UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2019
 
or
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________ to ______________
 
Commission file number: 333-206450
 
AJIA INNOGROUP HOLDINGS, LTD
(Name of registrant in its charter)
 
Nevada
 
82-1063313
(State or jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
1980 Festival Plaza Drive Suite 530
Las Vegas, NV 89135
(Address of principal executive offices)
 
Phone: (702)360-0652
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, par value $0.001
(Title of class)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
 
Emerging growth company x
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes     x No
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not available
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 
As of February 14, 2020, the registrant had 101,020,000 issued and outstanding shares of common stock.
 
 
 
 
 
  
AJIA INNOGROUP HOLDINGS, LTD
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements. We have based these forward- looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:
 
Factors that might cause these differences include the following:
 
 
·
the integration of multiple technologies and programs;
 
·
the ability to successfully complete development and commercialization of sites and our company’s expectations regarding market growth;
 
·
changes in existing and potential relationships with collaborative partners;
 
·
the ability to retain certain members of management;
 
·
our expectations regarding general and administrative expenses;
 
·
our expectations regarding cash balances, capital requirements, anticipated revenue and expenses, including infrastructure expenses;
 
·
other factors detailed from time to time in filings with the SEC.
 
In addition, we use words such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” and similar expressions to identify forward-looking statements.
 
We undertake no obligation to update publicly or revise any forward -looking statements, whether as a result of new information, or future events. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
  
 
2
 
 
 
AJIA INNOGROUP HOLDINGS, LTD
 
 
 
F-1
 
 
4
 
 
6
 
 
7
 
 
 
8
 
 
8
 
 
8
 
 
8
 
 
8
 
 
8
 
 
9
 
 
3
 
   
 
 
AJIA INNOGROUP HOLDINGS, LTD
 
 
 
F-2
 
 
F-3
 
 
F-4
 
 
F-5
 
 
F-6
 
 
F-1
 
  
AJIA INNOGROUP HOLDINGS, LTD.
December 31, 2019 and June 30, 2019
(Unaudited)
 
 
 
 
 
 
 
 
 
December 31,
 
 
June 30,
 
 
 
2019
 
 
2019
 
 
 
(Unaudited)
 
 
(Audited)
 
ASSETS
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$ 27,610
 
 
$ 31,867
 
Prepayments and other receivables
 
 
826
 
 
 
4,738
 
 
 
 
 
 
 
 
 
 
Total current assets
 
 
28,436
 
 
 
36,605
 
 
 
 
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
 
 
Plant and equipment, net
 
 
599
 
 
 
696
 
Total assets
 
$ 29,035
 
 
$ 37,301
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
Other payables and accrued liabilities
 
$ 33,727
 
 
$ 28,710
 
Amount due to a related party
 
 
135,844
 
 
 
387,665
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
 
169,571
 
 
 
416,375
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Deficit
 
 
 
 
 
 
 
 
Preferred stock, $0.001 par value, 100,000,000 shares authorized; no shares are issued
 
 
-
 
 
 
-
 
Common stock: $0.001 par value, 500,000,000 shares authorized, 101,020,000 & 7,270,000 shares issued
and outstanding as of December 31, 2019 and June 30, 2019 respectively
 
$ 101,020
 
 
$ 7,270
 
Additional paid-in capital
 
 
398,650
 
 
 
192,400
 
Accumulated other comprehensive income
 
 
794
 
 
 
(458 )
Accumulated deficit
 
 
(641,000 )
 
 
(578,286 )
 
 
 
 
 
 
 
 
 
Total stockholders’ deficit
 
 
(140,536 )
 
 
(379,074 )
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders’ deficit
 
$ 29,035
 
 
$ 37,301
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
F-2
 
 
For the three and six months ended December 31, 2019 and 2018
(Unaudited)
 
 
 
For the Three Months Ended
December 31,
 
 
For the Six Months Ended
December 31,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$ 10,117
 
 
$ 30,000
 
 
$ 20,080
 
 
$ 30,000
 
Cost of sales
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
10,117
 
 
 
30,000
 
 
 
20,080
 
 
 
30,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative expense
 
 
39,022
 
 
 
88,752
 
 
 
130,145
 
 
 
43,263
 
Professional fees
 
 
19,876
 
 
 
-
 
 
 
37,745
 
 
 
98,928
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
 
58,898
 
 
 
88,752
 
 
 
167,890
 
 
 
142,191
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
3
 
 
 
-
 
 
 
3
 
 
 
-
 
Sundry income
 
 
85,093
 
 
 
126,006
 
 
 
85,093
 
 
 
126,007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other income
 
 
85,096
 
 
 
126,006
 
 
 
85,096
 
 
 
126,007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income/(loss)
 
$ 36,315
 
 
$ 67,254
 
 
$ (62,714 )
 
