Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
KEMIAO GARMENT HOLDING GROUP
(FKA AIVTECH INTERNATIONAL GROUP CO.)
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(Exact
name of registrant as specified in its charter)
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Nevada
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N/A
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(State of other jurisdiction
of
incorporation or organization)
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(IRS Employer
Identification No.)
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6910 S. Cimarron
Rd.
Suite 240
Las Vegas, NV
89114
(Address of
Principal Executive Offices) (Zip Code)
(86) 021-38932525
(Registrant’s
telephone number, including area code)
Securities
to be Registered Under Section 12(b) of the Act:
None
Securities
to be Registered Under Section 12(g) of the Act:
Common Stock,
Par Value $0.001
(Title of Class)
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company, ” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
KEMIAO GARMENT
HOLDING GROUP
INDEX TO FORM
10
Cautionary
Note Regarding Forward-Looking Statements
This registration
statement on Form 10 contains “forward-looking statements” concerning our future results, future performance, intentions,
objectives, plans, and expectations, including, without limitation, statements regarding the plans and objectives of management
for future operations, any statements concerning our proposed services, any statements regarding future economic conditions or
performance, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this
document are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to
update any forward-looking statements. In some cases, forward-looking statements can be identified by the use of terminology such
as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,”
“believes,” “estimates,” “potential,” or “continue,” or the negative thereof or
other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein
are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct,
and actual results could differ materially from those projected or assumed in the forward-looking statements. Future financial
condition and results of operations, as well as any forward-looking statements are subject to inherent risks and uncertainties,
including those discussed under “Risk Factors” and elsewhere in this Form 10.
Introductory Comment
We are filing this
General Form for Registration of Securities on Form 10 to register our common stock pursuant to Section 12(g) of the Exchange Act.
Once this registration statement is deemed effective, we will be subject to the requirements of Section 13(a) under the Exchange
Act, which will require us to file annual reports on Form 10-K (or any successor form), quarterly reports on Form 10-Q (or any
successor form), and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange
Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.
Throughout this
Form 10, unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company”
and “our company” refer to Kemiao Garment Holding Group a Nevada corporation.
(a) Business Development
The Company was organized under the laws of the State of Nevada
on December 18, 2007 under the name of Ecochild Inc. The Company engaged in the design and manufacturing casual furniture audio
series, multimedia speakers, and LED business in China.
On May 12, 2010, the Company executed a Share Exchange Agreement
(“Exchange Agreement”) with AIVtech and the shareholders of AIVtech (the “AIVtech Shareholders”), and acquired
all of the outstanding shares of AIVtech from the AIVtech Shareholders.
As a result of the Share Exchange Transaction, AIVtech became
the Company’s wholly owned subsidiary and the Company, through AIVtech, acquired direct control of Shenzhen AIV Electronics
Company Limited (“Shenzhen AIVtech”), and DongGuan AIV Electronics Company Limited (“Dongguan AIVtech”).
Shenzhen AIVtech and Dongguan AIVtech are each engaged in the design and manufacturing casual furniture audio series, multimedia
speakers, and LED business in China.
On May 21, 2010, the Company changed its name to Aivtech International
Group Co. In March 2011, the Company’s formed a new subsidiary, Henan AIVtech Technology Company, Ltd., Henan AIVtech had
no operations.
On April 18, 2016, the
Eighth District Court of Clark County, Nevada granted the Application for Appointment of Custodian as a result of the absence of
a functioning board of directors and the revocation of the Company’s charter. The order appointed Bryan S. Glass custodial
with the right to appoint officers and directors, negotiate and compromise debt, execute contracts, issue stock and authorize new
classes of stock.
The court awarded custodianship to Bryan S. Glass based on the
absence of a functioning board of directors, revocation of the company’s charter, and abandonment of the business. Kemiao
Garment Holding Group was severely delinquent in filing annual reports for the Company’s charter. The last annual report
was filed on 1/28/2011 in on Form S1. In addition the company was subject to Exchange Act reporting requirements including filing
10Q’s and 10Ks. The Company filed its last 10Q for quarter ending 9/30/2011 and out of compliance with Exchange Act reporting.
Mr. Glass attempted to contact the Company’s officers and directors through letters, emails and phone calls, with no success.
Bryan S. Glass was a shareholder in the Company and applied
to the Court for an Order appointing Mr. Glass as the Custodian. This application was for the purpose of reinstating AIVI’s
corporate charter to do business and restoring value to the Company for the benefit of the stockholders.
