ITEM 1. BUSINESS
DESCRIPTION OF BUSINESS
Our Corporate History and Background
Eason Education Kingdom Holdings, Inc. was incorporated on July 1, 1999, under the laws of the State of Nevada, under the name “Han Logistics, Inc.” We changed our name to “Eason Education Kingdom Holdings, Inc.” on August 6, 2015. From our formation on July 1, 1999 until December 1, 2015, we were engaged in the business of namely the development, marketing and delivering of logistical analysis, problem solving and other logistics services and general business services. Amee Han Lombardi served as President, Secretary, Treasurer and a director from July 1, 1999 until her resignation on February 13, 2015. Michael Vardakis served as a director from April 19, 2012 until his resignation on February 13, 2015. On February 13, 2015, Kin Hon Chu was appointed a director, Law Wai Fan was appointed Chief Executive Officer, Cheng Kin Ning was appointed Chief Financial Officer, and Marie Huen Lai Chun was appointed Chief Operating Officer. Our business offices are currently located at Millennium City 1, No. 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong.
The Company does not have any current plans, arrangements, discussions or intentions, whether written or oral, to engage in a merger or acquisition with an identified or unidentified company or person to be used as a vehicle for a private company to become a reporting company.
We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since we have a specific business plan or purpose. We have not had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition or merger following this offering.
We are a development stage company and currently have no revenues or significant assets. At December 31, 2017, our total current assets were $143,314 and our total current liabilities were $25,000. Our net loss for the fiscal year ended December 31, 2017 was $60,138.
Change in Control
On February 12, 2015, Michael Vardakis, then our major shareholder, entered into a Stock Purchase Agreement with Kin Hon Chu wherein Mr. Vardakis sold 8,813,225 shares of the Company’s common stock, representing approximately 85% of all issued and outstanding shares. The aggregate purchase price paid was $400,000. In connection with such change of control occurred, we have shifted our business plan to focus on providing high quality fundamental training and pre-school and kindergarten education to children six years and under. We expect to offer a comprehensive six-year educational plan based upon the early years formation stage guidelines published by the Department for Education of the United Kingdom in September 2014. Our plan will be implemented through playground and art centers for pre-kindergarten children and kindergarten classes for children entering kindergarten. We expect to establish our first location at Xian province and thereafter expand to Foshan and Jiangmen provinces. Our locations will vary in size and the specific services offered.
Private Placement
On October 8, 2015, we closed an offering wherein we offered and sold an aggregate of 300,500,000 shares of common stock to 10 offerees, at a purchase price of $0.001 per share, for aggregate proceeds of $300,500. Our sole director, Chu Kin Hon, participated in the offering and purchased 200,000,000 of the 300,500,000 shares offered, on the same terms and conditions as offered to the other investors, for an aggregate purchase price of $200,000. In making the offer and sale of the shares of common stock, the Company relied upon the exclusion from registration under the Securities Act of 1933, as amended (the “Securities Act”), afforded by Rule 903(b)(3) of Regulation S, promulgated pursuant to the Securities Act, as a transaction where the offering was made to non-U.S. persons, offshore of the U.S., with no directed selling efforts in the U.S., and where offering restrictions were implemented. No finders fees or commissions were paid in connection with the offering. We expect to use the proceeds of the offering to establish our education centers located in the Xian province of China.
Education Systems in China
The central government in the Peoples Republic of China (the “PRC”), through the Ministry of Education, manages education in the PRC at a macro level, and is responsible for carrying out related laws, regulations, guidelines and policies of the central government; planning development of the education sector; integrating and coordinating educational initiatives and programs nationwide; maneuvering and guiding education reform countrywide. To a large degree, the provincial governments are left to implement basic education through development of teaching plans to supplement the required coursework from the central Ministry of Education and the funding of basic education in poorer areas. Provincial level governments have the main responsibilities for implementing basic education on a day-to-day basis.