$ 13,816
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income/(loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation gain/(loss)
 
 
(542 )
 
 
(47 )
 
 
1,252
 
 
 
(103 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income/(loss)
 
 
35,773
 
 
 
67,207
 
 
 
(61,462 )
 
 
13,713
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted income/(loss) per common share
 
$ 0.00
 
 
$ 0.01
 
 
$ (0.00 )
 
$ 0.00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding - basic and diluted
 
 
101,020,000
 
 
 
9,717,083
 
 
 
79,111,033
 
 
 
10,204,783
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
F-3
 
  
For the three and six months ended December 31, 2019 and 2018
(Unaudited)
 
 
 
Common stock
 
 
Common stock
 
 
Additional
 
 
Accumulated
other
 
 
 
 
 
Total
 
 
 
No. of
shares
 
 
Amount
 
 
to be
cancelled
 
 
paid-in
capital
 
 
comprehensive
income
 
 
Accumulated deficit
 
 
stockholders’
deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of July 1, 2018
 
 
7,270,000
 
 
$ 7,270
 
 
$ 3,000
 
 
$ 189,400
 
 
$ 421
 
 
$ (333,302 )
 
$ (133,211 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss for the period
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
13,816
 
 
 
13,816
 
Foreign currency translation adjustment
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(103 )
 
 
-
 
 
 
(103 )
Shares cancelled
 
 
-
 
 
 
-
 
 
 
(3,000 )
 
 
(125,700 )
 
 
-
 
 
 
-
 
 
 
(128,700 )
Balance as of December 31, 2018
 
 
7,270,000
 
 
$ 7,270
 
 
$ -
 
 
$ 63,700
 
 
$ 318
 
 
$ (319,486 )
 
$ (248,198 )
   

 

 

Common stock

 

 

Common stock

 

 

Additional

 

 

Accumulated

other

 

 

 

 

 

Total

 

 

 

No. of

shares

 

 

Amount

 

 

to be

cancelled

 

 

paid-in

capital

 

 

comprehensive

income

 

 

Accumulated deficit

 

 

stockholders’

deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of October 1, 2018

 

 

7,270,000

 

 

$ 7,270

 

 

$ 3,000

 

 

$ 189,400

 

 

$ 365

 

 

$ (386,740 )

 

$ (186,705 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

67,254

 

 

 

67,254

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(47 )

 

 

-

 

 

 

(47 )

Shares cancelled

 

 

-

 

 

 

-

 

 

 

(3,000 )

 

 

(125,700 )

 

 

-

 

 

 

-

 

 

 

(128,700 )

Balance as of December 31, 2018

 

 

7,270,000

 

 

$ 7,270

 

 

$ -

 

 

$ 63,700

 

 

$ 318

 

 

$ (319,486 )

 

$ (248,198 )

Balance as of July 1, 2019

 

 

7,270,000

 

 

$ 7,270

 

 

$ -

 

 

$ 192,400

 

 

$ (458 )

 

$ (578,286 )

 

$ (379,074 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares on promissory note

 

 

93,750,000

 

 

 

93,750

 

 

 

-

 

 

 

206,250

 

 

 

-

 

 

 

-

 

 

 

300,000

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(62,714 )

 

 

(62,714 )

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,252

 

 

 

-

 

 

 

1,252

 

Balance as of December 31, 2019

 

 

101,020,000

 

 

$ 101,020

 

 

$ -

 

 

$ 398,650

 

 

$ 794

 

 

$ (641,000 )

 

$ (140,536 )

Balance as of October 1, 2019

 

 

101,020,000

 

 

$ 101,020

 

 

$ -

 

 

$ 398,650

 

 

$ 1,336

 

 

$ (677,315 )

 

$ (176,309 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36,315

 

 

 

36,315

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(542 )

 

 

-

 

 

 

(542 )

Balance as of December 31, 2019

 

 

101,020,000

 

 

$ 101,020

 

 

$ -

 

 

$ 398,650

 

 

$ 794

 

 

$ (641,000 )

 

$ (140,536 )
   
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
 
 
F-4
 
 
For the six months ended December 31, 2019 and 2018
(Unaudited)
 
 
 
For the six months ended
December 31,
 
 
 
2019
 
 
2018
 
Cash flow from operating activities
 
 
 
 
 
 
Net loss
 
$ (62,714 )
 
$ 13,816
 
Less: Depreciation
 
 
97
 
 
 
98
 
Other non-cash item
 
 
-
 
 
 
(103 )
Cash flow from the operating activities
 
 
(62,617 )
 
 
13,811
 
Changes in Operating Assets and Liabilities:
 
 
 
 
 
 
 
 
Decrease/(increase) in prepayments and other receivables
 
 
3,912
 
 
 
(27,235 )
Increase in other payables and accrued liabilities
 
 
5,017
 
 
 