Bryan S. Glass performed the following
actions in its capacity as custodian:
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Funded any expenses of the company including paying off outstanding
liabilities, incurred in 2016.
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Brought the Company back into compliance with the Nevada Secretary
of State, resident agent, transfer agent
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Appointed officers and directors and held a shareholders meeting
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Upon appointment as custodian of Kemiao
Garment Holding Group, and under its duties stipulated by the Nevada court, Mr. Glass took initiative to organize the business
of the issuer. As custodian, Mr. Glass’ duties were to conduct daily business, hold shareholder meetings, appoint officers
and directors, reinstate the company with the Nevada Secretary of State. Mr. Glass also had authority to enter into contracts and
find a suitable merger candidate. Mr. Glass was compensated for its role as custodian in the amount of $40,000,000 shares of restricted
common stock. Mr. Glass did not receive any additional compensation, in the form of cash or stock, for custodian services. The
custodianship was discharged on August 31, 2016.
On April 18, 2016, Bryan S. Glass
was appointed as the Company’s CEO, Treasurer, Secretary and Director.
On December 24, 2018, Mr. Glass entered
into a Stock Purchase Agreement with World Capital Holding, Ltd., whereby World Capital Holding, Ltd. purchased 40,000,000 shares
of restricted common stock, the controlling block of stock. Of the 40,000,000 shares of restricted common stock, 36,000,000 shares
were issued to Ms. YuFang Zhu, and 4,000,000 shares were issued to World Capital Holding, Ltd., respectively. On Closing, Mr. Glass
resigned his position of sole officer and director and appointed Mr. Yanping Sheng as CEO, Treasurer, Secretary, and Director of
the Company. Mr. Yanping Sheng is a shareholder and officer for World Capital Holding, Ltd. In addition, Mr. Jimmy Lee was appointed
to the position of Director. On March 29, 2019, Ms. Yu Fang Zhu was appointed to the position of Director.
World
Capital Holding, Ltd. has 50,000 shares issued and outstanding with four shareholders as follows:
Yanping
Sheng - 1,000 shares 2%
Kung-Fa
Yang - 10,000 shares 20%
Kung-Fu,Yang
- 29,000 shares 58%
Kung-Hui
Yang - 10,000 shares 20%
On May 16, 2019, the Company changed its name from Aivtech International
Group Co. to Kemiao Garment Holding Group (“Kemiao”). The Company will be in the business of technology integration
and ecology.
We are currently a shell company, as
defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), and Rule 12b-2.
(b) Business of Issuer
Kemiao is a developmental stage
company, incorporated under the laws of the State of Nevada on December 18, 2007. We are a technology-based company that uses
ecology and integration to promote its clothing and agriculture industries.
In summary, Kemiao
is focused on creating two prongs of business development. First, we look to create a clothing platform that connects the
whole of the clothing chain industry. This includes the chain of development, design, production and sales. Second, is the
agriculture platform in which we integrate the whole process, from control of planting and procurement through the sale of
the product.
Subject to available capital, the Company
intends to invest in and form joint ventures in the following areas of clothing and agriculture:
Clothing
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Use of high grade fabrics
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Build platforms in the following areas:
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Marketing and Social Media
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Agriculture
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Owning land under cultivation
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Contract farming under cultivation
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Build platforms in the following areas:
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Marketing and Social Media
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Agriculture extraction, processing and packaging
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The Company intends to implement its
business plan through acquisitions.
The analysis of new Business Combinations
will be undertaken by or under the supervision of our management. As of the date of this filing, we have not entered into definitive
agreements. In our continued efforts to analyze potential Business Combinations, we intend to consider the following factors:
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Potential for growth, indicated by anticipated market expansion, new
products or new technology;
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Competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry as a whole;
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Strength and diversity of management, and the accessibility of required
management expertise, personnel, services, professional assistance and other required items;
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Capital requirements and anticipated availability of required funds,
to be provided by the Company or from operations, through the sale of additional securities or convertible debt, through joint
ventures or similar arrangements or from other sources;
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Capital requirements and anticipated availability of required funds,
to be provided by the Company or from operations, through the sale of additional securities or convertible debt, through joint
ventures or similar arrangements or from other sources;
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The extent to which the business opportunity can be advanced in the
marketplace; and
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Other relevant factors.