The PRC provides the following forms of academic education:
Type of Education
|
|
Age
|
Pre-kindergarten
|
|
0-3
|
Kindergarten
|
|
4-6
|
Primary education
|
|
6-12
|
Junior secondary education
|
|
12-15
|
Senior secondary education
|
|
16-18
|
Higher education
|
|
9 and above
|
Vocational education
|
|
12 and above
|
Adult education
|
|
18 and above
|
Special education
|
|
|
Under China’s Compulsory Education Law, nine years of education (grades 1 through 9) is compulsory and provincial and local governments are required to take the necessary steps to ensure that all students receive at least the required nine years of education. Primary education generally is six years (grades 1 through 6), junior middle school is three years (grades 7-9), and senior middle school is three years (grades 10-12). Children generally begin primary school at the age of six.
Prior to primary school, children attend kindergarten and or participate in other programs targeted toward pre-kindergarten aged children. In cities and towns, kindergartens usually offer three years of schooling and are either full-time or part-time. In rural areas, kindergartens are usually in the form of a nursery with one year of schooling. In rural areas, some kindergartens operate seasonally.
Education is funded by a variety of sources: schools directly controlled by the central government are generally funded from the central financial pool; schools controlled by local governments are supported by local governments, the central government, and fund raising projects initiated by these schools themselves; schools sponsored by township and village governments and by public institutions are mainly financed by the sponsor institutions and subsidized by local governments; private schools are funded by sponsors (including collecting tuition from students and soliciting contributions).
We believe that the PRC is under pressure to reform and develop its education system. On July 29 2010, the Ministry of Education released guidelines for middle and long-term educational reform and development over the next 10 years. According to the guidelines, the PRC hoped to increase kindergarten enrollment from 27 million in 2009 to 34 million in 2015 and 40 million by 2020. The guidelines further specified that enrollment in kindergarten at three years prior to compulsory education is targeted to be at 60% in 2015 and 70% by 2020. Enrollment in kindergarten at one year prior to compulsory education is targeted to be at 85% in 2015 and 95% by 2020. To reach these development targets, government expenditure in the sector is budgeted to increase with more financial support provided to students living in rural areas and areas of ethnic minorities.
On March 5, 2014, the second session of the 12th National People’s Congress concluded that the PRC government will set education as a strategic priority with a focus to promote equitable education development, with continued increment of educational resource investments. We believe that the government is expected to deepen the comprehensive reform of the education, to actively reform the examination and enrollment system, encourage the development of private schools and accelerate the construction of a modern employment-oriented vocational education system.
Data released from the report of Ministry of Education entitled
The Central and Local Budgets Report for 2015
in June 2014 show that China has been steadily increasing its spending to support its educational priorities. The gross domestic education expenditure of the PRC in 2014 was RMB 410.19 billion, representing an increase of 8.2% from the prior year’s budget. According to the Ministry of Education, China’s spending on preschool education in 2012 reached 74.8 billion yuan (11.9 billion U.S. dollars), showing an average annual increase of 49% each year from the 13.3 billion yuan spent in 2008. The report noted that the ratio of government spending on preschool education as compared to all educational investment increased at a higher rate than spending related to high school, college and vocational education. The Ministry stated that the heightened support focuses on providing preschool teaching for children from impoverished families, those in underdeveloped rural areas as well as the children of migrant workers in cities. The Ministry of Education further stated that the government intends to expand coverage of government sponsored kindergartens as well as private charitable kindergartens as a key measure to strengthen preschool education.
Kindergartens can be operated by government bodies and private operators. According to a report titled “Education in China” issued by KPMG in October 2010, about 134,000 kindergartens operated in China in 2008, of which 61% were run privately. According to the Ministry of Education, the number of public kindergartens shrank from 60,854 to 50,603 while the number of registered private kindergartens jumped from 55,536 to 83,119 from 2003 to 2008. During the same period, enrollment at public kindergartens decreased from 15.2 million to 14.9 million, while enrollment at private kindergartens increased from 4.8 million to 9.8 million. In 2008, the average national gross enrollment rate of kindergarten education was 44.6 (55.6% for urban areas and 35.6% for rural areas). The national plan has set the long-term target at 83.5% by 2020.