17,401
 
 
 
 
 
 
 
 
 
 
Net cash (used in)/provided by operating activities
 
 
(53,688 )
 
 
3,977
 
 
 
 
 
 
 
 
 
 
Cash flow from financing activities
 
 
 
 
 
 
 
 
Advance from a director
 
 
48,179
 
 
 
125,532
 
Cancellation of share
 
 
-
 
 
 
(128,700 )
 
 
 
 
 
 
 
 
 
Net cash provided by/(used in) financing activities
 
 
48,179
 
 
 
(3,168 )
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
 
1,252
 
 
 
-
 
 
 
 
 
 
 
 
 
 
Net (decrease)/increase in cash
 
 
(4,257 )
 
 
809
 
 
 
 
 
 
 
 
 
 
Cash, at beginning of period
 
 
31,867
 
 
 
1,816
 
 
 
 
 
 
 
 
 
 
Cash, at end of period
 
$ 27,610
 
 
$ 2,625
 
 
 
 
 
 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
 
 
 
 
Cash paid for interest
 
$ -
 
 
$ -
 
Cash paid for income taxes
 
$ -
 
 
$ -
 
 
 
 
 
 
 
 
 
 
NON-CASH FINANCING AND INVESTING TRANSACTIONS
 
 
 
 
 
 
 
 
Shares issued for the settlement of promissory note
 
$ 300,000
 
 
$ -
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
  
 
F-5
 
  
AJIA INNOGROUP HOLDINGS, LTD.
DECEMBER 30, 2019
(UNAUDITED)
 
NOTE 1 BASIS OF PRESENTATION
 
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
 
In the opinion of management, the consolidated balance sheet as of June 30, 2019 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended December 31, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2020 or for any future period.
 
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2019.
 
NOTE 2 ORGANIZATION AND BUSINESS BACKGROUND
 
Ajia Innogroup Holdings, Ltd., formerly “AJIA INNOGROUP HOLDINGS, LTD” (the “Company” or “AJIA”) was incorporated in the State of Nevada on March 19, 2014. The Company had intended to provide a website and mobile app to assist event planners in locating performers, bands and speakers, booking locations and planning events in areas around the United States and Canada. However, The Company changed its business plan in 2017 and is currently planning to pursue the business in having self-help photo kiosks to be implemented at major convenient locations, such as shopping mall, buildings near subway stations, etc. to attract customers to use the service. In addition, the Company provides system development consulting and training services. The main revenue for these businesses will be generated from the self-help photo kiosks at which one can do photo printing, Wechat printing, game commemorative photos, copying documents, etc., as well as from consulting contracts.
 
The details of the Company’s subsidiaries are described below:
 
Name
 
Place of incorporation and
kind of legal entity
 
Principal activities
and place of operation
 
Particulars of issued/
registered
share capital
 
Effective interest
Held
 
Splendor Radiant Limited
 
British Virgin
Islands, a limited liability company
 
Investment holding
 
1 issued shares of US$1 each
 
 
100 %
A Jia Creative Holdings Limited
 
Hong Kong, a limited liability company
 
Provision of system setup and maintenance services,
investment holding
 
100 issued shares of HK$1 each
 
 
100 %
Guangzhou Shengjia Trading Co., Ltd
 
The PRC, a limited liability company
 
Trading business
 
HK$1,000,000
 
 
100 %
 
AJIA and its subsidiaries are hereinafter referred to as (the “Company”)
 
 
F-6
 
 
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
 
·
Use of estimates
 
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.
 
·
Basis of consolidation
 
The condensed consolidated financial statements include the financial statements of AJIA and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
 
·
Cash and cash equivalents
 
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments.
 
·
Plant and equipment
 
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
 
 
Expected useful lives
Computer equipment
 
5 years
 
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
 
Depreciation expense for the six months ended December 31, 2019 and 2018 were $97and $98, respectively.
 
·
Impairment of long-lived assets
 
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the periods presented.
 
·
Revenue recognition
 
The Company’s revenue recognition policies are in compliance with FASB ASC 605-35 “Revenue Recognition”. Revenue is recognized when a formal arrangement exists, the price is fixed or determinable, all obligations have been performed pursuant to the terms of the formal arrangement and collectability is reasonably assured.
 
 
F-7
 
 
For the Company’s self-serve kiosks, revenue is recognized when each kiosk satisfies the performance obligation by transferring control of the promised goods or services to the customer.
 
For the Company’s business in catering system development and training, monthly revenue is recognized when the Company satisfies its obligation by transferring control of the promised goods or performance of services to the customer.
 
The Company recognizes revenues on sales of its services, based on the terms of the customer agreement. The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the service being sold and the sales price. If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized at the time the service is provided to the customer.
 