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In applying the foregoing criteria,
no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination
based upon reasonable investigative measures and available data. Due to our limited capital available for investigation, we may
not discover or adequately evaluate adverse facts about the opportunity to be acquired. Additionally, we will be competing against
other entities that may have greater financial, technical and managerial capabilities for identifying and completing business acquisitions
or mergers.
We are unable to predict when we will,
if ever, identify and enter into any definitive agreement with potential merger or acquisition candidates. We anticipate that proposed
Business Combinations would be made available to us through personal contacts of our directors, officers and principal stockholders,
professional advisors, broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited
proposals. In certain cases, we may agree to pay a finder’s fee or to otherwise compensate the persons who introduce the
Company to business opportunities in which we participate.
We expect that our due diligence will
encompass, among other things, meetings with incumbent management of the target business and inspection of its facilities, as necessary,
as well as a review of financial and other information, which is made available to the Company. This due diligence review will
be conducted either by our management or by third parties we may engage. We anticipate that we may rely on the issuance of our
common stock in lieu of cash payments for services or expenses related to any analysis.
We may incur time and costs required
to select and evaluate a target business opportunity and to structure and complete a Business Combination, which cannot presently
be determined with any degree of certainty. Any costs incurred with respect to the indemnification and evaluation of a prospective
Business Combination that is not ultimately completed may result in a loss to the Company. Also, fees may be paid in connection
with the acquisitions or mergers. These fees may include legal costs, accounting costs, finder’s fees, consultant’s
fees and other related expenses. We have no present arrangements for any of these types of fees.
We anticipate that the investigation
of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and
other instruments will require substantial management time and attention and substantial cost for accountants, attorneys, consultants
and others. Costs may be incurred in the investigation process, which may not be recoverable, if a decision is made not to participate
in a specific Business Combination. Furthermore, even if an agreement is reached for the participation in a specific business opportunity,
the failure to consummate that transaction may result in a loss to the Company of the related costs incurred.
Competition
Our
competitors in both the clothing and agriculture spaces, include professional growers and sellers of products and services dedicated
to the regulated agriculture industry, including the cultivation, manufacturing, processing, retail sales, Social Media and platform
competition. We compete in markets where clothing fashion and agriculture is regulated. We expect that the quantity and composition
of our competitive environment will continue to evolve as the industry matures. Additionally, increased competition is possible
to the extent that new geographies enter the marketplace as a result of continued enactment of regulatory and legislative changes.
We believe that diligently establishing and expanding Business Combination in new and existing platforms will establish us in an
already established industry. Additionally, we expect that establishing our product offerings in new and existing platforms are
factors that mitigate the risk associated with operating in a developing competitive environment. Additionally, the contemporaneous
growth of the industry as a whole will result in new customers entering the marketplace, thereby further mitigating the impact
of competition on our operations and results.
Effect of Existing or Probable Governmental
Regulations on the Business
Upon effectiveness of this Form 10,
we will be subject to the Exchange Act and the Sarbanes-Oxley Act of 2002. Under the Exchange Act, we will be required to file
with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The Sarbanes-Oxley Act
creates a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and to strengthen
auditor independence. It also (1) requires steps be taken to enhance the direct responsibility of senior members of management
for financial reporting and for the quality of financial disclosures made by public companies; (2) establishes clear statutory
rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; (3) creates guidelines
for audit committee members’ appointment, and compensation and oversight of the work of public companies’ auditors;
(4) prohibits certain insider trading during pension fund blackout periods; and (5) establishes a federal crime of securities fraud,
among other provisions.
We will also be subject to Section
14(a) of the Exchange Act, which requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act
to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted
to our stockholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our stockholders
with the information outlined in Schedules 14A or 14C of Regulation 14A. Preliminary copies of this information must be submitted
to the SEC at least 10 days prior to the date that definitive copies of this information are provided to our stockholders.
Employees
As of June 30, 2019, we had one officer
and no employees. We anticipate that we will begin to fill out our management team as and when we raise capital to begin implementing
our business plan. In the interim, we will utilize independent consultants to assist with accounting and administrative matters.
We currently have no employment agreements, and believe our consulting relationships are satisfactory. We plan to continue to hire
independent consultants from time to time on an as-needed basis.
Risks Relating to Our Business
Our
business involves a number of very significant risks. Our business, operating results and financial condition could be seriously
harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of
these risks. You should invest in our common stock only if you can afford to lose your entire investment.
We have extremely limited assets,
have incurred operating losses and have no current source of revenue.