According to the 2015 Credit Suisse Emerging Consumer Survey, Chinese consumers devote 5% of their monthly spending to educational expenses. Due to the one child policy, we believe that many parents are willing to invest in their child’s early education in order to gain advantage from the start. We believe that this presents great market demand for quality, private preschool facilities such as our education centers.
Our Educational Philosophy
We believe that:
|
·
|
every child is a unique child, who is constantly learning and can be resilient, capable, confident and self-assured;
|
|
·
|
children learn to be strong and independent through positive relationships;
|
|
·
|
children learn and develop well in enabling environments, in which their experiences respond to their individual needs and there is a strong partnership between practitioners and parents and/or care givers; and
|
|
·
|
children develop and learn in different ways and at different rates.
|
We believe that planned, purposeful play is essential for the development and confidence of a child as it allows children to explore, think about problems, and relate to others. We expect children to learn by leading their own play, and by taking part in play that is guided by adults. As children grow older, and as their development allows, we expect the balance of play to gradually shift towards more activities led by adults, to help children prepare for more formal learning.
In designing and operating our education centers, we expect to be guided by the early years formation stage (“EYFS”) guidelines published by the Department for Education of the United Kingdom in September 2014, or the EYFS, which set forth standards for the learning and development of children from birth to five and for safeguarding children and promoting their welfare. The EYFS learning and development requirements cover:
|
·
|
the areas of learning and development which must shape activities and experiences (educational programs) for children in all early years settings;
|
|
·
|
the early learning goals that providers must help children work towards (the knowledge, skills and understanding children should have at the end of the academic year in which they turn five); and
|
|
·
|
assessment arrangements for measuring progress (and requirements for reporting to parents and/or care givers).
|
The safeguarding and welfare requirements cover the steps that providers must take to keep children safe and promote their welfare. We believe that the EYFS sets forth robust standards for providing a high quality preschool education and that adhering to the EYFS will provide us with a competitive advantage over other providers of preschool education.
Our education centers will seek to develop the following seven areas of development through planned, purposeful play and through a mix of adult-led and child-initiated activity:
|
·
|
Communication and language development
: giving children opportunities to experience a rich language environment; to develop their confidence and skills in expressing themselves; and to speak and listen in a range of situations.
|
|
·
|
Physical development
: providing opportunities for young children to be active and interactive; and to develop their co-ordination, control, and movement. Children must also be helped to understand the importance of physical activity, and to make healthy choices in relation to food.
|
|
·
|
Personal, social and emotional development
: helping children to develop a positive sense of themselves, and others; to form positive relationships and develop respect for others; to develop social skills and learn how to manage their feelings; to understand appropriate behaviour in groups; and to have confidence in their own abilities.
|
|
·
|
Literacy development
: encouraging children to link sounds and letters and to begin to read and write. Children must be given access to a wide range of reading materials (books, poems, and other written materials) to ignite their interest.
|
|
·
|
Mathematics
: providing children with opportunities to develop and improve their skills in counting, understanding and using numbers, calculating simple addition and subtraction problems; and to describe shapes, spaces, and measures.
|
|
·
|
Understanding the world
: guiding children to make sense of their physical world and their community through opportunities to explore, observe and find out about people, places, technology and the environment.
|
|
·
|
Expressive arts and design
: enabling children to explore and play with a wide range of media and materials, as well as providing opportunities and encouragement for sharing their thoughts, ideas and feelings through a variety of activities in art, music, movement, dance, role-play, and design and technology.
|
With respect to the youngest children, we expect to focus strongly on the three prime areas of communication and language development, physical development and personal, social and emotional development, which are the basis for successful learning in the other four areas. We believe that the three prime areas reflect the key skills and capacities all children need to develop and learn effectively, and become ready for school. We expect the balance to shift towards a more equal focus on all areas of learning as children grow in confidence and ability within the three prime areas.
We expect to implement ongoing assessments of a child’s progress at our playgroup and art centers. Not only will assessment be important in recognizing a child’s progress and understanding the child’s needs, we expect the results of such assessments to impact the activities planned and support provided to each child by us.