·
Comprehensive income or loss
 
ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income or loss, as presented in the accompanying consolidated statement of stockholders’ deficit consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income or loss is not included in the computation of income tax expense or benefit.
 
·
Income taxes
 
The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, “ Income Taxes “ (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
 
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the years ended June 30, 2019. The Company and its subsidiaries are subject to local and various foreign tax jurisdictions. The Company’s tax returns remain open subject to examination by major tax jurisdictions.
 
·
Net loss per share
 
The Company calculates net loss per share in accordance with ASC Topic 260 “ Earnings per Share “. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
 
·
Foreign currencies translation
 
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
 
 
F-8
 
 
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiaries operating in Hong Kong and the PRC maintained their books and records in their local currency, Hong Kong Dollars (“HK$”) and Renminbi Yuan (“RMB”), which are functional currencies as being the primary currency of the economic environment in which these entities operate.
 
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
 
Translation of amounts from its reporting currencies into US$ has been made at the following exchange rates for the respective year:
  
 
 
2019
 
 
2018
 
Period-end HK$:US$1 exchange rate
 
 
7.7872
 
 
 
7.8405
 
Period average HK$:US$1 exchange rate
 
 
7.8267
 
 
 
7.8386
 
Period-end RMB:US$1 exchange rate
 
 
6.9668
 
 
 
6,7691
 
Period average RMB:US$1 exchange rate
 
 
7.0285
 
 
 
6,8027
 
 
·
Related parties
 
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
 
·
Concentration of credit risk
 
The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees for royalty income, and other products. The financial condition of these franchisees is largely dependent upon the underlying business trends of our brands and market conditions within the vending industry. This concentration of credit risk is mitigated, in part, by the large number of franchisees spread over a large geographical area and the short-term nature of the receivables.
 
·
Fair value of financial instruments
 
The carrying value of the Company’s financial instruments: cash and cash equivalents, prepayments and other receivables, accounts payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
 
The Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures “ (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
 
·
Level 1 : Observable inputs such as quoted prices in active markets;
 
·
Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
 
·
Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions
 
 
F-9
 
  
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
 
·
Recent accounting pronouncements
 
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2016-02, Leases . The main difference between the provisions of ASU No. 2016-02 and previous U.S. GAAP is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU No. 2016-02 retains a distinction between finance leases and operating leases, and the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right-of-use assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , which provides for the election of transition methods between the modified retrospective method and the optional transition relief method. The modified retrospective method is applied to all prior reporting periods presented with a cumulative-effect adjustment recorded in the earliest comparative period while the optional transition relief method is applied beginning in the period of adoption with a cumulative-effect adjustment recorded in the first quarter of 2019. This ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company will adopt this standard when it becomes effective, on January 1, 2019, and expects to elect the optional transition relief method.
 
In June 2016, the FASB issued ASU No. 2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments . ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s incurred loss approach with an expected loss model for instruments measured at amortized cost. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. The Company has not yet determined the impact this standard will have on its financial statements and related disclosures.
 
In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities . This ASU amends current US GAAP to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. This standard will replace today’s yield-to-maturity approach, which generally requires amortization of premium over the life of the instrument. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company’s financial statements and related disclosures.
 
In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This guidance allows companies to reclassify items in accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”). This ASU is effective for all entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. Companies may apply the guidance in the period of adoption or retrospectively to each period in which the income tax effects of the Tax Act related to items in accumulated other comprehensive income are recognized. The Company does not expect it to have a material effect on the Company’s financial statements and related disclosures.
 
 
F-10
 
 
In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting . ASU 2018-07 aligns the accounting for share-based payment awards issued to employees and nonemployees. Measurement of equity-classified nonemployee awards will now be valued on the grant date and will no longer be remeasured through the performance completion date. This amendment also changes the accounting for nonemployee awards with performance conditions to recognize compensation cost when achievement of the performance condition is probable, rather than upon achievement of the performance condition, as well as eliminating the requirement to reassess the equity or liability classification for nonemployee awards upon vesting, except for certain award types. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. When adopted, the new guidance should be applied to all new grants and other transition provisions are included in the guidance to simplify this adoption for most companies. The Company does not expect it to have a material effect on the Company’s financial statements and related disclosures.
 
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . As part of the FASB’s disclosure framework project, it has eliminated, amended and added disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy of timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. Public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of any interim or annual reporting period. This ASU will have an impact on the Company’s disclosures.
 