We have had minimal assets. We do not
expect to generate revenues until we begin to implement our business plan. However, we can provide no assurance that we will produce
any material revenues for our stockholders, or that our business will operate on a profitable basis.
We will, in all likelihood, sustain
operating expenses without corresponding revenues, at least until the consummation of a Business Combination or successful internal
development. This may result in our incurring a net operating loss that will increase unless we consummate a Business Combination
with a profitable business or internally develop our business. We cannot assure you that we can identify a suitable Business Combination
or successfully internally develop our business, or that any such business will be profitable at the time of its acquisition by
the Company or ever.
Our capital resources may not
be sufficient to meet our capital requirements, and in the absence of additional resources we may have to curtail or cease business
operations.
We have historically generated negative
cash flow and losses from operations and could experience negative cash flow and losses from operations in the future. Our independent
auditors have included an explanatory paragraph in their report on our financial statements for the fiscal years ended December
31, 2017 and 2018 expressing doubt regarding our ability to continue as a going concern. We currently only have a minimal amount
of cash available, which will not be sufficient to fund our anticipated future operating needs. The Company will need to raise
substantial sums to implement its business plan. There can be no assurance that the Company will be successful in raising funds.
To the extent that the Company is unable to raise funds, we will be required to reduce our planned operations or cease any operations.
Any significant fluctuation in
price of our raw materials may have a material adverse effect on the manufacturing cost of our products.
The prices for the raw materials that
we use in the manufacture of our products are subject to market forces largely beyond our control, including the price of coal,
our energy costs, organic chemical feedstock costs, market demand, and freight costs. The prices for these raw materials may fluctuate
significantly based upon changes in these forces. If we are unable to pass any raw material prices increases through to our customers,
we could incur significant losses and a diminution of the market price of our common stock.
Adverse weather conditions could
reduce demand for our products.
The demand for our organic liquid compound
fertilizer products fluctuates significantly with weather conditions, which may delay the application of the fertilizer or render
it unnecessary at all. If any natural disasters, such as snowstorm, flood, drought, hail, tornadoes or earthquakes, occur, demand
for our products would likely be reduced.
We may encounter substantial
competition in our business and our failure to compete effectively may adversely affect our ability to generate revenue.
We believe that existing and new competitors
will continue to improve the design and performance of their products and to introduce new products with competitive price and
performance characteristics. We expect that we will be required to continue to invest in product development and productivity improvements
to compete effectively in our markets. Our competitors could develop a more efficient product or undertake more aggressive and
costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect
on our business, results of operations and financial condition.
Our major competitors may be better
able than we to successfully endure downturns in our industrial sector. In periods of reduced demand for our products, we can either
choose to maintain market share by reducing our selling prices to meet competition or maintain selling prices, which would likely
sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot assure you that
additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing or
new competition.
We may not be able to obtain
regulatory or governmental approvals for our products.
The manufacture and sale of our agricultural
products in the PRC is regulated by the PRC. The legal and regulatory regime governing our industry is evolving, and we may become
subject to different, including more stringent, requirements than those currently applicable to us. We may be vulnerable to local
and national government agencies or other parties who wish to renegotiate the terms and conditions of, or terminate their agreements
or other understandings with us, or implement new or more stringent requirements, which may require us to suspend or delay production
of their products.
Potential environmental liability
could have a material adverse effect on our operations and financial condition.
To the knowledge of our management
team, neither the production nor the sale of our products constitutes activities, or generates materials that create any environmental
hazards or requires our business operations to comply with PRC environmental laws. Although it has not been alleged by PRC
government officials that we have violated any current environmental regulations, we cannot assure you that the PRC government
will not amend the current PRC environmental protection laws and regulations. Our business and operating results may be materially
and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to increase
expenditures to comply with environmental regulations affecting our operations.
We face a number of risks associated
with potential Business Combinations, including the possibility that we may incur substantial debt or convertible debt, which could
adversely affect our financial condition.
We intend to use reasonable efforts
to complete Business Combinations. Such Combinations will be accompanied by risks commonly encountered in acquisitions, including,
but not limited to, insufficient revenues to offset increased expenses associated with the acquisition. Failure to manage and successfully
integrate the acquisition we make could harm our business, our strategy and our operating results in a material way. Additionally,
completing a Business Combination is likely to increase our expenses and it is possible that we may incur substantial debt or convertible
debt in order to complete a Business Combination, which can adversely affect our financial condition. Incurring a substantial amount
of debt or convertible debt may require us to use a significant portion of our cash flow to pay principal and interest on the debt,
which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Our indebtedness
may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing
costs, and impact the terms, conditions, and restrictions contained in possible future debt agreements, including the addition
of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and
restrictions contained in possible future debt arrangements may require that we meet certain financial tests and place restrictions
on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that
have less debt.