To the extent permissible under PRC and local law, we expect to be guided by the safeguarding and welfare requirements set forth by the EYFS in the operation of our centers. These requirements address the specifics of safeguarding children, ensuring the suitability of adults who have contact with children, appropriate teacher–child ratios, promoting good health, behavior management and record maintenance, and policies and procedures.
Our Centers and Kindergartens
We expect to establish education centers that provide a high quality, comprehensive six-year education plan beginning at birth with fundamental training and ending with kindergarten education. For the very youngest children, we will provide nursery services and fundamental training. We expect offer purposeful, play-based art classes and playgroups that address the educational, physical, social, emotional and personal development to older children. Our plan will culminate with kindergarten classes that will address literacy, mathematics, and the other EYFS areas of focus. As part of our services, we will also provide educational consultation services to assist families in placing their children in desirable elementary schools. Enrolled children will be guaranteed placement in our kindergarten.
We expect to establish our first location at Xian province. We believe that the provinces of Xian, Jiangmen and Foshan are desirable locations and we intend to explore the development or acquisitions of additional educational centers in those regions after the establishment of the Xian education center. We expect our education centers to vary in size and the specific services offered.
Our Playgroups and Art Classes
Our education centers will offer playgroups that provide fundamental education through purposeful play in substantial accordance with the EYFS. We intend to offer playgroups to children from birth to three years old and expect playgroups to meet for 24 classes, each class being a one-hour period. We also intend to provide a variety of art and enrichment classes such as drawing, cooking, and music to children from birth to 6 years old. Our art and enrichment classes will be one hour in duration. We expect to provide a nursery for the very young children from 9 a.m. to 4 p.m.
On average, we expect to offer four art and playgroups classes per day. We anticipate that each child will attend a minimum of one art class or participate in one playgroup twice per week. We expect the cost of each class and playgroup to range from approximately $15.35 to approximately $38.38 per hour, depending on the number of students and the materials used in class. The price of each class and playgroup will vary based upon the location of the center offering such classes and the materials cost. In Xian, we expect playgroups and art classes to range from 100 renminbi to 150 renminbi (approximately $23) per hour. We believe that each center will be staffed by six to eight art/playgroup teachers with the capacity to serve approximately 350 students per month.
In general, we anticipate that we will require approximately 3 to 6 months to establish an education center offering art classes and playgroups. During this initial period, we will focus on securing a facility, obtaining all relevant permits, hiring personnel and engaging in activities necessary to commence operations. We expect to begin marketing efforts only after our facility is operational. We hope to begin enrolling students shortly after the commencement of our marketing efforts. We hope to recover our investment after approximately one year of operations.
Our Kindergartens
In the PRC, we expect to offer kindergarten classes to children between 4-6 years of age. Our kindergarten will operate in compliance with PRC regulations and follow the curriculum mandated by the PRC Ministry of Education. As such, we expect our kindergarten to operate during the hours of 9 a.m. to 4 p.m. and use standardized materials mandated by the Ministry of Education.
On average, we expect each education center to offer four kindergarten classes. Each class will have approximately 30 students and will be taught by two teachers and one teaching assistant. We expect to assess approximately 2,000 renminbi (approximately $307) to 3,000 renminbi (approximately $461) per month per student. The price of each class will vary based upon the location of the center. In Xian, we expect kindergarten classes to cost approximately 2,500 renminbi (approximately $384) per month.
In general, we anticipate that we will require approximately 9 to 12 months to establish our kindergarten. During this initial period, we will focus on securing a facility, obtaining all relevant permits, hiring personnel and engaging in activities necessary to commence operations. We expect to begin marketing efforts only after our facility is operational. We hope to begin enrolling students shortly after the commencement of our marketing efforts. We hope to recover our investment after approximately three to four years of operations.
Our Xian Location
We have identified a 4,000 square feet location in Xian for lease and expect to commence operations September 2016. Initially, we expect our education center to offer four art classes and or playgroups per day. We hope to enroll approximately 100 art and playgroup center students by the end of 2016. We expect our art and playgroup centers to achieve profitability by after twelve months of operation.