In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans . As part of the FASB’s disclosure framework project, it has changed the disclosure requirements for defined pension and other post-retirement benefit plans. The FASB eliminated disclosure requirements related to the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of plan assets expected to be returned to the employer, if any, information related to Japanese Welfare Pension Insurance Law, information about the amount of future annual benefits covered by insurance contracts and significant transactions between the employer or related parties and the plan, and the disclosure of the effects of a one-percentage-point change in the assumed health care cost trend rates on the (1) aggregate of the service and interest cost components of net periodic benefit costs and the (2) benefit obligation for postretirement health care benefits. Entities will be required to disclose the weighted-average interest crediting rate for cash balance plans and other plans with promised interest crediting rates as well as an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for public entities for annual periods beginning after December 15, 2020. Early adoption is permitted as of the beginning of any annual reporting period. This ASU will have an impact on the Company’s disclosures.
 
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This ASU requires companies to defer specified implementation costs in a cloud computing arrangement that are often expensed under current US GAAP and recognize these costs to expense over the noncancellable term of the arrangement. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company’s financial statements and related disclosures.
 
Recently Issued Financial Reporting Rules
 
In August 2018, the SEC adopted the final rule under SEC Release 33-10532, Disclosure Update and Simplification , which amended its rules to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments are part of the SEC’s ongoing disclosure effectiveness initiative. The amendments eliminate redundant and duplicative requirements including, but not limited to, the ratio of earnings to fixed charges, outdated regulatory disclosures, certain accounting policies about derivative instruments and specific SEC disclosures that are also required under current US GAAP. The amendments may expand current disclosures for certain companies, specifically the requirement to disclose the change in stockholders’ equity for the current and comparative quarter and year-to-date interim periods. The amended rules will become effective November 5, 2018 and will be applied to any filings after that date. On September 25, 2018, the SEC released guidance advising it will not object to a registrant adopting the requirement to include changes in stockholders’ equity in the Form 10-Q for the first quarter beginning after the effective date of the rule. The Company does not expect these final rules to have a material impact on its disclosures and financial statements.
 
 
F-11
 
 
Recently Adopted Accounting Pronouncements
 
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 became effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. See Note 2: Revenue for further discussion, including the impact on the Company’s condensed consolidated financial statements and required disclosures.
 
In February 2017, the FASB issued No. ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets . ASU 2017-05 was issued to provide clarity on the scope and application for recognizing gains and losses from the sale or transfer of nonfinancial assets, and should be adopted concurrently with ASU 2014-09, Revenue from Contracts with Customers . This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In March 2016, the FASB issued ASU No. 2016-04, Liabilities-Extinguishment of Liabilities: Recognition of Breakage for Certain Prepaid Stored Value Products . ASU No. 2016-04 contains specific guidance for the derecognition of prepaid stored-value product liabilities within the scope of this ASU. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments . ASU No. 2016-15 is intended to reduce diversity and clarify the classification of how certain cash receipts and cash payments are presented in the statement of cash flows. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. ASU No. 2016-16 requires entities to account for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs rather than current guidance which requires companies to defer the income tax effects of intercompany transfers of an asset until the asset has been sold to an outside party or otherwise recognized. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows - Restricted Cash . ASU No. 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption was permitted as of the beginning of any interim or annual reporting period. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business . ASU No. 2017-01 most significantly revises guidance specific to the definition of a business related to accounting for acquisitions. Additionally, ASU No. 2017-01 also affects other areas of US GAAP, such as the definition of a business related to the consolidation of variable interest entities, the consolidation of a subsidiary or group of assets, components of an operating segment, and disposals of reporting units and the impact on goodwill. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
 
F-12
 
  
In February 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . ASU 2017-07 requires sponsors of benefit plans to present the service cost component of net periodic benefit cost in the same income statement line or items as other employee costs and present the remaining components of net periodic benefit cost in one or more separate line items outside of income from operations. This ASU also limits the capitalization of benefit costs to only the service cost component. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. As a result of the retrospective adoption of this standard, for the three and nine months ended December 31, 2017 , the Company reclassified $0.1 million and $0.2 million , respectively, from marketing, general and administrative expense to other income (expense). The service cost component of periodic benefit cost is the only cost that remains in income from operations; all other periodic benefit costs, including interest cost, expected return on plan assets and amortization of amounts deferred from previous periods are now reflected outside of income from operations and reflected in the other income (expense) line item on the Company’s condensed consolidated statements of operations. There were no other changes to the Company’s condensed consolidated financial statements or disclosures.
 
In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, a company will apply modification accounting only if the fair value, vesting conditions or classification of the award change due to a modification in the terms or conditions of the share-based payment award. This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
 
In July 2017, the FASB issued ASU No. 2017-11, I. Accounting for Certain Financial Instruments With Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception. Part I of this ASU reduces the complexity associated with accounting for certain financial instruments with down round features. Part II of this ASU recharacterizes the indefinite deferral provisions described in Topic 480: Distinguishing Liabilities from Equity. It does not have an accounting effect. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company adopted this ASU on October 1, 2017. The Company evaluated its debt and related derivative instruments and determined that this standard did not have an impact on the Company’s condensed consolidated financial statements or related disclosures.
 
