Notes
to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Asia
Equity Exchange Group, Inc. (“the Company” or “AEEX”) is a Nevada corporation incorporated on July 15,
2013, under the name “I In The Sky, Inc.” (“SYYF”). The Company filed a name change to AEEX with the state
of Nevada on July 22, 2015. It is based in Hong Kong, the People’s Republic of China. The accounting and reporting policies
of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal
year ends on December 31.
The
Company’s original business plan was to manufacture and market low cost GPS tracking devices and software to businesses
and families. However this business was not successful and the Company had no revenues generated from its business until April
12, 2016 when it completed the reverse acquisition of Asian Equity Exchange Group Company Limited (“AEEGCL”).
On
November 30, 2015, the Company executed a Sale and Purchase Agreement (the “Purchase Agreement”) to acquire 100% of
the shares and assets of AEEGCL (the “Acquisition”). Pursuant to the Purchase Agreement, the Company issued one billion
(1,000,000,000) shares of common stock to the owners of AEEGCL. The Company had a total of 146,000,000 shares of common stock
outstanding immediately prior to Closing. After the Closing, the Company had a total of 1,146,000,000 shares of common stock outstanding,
with the AEEGCL Stockholders owning 87.3% of the total issued and outstanding shares of the Company’s common stock.
The
Closing of the transactions contemplated by the Purchase Agreement took place on April 12, 2016 (“Closing”). As a
result, AEEGCL became a wholly-owned subsidiary of the Company and AEEGCL’s former shareholders own the majority of the
Company’s voting stock. The Company’s previous business plan was terminated and the Company is currently engaged in
the business of AEEGCL.
AEEGCL
is a company incorporated under the laws of Samoa on May 29, 2015. It offers an international equity assistance and information
service platform designed to provide listing assistance services, equity investment financing information and public relationship
services to enterprises in Asia, mainly in China. AEEGCL owns 100% of AEEX (HK) International Financial Service Limited (formerly
known as Yinfu International Enterprise Limited, “AEEX HK”), a Hong Kong corporation incorporated on December 22,
2014. AEEX HK owns 100% of Asian & American Consultant (Shenzhen) Co., Ltd. (formerly known as Yinfu Guotai Investment Consultant
(Shenzhen) Co., Ltd., “AACCL”), a corporation incorporated in the People’s Republic of China (the “PRC”)
on April 15, 2015. Both AEEX HK and AACCL are engaged in the provision of investment and corporate management consultancy services.
The
acquisition of AEEGCL and its subsidiaries by the Company was accounted for as a reverse merger because on a post-merger basis,
the former shareholders of AEEGCL held a majority of the outstanding common stock of the Company on a voting and fully-diluted
basis. As a result, AEEGCL is deemed to be the acquirer for accounting purposes. Accordingly, the consolidated financial statement
data presented are those of AEEGCL, recorded at the historical basis of AEEGCL, for all periods prior to the Company’s acquisition
of AEEGCL on April 12, 2016, and the financial statements of the historical operations of the consolidated companies from the
effective date of the Closing.
The
Company aims to build and complement the multi-layer capital market system in Asia, and create a unique and authoritative intercontinental
equity information platform which will effectively complement in business functions, service means and financing channels with
OTC markets in countries and regions in Asia. AEEX also endeavours to build a system of global cooperation to provide listed enterprises
with equity financing means through domestic and overseas channels, and to offer nurturing pre-listing tutoring, incubating and
supporting services for their listing on overseas capital markets.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”).
The
interim condensed consolidated financial information as of March 31, 2017 and for the three month periods ended March 31, 2017
and 2016 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote
disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have not been
included. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the
audited financial statements of AEEGCL for the period ended December 31, 2016
.
In
the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present
a fair statement of the Company’s interim condensed consolidated financial position as of March 31, 2017, its interim condensed
consolidated results of operations and cash flows for the three month periods ended March 31, 2017 and 2016, as applicable, have
been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year
or any future periods.
Basis
of Consolidation
The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company
balances and transactions within the Company have been eliminated upon consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith
estimates and judgments.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than
three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are
subject to an insignificant risk of loss in value.
Intangible
Assets
Intangible
assets consist of computer software and are recorded at cost. Amortization is calculated using the straight line method over the
estimated useful life of the computer software, which is 5 years.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost. Depreciation is calculated using the straight line method over the estimated useful
lives of the assets. The useful lives are as follows:
|
Office
equipment 5 years
|
|
|
|
Motor
vehicles 5 years
|
Maintenance
and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets
are capitalized. When properties are disposed of the related costs and accumulated depreciation are removed from the accounts
and any gain or loss is reported in the period the transaction takes place.
