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Item 9.01
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Financial Statements and Exhibits
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Item 1.01
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Entry into a Material Definitive Agreement.
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The information contained in Item 2.01
below relating to the various agreements described therein is incorporated herein by reference.
Item 2.01
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Completion of Acquisition or Disposition of Assets
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THE SHARE EXCHANGE AGREEMENT AND
RELATED TRANSACTIONS
Share Exchange Agreement
On June 29, 2018, ORNC, Reliant, and the
shareholders of Reliant entered into the Share Exchange Agreement, which closed on June 29, 2018. Pursuant to the terms of
the Share Exchange Agreement, we will issue an aggregated 349,296,000 new shares of our common stock, par value $0.001 per share,
of which 28,000,000 were issued at the closing date of June 29, 2018, and the remaining 321,296,000 shares shall be issued at the
completion of the increase of the Company’s authorized shares, for all of the outstanding capital stock of Reliant with the
result that Reliant became a wholly owned subsidiary of ours.
Pursuant to the Share Exchange, we acquired
the business of Reliant, which is to engage in the sale and distribution of wine products in China and Hong Kong. As a result,
we have ceased to be a shell company.
At the closing of the Share Exchange, 10,000
shares of Reliant capital stock issued and outstanding immediately prior to the closing of the Share Exchange were exchanged for
28,000,000 new shares of our Common Stock, and an additional 321,296,000 new shares which will be issued at the completion of the
increase of the Company’s authorized shares.
The Share Exchange Agreement contained
customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions.
The Share Exchange is intended to be treated
as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.
The issuance of shares of our Common Stock
to holders of Reliant’s capital stock in connection with the Share Exchange was not registered under the Securities Act,
in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, which exempts transactions
by an issuer not involving any public offering, Regulation D promulgated by the SEC under that section and/or Regulation S promulgated
by the SEC. These securities may not be offered or sold in the United States absent registration or an applicable exemption from
the registration requirement, and some of these securities are subject to further contractual restrictions on transfer as described
below.
The form of the Share Exchange Agreement
is filed as an exhibit 2.1 to this Report.
Pro Forma Ownership
Immediately after giving effect to the
Share Exchange, there were 98,191,480 issued and outstanding shares of our Common Stock, which will become a total of 419,487,480
after the remaining 321,296,000 shares to be issued at the completion of the increase of the Company’s authorized shares,
as follows:
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The stockholders of Reliant prior to the Share Exchange hold 28,000,000 shares of our Common Stock, and an additional 321,296,000 shares shall be issued at the completion of the increase of the Company’s authorized shares, to make the total of 349,296,000 shares; and
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The stockholders of the Company prior to the Share Exchange hold the remaining 70,191,480 shares of our Common Stock.
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No other securities convertible into or
exercisable or exchangeable for our Common Stock are outstanding. Our Common Stock is quoted on the OTC Pink marketplace under
the symbol “ORNC”.
Accounting Treatment; Change of Control
The Share Exchange was accounted for under
the business combination under common control of accounting. Consequently, the assets and liabilities and the historical operations
that will be reflected in the financial statements prior to the Share Exchange will be those of Reliant and ORNC combined and will
be recorded at the historical cost basis and the consolidated financial statements after completion of the Share Exchange will
include the combined assets and liabilities of Reliant and ORNC from the closing date of the Share Exchange.
As a result of the issuance of the shares
of our Common Stock pursuant to the Share Exchange, a change in control of the Company occurred as of the date of consummation
of the Share Exchange. Except as described in this Current Report, no arrangements or understandings exist among present or former
controlling stockholders with respect to the election of members of our Board of Directors and, to our knowledge, no other arrangements
exist that might result in a change of control of the Company.
We continue to be a “smaller reporting
company,” as defined under the Exchange Act, following the Share Exchange.
Following the Share Exchange, the Company
will no longer be designated as a shell company.
Form 10 Information
Prior to the Share Exchange, the Company
had nominal operations. We were deemed a “shell company,” as defined in Rule 12b-2 of the Exchange Act, and in light
of the lack of operations prior to the completion of the Share Exchange.
Immediately following the Share Exchange,
the business of Reliant became our business. Reliant is engaged in the business of retail and wholesale of a wide spectrum of wine
products in China and Hong Kong.
With the resulting change in our business,
we are voluntarily providing the information as is required pursuant to Item 2.01(f) of Form 8-K as if we were filing a general
form for registration of securities on Form 10 under the Exchange Act for our Common Stock, which is the only class of our securities
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Share Exchange.
DESCRIPTION
OF BUSINESS
Prior to the Share Exchange, we were a
shell company with no substantive operations. The purpose of the Company was to seek and investigating potential assets, properties
or businesses to acquire while complying with the periodic reporting requirements of the Exchange Act for so long as we are subject
to those requirements.
Immediately following the Share Exchange,
the businesses of Reliant became our businesses. Reliant is engaged in alcohol wholesale in China through its operating subsidiary,
Fenyang Huaxin Wine Industry Development Co., Ltd. (“Huaxin”).
Overview
Huaxin is committed to alcohol wholesale
business in China. We currently focus our business on the sale of Chinese Fenjiu liquor and imported wines. We run a growing alcoholic
beverage business guided by a core purpose: to promote premium alcoholic beverages to China’s population. We aim to achieve
this purpose by catering to the ever-evolving tastes in alcohols through our creative marketing strategies and innovative product
designs that target different age groups of China’s population. To that end, we have hired marketing talents who have decades
of experience in effective alcohol brand building. As a result, we have managed to respond to the demand for Chinese Fenjiu liquor
and imported wines in the Chinese marketplace.
Corporate History and Structure of our PRC Operation
Corporate Organization Chart
The following is an organizational chart setting forth our
corporate structure, immediately following the Closing:
History
On December 26, 2017, Million Success Business
Limited, a British Virgin Islands corporation (“Buyer”) entered into a Share Purchase Agreement (“Purchase Agreement”)
with the then largest shareholder of the Company, Mr. Claudio Gianascio, who owned 90.4% of the total outstanding shares of the
Company (“Seller”). Pursuant to the terms of the Purchase Agreement, the Seller sold to the Buyer all of his shares
of common stock of the Company, par value $0.001 per share (the “Common Stock”), or 38,121,530 shares of the Common
Stock for $340,000 (such transaction, the “Share Purchase”). The Share Purchase closed on December 29, 2017.
At the closing of the Share Purchase, there
was a change in our board and executive officers. Mr. Claudio Gianascio, sole director, President, Treasurer and Secretary of the
Company appointed Mr. Peng Yang to serve as sole director, President, Treasurer and Secretary of the Company, with such appointment
effective on January 5, 2018, being ten days from the date the Information Statement on Schedule 14F-1 (the “Schedule 14F-1”)
reporting the change in control as a result of the Share Purchase was mailed to all the stockholders of the Company. Mr. Gianascio
resigned from all his positions with the Company effective on January 5, 2018.
Current Business
The popularity behind Chinese Fenjiu
liquor is its unique combination of light alcohol fragrance and its soft and subtle sweetness. This combination has been one
of the predominant taste preference amongst Chinese drinkers. Our Chinese Fenjiu liquor is a 53-proof clear spirit with a
long lasting clean after taste. Our strategic partner, Shanxi Xinghuacun Liquor Group Wine Industry Development Zone Sales
Co., Ltd. (“Fenjiu Group”), produces our Chinese Fenjiu product. Its brewing process is guided by the principle
of “clean” and “pure”, and such standard is achieved by double fermentation and double distillation
process in order to increase the yield of ethanol and expel any unfavorable flavors. The fermented grains, usually sorghum
and barley, will be distilled; the distilled grains will be fermented once more; then the re-fermented grains will be
distilled again.
Modern competition among different types
of Chinese hard liquor is largely dependent on brand recognition that was built upon decades of customer goodwill and unique marketing
strategies. Fenjiu liquor is recognized highly amongst the Chinese public. It has long been a common liquor choice for traditional
Chinese festivities, thus enjoying a deep cultural recognition amongst Chinese drinkers.
We believe that Fenjiu liquor presents
great business opportunities for us to utilize creative product designs and marketing strategies to attract Chinese consumers.
Collaborating with the Fenjiu Group, the sole producer of Fenjiu liquor in China, we have been focusing on product design to try
to convey a modern feel to our Fenjiu products while maintaining Fenjiu liquor’s historical elegance. We believe our designer
packaging stands out from our competitors’, symbolized by its bright coloring and prominently fat-bellied jars. With creative
designs and stylized name, our registered trademarks, such as Dagangjiu (translated as “Big Jar Liquor”), are effective
in capturing young and older Chinese populations’ attention.
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Established in 2017, we believe our imported
wine distribution business has a high growth potential as evidenced from the market prices of the imported wines from Spain and
New Zealand, countries from where we import our wine products, in the current Chinese market. A great majority of competitive players
have priced their 750mL bottles of wine imported from Spain and New Zealand well above RMB 200 ($31). This price falls within the
premium range in the general Chinese wine market. Within the general Chinese wine market, the premium range enjoyed the highest
year-on-year growth compared to other price tiers of wine in 2017. This pricing trend for premium wines is applicable to imported
wine from Spain and New Zealand, which we believe will benefit our growth in 2018. Accordingly, our strategy is to continue pricing
our imported wine products within the premium range levels to generate higher margins. Though marketing and brand identity are
still an integral part of the wine business in China, wine sales are highly driven by the origin of the wines. Since Spanish and
New Zealand are considered prime origins for wine productions, our wine products will continue to grab the attention of Chinese
drinkers, ensuring the sustainable growth of our imported wine business.
We have strategically organized our wholesale
and marketing channels. We sell directly to our six major distributors who then retail our products to over 300 storefronts and
outlets. Even though we do not retail our products online, we believe the internet is a great way to market our products. Aside
from promoting our products through traditional TV platforms, we have established our reputation on existing major Chinese e-commerce
platforms such as Taobao.com and further enhanced our business goodwill through our marketing on online-to-offline (“O2O”),
business-to-business (“B2B”) and business-to-consumer (“B2C”) platforms. We promote our Fenjiu liquors
and imported wine through WeChat and other social media apps to strengthen our marketing efforts and to educate the general public
on Chinese liquor tasting and history of Chinese Fenjiu liquors.
We believe that effective marketing strategies
and creative product designs are two major contributing factors to our success. To improve and maintain the effectiveness of our
marketing strategies, we have established integrated and collaborative processes to drive coordinated operations across our marketing
efforts and sales. Our marketing strategies enable us to promote multiple sales concepts across two major alcohol categories, effectively
attracting different age and cultural groups of Chinese populations. Our marketing plans are strategically designed to be efficiently
executed and are tailored to meet the unique taste and evolving demands of Chinese people. As a result, we believe that the Company’s
innovative and highly-customized designs draw considerable public attention, which in turns is a factor in maximizing sales. As
an example, in May 2015, we introduced a new line of product, “Qishierbian” (translated as “72 Earthly Transformations”),
which brings modern visuals, ancient stories and new interpretations of Chinese culture to traditional Fenjiu liquor. This has
helped creating acceptance of Fenjiu liquor from younger generations and its success reflects the changing needs and preferences
of the Chinese populations. Over the past three years, we have generated approximately $2,395,120 in revenue under “Qishierbian”.