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
 
NOTE 4 – GOING CONCERN
 
The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
 
The Company has experienced a net loss of $62,714 and negative operating cash flows of $53,688 for the period ended December 31, 2019. Also, at December 31, 2019, the Company has incurred an accumulated deficit of $641,000.
 
The continuation of the Company as a going concern through December 31, 2020 is dependent upon the continued financial support from its stockholders. Management believes the Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
 
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
 
 
F-13
 
  
NOTE 5 – PREFERRED STOCK AND COMMON STOCK
 
(A) Preferred stock
 
The Company was authorized to issue one hundred million (100,000,000) shares of preferred stock, par value $0.001 per share. On December 31, 2019 and 2018, none of the preferred shares have been issued.
 
(B) Common stock
 
Shares authorized
 
Upon formation, the total number of shares of all classes of stock which the Company was authorized to issue seventy-five million (75,000,000) shares of common stock, par value $0.001 per share. On December 15, 2017, the Company increased its authorized common shares to 500,000,000 shares at par value $0.001 per share.
 
Common stock issued
 
As of December 31, 2019 and June 30, 2018, the Company had a total of 101,020,000 and 7,270,000 shares of its common stock issued and outstanding.
 
On July 28, 2018, the Company issued a convertible promissory note in the amount of $300,000 to Full Yick International Ltd, a major shareholder to settle with the related party loan. Pursuant to the terms of the convertible promissory note, the note has an option to convert into 93,750,000 common shares of the Company at $0.0032 per share, on or the earlier of July 31, 2019. On July 31, 2019, Full Yick International Limited exercised their option to convert the $300,000 note into 93,750,000 common shares of the Company, at the price of $0.0032 per share. On August 9, 2019, the Company approved the share issuance of 93,750,000 common shares to Full Yick International Limited.
 
 
F-14
 
  
NOTE 6 – RELATED PARTY TRANSACTIONS
 
From time to time, the stockholder and director of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. The imputed interest on the loan from a related party was not significant.
 
As of December 31, 2019, the balance $135,844 related the loan account of the Director - Wan Yin Ling. The loan is unsecured, non-interest bearing, and due on demand.
 
NOTE 7 – SUBSEQUENT EVENTS
 
In accordance with ASC Topic 855, “ Subsequent Events “, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2019 up through the date the Company issued the audited consolidated financial statements. During the period, the Company did not have any material recognizable subsequent events.
 
 
F-15
 
  
 
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS ANNUAL REPORT. THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS ANNUAL REPORT.
 
FORWARD-LOOKING STATEMENTS
 
Certain statements made in this report may constitute “forward-looking statements on our current expectations and projections about future events “. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements .
 
Overview
 
Business Development
 
Ajia was incorporated in the State of Nevada on March 19, 2014, and our fiscal year end is June 30. The Company’s administrative address is 1980 Festival Plaza Drive Suite 530, Las Vegas, NV 89135. The telephone number is: (702) 360-0652 .
 
The Company had intended to provide a website and mobile app to assist event planners in locating performers, bands and speakers, booking locations and planning events in areas around the United States and Canada. However, The Company changed its business plan in 2017 and is currently planning to pursue the business in having self-help photo kiosks to be implemented at major convenient locations, such as shopping mall, buildings near subway stations, etc. to attract customers to use the service. In addition, the Company provides system development consulting and training services. The main revenue for these businesses will be generated from the self-help photo kiosks at which one can do photo printing, Wechat printing, game commemorative photos, copying documents, etc., as well as from consulting contracts.
 
On November 24, 2017, the Board of Directors (the “Board”) accepted the resignation of Ms. Elaine Yin Ling Wan as Chief Executive and Chief Financial Officer of the Company. At the same time, the Board elected the following individuals to the following positions: Mr. Zhi Qiang Liang was elected as President, Chief Executive Officer and Director of the Company; Mr. Wai Hing Samuel Lai was elected as Chief Financial Officer of the Company; Shun Ching (Dickson) Wong was elected as a Director and a Member of the Audit Committee of the Company; Ms. Sin Kei Stella Hui was elected as a Director and a Member of the Audit Committee; Ms. Kiu Chung Jacqueline Tang was elected as Chief Operating Officer of the Company; Mr. Jeffrey Firestone was elected as Director and Vice President of Investor Relations of the Company; Dr. Kwai Lam Terence Wong was elected as Vice President of Investor Relations and Elaine Yin Ling Wan was elected as Director, Secretary and Treasurer.
 
On December 1, 2017, the Company acquired a ten percent (10%) ownership interest in a collection code project (“Project”), the purpose of which is to improve the marketability and market penetration of Alipay Network Technology Co., Ltd. (“Alipay”) collection code system. As a part of the agreement, the Company will share 10% of expenses and profit on the Project.
 