Indefinite
Lived Intangible Assets
The
Company tests its indefinite-lived intangible assets for impairment at least annually (as of December 31) and whenever events
or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining
if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s
expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant
adverse change in legal factors or in the business climate of its segments; unanticipated competition; and slower growth rates.
Any adverse change in these factors could have a significant impact on the recoverability of the indefinite-lived intangible assets
and the Company’s consolidated financial results.
Impairment
of Long-lived Assets
The
long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as
a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing
the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to
sell. During the periods presented, the Company did not impair any plant and equipment .
Income
Tax
The
Company accounts for income taxes under the provisions of ASC Topic 740 “Accounting for Income Taxes.” Under ASC Topic
740, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts
and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected
to reverse.
The
provision for income tax is based on the results for the period as adjusted for items, which are non-assessable or disallowed.
It is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is accounted
for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable
tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets
are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences
can be utilized.
Deferred
income taxes are calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability
is settled. Deferred tax is charged or credited in the income statement, except when it related to items credited or charged directly
to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities
on a net basis.
ASC
Topic 740 also prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position
taken, or for one expected to be taken, in a tax return. ASC Topic 740 also provides guidance related to, among other things,
classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest
and penalties accrued related to unrecognized tax benefits will be recorded as tax expense.
Fair
Value of Financial Instruments
The
Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value
hierarchy based on the three levels of inputs, of which the first two are considered observable and the last is considered unobservable,
is used to measure fair value:
Level
1: Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices
in active markets for identical assets or liabilities.
Level
2: Observable inputs (other than Level 1 quoted prices) such as quoted prices active markets for similar assets or liabilities,
quoted prices in markets that are not active for identical or similar as or liabilities, or other inputs that are observable or
can be corroborated by observable market data.
Level
3: Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value
of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
The
carrying values of our financial instruments, including cash and cash equivalents, balances with directors and related parties,
other receivables and other payables approximate their fair value due to the short maturities of these financial instruments.
The Company did not have financial assets or liabilities that are measured at fair value on a recurring basis as of March 31,
2017 or December 31, 2016.
Revenue
Recognition
The
Company recognizes revenue from the sale of products and services in accordance with ASC 605, “Revenue Recognition.”
Revenue will be recognized only when all of the following criteria are met: persuasive evidence for an agreement exists, delivery
has occurred or services have been provided, the price or fee is fixed or determinable, and collection is reasonably assured.
Earnings
Per Share
The
Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic
EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic loss per share is computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the period. As of March 31, 2017
and December 31, 2016, there was no dilutive security outstanding.
Comprehensive
Income
Comprehensive
income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.
Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive
income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.
Comprehensive income includes net income and the foreign currency translation gain, net of tax.
Segment
Reporting
ASC
Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.
The management approach model is based on the way a company’s management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a company. Management determined that the Company’s
operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively in one business
segment: the operations of an equity information service platform designed to provide equity investment financing information
to all enterprises in Asia.
Foreign
Currency Translation
The
accompanying consolidated financial statements are presented in United States Dollar (USD). The functional currency of the Company
is USD. The functional currency of AEEGCL,AEEX HK and AACCL are USD, Hong Kong Dollar (HKD) and Renminbi (RMB),respectively. The
translation rates are as follows:
|
|
Three
months ended
|
|
|
|
March
31, 2017
|
|
|
December
31, 2016
|
|
Average
HKD : US$ exchange rate in the period
|
|
|
0.1288
|
|
|
|
0.1287
|
|
Spot
HKD : US$ exchange rate as at the period end
|
|
|
0.1287
|
|
|
|
0.1290
|
|
Average
RMB : US$ exchange rate in the period
|
|
|
0.1454
|
|
|
|
0.1534
|
|
Spot
RMB : US$ exchange rate as at the period end
|
|
|
0.1449
|
|
|
|
0.1548
|
|
Economic
and Political Risk
The
Company’s major operations are conducted in the PRC. Accordingly, the political, economic, and legal environments in the
PRC, as well as the general state of the PRC’s economy may influence the Company’s business, financial condition,
and results of operations.
The
Company’s major operations in the PRC are subject to special considerations and significant risks not typically associated
with companies in North America and Western Europe. These include risks associated with, among others, the political, economic,
and legal environment. The Company’s results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things.