We believe it is essential to improve the overall business sustainability through focusing on marketing strategies and creative
product designs to support our success.
For the year ended June 30, 2017, we generated
revenue of approximately 89.9% from Fenjiu liquor wholesale and approximately 10.1% from imported wine wholesale. For the year
ended June 30, 2016 100% of our revenue was generated from Fenjiu liquor. We have not experienced any seasonality in our business.
Industry Overview
Chinese Fenjiu Liquor Market
We believe that the long-term demand for Chinese hard liquor,
especially Fenjiu liquor, will continue to grow in China. The overall business environment has been optimistic, due to the continuous
economic growth evidenced by the significant growth of Chinese nominal gross domestic product (“GDP”). This has led
to an ever-increasing growth in China’s per capita expenditures on food, tobacco, and alcoholic beverages, indicating increased
consumers’ disposable income and willingness to spend money on alcoholic beverages in general. According to the National
Bureau of Statistics of China, the sales volumes of Chinese liquor in China has remained relatively flat between 2012 and 2016.
Given the increasing purchasing power and improving living standards, the sales volume of Chinese liquor increased from 11,267.0
million liters in 2012 to 13,057.1 million liters in 2016, with a compound annual growth rate (“CAGR”) of 3.8%. Overall,
we believe consumers are increasingly interested in drinking better quality liquor. We expect that with the Chinese consumers’
increasing purchasing power the consumption of Chinese liquor will shift to higher quality products and therefore the Chinese liquor
market is expected to experience growth in the near future. According to the China Insights Consultancy (“CIC”) report,
there are approximately 1,578 Chinese liquor producers in China with annual revenue above RMB 20 million in 2016. These producers
are mainly located in the southwest, northeast and central China. Given the Chinese government’s implementation of policies
designed to control and limit spending on “the three public consumptions”, namely overseas travel, receptions, and
official cars, the high-end Chinese liquor market in China has undergone extensive restructuring since 2012.
Chinese government officials had a
long history of using high-end liquors at reception events. However, in 2012, the Chinese governments implemented policies
designed to control and limit spending on “the three public consumptions”, namely overseas travel, receptions,
and use of government vehicles. Ripples of this anti-corruption campaign are felt beyond the high-end liquor industry, in
sectors that heavily rely on China’s gifting culture and the lavish lifestyle of the privileged for growth. This
extensive restructuring of Chinese liquor market caused by the anti-corruption campaign from Chinese government lasted for
several years. As a result, the overall spending on high-end liquor market in China was limited and the sales volumes of
Chinese high-end liquor has remained relatively flat till 2016. Nowadays, the structure of Chinese liquor market is stable
again and has a steady growth supported by constant economic growth in China. Chinese consumers are expected to spend more on
purchasing high-end liquors led by their increasing purchasing power.
Fenjiu Group and its subsidiaries are the sole suppliers of
Fenjiu liquor in China. Fenjiu liquor has a relatively long history and is one of the world-famous Chinese liquor brands. Due to
the Chinese government’s implementation of policies meant to control and limit spending on “the three public consumptions”,
sales revenue in the Fenjiu liquor market have followed a downward trend since 2012. However, with increasing per capita incomes
and rising demand for mid- to high-range products, the Fenjiu liquor market started to rebound in 2015, the market has expanded
in terms of sales revenue to reach RMB5,117.9 million in 2016. Shanxi Province is the main market of Fenjiu liquor. Approximately
55% of Fenjiu liquor sales revenue was achieved in Shanxi in 2016. It is expected that the sales revenue of Fenjiu liquor will
reach a further RMB10,532.0 million in China by 2022, increasing at a CAGR of 12.8% between 2016 and 2022.
According to the CIC report, at the end of 2016, the total number
of Fenjiu liquor distributors reached 987 in China. The Fenjiu liquor distribution market is highly competitive with no single
distributor occupying a lion’s share of the market.
There are relatively high entry barriers for new competitors in the Fenjiu liquor distribution market.
Firstly, it is important for new entrants to get an authorization from Fenjiu Group, which is the sole provider of Fenjiu liquor
products in China, to distribute Fenjiu Group’s products. Fenjiu Group started placing stricter requirements on its distributors,
including, for example, new sales target, rich experience in the industry, good past performance in cooperation with the Group,
etc. Thus, it has become increasingly difficult for new players to enter the market. Fenjiu liquor enjoys widespread popularity
in and around Shanxi Province, with markets in other parts of China being significantly smaller. It is therefore important for
new entrants to have a pre-existing distribution network in certain regions of China in order to be successful. It remains risky
for new entrants to enter into new areas where Fenjiu liquor is not yet fully established and where the distribution market is
already saturated. Distributors range from mom-and-pop stores in Shanxi Province to larger companies with years of experience in
the Fenjiu liquor industry, each competing for a fair share of the market. Intense competition arises between distributors within
the same region, selling the same or different Fenjiu brands. Fenjiu liquor includes a variety of products, differing in terms
of ABV, vintage, recipe, etc. Although there are no dominant varieties in the market, some are preferred by end consumers more
than others. However, almost all of these popular varieties have already been taken up by exclusive distributors. Thus, new entrants
might find it difficult to source popular products directly from Fenjiu Group or will be left to source them from existing distributors,
which entails lower profit margins.
Chinese Wine Market
According to the International Organization of Vine and Wine,
or OIV, the per capita wine consumption in China is much lower than the US average level between 2012 and 2016. After the reduction
of “three public consumptions” in 2013, China’s per capita consumption showed a further decrease. However, the
consumption pattern has changed and the wine consumption has grown into a mass consumption accompanied by a decrease in wine price.
Compared with the world average consumption, China’s per capita wine consumption has been around one-third of the world’s
average since 2010. The relatively low per capita wine consumption in China indicates great growth potential for China’s
wine market in the future.
According to the CIC report, Chinese consumers should, between
2017 and 2022, develop the habit of drinking wine rather than other alcoholic beverages, wine consumption is considered a healthier
option. In addition, the development of O2O platforms selling wine will most certainly facilitate the purchase of wine in China.
There are three market drivers for
China’s wine market. Firstly, China’s per capita disposable income has been increasing rapidly mainly due to
increasing wages. Rising disposable income translates into increasing purchasing power for Chinese people; it also means that
Chinese people tend to focus more on their quality of life. As wine is seen in China as a premium product with some
beneficial health effect, we believe that increasing purchasing power will stimulate the further growth of wine consumption.
In addition, the characteristics associated with drinking wine, such as beautification and antioxidation, play an important
role in contributing to its consumption, especially for female customers. Secondly, China’s urbanization rate has been
improving greatly during the past decades and the Chinese government sets up the goal that the urbanization rate of China is
set to reach 60% by 2020. With the further improvement of the urbanization rate in China, the retail sales market is
experiencing a rapid growth in urban regions in China. Thirdly, there are favorable national and international policies for
imported wine. According to bilateral trade agreements signed by the PRC government with New Zealand, Chile and Australia,
imported goods from the three countries will benefit from low tariff rates, effective from 2019. According to those
agreements, by 2019, these tariffs will be totally eliminated. This favorable policy should reduce the wine retailing price
and hence contribute to a growth in sales.
Our Strengths
Our Company has a high brand recognition
in the Chinese Fenjiu liquor market
Our “Dagangjiu” brand Fenjiu
liquor is one of the Chinese Fenjiu liquor market’s popular brands. We believe that we have built a reputation among Chinese
drinkers as a reliable Fenjiu liquor brand. Our customers choose our Fenjiu products for personal enjoyment, gifts for loved ones
or superior quality alcohol for special occasions such as weddings and other traditional Chinese festivities. We have also leveraged
the strength of the Fenjiu Group to become one of the leading Fenjiu brands in international alcohol festivals such as the World
Wine Culture Expo held in Shanxi, China in 2017. We believe our high brand recognition anchors our packaging and distribution business
with strong customer goodwill in Shanxi province and beyond, providing us with a competitive advantage.
Our Marketing Experts’ Extensive
Experience and Superior Reputation in our Industry
We believe that our competitors’
marketing team cannot match our marketing experts’ extensive industry experience and their superior reputation. We believe
our commercial campaigns build strong credibility with consumers and potential liquor distribution partners and shape the market
trends of consumer preferences and business evolutions in the industry.
Additionally, we believe our marketing
expertise and design proficiency required to successfully attract new customers combined with our ability to generate a range of
business concepts and capability to customize each sales opportunity according to customers’ need are advantages when competing
in the Chinese Fenjiu market. Our expertise also allows us to successfully manage the numerous regional and cultural complexities
involved in operating a traditional liquor business in China.
A Flexible Business Model
Our current business model is flexible.
It can be diversified in terms of the product flavors we serve and producers we sign commissions with. While operating a mix of
marketing campaigns and business concepts under our own registered trademarks “Dagangjiu” and “Dagang Jiufang”,
we entrust the liquor production to reputed large-scale producers. Currently, we are in a strategic partnership with Fenjiu Group.
Although our current business strategy
emphasizes on the marketing, packaging and distribution of Fenjiu liquor and imported wines, should we want to change our business
strategy to cater to more popular product types such as Luzhou-flavor liquor and Maotai-flavor liquor, we can quickly adjust our
marketing concepts and product packaging to meet customers’ evolving needs and preferences. Since our bard is well recognized
and the intellectual property used for our brand is owned by us, we can change our strategic partnerships to address new product
preferences while maintaining our accumulated goodwill. This approach enables us to update marketing concepts and product mix at
any time and allows us to be flexible in our marketing approach.
This reliable and flexible business model has contributed to
the marketing resilience of our business performance.
Service-driven and Cohesive Management Team
Our talented and dedicated senior management
team has guided our organization through its expansion and, we believe, positioned us for continued growth. Each member of our
team has an average of 20 years of expertise. Additionally, our management team possesses extensive experience across a broad range
of disciplines, including Chinese liquor marketing, sales, E-Commerce, finance, franchising and business management. Our management
team embraces our core purpose to “promote premium alcoholic beverages to the Chinese population of all ages” and exemplifies
our passionate and customer-oriented culture, which is shared by our employees throughout our company. We believe this results
in a service-driven and cohesive management team focused on long-term business growth.
Principal Products and Services
For the year ended June 30, 2017, we generated
revenue of approximately 89.9% from Fenjiu liquor wholesale and approximately 10.1% from imported wine wholesale. For the year
ended June 30, 2016, 100% of our revenue was generated from Fenjiu liquor wholesale. We have not experienced any seasonality in
our business.
Fenjiu Liquor Wholesale
For our Fenjiu liquor wholesale business,
we secure a strategic partnership with dealers based on our market survey data, market positioning data, sales channels data, sales
capabilities data and sales potential evaluation. We further evaluate dealers according to their geographical and administrative
area and categorize them into provincial, municipal and county agents. We establish cooperative relationships and strategic sales
partnership amongst them to further facilitate the sales of our products. We wholesale our Fenjiu liquor products directly to these
dealers.