Effective February 9, 2018, the Board accepted the resignation of Jeffrey S. Firestone from his position as Vice President and director of the Company.
 
On April 25, 2018, the Company announced that its wholly owned subsidiary, Guangzhou Shengjia Trading Co., Ltd. of Guangzhou, China (“Shengjia”) has entered into an agreement with Guangzhou Renhai Network Technology Co., Ltd. (“Renhai”) in which Shengjia would replace its 10% interest in the Alipay payment code business development project (“Alipay Project”), with a 30% interest of Renhai’s new China Mobile project. Renhai has recently reached an agreement with China Mobile Communications Corporation (“China Mobile”) whereby Renhai and China Mobile are to sign an agreement appointing Renhai as one of China Mobile’s marketers in promoting China Mobile’s business products for the period from April 1, 2018 to September 30, 2018. Renhai’s China Mobile agreement will be extended once certain business targets are fulfilled
 
Nevertheless, even with the above remedies, the returns from the projects are still not satisfied by the Company’s management and are far below the estimations made from Renhai to the Company. In this regard, on December 28, 2018, both parties agreed that the agreements between Shengia and Renhai are rescinded and voided. Renhai shall return the Company’s 3,000,000 shares to the Company for cancellation and the Company shall return all the incomes previously received from Renhai. The Company cancelled these 3,000,000 shares of common stock on December 28, 2018.
 
The Company’s activities are subject to significant risks and uncertainties including failing to secure additional funding to operationalize the Company’s website and apps before another company develops similar websites or apps.
 
On July 28, 2018, the Company issued a convertible promissory note in the amount of $300,000.00 to Full Yick International Ltd. Pursuant to the terms the convertible promissory note was convertible into 93,750,000 common shares of the Company at $0.0032 per share on July 31, 2019. On or about August 9, 2019, Full Yick International Ltd. exercised their option to convert the $300,000.00 note into 93,750,000 common shares of the Company, which constitutes approximately 92.8% of the issued and outstanding common shares of the Company, and instructed the Company to issue the shares to approximately 84 shareholders. Of those approximately 84 shareholders, the largest, Full Yick International, Ltd., holds 12,038,723 shares, or approximately 11.9% of the issued and outstanding shares of the Company. There are no arrangements between the members of the former and new control groups and their associates with respect to election of directors or other matters.
 
On September 20, 2019, Mr. Kin Chung Ken Tam was appointed as members of the Board of Directors (the “Board”) of the Company’s Executive directors. Mr. Hung Hin Samuel Leung and Mr. Kwok Fai Thomas Yip were appointed as members of the Board of the Company’s Independent and Non-executive directors – Audit committee. On September 20, 2019, Ms. Sin Kei Stella Hui and Mr. Shun Ching (Dickson) Wong were resigned from the member of the Board of the Company
 
 
4
 
 
Business Plan
 
On December 1, 2017, the Company acquired a ten percent (10%) ownership interest in a collection code project (“Project”), the purpose of which is to improve the marketability and market penetration of Alipay Network Technology Co., Ltd. (“Alipay”) collection code system. The Company plans to acquire additional interest in this project as the project develops.
 
In addition to the Alipay collection code project, the Company is planning to acquire a business in the development of self-help photo kiosks, which is to be implemented at major convenient locations, such as shopping mall, buildings nearby subway station, etc. to attract customers to use the service. Arising from the growing needs of identity verification and photos for official processing of formal permit applications (e.g. such as driving license, individual identification card, passport and visa application, and etc.), this new business will implement innovative photo kiosks in major locations in cities to provide economic and convenient self-help service. This type of mini photo kiosks provides a one stop self-help service center to allow the customers to apply varieties of permits through a simple process from the identity verification, photo taking, document scanning, and electronic signature to making payment.
 
Furthermore, the Company is now under negotiation with some restaurants in Hong Kong to provide IT services and solutions to them. The Company’s management expects that service contracts shall be concluded and more future incomes shall be received upon these services.
 
The management will have further announcements when there are further developments in these new business opportunities in the future.
 
Principal Products, Services and Their Markets
 
In previous year, our business plan was to create a website and an independent mobile application that enabled consumers to find the best performers, entertainers, bands, speakers and event services easily and which are expected to be accessible for everyone in the United States and Canada. Nevertheless, the management attempts to invest in other IT project and considers acquiring the self-help photo kiosks In recent periods, the management has actively sought business opportunities; however, due to the unstable business and social environments in Hong Kong, the management has experienced hard time to make the Company’s business expansion and growth; however, as mentioned above, the management is still actively look other new business opportunities in the future.
 
Status of Publicly Announced New Products or Services
 
Ajia currently has no new publicly announced products or services.
 
Patents, Trademarks, Licenses, Agreements or Contracts
 
There are no aspects of our business plan currently which require a patent, trademark, or product license. We have not entered into any vendor agreements or contracts that give or could give rise to any obligations or concessions.
 
