not issued
and outstanding.
NOTE
7. STOCK BASED COMPENSATION
The
Company entered into an employment lock-up agreement on July 1, 2016 with Alton Perkins to serve as the Chairman of the
Board, President, Chief Executive Officer, Chief Financial Officer and Secretary. The term of Mr. Perkins' agreement is five
years with the Company retaining an option to extend in one- year periods. In consideration for Mr. Perkins' services, the
Company has agreed to issue to his designee, the Alton & Xiang Mei Lin Perkins Family Trust, 10,000,000 shares of common
stock. The Company may elect in the future to include money compensation to Mr. Perkins or his designee for his services
provided there is sufficient cash flow.
For
the six months ended December 31, 2016, $50,000 of stock compensation was charged to operating expenses and $450,000 was recorded
as deferred compensation on December 31, 2016.
NOTE
8. RELATED PARTIES TRANSACTIONS
The
Company intends on relying on other businesses controlled by our sole director and officer, and beneficial owner of the majority
shares of common stock in the Company – Alton Perkins, in implementing its business plan.
Mr.
Perkins is the control person of Yilaime Corporation, AmericaTowne and AXP Holding Corporation. At this time, the purpose of the
Company is to service the construction and related technology needs of AmericaTowne under AmericaTowne’s agreements with
the Shexian County Investment Promotion Bureau in developing an AmericaTowne community in the Hanwang mountains in Shexian, China.
The Company also intends on supporting these services in other AmericaTowne ventures at the invitation of the Xiamen Longyan City
Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency in developing an AmericaTowne Community and
an International School in Longyan County China.
The
related export services rendered to the Company in the implementation of its business plan cannot be provided by AmericaTowne
or through the AmericaTowne relationship. In order to avoid conflicts of interest, Mr. Perkins is of the opinion that there must
be a separate and distinct agreement between, in this case, the Company and AXP Holding Corporation. Furthermore, although other
similar IC-DISC entities exist, the Company is able to obtain better terms and conditions from AXP Holding Corporation in light
of Mr. Perkins’ control of AXP Holding Corporation.
AmericaTowne’s
Board of Directors determined that operating and controlling a separate but related entity focused on the development and the
exporting of modular energy efficient technology and processes for government and private enterprises in China would be more prudent
from a risk mitigation and operational standpoint than providing these services under the AmericaTowne business plan. Furthermore,
the intent of the Company is to expand its services and relationships to other similar endeavors in projects not related to AmericaTowne,
thus the need to maintain and operate a separate entity.
Cooperative
Agreement (Shexian County Government, China)
The
Company’s majority and controlling shareholder – AmericaTowne, is a party under the Cooperative Agreement with
the Shexian County Investment Promotion Bureau (the “Shexian Agreement”). Under the Shexian Agreement,
AmericaTowne and the Shexian County Bureau have agreed to a partnership in furthering the development of an AmericaTowne
community in the Hanwang mountains. Although not definitive at this time, the parties have agreed that, in consideration for
AmericaTowne’s investment of approximately $30,000,000 into the development, plus any additional tax paid to the local
government, where applicable, the Shexian County Bureau will dedicate local resources, including land (which AmericaTowne
would be required to obtain rights through local bid invitation), and participation with AmericaTowne in an agreed upon
equity split through a future definitive agreement.
The
Company will be providing construction and technology services to AmericaTowne in facilitating AmericaTowne’s obligations
under the Shexian Agreement. The Company’s ability to generate revenue under its agreement with AmericaTowne could be impaired
in the event AmericaTowne is not able to meet its obligations under the Shexian Agreement. Furthermore, Mr. Perkins, as a control
person of each entity, might elect to forego certain obligations of AmericaTowne under the Shexian Agreement or not enter into
a more definitive agreement with the Shexian County Bureau, which in turn, could impact the Company’s ability to meet its
business plan set forth herein.
Sales
and Support Services Agreement (Yilaime Corporation)
On
June 27, 2016, we entered into a Sales and Support Services Agreement with Yilaime Corporation, a Nevada corporation (“Yilaime”).