We are in the process of obtaining relevant approvals to operate kindergarten classes at our Xian location. We expect to begin offering kindergarten classes by the third calendar quarter of 2017. We expect to offer four kindergarten classes and have approximately 100 students by the end of 2017. By the end of 2018, we hope to offer 6-7 kindergarten classes with approximately 200 enrolled students. We expect our kindergartens to achieve profitability after three to four years of operations.
Near-Term Requirements for Additional Capital
For the immediate future, we intend to focus on our near-term goal of establishing our education center located in Xian province. We believe that we can finance all costs associated with the establishment and operation of our Xian education center through the proceeds derived from our October 2015 private placement. We expect to finance the establishment or acquisition of additional education centers through sales of our securities to existing shareholders and loans from existing shareholders or financial institutions.
We are subject to all of the risks inherent in a pre-revenue educational company. We hope to enroll approximately 100 art and playgroup center students by the third calendar quarter of 2017 and have our art and playgroup centers achieve profitability by after twelve months of operation. By the end of 2018, we hope to offer 6-7 kindergarten classes with approximately 200 enrolled students and have our kindergartens achieve profitability after three to four years of operations.
There can be no assurance that that we will ever be successful in our preschool and kindergarten education business.
Marketing
We expect to employ sales persons to market our art and playgroup centers and our kindergartens by way of the following methods: (i) through direct solicitations at popular local destinations such as supermarkets, post offices and banks; (ii) through cold calls, fliers or coupons; (iii) through various internet links and search engines; and (iv) hosting conferences featuring famous or reputable educational experts and or attending third party conferences and events conferences where we invite teachers, students and their families to learn about our services. We expect to begin enrolling children within one or two weeks after we begin our direct solicitations and other marketing efforts.
In the future, we hope to be able to attract users by reputation and referrals from current students.
Customers
We do not expect to enter into long-term agreements with our customers. We do expect, however, for our customers to purchase up to six months of classes in advance. We also expect to offer price concessions for customers that purchase one year of classes in advance.
Competition
The preschool and kindergarten education business is highly competitive and fragmented among individuals, partnerships and private entities. We compete with a number of PRC companies of various sizes ranging from local to national in scope. Many of our competitors are larger, more established companies, and include nationwide franchises such as Xing Ai Bei, Dong Fang Ai Bei and Rei Xing Bei. These larger, more established companies may have diverse businesses and may possess greater financial, marketing, or other resources than we have. We also compete with companies that may specialize in one or more of the services that we offer through our education centers such as preschool only centers, kindergartens, entities that specialize in education consulting, and entities that offer art classes or playgroups to children six and under.
Although we may compete against large sophisticated owners and operators, owners and operators of any size can provide effective competition for preschool and kindergarten education. There are many new local companies that are entering the educational market in the PRC and may offer products and services at lower costs to build up their market share.
Seasonality
We expect revenue derived from our kindergarten to increase as the school year begins, with a lull during summer vacation. We do not expect income derived from our playgroup and art centers to be seasonal, but we do expect inclement weather conditions such as snow or heavy rains to affect adversely attendance, which would impact our revenue.
Insurance
We do not currently maintain property, business interruption and casualty insurance. We expect to obtain such insurance in accordance with customary industry practices.
Government Regulations
The education industry in the PRC is heavily regulated at all levels - national, provincial and local. PRC practices and policies have limited contact with non-PRC entities in the education industry. In addition, our business is subject to numerous PRC rules and regulations, including restrictions on foreign ownership of education companies. Many of the rules and regulations that we face are not explicitly communicated, but arise from the fact that education is a politically sensitive area of the economy. We believe that the Ministry of Education and the provincial education commissions prefer to contract with PRC companies in the education industry. As a result, all of our PRC subsidiaries are staffed with PRC nationals. All of our revenue is derived from our PRC subsidiaries, and our success is dependent on the skill and experience of the employees of our subsidiaries.