In addition, we target dealers with sales
access to retail stores and outlets. We sell our Fenjiu products with simple and bulk packaging to these dealers. The main idea
is to achieve profit margins through the reduction of high-end designs and packaging while maintaining a relatively low price of
our Fenjiu liquor products. In this way, we reach more Chinese customers through the cost-effectiveness of our products. We sell
our products to our dealers who then resell these products to retail stores and outlets.
Revenue generated from our Fenjiu liquor
wholesale business accounted for 89.9% and 100%, respectively, of the total revenue derived from our general business in 2016 and
2017.
Imported Wine Wholesale
For our imported wine wholesale business,
we secure strategic partnership with dealers based on our market survey data, market positioning data, sales channels data, sales
capabilities data and sales potential evaluation. We further evaluate dealers according to their geographical and administrative
area and categorize them into provincial, municipal and county agents. We establish cooperative relationships and strategic sales
partnership amongst them to further facilitate the sales of our products. We wholesale our imported wines directly to these dealers.
Revenue generated from our imported wine
wholesale business accounted for 10.1% of the total revenue derived from our general business in 2017.
Competition
There is intense competition in the Chinese
liquor market. As a result, customers face a tremendous number of choices when deciding which brand or product to choose from.
Fenjiu Group has nearly 1,000 multi-layered
distributors as of the beginning of 2017, with these distributors often serving as Fenjiu brand co-builders. Although the Fenjiu
Group is now widely known as the only producer of Fenjiu throughout the market, intense competition in the wholesale market remains
since Fenjiu liquor distributors will continue working to co-build and enhance their respective brand image alongside Fenjiu Group
to capture additional market share from competitors. By the end of 2017, there were nearly 1,268 distributors of Fenjiu liquor
in China. Distributors range from mom-and-pop stores in Shanxi Province to larger companies with years of experience in the Fenjiu
liquor industry, each competing for a fair share of the market. Competition is even more intense amongst the distributors within
the same region.
The Chinese wine industry is very competitive.
Competitors conduct various marketing activities and pricing strategies in an effort to keep their market shares, which directly
impact our sales, revenues and profitability. We follow the market trend constantly and adjust our own advertising, promotion,
pricing and sourcing strategies accordingly. In addition, competitors in the Chinese wine market competes against us for regaining
highly qualified marketing personnel and staff members.
In response to the intense competition
in the Chinese liquor market, we have implemented a number of initiatives designed to expand revenues. Our revenue enhancement
initiatives include expanding our marketing efforts, developing new products and working with start-up and bulk-sale customers
to decrease our marketing costs.
Regulations
Huaxin is in the alcohol wholesale business,
including Fenjiu liquor wholesale and imported wine wholesale, in China. Huaxin is subject to various existing and probable governmental
regulations on its alcohol wholesale business.
According to the Regulations on Administration
of Liquor of Shanxi Province which came into effect on January 1, 2000, entities or individuals who engage in liquor wholesale
in Shanxi Province shall apply for a License for Liquor Wholesale. Huaxin has obtained the License for Liquor Wholesale and such
license will expire on December 31, 2018. Also, Huaxin is required to obtain the Food Operation License pursuant to the Administrative
Measures for Food Operation Licensing which came into effect on November 17, 2017. Huaxin has obtained Food Operation License and
such license will expire on August 31, 2022. Nevertheless, Huaxin may be subject to penalties by PRC regulatory authorities if
the wholesale license and food operation license is not timely renewed after expiration.
Currently, license for liquor wholesale is
no longer required in nationwide level, but it is still required in some particular Provinces, such as Shanxi Province and Shanghai.
In addition to Shanxi Province, the Company also sell liquor to other Provinces, namely Fujian, Ningxia, Gansu, Xinjiang, Beijing,
Shanghai and Hebei Province. Liquor wholesale business of the Company is operated by its subsidiaries, Huaxin and Fenyang Jinqiang
Wine Co., Ltd. (“Jinqiang”), both of which were established in Shanxi Province and have obtained wholesale licenses
in Shanxi Province. According to our telephone consultation with the competent authorities in Beijing, Shanghai, Ningxia, Gansu
and Hebei, no wholesale license is required for Huaxin or Jinqiang in such Provinces since Huaxin and Jinqiang were established
in Shanxi Province and have already obtained wholesale licenses in Shanxi Province. In conclusion, no further wholesale license
is required in other Provinces where the Company operates its business, unless the Company newly establish operating entity in
such Provinces and license is still required for liquor wholesale business in such Provinces.
Regarding the imported wine
business, pursuant to the Foreign Trade Law of the People’s Republic of China (Revised in 2016), a foreign trade
operator engaged in import and export of goods shall register with competent local regulatory authorities in Shanxi Province
that in charge of foreign trades; and pursuant to the Administrative Provisions of the Customs of the People’s Republic
of China on the Registration of Customs Declaration Entities, consignors and consignees of imported and exported goods shall
go through customs declaration entity registration formalities with their local Customs in accordance with the applicable
provisions. Huaxin has completed the registration for a record as a foreign trade operator and has obtained Certificate of
the Customs of the People’s Republic of China on the Registration of Customs Declaration Entities. The registration for
a record as a foreign trade operator has no time limit; while the validity period for Certificate of the Customs of the PRC
on the Registration of Customs Declaration Entities is two years and such certificate can be renewed before the expiration
date. Nevertheless, Huaxin may be subject to penalties by PRC regulatory authorities if Huaxin fails to go through the
modification formalities in the event of a change to any of its details registered with the competent governmental
authorities including its name, nature, domicile and legal representative.
Customers
Our customers are downstream distributors.
We rely upon several of our large customers from whom we generated substantial revenue each year, and the composition of our largest
customers has changed from year to year. For the year ended June 30, 2018, five of our customers, Beijing Huaxin Rongfa Trading
Co., Ltd., Fuqing Jingjing Trading Co., Ltd., Shanghai Baiwang Trading Co., Ltd., New Jinxing Trading (Fujian) Group Co., Ltd.
and Shanxi Moeneng Trading Co., Ltd. represented approximately 16.3%, 16.2%, 11.5%, 11.2% and 10.6% of Huaxin’s revenue,
respectively. For the year ended June 30, 2017, four of our customers, Fuqing Jingjing Trading Co., Ltd., Beijing Huaxin Rongfa
Trading Co., Ltd., New Jinxing Trading (Fujian) Group Co., Ltd. and Shanghai Baiwang Trading Co., Ltd. represented approximately
27%, 30%, 11% and 15% of Huaxin’s revenue, respectively. Huaxin currently engages its major customers with purchase agreements
negotiated on an arm’s length basis. These purchase agreements customarily cover a one-year period and contain material subsections
such as targeted customers’ selling goals, representation and warranties of the customers, rights and responsibility of the
customers, pricing adjustment, logistics and shipping, payment methods, downstream management and dispute resolutions. While we
believe that one or more of our major customers could account for a significant portion of our sales for at least the year 2019,
we anticipate that our customer base will continue to expand and that in the future we will be less dependent on major customers.
Suppliers
We primarily rely upon five main suppliers
from whom we purchase materials each year. For the year ended June 30, 2018, five of our suppliers, Shanxi Xinghuacun Liquor Group
Wine Industry Development Zone Sales Co., Ltd., Fuzhou Tongshunda Trading Co., Ltd., Fenyang Xinghua Haokoufu Wine Industry Flagship
Store, Shanxi Yuanquan Drinking Co., Ltd. and Shanxi Xinjin Merchants Wine Group Co., Ltd., accounted for 41%, 17%, 10%, 8% and
8% of our total supply purchases. For the year ended June 30, 2017, five of our suppliers, Shanxi Yuanquan Drinking Co., Ltd.,
Shanxi Wanli Wine Industry Sales Co., Ltd., Fuyang City Xinghua Haokoufu Wine Industry Flagship Store, Shanxi Xinjin Merchants
Wine Group Co., Ltd. and Fuzhou Tongshunda Trading Co., Ltd. represented for 45%, 21%, 13%, 11% and 8% of the total supply purchases.
All suppliers contracts with large suppliers were entered from year to year on an arm’s length basis.
In general, we enter into procurement agreements
in the ordinary course of business with our suppliers, pursuant to a form of supply order typically on a “deal by deal”
basis. However, we have a strategic partnership with Fenjiu Group. We entered into a partnership agreement with Fenjiu Group on
June 30, 2017, pursuant to which Fenjiu Group has agreed to supply us $4,379,850 worth of Fenjiu liquor during a three-year period.
We are committed to buy and sell $4,379,850 worth of Fenjiu liquor pursuant to the strategic partnership agreement.
Intellectual Property
Protection of our intellectual property
is a strategic priority for our business. We rely on a combination of patent, copyright, trademark and trade secret laws, as well
as confidentiality agreements, to establish and protect our proprietary rights. We do not rely on third-party licenses of intellectual
property for use in our business.
As of the date of this 8-K Report, we had
obtained 2 patents for liquor-making devices that can change proofs of various liquors, both of which were registered in 2015.
Our issued PRC patents will expire in 2025. As of the date of this 8-K Report, we had registered 10 trademarks and had submitted
11 additional trademark applications. Our registered PRC trademarks will expire between 2024 and 2028 but can be renewed before
the trademarks’ respective expiration date. As of the date of this 8-K Report, we had obtained 2 registered domain names.
In addition to the foregoing protections,
we generally control access to and use of our proprietary and other confidential information through the use of internal and external
controls, such as the use of confidentiality agreement with our employees and outside consultants.
Properties
Prior to the change in control, the Company’s
office is located at One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006. Because the Company has had no business, its activities
will be limited to keeping itself in good standing in the State of Nevada, seeking out acquisitions, reorganizations or mergers
and preparing and filing the appropriate reports with the SEC. These activities have consumed an insubstantial amount of management’s
time.
After the change in control, ORNC adopts
the business of Reliant. Reliant’s corporate office is located at Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.
Huaxin’s headquarters are located
at Building 22, Baihui Shoufu, Xinghuacun Town, Fenyang City, Shanxi Province, China, where we own the property with an aggregate
floor area of approximately 1561.6 square meters. This includes Huaxin’s sales and marketing office, communication and business
development office and our management and operations facilities.
Huaxin currently lease from Fenyang Baihui
Real Estate Co., Ltd. on an arm’s length basis, approximately 50 square meters of office space at No.2, 1
st
Floor,
Block A4, Baihui Shoufu, Xinghuacun Town, Fenyang City, Shanxi Province, China under a lease that expires on September 6, 2018
and can be renewed subject to mutual agreements by both parties.
Huaxin also currently lease from Taiyuan
Xiangyu Enterprise Management Consulting Co. Ltd. on an arm’s length basis, approximately 100 square meters of office space
at No.5, Unit 1, Building 2, No. 343, Fenyang Road, Xiaodian District, Taiyuan City, Shanxi Province, China under a lease that
expires on November 9, 2018 and can be renewed subject to mutual agreements by both parties.
Huaxin also currently lease from Shanxi
Zhanpeng Metal Products Co., Ltd. on an arm’s length basis, approximately 1000 square meters of office space at No.
2, South Hero Road, Fenyang City, Shanxi Province, China under a lease that expires on March 9, 2021 and can be renewed subject
to mutual agreements by both parties.