Yilaime is controlled by Alton Perkins, who is our sole director and officer. Yilaime holds the majority of issued and outstanding
shares of common stock in AmericaTowne, Inc. (“ATI”), a Delaware corporation and fully-reporting company with the
United States Securities and Exchange Commission (the “SEC”). Mr. Perkins is also the Trustee of the Alton & Xiang
Mei Lin Perkins Family Trust (“Perkins Trust”) and the AXP Nevada Asset Protection Trust 1 (“AXP”), which
holds 5,100,367 and 120,000 shares, respectively, of the issued and outstanding common stock in ATI. Mr. Perkins is the beneficial
owner of 20,674,484 shares of ATI, which equals 90.11% of issued and outstanding shares. Mr. Perkins is the beneficial owner of
the majority and controlling interest in the Company through his direct holdings, and beneficial holdings through Yilaime, AXP
and the Perkins Trust. ATI, Perkins Trust and Mr. Perkins beneficially own 110,117,593 shares, or 86%, of the Company’s
common stock.
Under
the Services Agreement, Yilaime will provide the Company with marketing, sales and support services in the Company’s pursuit
of ATI Modular business in China in consideration of a commission equal to 10% of the gross amount of monies procured for the
Company through Yilaime’s services. In consideration of the right to receive this commission, Yilaime has agreed to pay
the Company a quarterly fee of $250,000 starting on July 1, 2016. The Services Agreement is set to expire on June 10, 2020, absent
early termination for breach thereof by either party. Yilaime retains an option to extend the term under its sole discretion until
June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s exclusive
independent contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent
agreement.
Yilaime
is obligated to provide support services only in a manner that is deemed commercially acceptable by Yilaime and Yilaime has the
sole right to determine the means, manner and method by which services will be provided and at the time and location of its choosing.
Furthermore, as the control person of Yilaime, Mr. Perkins might make decisions he deems are in the best interests of Yilaime,
which might be to the detriment of the goals and objectives of the Company.
Modular
Construction & Technology Services Agreement (AmericaTowne)
On
June 28, 2016, we entered into a Modular Construction & Technology Services Agreement (the “Modular Services Agreement”)
with AmericaTowne Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). The impetus behind the Modular Services Agreement was the Company’s Cooperative
Agreement with the Shexian County Government, China. Under the Cooperative Agreement, ATI and the Shexian County Bureau have agreed
to a partnership in furthering the development of an AmericaTowne community in the Hanwang mountains, Shexian, China. In addition,
ATI, at the invitation of the Xiamen Longyan City Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning
Agency plan to pursue the development of an AmericaTowne Community and an International School in Longyan County China.
Under
the Modular Services Agreement, ATI Modular shall provide the research, development, training and modular technology in a manner
deemed commercially acceptable by ATI based on its commercially reasonable requirements, plans and specifications, which shall
be agreed upon in advance of any substantial and material construction. ATI will pay the Company a quarterly fee of $125,000 per
quarter. The initial fee was paid upon signing the Modular Services Agreement. The Services Agreement is set to expire on June
10, 2020, absent early termination for breach thereof by either party. ATI retains an option to extend the term under its sole
discretion until June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s
exclusive independent contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent
agreement.
Interest
Charge – Domestic International Sales Agreement (AXP Holding Corporation)
On
June 29, 2016, we entered into an IC-DISC Service Provider Agreement with AXP Holding Corporation, a Nevada corporation (“AXP
Holding”) and related party to the Company through Mr. Perkins control of AXP Holding. AXP Holding is an Interest Charge
- Domestic International Sales Corporation, or “IC-DISC”. AXP IC-DISC tax-exempt status was authorized and approved
by the United States Department of the Treasury, Internal Revenue Service. As an IC-DISC, AXP Holding may, under certain conditions,
act as a sister corporation to entities and provide services to assist a company in obtaining lower tax rates on export income.