Regulations on Private Education in China
The principal regulations governing private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education (2003), as amended, and the Implementation Rules for the Law for Promoting Private Education (2004), and the Regulations on Chinese-Foreign Cooperation in Operating Schools. Below is a summary of the relevant provisions of these regulations.
Education Law of the PRC
On March 18, 1995, the National People’s Congress enacted the Education Law of the PRC, or the Education Law. The Education Law sets forth provisions relating to the fundamental education systems of the PRC, including a school system of pre-school education, primary education, secondary education and higher education, a system of nine-year compulsory education and a system of education certificates. The Education Law stipulates that the government should formulate plans for the development of education and establish and operate schools and other institutions of education, and that in principle, enterprises, social organizations and individuals are encouraged to operate schools and other types of educational organizations in accordance with PRC laws and regulations. However, no organization or individual may establish or operate a school or any other institution of education for profit-making purposes, though private schools may be operated for “reasonable returns,” as described in more detail below.
The Law for Promoting Private Education (2003) and the Implementation Rules for the Law for Promoting Private Education (2004)
The Law for Promoting Private Education became effective on September 1, 2003 and was amended on June 29, 2013, and the Implementation Rules for the Law for Promoting Private Education became effective on April 1, 2004. Under these regulations, “private schools” are defined as schools established by social organizations or individuals using non-government funds. In addition, private schools providing certifications, pre-school education, education for self-study aid and other academic education shall be subject to approval by the education authorities, while private schools engaging in occupational qualification training and occupational skill training shall be subject to approvals from the authorities in charge of labor and social welfare. A duly approved private school will be granted a Permit for Operating a Private School, and shall be registered with the Ministry of Civil Affairs or its local counterparts as a privately run non-enterprise institution. Each of our schools has obtained the Permit for Operating a Private School and has been registered with the relevant local counterpart of the Ministry of Civil Affairs.
Under the above regulations, private schools have the same status as public schools, though private schools are prohibited from providing military, police, political and other kinds of education which are of a special nature. Government-run schools that provide compulsory education are not permitted to be converted into private schools. In addition, the operation of a private school is highly regulated. For example, the types and amounts of fees charged by a private school providing certifications shall be approved by the governmental pricing authority and be publicly disclosed. A private school that does not provide certifications shall file its pricing information with the governmental pricing authority and publicly disclose such information. Currently none of our schools provides a diploma or certification to students.
Private education is treated as a public welfare undertaking under the regulations. Nonetheless, investors of a private school may choose to require “reasonable returns” from the annual net balance of the school after deduction of costs, donations received, government subsidies, if any, the reserved development fund and other expenses as required by the regulations. Private schools are divided into three categories: private schools established with donated funds; private schools that require reasonable returns and private schools that do not require reasonable returns.
The election to establish a private school requiring reasonable returns shall be provided in the articles of association of the school. The percentage of the school’s annual net balance that can be distributed as reasonable return shall be determined by the school’s board of directors, taking into consideration the following factors: (1) items and criteria for the school’s fees, (2) the ratio of the school’s expenses used for educational activities and improving the educational conditions to the total fees collected, and (3) the admission standards and educational quality. The relevant information relating to the above factors shall be publicly disclosed before the school’s board determines the percentage of the school’s annual net balance that can be distributed as reasonable returns. Such information and the decision to distribute reasonable returns shall also be filed with the approval authorities within 15 days from the decision made by the board. However, none of the current PRC laws and regulations provides a formula or guidelines for determining “reasonable returns.” In addition, none of the current PRC laws and regulations sets forth different requirements or restrictions on a private school’s ability to operate its education business based on such school’s status as a school that requires reasonable returns or a school that does not require reasonable returns.