Our ability to hire and retain
key personnel will be an important factor in the success of our business and a failure to hire and retain key personnel may result
in our inability to manage and implement our business plan.
We may not be able to attract and retain
the necessary qualified personnel. If we are unable to retain or to hire qualified personnel as required, we may not be able to
adequately manage and implement our business plan. We currently have no employment or consulting agreements.
Our future success is highly
dependent on the ability of management to locate and attract suitable business opportunities and our stockholders will not know
what business we will enter into until we consummate a transaction with the approval of our then existing directors and officers.
The nature of our operations is highly
speculative, and there is a consequent risk of loss of an investment in the Company. The success of our plan of operations will
depend to a great extent on the operations, financial condition and management of future Business Combinations and internal development.
While management intends to seek business combinations with entities having established operating histories, we cannot provide
any assurance that we will be successful in locating opportunities meeting that criterion. In the event we complete a Business
Combination, the success of our operations may be dependent upon management of the acquired firm, its financial position and numerous
other factors beyond our control.
There can be no assurance that
we will successfully consummate a business combination or internally develop a successful business.
We can give no assurance that we will
successfully identify and evaluate suitable business opportunities or that we will conclude a Business Combination. We cannot guarantee
that we will be able to negotiate a Business Combination on favorable terms. No assurances can be given that we will successfully
identify and evaluate suitable business opportunities, that we will conclude a business combination or that we will be able to
internally develop a successful business. Our management and affiliates will play an integral role in establishing the terms for
any future business combination.
We will incur increased costs
as a result of becoming a reporting company, and given our limited capital resources, such additional costs may have an adverse
impact on our profitability.
Following the effectiveness of this
Form 10, we will be an SEC reporting company. The Company currently has no business that produces revenues. However, the rules
and regulations under the Exchange Act require a public company to provide periodic reports with interactive data files which will
require the Company to engage legal, accounting and auditing services, and XBRL and EDGAR service providers. The engagement of
such services can be costly and the Company is likely to incur losses, which may adversely affect the Company’s ability to
continue as a going concern. In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by
the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public
companies. For example, as a result of becoming a reporting company, we will be required to file periodic and current reports and
other information with the SEC and we must adopt policies regarding disclosure controls and procedures and regularly evaluate those
controls and process.
The additional costs we will incur
in connection with becoming a reporting company will serve to further stretch our limited capital resources. In other words, due
to our limited resources, we may have to allocate resources away from other productive uses in order to pay any expenses we incur
in order to comply with our obligations as an SEC reporting company. Further, there is no guarantee that we will have sufficient
resources to meet our reporting and filing obligations with the SEC as they come due.
The time and cost of preparing
a private company to become a public reporting company may preclude us from entering into an acquisition or merger with the most
attractive private companies and others.
Target companies that fail to comply
with SEC reporting requirements may delay or preclude acquisitions. Sections 13 and 15(d) of the Exchange Act require reporting
companies to provide certain information about significant acquisitions, including certified financial statements for the company
acquired, covering one or two years, depending on the relative size of the acquisition. The time and additional costs that may
be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of
an acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements
may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
A Business Combination may result
in a change of control and a change of management.
In conjunction with completion of a
business acquisition, it is anticipated that we may issue an amount of our authorized but unissued common or preferred stock which
represents a majority of the voting power and equity of our capital stock, which would result in stockholders of a target company
obtaining a controlling interest in us. As a condition of the business combination agreement, our current stockholders may agree
to sell or transfer all or a portion of our common stock as to provide the target company with all or majority control. The resulting
change in control may result in removal of our present officers and directors and a corresponding reduction in or elimination of
their participation in any future affairs.
We depend on our officers and the loss of their services
would have an adverse effect on our business
We have officers and directors of the Company and of our subsidiaries
that are critical to our chances for business success. We are dependent on their services to operate our business and the
loss of these persons, or any of them would have an adverse impact on our operations until such time as he or she could be replaced,
if he could be replaced. We do not have employment contracts or employment agreements with our officers and we do not carry key
man life insurance on their lives.