Concentrations
of Credit Risk
Cash
includes cash at banks and demand deposits in accounts maintained with banks within the PRC. Total cash in these banks as of March
31, 2017 amounted to $164,417, none of which is covered by insurance. The Company has not experienced any losses in such accounts
and believes it is not exposed to any risks to its cash in bank accounts.
The
Company performs ongoing credit evaluations of customers and has not experienced any material losses to date. The Company has
not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial
difficulties of its major customers.
Net
Profit (Loss) Per Share of Common Stock
The
Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic
EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share
is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The
following table sets forth the computation of basic earnings per share, for the years ended March 31, 2017 and 2016:
|
|
Three months ended
|
|
|
|
March 31, 2017
|
|
|
March 31, 2016
|
|
Net profit (net loss)
|
|
$
|
230,075
|
|
|
$
|
(6,849
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares issued and outstanding (basic and diluted)
|
|
|
1,146,000,000
|
|
|
|
146,000,000
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) per common share, basic and diluted
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
Advertising
Costs
The
Company follows ASC 720, “
Advertising Costs,”
and expenses costs as incurred. No advertising costs were incurred
for the three months ended March 31, 2017.
Related
Parties
The
Company follows ASC 850,
“Related Party Disclosures,”
for the identification of related parties and disclosure
of related party transactions. See note 9.
Commitments
and Contingencies
The
Company follows ASC 450-20
, “Loss Contingencies
,” to report accounting for contingencies. Liabilities for loss
contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or
contingencies as of March 31, 2017.
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements
will not have a material effect on the Company’s consolidated financial statements.
NOTE
3 - GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. As of March 31, 2017, the Company
has shareholder’s deficit of $230,619.
The
ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing
to continue operations, and development of its business plan. In response to these problems, management intends to raise additional
funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE
4 – PREPAYMENTS
The
amounts of $12,222 and $5,554 as at March 31, 2017 and December 31, 2016, respectively, primarily included prepayments to a third
party for unlimited EDGAR & XBRL Annual filing package services $10,000 and $278, respectively.
NOTE
5 – INTANGIBLE ASSETS
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Computer software
|
|
$
|
7,059
|
|
|
$
|
7,020
|
|
Accumulated amortization
|
|
|
(1,257
|
)
|
|
|
(1,008
|
)
|
|
|
$
|
5,801
|
|
|
$
|
6,013
|
|
NOTE
6 – RESTATEMENT – GOODWILL
The
Company has determined its previously issued unaudited interim consolidated financial statements for the three months periods
ended March 31, 2017 contained an error with respect to ASC 805, Business Combinations. Specifically, the transaction is equivalent
to the issuance of stock by the private company for the net monetary assets of the shell corporation, accompanied by a recapitalization.
The accounting is identical to that resulting from a reverse acquisition, except that no goodwill should be recorded. The impact
of such restatement is as below:
|
|
As
of March 31, 2017
|
|
|
|
As
reported
|
|
|
As
restated
|
|
ASSETS
|
|
|
|
|
|
|
Goodwill
|
|
$
|
1,189,921
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Capital
deficiency
|
|
$
|
(23,713
|
)
|
|
$
|
(1,213,634
|
)
|
NOTE 7 – PLANT AND EQUIPMENT
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Office equipment
|
|
$
|
18,878
|
|
|
$
|
18,799
|
|
Motor vehicle
|
|
$
|
28,052
|
|
|
$
|
28,110
|
|
|
|
|
46,930
|
|
|
|
46,909
|
|
Accumulated depreciation
|
|
|
(15,517
|
)
|
|
|
(12,689
|
)
|
|
|
$
|
31,413
|
|
|
$
|
34,220
|
|
NOTE 8 – INCOME TAXES LIABILITIES
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Value added tax payable
|
|
$
|
8,865
|
|
|
$
|
839
|
|
Personal Income Tax payable
|
|
$
|
274
|
|
|
$
|
6
|
|
Urban construction and maintenance tax
|
|
$
|
621
|
|
|
$
|
127
|
|
Education surcharge
|
|
$
|
266
|
|
|
$
|
80
|
|
Local education surcharge
|
|
$
|
177
|
|
|
$
|
53
|
|
Income tax payable
|
|
$
|
(88
|
)
|
|
$
|
(87
|
)
|
Total
|
|
|
10,116
|
|
|
|
1,017
|
|
NOTE 9 – OTHER PAYABLE
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Salaries and wages accrued to employees
|
|
$
|
6,558
|
|
|
$
|
8,100
|
|
Accrued charges to third parties
|
|
$
|
43,483
|
|
|
$
|
166,643
|
|
Other payables
|
|
$
|
256
|
|
|
$
|
(3,965
|
)
|
|
|
|
50,296
|
|
|
|
170,778
|
|
NOTE 10 – RELATED PARTY TRANSACTIONS
Mr.