Governmental Controls, Approval and Licensing Requirements
 
None
 
Research and Development Activities and Costs
 
We have spent no time on specialized research and development activities.
 
Number of Employees
 
Ajia has no employees and where necessary in expanding the Company’s business, the Company may consider hiring additional employees.
 
Plan of Operation
 
Ajia have limited business activity to generate revenue in preliminary stages and also no significant assets. Our executive offices are located at Room 1001, 10/F., Grandmark, No.10 Granville Road, Tsim Sha Tsui, Hong Kong. The office is a location at which the Company receives mail, has office services and can hold meetings. Our officer, Ms. Wan Yin Ling, Elaine, works on Company business in Hong Kong.
 
Results of Operations
 
Comparison for the Three Months Ended December 31, 2019 and 2018
 
Revenues
 
During the three months ended December 31, 2019, we have derived income of $10,117 (2018: $30,000).
 
Operating Expenses
 
The Company’s operating expenses for the three months ended December 31, 2019 is $58,898 and for the three months ended December 31, 2018 is $88,752.
 
Net Income (Loss)
 
During the three months ended December 31, 2019 and 2018 the company recognized net income $36,315and $67,254 respectively.
 
Comparison for the Six Months Ended December 31, 2019 and 2018
 
Revenues
 
During the six months ended December 31, 2019, we have derived income of $20,080 (2018: $30,000).
 
Operating Expenses
 
The Company’s operating expenses for the six months ended December 31, 2019 is $167,890 and for the six months ended December 31, 2018 is $142,191.
 
Net Income (Loss)
 
During the six months ended December 31, 2019 and 2018 the company recognized net losses $62,714 and net income of $13,816 respectively.
 
Liquidity and Capital Resources
 
As at December 31, 2019, we had total current assets of $28,436 which consist of $27,610 in Cash and $826 in prepayment and other receivables. We had total current liabilities of $169,571, which consist of $135,844 due to related party and $33,727 in other payables and accrued liabilities.
 
 
5
 
  
We have limited business activity to generate revenue in preliminary stages from our operations. We will require additional funds to fully implement our plans. These funds may be raised through equity financing, debt financing, or other sources, which may result in the dilution in the equity ownership of our shares. We currently do not have any arrangements for additional financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain financing, a successful marketing and promotion program and, further in the future, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. We will require additional funds to maintain our reporting status with the SEC and remain in good standing with the state of Nevada.
 
Going Concern
 
We have incurred net loss since our inception on March 19, 2014 through December 31, 2019 totaling $641,000 and experienced a net loss of $62,714 and negative operating cash flows of $53,688 for the period ended December 31, 2019. We have completed only the preliminary stages of our business plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly, our independent auditors’ report on our financial statements for the year ended June 30, 2019 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.
 
Recently Issued Accounting Pronouncements
 
We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements.
 
 
Not Required
 
 
6
 
 
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
As required by Rule 13a-15/15d-15 under the Securities and Exchange Act of 1934,as amended (the “Exchange Act”), as of December 31, 2019, we have carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Company’s management, our President (Principal Executive Officer) and Treasurer (Principal Accounting Officer). Based upon the results of that evaluation, our management has concluded that, as of December 31, 2019, our Company’s disclosure controls and procedures were not effective and did not provide reasonable assurance that material information related to our Company required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions on required disclosure.
 
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
 
 
·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
 
 
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
 
 
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in INTERNAL CONTROL -- INTEGRATED FRAMEWORK.
 
Our management concluded that, as of December 31, 2019, our internal control over financial reporting was not effective based on the criteria in INTERNAL CONTROL -- INTEGRATED FRAMEWORK issued by the COSO.
 
This quarterly report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
 
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
 
There were no changes in our internal control over financial reporting identified in connection with the evaluation described above during this current quarter ended December 31, 2019, that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.
  
 
7
 
  
 
 
We are not aware of any legal proceedings to which we are a party or of which our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.
 
 
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.
 
 
None.
 
 
None.
 
 
None.
 
 
None.
 
 
8
 
 
 
Exhibit Description
 
Exhibit
Number
 
Exhibit Description
 
 
 
 
_________
* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
 9
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 

 

AJIA INNOGROUP HOLDINGS, LTD.

 

 

(Registrant)

 

 

 

Dated: February 14, 2020

 

/s/ Mr. Zhi Qiang Liang

 

 

Mr. Zhi Qiang Liang

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

Dated: February 14, 2020

 

/s/ Mr. Wai Hing (Samuel) Lai

 

 

Mr. Wai Hing (Samuel) Lai

 

 

Chief Financial Officer

 

 

(Principal Financial Officer and Principal Accounting Officer)

 

 
 
 
10
 
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