Huaxin also currently lease from Ms. Jiangmei
Guo on an arm’s length basis, approximately 140 square meters of office space at No. 1011, Unit 2, Unit 1, Wenxingyuan, Xiaodian
District, Fenyang City, Shanxi Province, China under a lease that expires on December 8, 2018 and can be renewed subject to mutual
agreements by both parties.
Huaxin also currently lease from Mr. Genshan
Zhao on an arm’s length basis, approximately 60 square meters of office space at Room 915, Wufeng International, No. 11 Zhenxing
Street, High-Tech Zone, Taiyuan City, Shanxi Province, China under a lease that expires on September 30, 2018 and can be renewed
subject to mutual agreements by both parties.
Huaxin also currently lease from Mr. Jianhong
Zhang on an arm’s length basis, approximately 50 square meters of office space at Room 903, 9th Floor, Wufeng International
Building, High-tech Development Zone, Taiyuan City, Shanxi Province, China under a lease that expires on September 20, 2018 and
can be renewed subject to mutual agreements by both parties.
In addition, Huaxin currently lease from
Fenyang City Jiudu Xinhua Liquor Trading Center Co., Ltd. on an arm’s length basis, approximately 1200 square meters of warehouse
space at South District if Shudao Avenue, High-Speed Exit, Xinghua Village, Fenyang City, Shanxi Province, China under a lease
that expires on January 11, 2019 and can be renewed subject to mutual agreements by both parties.
We believe that our current facilities
are adequate and suitable for our operations.
Employees
As of the date of this report, we had 54 employees
throughout our operations in 4 offices and 3 warehouses. None of our employees are covered by a collective bargaining agreement.
We have not experienced any work stoppages and we consider our relations with our employees to be good.
Legal Proceedings
From time to time, we may become involved
in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm our business. To the knowledge of management,
no federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive
officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company’s common
stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
WHERE YOU CAN FIND MORE INFORMATION
The registrant is subject to the requirements
of the Exchange Act, and files reports, proxy statements and other information with the SEC. You may read and copy these reports,
proxy statements and other information at the public reference room maintained by the SEC at its Public Reference Room, located
at 100 F Street, N.E. Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling
the SEC at (800) SEC-0330. In addition, we are required to file electronic versions of those materials with the SEC through the
SEC’s EDGAR system. The SEC also maintains a website at http://www.sec.gov, which contains reports, proxy statements and
other information regarding registrants that file electronically with the SEC.
RISK FACTORS
As a “smaller reporting company”
as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Our business operations are subject to
various risks related to doing business in China.
First, we conduct all of our operations
and all of our revenue is generated in the PRC. Accordingly, economic, political and legal developments in the PRC will significantly
affect our business, financial condition, results of operations and prospects. Our ability to operate profitably in the PRC may
be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation,
particularly those dealing with the Internet, including censorship and other restriction on material which can be transmitted over
the Internet, security, intellectual property, money laundering, taxation and other laws that affect our ability to operate our
business through mobile APP.
Second, since our business is dependent
upon government policies that encourage a market-based economy, change in the political or economic climate in the PRC may impair
our ability to operate profitably, if at all. The PRC government continues to exercise significant control over economic growth
in the PRC and we are dependent upon the PRC government pursuing policies that encourage private ownership of businesses. Restrictions
on private ownership of businesses would affect the e-commerce and lodging services in general.
Third, PRC laws and regulations governing
our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability
to operate profitably. The Laws and regulations regarding the interpretation and application of PRC laws that govern our business
and the enforcement and performance of our arrangements with customers in certain circumstances are sometimes vague and may be
subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. New laws and
regulations that affect existing and proposed future businesses may also be applied retroactively, which may have an adverse effect
on our business.
In addition, because our business is conducted
in RMB and the price of our Common Stock is quoted in United States dollars, changes in currency conversion rates may affect the
value of your investments. Fluctuation in the exchange rate between the RMB and dollar resulting from economic conditions and others
affect the value of our assets and the results of our operations in United States dollars. Any significant revaluation of the RMB
may materially and adversely affect our cash flows, revenue and financial condition.
Further, the Enterprise Income Tax Law
(“EIT Law”) and its implementing rules provide that enterprises established outside of China whose “de facto
management bodies” are located in China are considered “resident enterprises” under PRC tax laws. However, there
are no detailed rules or precedents governing the procedures and specific criteria for determining the “de facto management
body.” If we are deemed as a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our
worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiary and any other
PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC
“resident recipient” status. In addition, any dividends we pay to our non-PRC investors, and the gains realized from
the transfer of our Common Stocks may be considered income derived from sources within the PRC and be subject to PRC tax, at a
rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions
of any applicable tax treaty). This could have a material and adverse effect on our overall effective tax rate, our income tax
expenses, our net income and our dividends paid to our shareholders.
Finally, there are significant uncertainties
under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary
to our offshore subsidiaries may not qualify to enjoy certain treaty benefits. Under the PRC EIT Law and its implementation rules,
the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company
outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the
PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company.
Our PRC subsidiary is wholly-owned by our Hong Kong subsidiary. In current practice, a Hong Kong enterprise must obtain a tax resident
certificate from the relevant Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax
authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain
the tax resident certificate from the relevant Hong Kong tax authority. Additionally, even after we obtain the Hong Kong tax resident
certificate, we are required by applicable tax laws and regulations to file required forms and materials with relevant PRC tax
authorities to prove that we can enjoy 5% lower PRC withholding tax rate. There is no assurance that the PRC tax authorities will
approve the 5% withholding tax rate on dividends received from our Hong Kong business entity.
Item 2.02
|
Results of Operations and Financial Condition.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this discussion that
are not historical facts are “forward-looking statements.” The words “may,” “will,” “expect,”
“believe,” “anticipate,” “intend,” “could,” “estimate,” “continue,”
the negative forms thereof, or similar expressions, are intended to identify forward-looking statements, although not all forward-looking
statements are identified by those words or expressions. Forward-looking statements by their nature involve substantial risks and
uncertainties, certain of which are beyond our control. Actual results, performance or achievements may differ materially from
those expressed or implied by forward-looking statements depending on a variety of important factors, including, but not limited
to, weather, local, regional, national and global coke and coal price fluctuations, levels of coal and coke production in the region,
the demand for raw materials such as iron and steel which require coke to produce, availability of financing and interest rates,
competition, changes in, or failure to comply with, government regulations, costs, uncertainties and other effects of legal and
other administrative proceedings, and other risks and uncertainties. We are not undertaking to update or revise any forward-looking
statement, whether as a result of new information, future events or circumstances or otherwise.
Factors Affecting Financial Performance
We believe that the following factors will affect our financial
performance:
Increasing demand for our products
- The increasing demand for our Fenjiu liquor products and our imported wines products, will have a positive impact on our financial
position. We plan to expand our distribution network, aimed at increasing awareness of our brand, developing customer loyalty,
meeting customer demands in various markets and providing solid foundations for our continuous growth. As of the date of this Report,
however, we do not have any agreements, undertakings or understandings to expand our distribution network and there can be no guarantee
that we ever will.
Expansion of our sales network
- To meet the increasing demand for our products, we need to expand our sales network. In the short-run, we intend to increase
our investment in personnel training, information technology applications and logistic system upgrades.
Maintaining effective control of
our costs and expenses
- We will focus on improving our long-term cost control strategies including establishing long-term
alliances with certain suppliers. We will carry forward the economies of scale and advantages from our nationwide distribution
network and diversified offerings. Moreover, we will step up our efforts in improvements over quality management, procurement processes
and cost control, and give full play to the trustworthy sales teams to maximize our profit and bring a better long-term return
for our shareholders.
Economic and Political Risks
Our operations are conducted primarily
in the PRC. Accordingly, our business, financial conditions and results may be influenced by the political, economic and legal
environment in the PRC, and by the general state of the PRC economy.
Our 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 with, among others, the political, economic and legal environment and foreign currency exchange. Our Company’s
results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental
policies with respect to laws and regulations, anti-inflationary measures, currency conversions, remittances abroad, and rates
and methods of taxation, among other things.
Critical Accounting Policies and Estimates
The preparation of financial statements
in conformity with the U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting period.
Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact
on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other
factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies used in the preparation of our consolidated financial
statements require significant judgments and estimates. For additional information relating to these and other accounting policies,
see our consolidated financial statements included elsewhere in this Report.
Use of Estimates
The preparation of the consolidated financial
statements in conformity with U.S. GAAP 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 consolidated financial statements
as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates required to be made
by management include, but are not limited to, useful lives of property, plant, and equipment, the recoverability of long-lived
assets and the valuation of accounts receivable, accrued expenses and taxes payable and inventories. Actual results could differ
from those estimates.
Accounts Receivable
Accounts receivable are recorded at net
realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. The Company reviews
the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability
of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors,
including the age of the balance, the customers’ historical payment history, their current credit-worthiness and current
economic trends. Accounts are written off against the allowance after efforts at collection prove unsuccessful.
Inventories
Inventories, which are stated at the lower
of cost or current market value, consist of raw materials, work-in-progress, and finished goods related to the Company’s
products. Cost is determined using the first in first out (“FIFO”) method. The market is the lower of replacement cost
or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as
seed selection, fertilizer, labor cost and contract fees that are spent in growing agricultural products on the leased farmland,
and indirect costs which include amortization of prepayments of farmland leases and farmland development cost. All the costs are
accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically
evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable.
Revenue Recognition
The Company recognizes revenue from sales
of wine products. Revenue from the sale of goods is recognized when the significant risks and rewards of ownership have been transferred
to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold. This is usually taken as the time when the goods are delivered and the customers have
accepted the goods.
Fair Value of Financial Instruments
The Company follows the provisions of ASC
820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1 applies to assets or liabilities
for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities
for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar
assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume
or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can
be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities
for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value
of the assets or liabilities.
The carrying value of financial instruments
included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.