In addition to the export tax savings provided by AXP, AXP can provide an additional array of services including promoting the
Company’s export activities, purchasing receivables from the Company at a discount through a factoring relationship, and
providing the Company with working capital loans.
The
term under the IC-DISC Service Provider Agreement is set to expire on December 6, 2019, absent early termination for breach thereof
by either party. AXP retains the right to extend the term, exercising its sole discretion, to December 6, 2024 by providing written
notice to the Company by November 6, 2019. AXP has agreed to a non-compete and non-circumvent in providing the services under
the IC-DISC Service Provider Agreement.
The
Company has agreed to pay AXP a commission fee up to the greater of 50% of the Company’s export net income or 4% of
the Company’s export gross receipts. The Company will determine the exact amount and the method of payment of the
commission fee. The commission fee shall be paid at the option of the Company periodically throughout the year, but no later
than December 31 on annual basis. If there is no commission fee due to no export sales, the Company will pay AXP an export
service fee of $50,000. The export service fee, if any, is due on or before December 31 on an annual basis.
In
addition, for referring businesses from the Company’s “Export Platform” or “Community,” AXP agrees
to pay the Company 25% of each “Sales Export Service Fee” charged and received as an “IC-DISC Commission”
from each Exporter or Licensee resulting from participating in the Export Platform or Community. This fee is called a “Group
Export Consulting Fee” in the IC-DISC Service Provider Agreement, and is due no later than fifteen business days after receipt
from the Exporter or Licensee, but no later than December 31 on an annual basis. For illustrative purposes, if AXP receives and
or charges an Exporter 50% of its net export sales as a commission, and that value is $100,000, AXP would owe the Company 25%,
or $25,000. Furthermore, during the term, the Company shall pay AXP a flat fee of $5,000 per transaction for purchasing receivables
from the Company, plus an interest rate for such factoring at the prime rate plus one-percent.
In
addition, Joseph Arcaro is the Company’s prior Chief Executive Officer, Chief Financial Officer, Secretary and Chairman
of the Board of Directors.
The
Company recognizes and confirms the requirements in ACS 850 10506 to disclose all related party transactions between the Company
and related party transactions and or relationships.
Pursuant
to ASC 850-10-50-6, the Company makes the following transaction disclosures:
The
Company also leases office space from Yilaime for $2,500/month.
Operating
Statement Related Party Transactions (for the six months ending December 31, 2016 and 2015; for the years ended June 30, 2016
and 2015).
(a)
$15,000, $0, $2,500 and $0 for general and administrative expenses for rent expenses the Company paid to Yilaime towards its lease
agreement.
(b)
$250,000, $0, $125,000 and $0 in revenues for ATI Services Agreements with the Company
(c)
$50,000, $0, $0 and $0 for general and administrative operating expenses recorded as stock compensation for respective employment
agreements;
(d)
$3,334, $0, $0 and $0 for general and administrative expenses for commissions and fees;
(e)
$198,000, $0, $0 and $0 for operational expense for Anhui Ao De Xin Modular Construction Technology Co., Ltd.
(f)
$0, $0, $100,000 and $0 of compensation expense by issuing 100,000,000 shares to Joseph Arcaro.
(g)
$0, $0, $3,859 and $0 other income of debt forgiveness from Joseph Arcaro
Balance
Sheet Related Party Transactions (on December 31, 2016, June 30, 2016 and June 30, 2015)
(a)
$60,088, 118,750 and $0 net account receivables ATI owes to the Company;
(b)
$398,668, $0 and $0 net account receivables Yilaime owes to the Company;
(c)
$159,772, $0 and $0 prepayments to AXP Holding Corp; and
(d)
$198,000, $0 and $0 as accounts payable to Anhui Ao De Xin Modular Construction Technology Co., Ltd.; and
(e)
$450,000, $0 and $0 as deferred compensation pursuant to respective employment agreements.
(f)
$0, $19,241 and $0 advances to officers-Alton Perkins
(g)
$0, $30,000 and $0 deposit from customers- Yilaime.
(h)
$324,387, 0 and $0 deferred revenue-Yilaime