Jun Liu (“Mr. Liu”), the Company’s President and Chief Executive Officer, advanced the Company $451,949 as of
March 31, 2017 compared with $423,686 as of December 31, 2016.. The amount due to Mr. Liu is unsecured, interest free and has
no fixed terms of repayment.
NOTE 11 – EQUITY
Preferred
Stock
The
Company has authorized 1,000,000 preferred shares with a par value of $0.001 per share. The Board of Directors are authorized
to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish
the shares thereof from the shares of all other series and classes. As of March 31, 2017, the Company does not have any issued
shares of preferred stock and has not designated any shares for issuance.
Common
Stock
The
Company has authorized 3,000,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder
to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On
July 8, 2015, the Board of Directors authorized a ten for one (10:1) forward stock split, which was effectuated upon the filing
of our amended Articles of Incorporation. The amended Articles of Incorporation were filed with the state of Nevada on July 22,
2015. Accordingly, the Company’s outstanding number of shares of common stock increased from 14,600,000 to 146,000,000.
All relevant information relating to numbers of shares and per share information have been retrospectively adjusted to reflect
the forward stock split for all periods presented.
On
November 30, 2015, the Company executed a Sale and Purchase Agreement (the “Purchase Agreement”) to acquire 100% of
the shares and assets of AEEGCL (the “Acquisition”). Pursuant to the Purchase Agreement, the Company issued one billion
(1,000,000,000) shares of common stock to the owners of AEEGCL. The Company had a total of 146,000,000 shares of common stock
outstanding immediately prior to Closing. After the Closing, the Company had a total of 1,146,000,000 shares of common stock outstanding,
with the AEEGCL Stockholders owning 87.3% of the total issued and outstanding shares of the Company’s common stock.
As
of March 31, 2017, the Company has 1,146,000,000 shares of common stock issued and outstanding.
NOTE 12 – COMMITMENTS AND CONTINGENCIES
The
Company has no known commitments or contingencies as of March 31, 2017. From time to time the Company may become a party to litigation
matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are
no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 13 - SUBSEQUENT EVENTS
Management
has evaluated subsequent events through the date these consolidated financial statements were issued, and concluded that no subsequent
events required disclosure in the financial statements.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The
following management’s discussion and analysis should be read in conjunction with our financial statements and the notes
thereto and the other financial information appearing elsewhere in this report. Our financial statements are prepared in US. Dollars
and in accordance with U.S. GAAP.
Special
Note Regarding Forward Looking Statements
In
addition to historical information, this report contains forward-looking statements. We use words such as “believe,”
“expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,”
“intend,” “aim,” “will,” or similar expressions which are intended to identify forward-looking
statements. Such statements include, among others, those concerning market and industry segment growth; any projections of earnings,
revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations;
any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions
or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, including those identified in Item 1A of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause our results
to differ materially from those expressed or implied by such forward-looking statements.
Readers
are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC.
These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition
and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and
we disclaim any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in
our expectations or future events.
Use
of Terms
Except
as otherwise indicated by the context and for the purposes of this report only, references in this report to:
●
|
“Company”,
“we”, “us” and “our” are to the combined business of Asia Equity Exchange Group, Inc.,
a Nevada corporation, and its consolidated subsidiaries;
|
|
|
●
|
“AEEGCL”
are to our Samoa subsidiary, Asia Equity Exchange Group Company Ltd.;
|
|
|
●
|
“AEEX
HK” are to AEEX (HK) International Finance Service Limited (formerly known as Yinfu International Enterprise Limited),
a company formed in Hong Kong;
|
|
|
●
|
“AACCL”
are to Asian & American Consultant (Shenzhen) Co., Ltd., (formerly known as Yinfu Guotai Investment Consultant (Shenzhen)
Co., Ltd.),our PRC subsidiary ;
|
|
|
●
|
“China”
and “PRC” are to the People’s Republic of China;
|
|
|
●
|
“RMB”
are to Renminbi, the legal currency of China;
|
|
|
●
|
“U.S.
dollar”, “$” and “US$” are to the legal currency of the United States;
|
|
|
●
|
“SEC”
are to the United States Securities and Exchange Commission;
|
|
|
●
|
“Securities
Act” are to the Securities Act of 1933, as amended; and
|
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“Exchange
Act” are to the Securities Exchange Act of 1934, as amended
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.