Results of Operations
Overview
a) For the years ended June 30, 2017 and 2016
|
|
Years Ended June 30,
|
|
|
Variance
|
|
|
|
2017
|
|
|
2016
|
|
|
Amount
|
|
|
%
|
|
Revenue
|
|
|
91,144,666
|
|
|
|
24,249,106
|
|
|
|
66,895,560
|
|
|
|
275.9
|
%
|
Cost of sales
|
|
|
24,065,113
|
|
|
|
6,125,410
|
|
|
|
17,939,703
|
|
|
|
292.9
|
%
|
Gross profit
|
|
|
67,079,553
|
|
|
|
18,123,696
|
|
|
|
48,955,857
|
|
|
|
270.1
|
%
|
Selling and distribution expenses
|
|
|
2,521,950
|
|
|
|
352,887
|
|
|
|
2,169,063
|
|
|
|
614.7
|
%
|
Administrative expenses
|
|
|
5,505,952
|
|
|
|
2,897,075
|
|
|
|
2,608,877
|
|
|
|
90.1
|
%
|
Income from operations
|
|
|
59,051,651
|
|
|
|
14,873,734
|
|
|
|
44,177,917
|
|
|
|
297.0
|
%
|
Other income
|
|
|
227,552
|
|
|
|
135,833
|
|
|
|
91,719
|
|
|
|
67.5
|
%
|
Interest and other financial charges
|
|
|
3,431,027
|
|
|
|
1,976,614
|
|
|
|
1,454,413
|
|
|
|
73.6
|
%
|
Income before income taxes
|
|
|
55,848,176
|
|
|
|
13,032,953
|
|
|
|
42,815,223
|
|
|
|
328.5
|
%
|
Income taxes
|
|
|
14,121,343
|
|
|
|
3,441,782
|
|
|
|
10,679,561
|
|
|
|
310.3
|
%
|
Net income
|
|
|
41,726,833
|
|
|
|
9,591,171
|
|
|
|
32,135,662
|
|
|
|
335.1
|
%
|
Revenue
|
|
Years Ended June 30,
|
|
|
Variance
|
|
|
|
2017
|
|
|
%
|
|
|
2016
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
81,973,982
|
|
|
|
89.9
|
%
|
|
|
24,249,106
|
|
|
|
100.0
|
%
|
|
|
57,724,876
|
|
|
|
239.3
|
%
|
Sales of imported wine products
|
|
|
9,170,684
|
|
|
|
10.1
|
%
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
9,170,684
|
|
|
|
N/A
|
|
Total Amount
|
|
|
91,144,666
|
|
|
|
100.0
|
%
|
|
|
24,249,106
|
|
|
|
100.0
|
%
|
|
|
66,895,560
|
|
|
|
275.9
|
%
|
Currently, we have two types of revenue
streams deriving for our wine wholesale business. First, revenue generated from our Fenjiu liquor wholesale business. And second,
revenue generated from our imported wine wholesale business, which commenced during the year ended June 30, 2017.
For the year ended June 30, 2017 and 2016,
revenue generated from our Fenjiu liquor wholesale business was RMB 81,973,982 and RMB 24,249,106, respectively, which represented
an increase of RMB 57,724,876 or 239.3%. The increase in revenue generated from our Fenjiu liquor wholesale business was mainly
due to the increased sales volume of our Fenjiu liquor products.
For the year ended June 30, 2017 and 2016,
revenue generated from our imported wine wholesale business was RMB 9,170,684 and Nil, respectively, which represented an increase
of RMB 9,170,684. The increase in revenue generated from our imported wine wholesale business was mainly due to the increased sales
volume of our imported wine products.
Cost of Sales
|
|
Years Ended June 30,
|
|
Variance
|
|
|
|
2017
|
|
|
%
|
|
|
2016
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
21,645,410
|
|
|
|
89.9
|
%
|
|
|
6,125,410
|
|
|
|
100.0
|
%
|
|
|
15,520,000
|
|
|
|
253.4
|
%
|
Sales of imported wine products
|
|
|
2,419,703
|
|
|
|
10.1
|
%
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
2,419,703
|
|
|
|
N/A
|
|
Total Amount
|
|
|
24,065,113
|
|
|
|
100.0
|
%
|
|
|
6,125,410
|
|
|
|
100.0
|
%
|
|
|
17,939,703
|
|
|
|
292.9
|
%
|
For the year ended June 30, 2017 and 2016,
the cost of sales from our Fenjiu liquor wholesale business was RMB 21,645,410 and RMB 6,125,410, respectively, which represented
an increase of RMB 15,520,000 or 253.4%. The increase in cost of sales from our Fenjiu liquor wholesale business was mainly due
to the increased sales volume of our Fenjiu liquor products.
For the year ended June 30, 2017 and 2016,
the cost of sales from our imported wine wholesale business was RMB 2,419,703 and Nil, respectively, which represented an increase
of RMB 2,419,703. The increase in cost of sales from our imported wine wholesale business was mainly due to the increased sales
volume of our imported wine products.
Gross Profit
|
|
Years Ended June 30,
|
|
|
Variance
|
|
|
|
2017
|
|
|
%
|
|
|
2016
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
60,328,572
|
|
|
|
89.9
|
%
|
|
|
8,123,696
|
|
|
|
100.0
|
%
|
|
|
42,551,030
|
|
|
|
232.9
|
%
|
Sales of imported wine products
|
|
|
6,750,981
|
|
|
|
10.1
|
%
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
6,750,981
|
|
|
|
N/A
|
|
Total Amount
|
|
|
67,079,553
|
|
|
|
100.0
|
%
|
|
|
18,123,696
|
|
|
|
100.0
|
%
|
|
|
48,955,857
|
|
|
|
270.1
|
%
|
Gross profit from our Fenjiu liquor wholesale
business increased by RMB 42,551,030 or 232.9% for the year ended June 30, 2017, as compared to the same period of 2016. The Company
adopted its strategy to sell products with fairly stable profit margins that gross profit contribution percentage was 73.6% for
the year ended June 30, 2017, as compared to 74.7% for the same period of 2016.
Gross profit from our imported wine wholesale business increased
by RMB 6,750,981 and the gross profit contribution percentage was 73.6% for the year ended June 30, 2017.
Selling and Distribution Expenses
For the year ended June 30, 2017, our selling and distribution
expenses were RMB 2,521,950, representing an increase of RMB 2,169,063, or 614.7%, as compared to the same period of 2016. The
increase was primarily due to increased advertising expenses, packaging expenses, freight charges and salaries during the year
ended June 30, 2017 compared to the same period of 2016.
Administrative Expense
For the year ended June 30, 2017, our administrative
expenses were $5,516,707, representing an increase of RMB 2,619,632 or 90.4%, as compared to the same period of 2016. The increase
was primarily due to increased traveling expenses, hospitality expenses, office expenses, rental expenses and salaries for the
years ended June 30, 2017 as compared to the same period of 2016.
Other Income
For the year ended June 30, 2017, our other income was RMB 227,552
as compared to other income of RMB 135,833 in the same period of 2016. The increase in other interest income was primarily due
to increased interest income from bank deposits.
Interest and Other Financial Charges
For the year ended June 30, 2017, our interest and other financial
charges were RMB 3,420,272 as compared to interest and other financial charges of RMB 1,976,614 in the same period of 2016. The
increase in interest and other financial charges was primarily due to bank borrowings.
Income Taxes
For the years ended June 30, 2017 and 2016, the Company’s
income taxes increased by RMB 10,679,561 or 310.3% to RMB 14,121,343 for the year ended June 30, 2017 from RMB 3,441,782 for the
year ended June 30, 2016. The increase in the Company’s income taxes was primarily due to increased taxable income of the
Company for the period indicated.
b) For the periods ended March 31, 2018 and 2017.
|
|
Periods
Ended March 31,
|
|
|
Variance
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
Revenue
|
|
|
83,258,237
|
|
|
|
73,856,595
|
|
|
|
9,401,642
|
|
|
|
12.7
|
%
|
Cost of sales
|
|
|
23,002,777
|
|
|
|
19,569,924
|
|
|
|
3,432,853
|
|
|
|
17.5
|
%
|
Gross profit
|
|
|
67,079,553
|
|
|
|
54,286,671
|
|
|
|
5,968,789
|
|
|
|
11.0
|
%
|
Selling and distribution expenses
|
|
|
3,338,043
|
|
|
|
1,691,153
|
|
|
|
1,646,890
|
|
|
|
97.4
|
%
|
Administrative
expenses
|
|
|
3,686,062
|
|
|
|
3,795,211
|
|
|
|
(109,149
|
)
|
|
|
(2.
9
|
%)
|
Income from operations
|
|
|
53,231,355
|
|
|
|
48,800,307
|
|
|
|
4,431,048
|
|
|
|
9.1
|
%
|
Other income
|
|
|
131,447
|
|
|
|
63,541
|
|
|
|
67,906
|
|
|
|
106.9
|
%
|
Interest and
other financial charges
|
|
|
1,768,720
|
|
|
|
2,566,004
|
|
|
|
(707,284
|
)
|
|
|
(31.1
|
%)
|
Income before income
taxes
|
|
|
51,594,082
|
|
|
|
46,297,844
|
|
|
|
5,296,238
|
|
|
|
11.4
|
%
|
Income taxes
|
|
|
12,623,911
|
|
|
|
11,784,144
|
|
|
|
839,767
|
|
|
|
7.1
|
%
|
Net
income
|
|
|
38,970,171
|
|
|
|
34,513,700
|
|
|
|
4,456,471
|
|
|
|
12.9
|
%
|
Revenue
|
|
Periods Ended March 31,
|
|
|
Variance
|
|
|
|
2018
|
|
|
%
|
|
|
2017
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
71,044,181
|
|
|
|
85.3
|
%
|
|
|
65,895,313
|
|
|
|
89.2
|
%
|
|
|
5,148,868
|
|
|
|
7.8
|
%
|
Sales of imported wine products
|
|
|
12,214,056
|
|
|
|
14.7
|
%
|
|
|
7,961,282
|
|
|
|
10.8
|
%
|
|
|
4,252,774
|
|
|
|
53.4
|
%
|
Total Amount
|
|
|
83,258,237
|
|
|
|
100.0
|
%
|
|
|
73,856,595
|
|
|
|
100.0
|
%
|
|
|
9,401,642
|
|
|
|
12.7
|
%
|
For the nine months ended March 31, 2018 and 2017, revenue generated
from our Fenjiu liquor wholesale business was RMB 71,044,181 and RMB 65,895,313, respectively, which represented an increase of
RMB 5,148,868 or 7.8%. The increase of revenue generated from our Fenjiu liquor wholesale business was mainly due to the increased
sales volume of our Fenjiu liquor products.
For the nine months ended March 31, 2018 and 2017, revenue generated
from our imported wine wholesale business was RMB 12,214,056 and RMB 7.961,282, respectively, which represented an increase of
RMB 4,252,774. The increase of revenue generated from our imported wine wholesale business was mainly due to the increased sales
volume of our imported wine products.
Cost of Sales
|
|
Periods Ended March 31,
|
|
|
Variance
|
|
|
|
2018
|
|
|
%
|
|
|
2017
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
19,242,361
|
|
|
|
83.7
|
%
|
|
|
17,381,330
|
|
|
|
88.8
|
%
|
|
|
1,861,031
|
|
|
|
10.7
|
%
|
Sales of imported wine products
|
|
|
3,760,416
|
|
|
|
16.3
|
%
|
|
|
2,188,594
|
|
|
|
11.2
|
%
|
|
|
1,571,822
|
|
|
|
71.8
|
%
|
Total Amount
|
|
|
23,002,777
|
|
|
|
100.0
|
%
|
|
|
19,569,924
|
|
|
|
100.0
|
%
|
|
|
3,432,853
|
|
|
|
17.5
|
%
|
For the nine months ended March 31, 2018 and 2017, cost of sales
from our Fenjiu liquor wholesale business was RMB 19,242,361 and RMB 17,381,330, respectively, which represented an increase of
RMB 1,861,031 or 10.7%. The increase of cost of sales from our Fenjiu liquor wholesale business was mainly due to the increased
sales volume of our Fenjiu liquor products.
For the nine months ended March 31, 2018 and 2017, cost of sales
from our imported wine wholesale business was RMB 3,760,416 and RMB 2,188,594, respectively, which represented an increase of RMB
1,571,822 or 71.8%. The increase of cost of sales from our imported wine wholesale business was mainly due to the increased sales
volume of our imported wine products.