At the end of each fiscal year, every private school is required to allocate a certain amount to its development fund for the construction or maintenance of the school or procurement or upgrade of educational equipment. In the case of a private school that requires reasonable returns, this amount shall be no less than 25% of the annual net income of the school, while in the case of a private school that does not require reasonable returns, this amount shall be equal to no less than 25% of the annual increase in the net assets of the school, if any. Private schools that do not require reasonable returns shall be entitled to the same preferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall be formulated by the finance authority, taxation authority and other authorities under the State Council. To date, however, no regulations have been promulgated by the relevant authorities in this regard. Preferential tax treatments that may be granted to our schools by governmental authorities are will be subject to review and may be adjusted or revoked at any time in the future.
However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including the laws and regulations governing the enforcement and performance of our contractual arrangements in the event of imposition of statutory liens, bankruptcy and criminal proceedings. Accordingly, we cannot assure you that the PRC regulatory authorities will not ultimately take a contrary view.
If the PRC government finds that the agreements that establish the structure of our operations in the PRC do not comply with PRC government restrictions on foreign investment in our industry, we could be subject to severe penalties.
Laws Pertaining to the Management of Kindergartens
To enhance the management and guidance of kindergartens, the state has formulated a serious of regulations including “Regulations on The Management of Kindergartens” and the “Regulations on Kindergarten Work” placing the management of kindergartens on scientifically sound and institutionalized basis. The state has also formulated regulations and rules concerning the qualification of kindergarten teachers and the assessment of their performance.
Licensing Requirements
In addition to normal and customary business licenses, we may be required to obtain additional city level permits to operate an education center offering art classes and playgroups depending upon the specific regulations adopted by the city in which such center will be located. We do not expect the costs of obtaining these permits, if required at all, to be material. We do not expect to be required to obtain a special city license with respect to our education center to be located in Xian province.
Education centers that offer kindergarten classes are required to obtain approvals and permits from numerous nation, province and city level regulatory authorities. We expect to devote approximately five to ten percent of our set up costs to obtain such approvals and permits as set forth below:
Kindergarten Licensing Costs
|
|
|
Rural Area
|
Urban Area
|
5 million (approximately $768,305) to 10 million RMB (approximately $1,536,609)
|
10 million (approximately $1,536,609) to 50 million RMB (approximately $7,683,044)
|
We expect licensing costs to vary based upon the size and location of the education center and the number of kindergarten classes offered. We anticipate that we will require approximately 12 months to obtain all required licenses to offer kindergarten classes.
Intellectual Property
We expect to rely on, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect our brand and services. These legal means, however, afford only limited protection and may not adequately protect our rights. Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. Litigation could result in substantial costs and diversion of resources and management attention.
In addition, the laws of the PRC may not protect our brand and services and intellectual property to the same extent as U.S. laws, if at all. We may be unable to fully protect our intellectual property rights in these countries.
We intend to seek the widest possible protection for significant product and process developments in our major markets through a combination of trade secrets, trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon the level of protection afforded by the particular jurisdiction. We expect that our revenue will be derived principally from our operations in Cambodia where intellectual property protection may be limited and difficult to enforce. In such instances, we may seek protection of our intellectual property through measures taken to increase the confidentiality of our findings.
We intend to register trademarks as a means of protecting the brand names of our companies and products. We intend protect our trademarks against infringement and also seek to register design protection where appropriate.
We rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. We expect that, where applicable, we will require our employees to execute confidentiality agreements upon the commencement of employment with us. We expect these agreements to provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements will also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign, or if they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.
Employees
Our officers and sole director are non-employee officers and directors of the Company; we have no employees as of December 31, 2017.
In the next twelve months, we expect to engage approximately twenty-five employees at our first art and playgroup center located in Xian as follows:
Kindergarten teachers and teaching assistants
|
|
|
12
|
|
Playgroup and art center teachers and assistants
|
|
|
4
|
|
Staff
|
|
|
6
|
|
Management
|
|
|
3
|
|
Total
|
|
|
25
|
|
As a general matter, we expect to hire 6-8 teachers and teaching assistants for facilities offering art and playgroup centers and 2 teachers and one assistant for each kindergarten class.
Research and Development Expenditures
For the year ended December 31, 2017, we incurred no research or development expenditures.
Bankruptcy or Similar Proceedings
We have never been subject to bankruptcy, receivership or any similar proceeding.