Because we are significantly smaller than the some of
our competitors, we may lack the resources needed to capture market share
The fashion and agriculture industries are highly
competitive and affected by changes in consumer tastes, as well as national, regional and local economic conditions and
demographic trends. Our sales can be affected by changes in consumer tastes and practices. We compete with a variety of
other manufacturers, producers and distributors with name brand recognition who manufacture more than just a single product
or product line. Many of our competitors have a more established market presence and substantially greater financial,
marketing and other resources than do we. New competitors may emerge and may develop new or innovative products that
compete with our products. No assurance can be given that we will be able to compete successfully in these industries.
Our ability to use our net operating loss carry-forwards
and certain other tax attributes may be limited
We have incurred losses during our history. To the extent that
we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused
losses expire. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership
change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the
corporation’s ability to use its pre-change net operating loss carry-forwards, or NOLs, and other pre-change tax attributes
(such as research tax credits) to offset its post-change income may be limited. We may experience ownership changes in the future
as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change
net operating loss carry-forwards to offset U.S. federal taxable income may be subject to limitations, which could potentially
result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs
is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
We face a number of risks associated
with potential Business Combinations, including the possibility that we may incur substantial debt or convertible debt, which could
adversely affect our financial condition.
We intend to use reasonable efforts
to complete Business Combinations. Such Combinations will be accompanied by risks commonly encountered in acquisitions, including,
but not limited to, insufficient revenues to offset increased expenses associated with the acquisition. Failure to manage and successfully
integrate the acquisition we make could harm our business, our strategy and our operating results in a material way. Additionally,
completing a Business Combination is likely to increase our expenses and it is possible that we may incur substantial debt or convertible
debt in order to complete a Business Combination, which can adversely affect our financial condition. Incurring a substantial amount
of debt or convertible debt may require us to use a significant portion of our cash flow to pay principal and interest on the debt,
which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Our indebtedness
may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing
costs, and impact the terms, conditions, and restrictions contained in possible future debt agreements, including the addition
of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and
restrictions contained in possible future debt arrangements may require that we meet certain financial tests and place restrictions
on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that
have less debt.
Our ability to hire and retain
key personnel will be an important factor in the success of our business and a failure to hire and retain key personnel may result
in our inability to manage and implement our business plan.
We may not be able to attract and retain
the necessary qualified personnel. If we are unable to retain or to hire qualified personnel as required, we may not be able to
adequately manage and implement our business plan.
Our future success is highly
dependent on the ability of management to locate and attract suitable business opportunities and our stockholders will not know
what business we will enter into until we consummate a transaction with the approval of our then existing directors and officers.
The nature of our operations is highly
speculative, and there is a consequent risk of loss of an investment in the Company. The success of our plan of operations will
depend to a great extent on the operations, financial condition and management of future Business Combinations and internal development.
While management intends to seek business combinations with entities having established operating histories, we cannot provide
any assurance that we will be successful in locating opportunities meeting that criterion. In the event we complete a Business
Combination, the success of our operations may be dependent upon management of the acquired firm, its financial position and numerous
other factors beyond our control.
Legal disputes could have an impact on our Company
We own and license technologies originally developed by other
persons and have officers and directors leave the Company from time to time. We also engage in other business matters that
are common to the business world that can result in disputations of a legal nature. In the event the Company is ever sued
or finds it necessary to bring suit against others, there is the potential that the results of any such litigation could have an
adverse impact on the Company.
Our common stock is quoted on the OTC MARKETS. An
investment in our common stock must be considered to be risky and there can be no assurance that the price for our stock will not
decrease substantially in the future.
Our common stock is quoted on the OTC Markets. The
market for our stock has been volatile and has been characterized by large swings in the trading price that do not appear to
be directly related to our business or financial condition. As a result, an investment in our common stock must be considered
to be risky and there can be no assurance that the price for our stock will not decrease substantially in the future.
Our stock trades below $5.00 per share and is subject
to special sales practice requirements that could have an adverse impact on any trading market that may develop for our stock.
If our stock trades below $5.00 per share and is subject to
special sales practice requirements applicable to "penny stocks" which are imposed on broker-dealers who sell low-priced
securities of this type. These rules may be anticipated to affect the ability of broker-dealers to sell our stock, which
may in turn be anticipated to have an adverse impact on the market price for our stock if and when an active trading market should
develop.