Gross Profit
|
|
Periods Ended March 31,
|
|
|
Variance
|
|
|
|
2018
|
|
|
%
|
|
|
2017
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Sales of Fenjiu liquor products
|
|
|
51,801,820
|
|
|
|
86.0
|
%
|
|
|
48,513,983
|
|
|
|
89.4
|
%
|
|
|
3,287,837
|
|
|
|
6.8
|
%
|
Sales of imported wine products
|
|
|
8,453,640
|
|
|
|
16.3
|
%
|
|
|
5,772,688
|
|
|
|
10.6
|
%
|
|
|
2,680,952
|
|
|
|
46.4
|
%
|
Total Amount
|
|
|
60,255,460
|
|
|
|
100.0
|
%
|
|
|
54,286,671
|
|
|
|
100.0
|
%
|
|
|
5,968,789
|
|
|
|
11.0
|
%
|
Gross profit from our Fenjiu liquor wholesale business increased
by RMB 3,287,837 or 6.8% for the nine months ended March 31, 2018, as compared to the same period of 2017. The Company adopted
its strategy to sell products with fairly stable profit margins that gross profit contribution percentage was 72.9% for the nine
months ended March 31, 2018, as comparted to 73.6% for the same period of 2017.
Gross profit from our imported wine wholesale business increased
by RMB 2,680,952 or 46.4% for the nine months ended March 31, 2018, as compared to the same period of 2017. The gross profit contribution
percentage was 69.2% for the nine months ended March 31, 2018, as compared to 72.5%. for the same period of 2017. The decrease
in gross profit contribution percentage represented different product mix.
Selling and Distribution Expenses
For the nine months ended March 31, 2018, our selling and distribution
expenses were RMB 3,338,043, representing an increase of RMB 1,646,890, or 97.4%, as compared to the same period of 2017. The increase
was primarily due to increased advertising expenses, packaging expenses and salaries during the nine months ended March 31, 2018,
as compared to the same period of 2017.
Administrative Expense
For the nine months ended March 31, 2018, our administrative
expenses were RMB 3,686,062, representing a decrease of RMB 109,149 or 2.9%, as compared to the same period of 2017. The decrease
was primarily due to effective control of our costs and expenses..
Other Income
For the nine months ended March 31, 2018, our other income was
RMB 131,447, representing an increase of RMB 67,906 or 106.9%, as compared to the same period of 2017. The increase was primarily
due to the write back of other receivables.
Interest and Other Financial Charges
For the nine months ended March 31, 2018, our interest and other
financial charges were RMB 1,768,720 as compared to interest and other financial charges of RMB 2,566,004 in the same period of
2017. The decrease in interest and other financial charges was primarily due to repayment of bank borrowings.
Income Taxes
For the nine months ended March 31, 2018 and 2017, the Company’s
income taxes increased by RMB 839,767 or 7.1% to RMB 12,623,911 for the nine months ended March 31, 2018 from RMB 11,784,144 for
the nine months ended March 31, 2017. The increase in the Company’s income taxes was primarily due to increased taxable income
of the Company for the period indicated.
Liquidity and Capital Resources
We currently finance our business operations
primarily through cash flows from operations and from banks loans. Our current cash primarily consists of cash on hand and cash
in bank, which is unrestricted as to withdrawal and use and is deposited with banks in China.
Management believes that our current cash,
cash flows from current and future operations, and access to loans will be sufficient to meet our working capital needs for at
least the next 12 months. We intend to continue to carefully execute our growth plans and manage market risk.
Treasury Policies
We have established treasury policies with
the objectives of achieving effective control of treasury operations and of lowering cost of funds. Therefore, funding for all
operations and foreign exchange exposure have been centrally reviewed and monitored from the top level.
Our policy precludes us from entering into
any derivative contracts purely for speculative activities. Through our treasury policies, we aim to:
(a) Minimize interest risk
We will continue to closely monitor the
borrowing interest rates under different currencies and new offers from banks.
(b) Minimize currency risk
In view of the current volatile currency
market, we will closely monitor the foreign currency borrowings at the company level. As of March 31, 2018, June 30, 2017 and 2016,
we do not engage in any foreign currency borrowings or loan contracts.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with SEC
rules, shares of our Common Stock which may be acquired upon exercise of stock options or warrants which are currently exercisable
or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders
of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person,
but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. Subject to community
property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect
to all shares of our Common Stock indicated as beneficially owned by them.
Pre-Share Exchange
The following table sets forth certain
information regarding the beneficial ownership of our Common Stock as of July 6, 2018, prior to the Share Exchange, by (i) each
stockholder known by us to be the beneficial owner of more than 5% of our Common Stock (our only classes of voting securities),
(ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. Unless otherwise
indicated, the persons named in the table below had sole voting and investment power with respect to the number of shares indicated
as beneficially owned by them.
Name and address of beneficial owner
|
|
Amount and nature of beneficial ownership
|
|
|
Percent of
class
(1)
|
|
Peng Yang (2) One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006
|
|
|
53,121,530 shares (indirect)
|
|
|
|
75.7
|
%
|
All directors and executive officers as a group (1 person)
|
|
|
53,121,530
|
|
|
|
75.7
|
%
|
(1)
|
Percentage is calculated upon the 70,191,480 shares outstanding as of June 28, 2018 prior to the closing
of the Share Exchange.
|
(2)
|
53,121,530 shares of common stock held in record by Million Success Business Limited, 100% controlled by Peng Yang.
|
Post-Share Exchange
The following table sets forth information
with respect to the beneficial ownership of our Common Stock as of June 29, 2018, by (i) each stockholder known by us to be the
beneficial owner of more than 5% of our Common Stock (our only class of voting securities), (ii) each of our directors and executive
officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated,
each of the persons named in the table has sole voting and investment power with respect to the shares of our Common Stock beneficially
owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed
below are held under a voting trust or similar agreement, except as noted. Other than the Share Exchange, to our knowledge, there
is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which
may at a subsequent date result in a change in control of the Company.
Name and address of beneficial owner
|
|
Amount and nature of beneficial ownership
|
|
|
Percent of
class
(1)
|
|
Peng Yang (2) One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006
|
|
|
322,079,450 shares
|
|
|
|
76.78
|
%
|
Ronald Zhang, One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006
|
|
|
0
|
|
|
|
0
|
%
|
All directors and executive officers as a group (2 persons)
|
|
|
322,079,450
|
|
|
|
76.78
|
%
|
(1)
|
Percentage is calculated upon the 419,487,480 shares outstanding post Share Exchange
|
(2)
|
Includes 53,121,530 shares of common stock held in record by Million Success Business Limited, 100% controlled by Peng Yang.
|
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL
PERSONS
Prior to the Share Exchange, Mr. Yang Peng
served as Director, President, Secretary, and Treasurer of the Company. Upon the closing of the aforementioned Share Exchange,
Mr. Peng Yang remains to serve as sole director, president, treasurer and secretary of the Company.
Upon closing of the Share Purchase, our executive officers and
directors are:
NAME
|
|
AGE
|
|
|
POSITION(S)
|
|
DATE ELECTED OR APPOINTED
|
|
|
|
|
|
|
|
|
|
Peng Yang
|
|
|
26
|
|
|
Director, President, Secretary, and Treasurer
|
|
Appointed 01/05/2018
|
Ronald Zhang
|
|
|
46
|
|
|
Chief Financial Officer
|
|
Appointed 04/16/2018
|
Mr. Yang, age 26, has international business and management
experience from his positions working with Huaxin, a company engaged in wine trading and Reliant Investment (Group) Limited, an
investment company. He has served as the general manager assistant and overseas affairs manager of Huaxin since 2015 and as limited
director of Reliant Investment (Group) Limited since 2016. Mr. Yang is a leading member of our sophisticated and long-serving management
team who has experience in alcohol marketing and has led us through multiple business breakthroughs. Mr. Yang holds a bachelors
of engineering degree, with honors, from the University of Auckland in New Zealand in 2016.
Mr. Zhang, age 46, has substantial experience in corporate finance,
financial planning, financial risks and financial reporting. He has served as the executive director of Guangzhou Double 3D Technology
Limited since June 2017. From January 2010 to April 2017, Mr. Zhang served as the executive director of Moon Treasure Limited.
Mr. Zhang received his GAAP Certificate from the American Institute of Certified Public Accountants in June, 2018. He received
his Bachelor of Arts in Accounting from Edinburgh Napier University in 1999 and his Master of Laws from the University of Wolverhampton
in 2014.
Director Independence
We are not currently subject to listing
requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the
board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors
comprised of a majority of “independent directors.” None of our directors are independent directors under the applicable
standards of the SEC and the NASDAQ stock market.
Family Relationships
There are no family relationships among our directors or executive
officers.
Involvement in Certain Legal Proceedings
None of our directors or executive officers
has been involved in any of the following events during the past ten years:
|
●
|
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
|
|
●
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
●
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or
|
|
●
|
being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
Board Committees
The Company currently has not established
any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and
one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we
do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other
than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions
that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees.
If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities
accordingly.
Audit Committee Financial Expert
We have no separate audit committee at
this time. The entire Board of Directors oversees our audits and auditing procedures. Neither of our directors is an “audit
committee financial expert” within the meaning of Item 407(d)(5) of SEC regulation S-K.
Compensation Committee
We have no separate compensation committee
at this time. The entire Board of Directors oversees the functions which would be performed by a compensation committee.
Code of Ethics
The Company has adopted a code of ethics
that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller
which was attached as Exhibit 99.1 to the March 29, 2004 10KSB for the period of 12/31/2003.
EXECUTIVE COMPENSATION
No current or prior officer or director
has received any remuneration or compensation from the Company in the past three years, nor has any member of the Company’s
management been granted any option or stock appreciation right. Accordingly, no tables relating to such items have been included
within this Item. None of our employees is subject to a written employment agreement nor has any officer received a cash salary
since our founding. The Company has no agreement or understanding, express or implied, with any director, officer or principal
stockholder, or their affiliates or associates, regarding compensation in the form of salary, bonuses, stocks, options, warrants
or any other form of remuneration, for services performed on behalf of the Company. Nor are there compensatory plans or arrangements,
including payments to any officer in relation to resignation, retirement, or other termination of employment, or any change in
control of the Company, or a change in the officer’s responsibilities following a change in control of the Company.
Employment Agreements
None of the Company’s executive officers
have employment agreements directly with the Company, although they may enter into such agreements in the future.
Director Compensation
We have not compensated our directors, in their capacities as
such, since our respective formations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SEC rules require
us to disclose any transaction or currently proposed transactions in which the Company is a participant and in which any related
person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average
of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer,
director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any
of those persons.
The descriptions set
forth above under the captions “The Share Exchange and Related Transactions—Share Exchange Agreement,” “Executive
Compensation—Employment Agreements” and “Director Compensation” and below under “Description of Securities—Options”
are incorporated herein by reference.