Overview
of Our Business
We
were incorporated in the State of Nevada on July 15, 2013, under the name “I In The Sky, Inc.” On July 22, 2015, we
changed the company name to our current name. Our original business plan was to manufacture and market low cost GPS tracking devices
and software to businesses and families. However this business was not successful and we had no revenues generated from our business
until April 12, 2016 when we completed our reverse acquisition of AEEGCL.
AEEGCL
is a company incorporated under the laws of Samoa on May 29, 2015. Effective November 30, 2015, we executed a Sale and Purchase
Agreement (the “Purchase Agreement”) to acquire 100% of the shares and assets of AEEGCL, in exchange for one billion
(1,000,000,000) shares of common stock of the Company that were issued to the owners of AEEGCL. The transactions contemplated
by the Purchase Agreement were closed on April 12, 2016. As a result, our previous business plan was terminated and we are currently
engaged in the business of AEEGCL.
AEEGCL
offers an international equity assistance and information service platform designed to provide member registration services, equity
investment financing information to enterprises in Asia, mainly in China. Currently 40 companies are registered with us, and additional
10 companies are in the process of preparing the necessary documents for registration with us. All companies currently registered
with us are located in China, as are the additional companies in the process.
Our
member registration services refer to companies seeking to join our equity investment and financing information dissemination
platform. All medium and small-sized enterprises in Asia can apply to register with us. They can distribute their basic information,
project status, financial status and equity structure information through our platform to attract individual investors and investment
institutions all over the world. Our current focus is on helping companies in China which seek financing while we plan to offer
our services in other Asian countries where we can assist with a company’s public and investor awareness and investor relationship
needs and financing needs. Where we can, we will assist companies by finding appropriate legal as well as accounting services.
We do not work with companies planning to become SEC reporting companies or that intend to begin trading on U.S. markets.
AEEGCL
owns 100% of AEEX HK, a Hong Kong corporation incorporated on December 22, 2014. AEEX HK owns 100% of Asian & American Consultant
(Shenzhen) Co., Ltd., a corporation incorporated in the PRC on April 15, 2015. Both AEEX HK and AACCL are engaged in the provision
of investment and corporate management consultancy services.
The
acquisition of AEEGCL and its subsidiaries by us was accounted for as a reverse merger because on a post-merger basis, the former
shareholders of AEEGCL held a majority of our outstanding common stock on a fully-diluted basis. As a result, AEEGCL is deemed
to be the acquirer for accounting purposes. Accordingly, the consolidated financial statement data presented are those of AEEGCL,
recorded at the historical basis of AEEGCL, for all periods prior to our acquisition of AEEGCL on April 12, 2016, and the financial
statements of the historical operations of the consolidated companies from the effective date of the closing of the reverse merger.
We
generated revenues of $353,513 and $nil for the three months ended March 31, 2017 and 2016, respectively. We had a net profit
of $230,075 and a net loss of $6 ,849 in the first quarter of 2017 and 2016. As of March 31, 2017, we had an accumulated deficit
of $162,200 and net assets of $959,301.
Results
of Operations
Comparison
of Three Months Ended March 31, 2017 and 2016
The
following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage
of net revenues.
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Three
Months Ended March 31,
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Change
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2017
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2016
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$
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%
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REVENUE
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$
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353,513
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$
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-
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353,513
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100
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Cost
of Sales
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-
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-
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-
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-
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Gross
Profit
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353,513
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-
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353,513
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100
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OPERATING
EXPENSES
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General
and administrative
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111,560
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-
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111,560
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100
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Professional
fees
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10,887
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5,000
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5,887
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118
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Total
other expenses
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991
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1,849
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(858
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)
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(46
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Total
Operating Expenses
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123,438
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6,849
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116,589
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1,702
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Net
profit (loss) from operations
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230,075
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(6,849
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)
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236,924
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3,459
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Provision
for income taxes
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-
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-
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-
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-
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Net
profit (net loss)
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$
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230,075
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$
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(6,849
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)
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236,924
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3,459
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Revenues.
Our company has generated $353,513 and $nil revenues during the three months ended March 31, 2017 and 2016, respectively,
from the provision of consultancy services in investment and corporate management.