Our officers, directors and principal stockholders own
a large percentage of our issued and outstanding shares and other stockholders have little or no ability to elect directors or
influence corporate matters
As of June 30, 2019, our officers, directors and principal
stockholders were deemed to be the beneficial owners of approximately 77% of our issued and outstanding shares of common
stock. As a result, such persons are able to determine the outcome of any actions taken by us that require stockholder
approval. For example, they will be able to elect all of our directors and control the policies and practices of the
Company.
There can be no assurance that
we will successfully consummate a Business Combination or internally develop a successful business
We can give no assurance that we will
successfully identify and evaluate suitable business opportunities or that we will conclude a Business Combination. We cannot guarantee
that we will be able to negotiate a Business Combination on favorable terms. No assurances can be given that we will successfully
identify and evaluate suitable business opportunities, that we will conclude a business combination or that we will be able to
internally develop a successful business. Our management and affiliates will play an integral role in establishing the terms for
any future business combination.
We will incur increased costs
as a result of becoming a reporting company, and given our limited capital resources, such additional costs may have an adverse
impact on our profitability.
Following the effectiveness of this
Form 10, we will be an SEC reporting company. The Company currently has no business that produces revenues. However, the rules
and regulations under the Exchange Act require a public company to provide periodic reports with interactive data files which will
require the Company to engage legal, accounting and auditing services, and XBRL and EDGAR service providers. The engagement of
such services can be costly and the Company is likely to incur losses, which may adversely affect the Company’s ability to
continue as a going concern. In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by
the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public
companies. For example, as a result of becoming a reporting company, we will be required to file periodic and current reports and
other information with the SEC and we must adopt policies regarding disclosure controls and procedures and regularly evaluate those
controls and procedures.
The additional costs we will incur
in connection with becoming a reporting company will serve to further stretch our limited capital resources. In other words, due
to our limited resources, we may have to allocate resources away from other productive uses in order to pay any expenses we incur
in order to comply with our obligations as an SEC reporting company. Further, there is no guarantee that we will have sufficient
resources to meet our reporting and filing obligations with the SEC as they come due.
The time and cost of preparing
a private company to become a public reporting company may preclude us from entering into an acquisition or merger with the most
attractive private companies and others
Target companies that fail to comply
with SEC reporting requirements may delay or preclude acquisitions. Sections 13 and 15(d) of the Exchange Act require reporting
companies to provide certain information about significant acquisitions, including certified financial statements for the company
acquired, covering one or two years, depending on the relative size of the acquisition. The time and additional costs that may
be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of
an acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements
may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
A Business Combination may result
in a change of control and a change of management
In conjunction with completion of a
business acquisition, it is anticipated that we may issue an amount of our authorized but unissued common or preferred stock which
represents a majority of the voting power and equity of our capital stock, which would result in stockholders of a target company
obtaining a controlling interest in us. As a condition of the business combination agreement, our current stockholders may agree
to sell or transfer all or a portion of our common stock as to provide the target company with all or majority control. The resulting
change in control may result in removal of our present officers and directors and a corresponding reduction in or elimination of
their participation in any future affairs.
Risks Related to Our Shareholders
and Shares of Common Stock
There is presently no public
market for our securities
Our common stock is not currently trading
on any market, and a robust and active trading market may never develop. Because of our current status as a “shell company,”
Rule 144 is not currently available. Future sales of our common stock by existing stockholders pursuant to an effective registration
statement or upon the availability of Rule 144 could adversely affect the market price of our common stock. A shareholder who decides
to sell some or all of his shares in a private transaction may be unable to locate persons who are willing to purchase the shares,
given the restrictions. Also, because of the various risk factors described above, the price of the publicly traded common stock
may be highly volatile and not provide the true market price of our common stock.
Our stock is not traded, so you
may be unable to sell your shares at or near the quoted bid prices if you need to sell a significant number of your shares
Even if our stock becomes trading,
it is likely that our common stock will be thinly traded, meaning that the number of persons interested in purchasing our common
shares at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number
of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend
the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several
days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We
cannot give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained,
or that current trading levels will be sustained. Due to these conditions, we can give you no assurance that you will be able to
sell your shares at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.
Our common stock is be considered
a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult
to sell
A common stock is a “penny stock”
if it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded
on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Capital Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets
less than $5 million.
The principal result or effect of being
designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject
to the “penny stock” regulations set forth in Rules 15g-2 through 15g-9 promulgated under the Exchange Act. For example,
Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting
any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks
to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure
requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable
for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks
of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer
made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming
that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance
with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to
third parties or to otherwise dispose of them in the market or otherwise.