As of June 30, 2018,
June 30, 2017 and June 30, 2016, Sure Rich Investment (Group) Limited (“Sure Rich”) and its subsidiaries (together,
“Sure Rich Group”) had the following related-party transactions with Sure Rich’s director, Mr. Peng Yang:
During the fiscal year ending June 30, 2015,
Fujian Jinou Trading Co., Ltd. (“Jinou”), a subsidiary of Sure Rich, borrowed RMB 4,700,000 from China CITIC Bank Fuqing
Branch, with a fixed interest rate of 9% per annum for the period from October 13, 2015 to December 31, 2015. Mr. Peng Yang, in
his personal capacity, repaid the loan (RMB 4,700,000) and interests accrued (RMB122,655) on December 28, 2015. During the fiscal
year ending June 30, 2016, Jinou borrowed RMB 4,650,000 from China CITIC Bank Fuqing Branch with a fixed interest rate of 6.53%
per annum for the period from December 31, 2015 to November 30, 2016. Mr. Peng Yang, in his personal capacity, repaid the loan
(RMB 4,650,000) and interests accrued (RMB 214,04) on September 26, 2016. The Company does not have any interest income that can
be recognized as related transactions as of June 30, 2018.
|
|
Unaudited
June 30, 2018
|
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from director
|
|
|
-
|
|
|
|
214,046
|
|
|
|
122,655
|
|
As of June 30, 2018,
the Company had an amount of RMB 13,140,349 due from Mr. Peng Yang and an amount of RMB 109,371,717 due to Mr. Peng Yang. During
the year ending June 30, 2017 and 2016, the Company had an amount of RMB 11,814,199 and 16,642,476 due from Mr. Peng Yang, respectively,
and an amount of RMB 13,395,233 due to Mr. Peng Yang. The Company’s loan due to Mr. Peng Yang does not bear interest and
is due on demand.
|
|
July 1,
2015
|
|
|
Settlement
|
|
|
Repayment
|
|
|
New
Loans
|
|
|
June 30,
2016
|
|
Amount due to director
|
|
|
(13,395,233
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,395,233
|
)
|
Amount due from director
|
|
|
16,692,476
|
|
|
|
-
|
|
|
|
(4,700,000
|
)
|
|
|
4,650,000
|
|
|
|
16,642,476
|
|
|
|
|
3,297,243
|
|
|
|
|
|
|
|
(4,700,000
|
)
|
|
|
4,650,000
|
|
|
|
3,247,243
|
|
|
|
July 1,
2016
|
|
|
Settlement
|
|
|
Repayment
|
|
|
New
Loans
|
|
|
June 30,
2017
|
|
Amount due to director
|
|
|
(13,395,233
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,395,233
|
)
|
Amount due from director
|
|
|
16,642,476
|
|
|
|
(178,277
|
)
|
|
|
(4,650,000
|
)
|
|
|
-
|
|
|
|
11,814,199
|
|
|
|
|
3,247,243
|
|
|
|
(178,277
|
)
|
|
|
(4,650,000
|
)
|
|
|
-
|
|
|
|
(1,581,034
|
)
|
|
|
July 1,
2017
|
|
|
Settlement
|
|
|
Repayment
|
|
|
New
Loans
|
|
|
June 30, 2018
|
|
Amount due to director
|
|
|
(13,395,233
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(95,976,484
|
)
|
|
|
(109,371,717
|
)
|
Amount due from director
|
|
|
11,814,199
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,326,150
|
|
|
|
13,140,349
|
|
|
|
|
(1,581,034
|
)
|
|
|
|
|
|
|
|
|
|
|
(94,976,484
|
)
|
|
|
96,231,368
|
|
The amount due
to our director increased significantly during the year ending June 30, 2018 as a result of Reliant’s acquisition of Sure
Rich which closed on April 27, 2018 (the “Transaction”). Pursuant to the Transaction, Mr. Peng Yang transferred all
his Sure Rich ordinary shares to Reliant for a consideration of RMB 94,106,363, which was considered fair value according to a
business valuation report issued by a professional valuation service provider after appreciating the net assets of Sure Rich as
of March 31, 2018. In addition, the amount due to our director had increased significantly because Mr. Peng Yang, in his personal
capacity, paid professional fees amounted to RMB 142,800 on behalf of Sure Rich during the fiscal year ended June 30, 2018.
The amount due to our director, Mr. Peng Yang during the year ending June 30, 2018 can be further
broken down as following:
Nature
|
|
Amount
|
|
|
|
RMB
|
|
|
|
|
|
Funding to the company by Mr. Peng Yang (1)
|
|
|
(1,366,420
|
)
|
Loan to the company (2)
|
|
|
(94,106,363
|
)
|
Capital injection by Mr. Peng Yang (3)
|
|
|
69,100
|
|
Expenses paid on behalf of the Company by Mr. Peng Yang (4)
|
|
|
(572,801
|
)
|
|
|
|
(95,976,484
|
)
|
1
|
Mr.
Peng Yang deposited RMB 1,366,420 to the Company’s bank account for operational
purposes during the year ended June 30, 2018.
|
2
|
Mr.
Peng Yang transferred all his Sure Rich ordinary shares to Reliant on April 27, 2018
for an aggregate consideration of RMB 94,106,363 due to him. RMB 94,106,363 was a fair
value according to a professional valuation service provider after appreciating Sure
Rich’s net assets as of March 31, 2018.
|
3
|
Mr.
Peng Yang made capital injections of RMB 69,100 to Reliant on January 3, 2017.
|
4
|
These
expenses, amounting to RMB 572,801 in the aggregate, were paid by Mr. Peng Yang on behalf of the Company for legal services
provided by Hunter Taubman Fischer & Li LLC (RMB 20,378 on April 17, 2018), transfer agent services provided Edgar Agents
LLC (RMB 993 on May 21, 2018), secretary services provided by Grandest International Limited (RMB 14,671 on April 18, 2018),
auditing services provided by PKF Littlejohn LLP (RMB 398,911) on October 16, 2017 and miscellaneous expense such as travel,
lodging and meals (RMB 190,608 during the year ended June 30, 2018 ).
|
As of June 30, 2018,
June 30, 2017 and June 30, 2016, Sure Rich Group had the following related-party transactions with trade parties:
As of June 30, 2017
and June 30, 2016, the Company was owed an amount of RMB 15,000,875 and RMB 13,175,067 from Fuqing Jing Hong Trading Co. Ltd (“Jing
Hong”), respectively, as trade receivables. Ms. Shan Yang, a sister of Mr. Pang Yang, our director, was as a director
of Jing Hong on June 28, 2018. Management is of the opinion that these related party transactions were conducted in the normal
course of business of the Sure Rich Group with standard sales terms and conditions. The Company does not have any trade receivables
that can be recognized as related transactions as of June 30, 2018 because Ms. Shan Yang, a sister of Mr. Pang Yang, retired as
a director of Jing Hong on June 28, 2018.
|
|
unaudited
June 30,
2018
|
|
|
Audited
June 30,
2017
|
|
|
Audited
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
Sale to a related party- Jing Hong
|
|
|
14,359,832
|
|
|
|
25,110,022
|
|
|
|
25,110,022
|
|
Trade receivables included an amount due from a related party- Jing Hong
|
|
|
-
|
|
|
|
15,000,875
|
|
|
|
13,175,067
|
|
|
|
July 1,
2015
|
|
|
Settlement for the sale
|
|
|
New Loans
|
|
|
Sale amount to the related party
|
|
|
Transfer to Account receivable
|
|
|
June 30,
2016
|
|
Amount due to a related party- Jing Hong
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amount due from a related party- Jing Hong
|
|
|
6,348,000
|
|
|
|
(5,225,172
|
)
|
|
|
-
|
|
|
|
12,052,239
|
|
|
|
-
|
|
|
|
13,175,067
|
|
|
|
July 1,
2016
|
|
|
Settlement for the sale
|
|
|
New Loans
|
|
|
Sale amount to the related party
|
|
|
Transfer to Account receivable
|
|
|
June 30,
2017
|
|
Amount due to a related party- Jing Hong
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amount due from a related party- Jing Hong
|
|
|
13,175,067
|
|
|
|
(23,284,214
|
)
|
|
|
-
|
|
|
|
25,110,022
|
|
|
|
-
|
|
|
|
15,000,875
|
|
|
|
July 1,
2017
|
|
|
Settlement for the sale
|
|
|
New Loans
|
|
|
Sale amount to the related party
|
|
|
Transfer to Account receivable
|
|
|
June 30,
2018
|
|
Amount due to a related party- Jing Hong
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amount due from a related party- Jing Hong
|
|
|
15,000,875
|
|
|
|
(24,953,935
|
)
|
|
|
-
|
|
|
|
14,359,832
|
|
|
|
(4,406,773
|
)
|
|
|
-
|
|
Trade receivables
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,406,773
|
|
|
|
4,406,773
|
[1]
|
1.
|
Jing Hong stopped being a related party to the Company
on June 28, 2018. RMB 4,406,773 was the balance Jing Hong due to the Company as of June 30, 2018.
|
Except
as above shown, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which
we are or will be a party.
We
have a policy in place to address related party transactions. The policy outlines standards of review for the approval of transactions
with related parties. Accordingly, the Company’s sole director, Mr. Peng Yang, reviews business proposals and recommends
courses of actions that comply with the policy. In cases where a business proposal involves a related party, such a proposal will
not be approved.
DESCRIPTION
OF SECURITIES
Common Stock
Our authorized capital stock consists of
100,000,000 shares of common stock, with a par value of $0.001 per share. As dictated by our Articles of Incorporation, all shares
of common stock have equal rights and privileges with respect to (i) one non-cumulative vote for each share held of record on all
matters submitted to a vote of the stockholders; (ii) to participate equally and to receive any and all such dividends as
may be declared by the Board of Directors out of funds legally available therefor; and (iii) to participate pro rata in any
distribution of assets available for distribution upon liquidation of the Company. Stockholders of the Company have no pre-emptive
rights to acquire additional shares of common stock or any other securities. The common stock is not subject to redemption and
carries no subscription or conversion rights. All outstanding shares of common stock are fully paid and non-assessable. The Articles
of Incorporation may only be amended by a majority vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote. A quorum of outstanding shares for voting on an Amendment to the Articles of Incorporation shall
not be met unless 51% or more of the issued and outstanding shares are present at a properly called and noticed meeting of the
Stockholders.
In the event of any merger or consolidation
with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares
of stock, other securities or property (including cash) a general or special shareholder’s meeting should be called for such
purpose, wherein all shareholders would be entitled to vote in person or by proxy. In the notice of such a shareholder’s
meeting and proxy statement, the Company will provide shareholders complete disclosure documentation concerning a potential acquisition
of merger candidate, including financial information about the target and all material terms of the acquisition or merger transaction.
As of the date of this report, there were
98,191,480 shares of common stock issued and outstanding.
MARKET
PRICE OF AND DIVIDENDS ON THE COMPANY’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock trades in the OTC Pink
marketplace under the symbol “ORNC”. The OTC Pink marketplace is a quotation service that displays real-time quotes,
last-sale prices, and volume information in over-the-counter (“OTC”) equity securities. An OTC Pink equity security
generally is any equity that is not listed or traded on a national securities exchange.