General
and administrative expenses.
General and administrative expenses increased to $111,560, or 32% of revenues, for the three
months ended March 31, 2017, as compared to $nil, for the same period in 2016, representing an increase of $111,560 , or 100%.
We
commenced our business in the second half of 2016 since we completed our reverse acquisition of AEEGCL and accordingly incurred
more staff costs, entertainment and travelling expenses, office and staff rental expenses as compared to the same period in 2016.
Income
tax expense.
No income tax expense was incurred for the three months ended March 31, 2017 and 2016.
Net
(loss) profit.
As a result of the foregoing, we had a net profit of $230,075 for the three months ended March 31, 2017,
compared to a net loss of $6,849 for the three months ended March 31, 2016.
Liquidity
and Capital Resources
We
have financed our liquidity requirements primarily from funding from Mr. Jun Liu, our President and Chief Executive Officer and
revenues.
As
of March 31, 2017, we had cash and cash equivalents of approximately $110,103. Our total current assets were $241,584 and our
total current liabilities were $512,361. For the three months ended March 31, 2017, we have a net profit of $230,075 and an accumulated
deficit of $162,200 and shareholder’s deficit $230,619 as of March 31, 2017.
We
plan to fund the operations through equity financing arrangements, which may be insufficient to fund our capital expenditures,
working capital and other cash requirements. Also, there can be no assurance that we will be successful in obtaining financing.
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Three
Months Ended March 31,
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2017
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2016
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$
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$
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Net
Cash (Used In) Provided By Operating Activities
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110,103
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-
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Net
Cash (Used In) Provided By Investing Activities
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-
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-
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Net
Cash (Used In) Provided By Financing Activities
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-
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-
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Effect
of foreign exchange rate
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(846
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-
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Net
increase (decrease) in cash and cash equivalents
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109,257
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-
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Cash
and cash equivalents, beginning of period
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-
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Cash
and cash equivalents, end of period
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$
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55,360
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$
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-
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Operating
Activities
Net
cash provided by operating activities was $110,103 in the three months ended March 31, 2017, as compared to net cash provided
by operating activities of $nil in the same period in 2016. The increase of net cash provided by operating activities was attributed
to our net profit. During the three months ended March 31, 2017 we received $324,506 from provided services. At the same time we paid $28,820 for salary, $1,945 for taxes and charges, and $413,772 for other
operating activities.
Investing
Activities
During
the three months ended March 31, 2017 and 2016, the Company used no cash in investing activities.
Financing
Activities
During
the three months ended March 31, 2017 and 2016, the Company used no cash in financing activities and received no cash from financing
activities.
Off-Balance
Sheet Transactions
We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital
resources that is material to investors.
Critical
Accounting Policies
We
prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments.
We base our estimates and judgments on historical experience, current trends and other factors that management believes to be
important at the time the condensed financial statements are prepared. On a regular basis, current trends and other factors considered
support the preparation of our financial statements in conformity with U.S. GAAP, actual results could differ from our estimates
and such differences could be material.
While
we believe that the historical experience, current trends and other factors considered support the preparation of our financial
statements in conformity with U.S. GAAP, actual results could differ from our estimates and such differences could be material.
Our
significant accounting policies are described more fully in Note 2 to our accompanying condensed financial statements. We believe
the following accounting policies are the most critical to aid you in fully understanding and evaluating this Management Discussion
and Analysis.
Basis
of Presentation
The
interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”).
Basis
of Consolidation
The
consolidated financial statements include the financial statements of AEEX and its subsidiaries. All significant inter-company
balances and transactions have been eliminated upon consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith
estimates and judgments.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than
three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are
subject to an insignificant risk of loss in value.
Property,
plant and equipment
Property,
plant and equipment are recorded at cost. Depreciation is calculated using the straight line method over the estimated useful
lives of the assets. The useful lives are as follows:
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Office
equipment
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5
years
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Motor
vehicles
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5
years
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Maintenance
and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets
are capitalized. When
properties
are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported
in the period the transaction takes place.
Impairment
of long-lived assets
The
long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result
of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying
amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During
the periods presented, we did not impair any plant and equipment.
Revenue
recognition
We
recognize revenue from the sale of products and services in accordance with ASC 605, “Revenue Recognition.” Revenue
will be recognized only when all of the following criteria are met: persuasive evidence for an agreement exists, delivery has
occurred or services have been provided, the price or fee is fixed or determinable, and collection is reasonably assured.