Price Range of Common Stock
The following table shows, for the periods
indicated, the high and low bid prices per share of our common stock as reported by the OTC Pink quotation service. These bid prices
represent prices quoted by broker-dealers on the OTC Pink quotation service. The quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not represent actual transactions.
|
|
High
|
|
|
Low
|
|
Fiscal Year 2018
|
|
Bid
|
|
|
Bid
|
|
First Quarter
|
|
$
|
0.4
|
|
|
$
|
0.2
|
|
Fiscal Year 2017
|
|
Bid
|
|
|
Bid
|
|
First Quarter
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
Second Quarter
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
Third Quarter
|
|
$
|
1
|
|
|
$
|
1
|
|
Fourth Quarter
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
Fiscal Year 2016
|
|
Bid
|
|
|
Bid
|
|
First Quarter
|
|
$
|
0.6015
|
|
|
$
|
0.6015
|
|
Second Quarter
|
|
$
|
0.425
|
|
|
$
|
0.425
|
|
Third Quarter
|
|
$
|
0.425
|
|
|
$
|
0.425
|
|
Fourth Quarter
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
There is no “public market”
for shares of common stock of the Company. Although the Company’s shares are quoted on the OTC Pink marketplace, the Company
is aware of only a few transactions that have taken place in the previous ten years. In any event, no assurance can be given that
any market for the Company’s common stock will develop or be maintained.
Stockholders of Record
As of October 4, 2018 there were approximately
49 stockholders of record of our common stock.
Preferred Stock
The Company does not have any preferred
stock, authorized or issued.
Warrants
There are currently no outstanding warrants.
Options
There are currently no outstanding options.
Penny Stock Regulations
The ability of an individual shareholder
to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states
require that an issuer’s securities be registered in their state or appropriately exempted from registration before the
securities are permitted to trade in that state. Presently, the Company has no plans to register its securities in any particular
state. Further, most likely the Company’s shares will be subject to the provisions of Section 15(g) and Rule 15g-9 of the
Exchange Act, commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements for transactions
in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The SEC generally defines penny stock to
be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that
any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the SEC; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment
company; excluded from the definition on the basis of price (at least $5.00 per share) or the issuer’s net tangible assets;
or exempted from the definition by the SEC. If the Company’s shares are deemed to be a penny stock, trading in the shares
will be subject to additional sales practice requirements on broker- dealers who sell penny stocks to persons other than established
customers and accredited investors, generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000,
or $300,000 together with their spouse.
For transactions covered by these rules,
broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser’s
written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt,
the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market.
A broker- dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current
quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks
held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in the Company’s Common stock and may affect the ability of shareholders
to sell their shares.
Dividends
The Company has not declared any cash dividends
with respect to its common stock and does not intend to declared dividends in the foreseeable future. The future dividend policy
of the Company cannot be ascertained with any certainty, and until the Company completes any acquisition, reorganization or merger,
as to which no assurance may be given, no such policy will be formulated. There are no material restrictions limiting, or that
are likely to limit, the Company’s ability to pay dividends on its common stock.
Securities authorized for issuance under equity compensation
plans
.
None; not applicable
Purchase of Equity Securities By
the Issuer and Affiliated Purchasers.
None.
Transfer Agent and Registrar
Issuer Direct Corporation (formerly known
as “Interwest Transfer Company, Inc.”) has been appointed as our Transfer Agent and Registrar for our common stock.
Its mailing address is 1981 Murray Holladay Road, Suite 100 Salt Lake City, UT 84117 and their phone number is 801-272-9294.
LEGAL PROCEEDINGS
From time to time, we may become involved
in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
We are currently not aware of any pending
legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings
that are contemplated by any governmental authority.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Private Corporation Law and
our Articles of Incorporation allow us to indemnify our officers and directors from certain liabilities and our By-Laws state that
we shall indemnify every present or former director or officer of ours or one of our subsidiaries (each an “Indemnitee”).
Our By-Laws provide for indemnification
for liability, including expenses incurred in connection with a claim of liability arising from having been an officer or director
of the Company for any action alleged to have been taken or omitted by any such person acting as an officer or director, not involving
gross negligence or willful misconduct by such person.
Other than discussed above, none of our
By-Laws, or Articles of Incorporation includes any specific indemnification provisions for our officers or directors against liability
under the Securities Act. Additionally, insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
Item 3.02
|
Unregistered Sales of Equity Securities
|
Shares Issued in Connection with the
Share Exchange
On June 29, 2018, pursuant to the terms
of the Share Exchange, all of the shares of Reliant were exchanged for 349,296,000 newly-issued shares of common stock of the Company
to Sellers, of which 28,000,000 were issued at the closing date of June 29, 2018, and the remaining 321,296,000 shares shall be
issued at the completion of the increase of the Company’s authorized shares. This transaction was exempt from registration
pursuant to Section 4(a)(2) of the Securities Act as not involving any public offering and/or Regulation S under the Securities
Act. None of the shares were sold through an underwriter and accordingly, there were no discounts or commissions involved.
Sales of Unregistered Securities of
ORNC
Set forth below is information regarding
shares of ordinary shares granted by ORNC within the past three years that were not registered under the Securities Act of 1933,
as amended (the “Securities Act”). Also included is information relating to the section of the Securities Act, or rule
of the Securities and Exchange Commission, under which exemption from registration was claimed. Share and per share stock numbers
below in this Item do not give effect to the Share Exchange on June 29, 2018, in which each share of ORNC stock outstanding at
the time of the Share Exchange was automatically converted into shares of our Reliant at the applicable conversion ration described
elsewhere herein.
The Company issued four notes to Claudio
Gianascio, a former director and officer of the Company until December 26, 2017, on the following dates and in the following amounts:
(i) on August 5, 2016 in the amount of $10,000; (ii) on April 6, 2017 in the amount of $7,500; (iii) on April 27, 2017 in the
amount of $10,000; and (iv) on November 2, 2017 in the amount of $9,500. All four notes were convertible into common stock at
$0.001 per share. Claudio Gianascio converted the four notes on November 9, 2017 and December 27, 2017 and was issued 28,374,680
and 9,546,850 shares of common stock, respectively.
Item 5.03
|
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Yea
r.
|
On June 29, 2018, the Board of Directors
of ORNC approved a change in the fiscal year end from a fiscal year ending December 31 to a fiscal year ending June 30. The Company
expects to make the fiscal year change on a prospective basis and will not adjust operating results for prior periods. The change
to the Company’s fiscal year will not impact the Company’s calendar year results for the year ended December 31, 2017.
However, the change will impact the prior year comparability of each of the fiscal quarters and annual period in 2018 in future
filings. The Company believes this change will provide numerous benefits, including aligning its reporting periods to be more consistent
with Reliant.
The new fiscal year commenced July 1, 2018.
The reporting periods and applicable reports
for fiscal year 2018 are expected to be as follows:
FISCAL PERIOD
|
|
|
REPORTING PERIOD
|
|
|
REPORT TO BE FILED
|
Fiscal year 2017
|
|
|
July 1, 2016 to June 30, 2017
|
|
|
Annual Report on Form 10-K
|
First quarter of fiscal 2018
|
|
|
July 1, 2018 to September 30, 2018
|
|
|
Quarterly Report on Form 10-Q
|
Second quarter of fiscal 2018
|
|
|
October 1, 2018 to December 31, 2018
|
|
|
Quarterly Report on Form 10-Q
|
Third quarter of fiscal 2018
|
|
|
January 1, 2018 to March 31, 2018
|
|
|
Quarterly Report on Form 10-Q
|
Fiscal year 2018
|
|
|
July 1
,
2018 to June 30, 2019
|
|
|
Annual Report on Form 10-K
|
Financial Impact
The Company expects the change in fiscal
year end to have no financial impact on the 2018 quarterly and annual financial results.
Item 5.06
|
Change in Shell Company Status
|
Prior to the closing of the Share Purchase,
the Company was a “shell company” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
As described above in Item 2.01, which is incorporated herein by reference into this Item 5.06, the Company ceased being a shell
company upon the completion of the Share Purchase on July 2, 2018.
Item 9.01
|
Financial Statements and Exhibits
|
(a) Financial statements of businesses acquired.
In accordance with Item 9.01(a), Reliant’s
audited financial statements as of, and for the years ended June 30, 2017 and 2016, Reliant’s unaudited financial statements
as of, and for the nine months ended March 31, 2018, and the accompanying notes, are included in this Report beginning on Page
F-1.
(b) Pro forma financial information.
In accordance with Item 9.01(c), the following
unaudited pro forma financial information with respect to the Share Exchange reported in Item 2.01 of this Current Report on Form
8-K are included in this Report beginning on page F-24.
|
●
|
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2018
|
|
|
|
|
●
|
Notes to the Unaudited Pro Forma Consolidated Financial Statements.
|
(c) Exhibits
In reviewing the agreements included or
incorporated by reference as exhibits to this Current Report on Form 8-K, please remember that they are included to provide you
with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company
or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the
applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable
agreement and:
|
●
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
|
●
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
|
●
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
|
●
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Accordingly, these representations and
warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information
about the Company may be found elsewhere in this Current Report on Form 8-K and the Company’s other public filings, which
are available without charge through the SEC’s website at http://www.sec.gov.
(d) Exhibits:
Exhibit
Number
|
|
Description
|
|
|
|
2.1*
|
|
Share
Exchange Agreement, dated as of June 29, 2018, by and among the Registrant, Reliant and the shareholders of Reliant
|
|
|
|
3.1*
|
|
Initial
Articles of Incorporation (incorporated by reference to our Form 10-K exhibit 3.1 filed with the SEC on November
18, 1999)
|
|
|
|
3.2*
|
|
Articles
of Amendment to the Articles of Incorporation (incorporated by reference to our Form 10-K exhibit 3.2 filed with
the SEC on November 18, 1999)
|
|
|
|
3.3
*
|
|
By-Laws
(incorporated by reference to our Form 10-K exhibit 3.2 filed with the SEC on November 18, 1999)
|
|
|
|
10.1*
|
|
Partnership Agreement, dated as of June 30, 2017, by and between the Registrant and Shanxi Xinghuacun Liquor Group Spirit Development Zone Sales Co., Ltd.
|
|
|
|
10.2*
|
|
Supplier Contract, dated as of November 17, 2016, by and between the Registrant and Shanxi Yuanquan Drinking Co., Ltd.
|
|
|
|
10.3*
|
|
Supplier Contract, dated as of January 10, 2016, by and between the Registrant and Shanxi Yuanquan Drinking Co., Ltd.
|
|
|
|
10.4*
|
|
Supplier Contract, dated as of September 5, 2016, by and between the Registrant and Shanxi Xinjin Merchants Wine Group Co., Ltd.
|
|
|
|
10.5*
|
|
Supplier Agreement, dated as of November 20, 2017, by and between the Registrant and Fuzhou Tongshunda Trading Co., Ltd.
|
|
|
|
10.6*
|
|
Supplier Agreement, dated as of November 1, 2016, by and between the Registrant and Fuyang City Xinghua Haokoufu Wine Industry Flagship Store
|
|
|
|
21.1*
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Subsidiaries
of the Registrant
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