We may issue more shares in an
acquisition or merger, which will result in substantial dilution
Our Articles of Incorporation, as amended,
authorize the Company to issue an aggregate of ninety million shares of common stock of which 62,515,334 shares are currently outstanding
and 10,000,000 shares of Preferred Stock of which 10,000,000 shares of Preferred Stock are authorized and 0 shares are outstanding.
Any acquisition or merger effected by the Company may result in the issuance of additional securities without stockholder approval
and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover,
shares of our common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length
basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders.
In an acquisition type transaction, our Board of Directors has the power to issue any or all of such authorized but unissued shares
without stockholder approval. To the extent that additional shares of common stock are issued in connection with a business combination
or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially
adversely affected.
Obtaining additional capital
though the sale of common stock will result in dilution of stockholder interests
We may raise additional funds in the
future by issuing additional shares of common stock or other securities, which may include securities such as convertible debentures,
warrants or preferred stock that are convertible into common stock. Any such sale of common stock or other securities will lead
to further dilution of the equity ownership of existing holders of our common stock. Additionally, the existing conversion rights
may hinder future equity offerings, and the exercise of those conversion rights may have an adverse effect on the value of our
stock. If any such conversion rights are exercised at a price below the then current market price of our shares, then the market
price of our stock could decrease upon the sale of such additional securities. Further, if any such conversion rights are exercised
at a price below the price at which any particular stockholder purchased shares, then that particular stockholder will experience
dilution in his or her investment.
Our directors have the authority
to authorize the issuance of preferred stock
Our Articles of Incorporation, as amended,
authorize the Company to issue an aggregate of 10,000,000 shares of Preferred Stock. Our directors, without further action by our
stockholders, have the authority to issue shares to be determined by our board of directors of Preferred Stock with the relative
rights, conversion rights, voting rights, preferences, special rights and qualifications as determined by the board without approval
by the shareholders. Any issuance of Preferred Stock could adversely affect the rights of holders of common stock. Additionally,
any future issuance of preferred stock may have the effect of delaying, deferring, or preventing a change in control of the Company
without further action by the shareholders and may adversely affect the voting and other rights of the holders of common stock.
Our Board does not intend to seek shareholder approval prior to any issuance of currently authorized stock, unless otherwise required
by law or stock exchange rules.
We have never paid dividends
on our common stock, nor are we likely to pay dividends in the foreseeable future. Therefore you may not derive any income solely
from ownership of our stock
We have never declared or paid dividends
on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available
for payment of dividends will be re-invested into the Company to further our business strategy. This means that your potential
for economic gain from ownership of our stock depends on appreciation of our stock price and will only be realized by a sale of
the stock at a price higher than your purchase price.
We have never paid dividends
on our common stock, nor are we likely to pay dividends in the foreseeable future. Therefore you may not derive any income solely
from ownership of our stock.
We have never declared or paid dividends
on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available
for payment of dividends will be re-invested into the Company to further our business strategy. This means that your potential
for economic gain from ownership of our stock depends on appreciation of our stock price and will only be realized by a sale of
the stock at a price higher than your purchase price.
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Item 2.
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Financial Information
|
Management’s Discussion And
Analysis Or Plan Of Operation
Upon effectiveness of this Registration
Statement, we will file with the SEC annual and quarterly information and other reports that are specified in the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and SEC regulations. Thus, we will need to ensure that we will have the
ability to prepare, on a timely basis, financial statements that comply with SEC reporting requirements following the effectiveness
of this registration statement. We will also become subject to other reporting and corporate governance requirements, including
the listing standards of any securities exchange upon which we may list our Common Stock, and the provisions of the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”), and the regulations promulgated hereunder, which impose significant compliance
obligations upon us. As a public company, we will be required, among other things, to:
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·
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Prepare and distribute reports and other stockholder communications
in compliance with our obligations under the federal securities laws and the applicable national securities exchange listing rules;
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|
·
|
Define and expand the roles and the duties of our Board of Directors
and its committees;
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|
·
|
Institute more comprehensive compliance, investor relations and internal
audit functions;
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|
·
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Involve and retain outside legal counsel and accountants in connection
with the activities listed above.
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Management for each year commencing
with the year ending December 31, 2017 must assess the adequacy of our internal control over financial reporting. Our internal
control over financial reporting will be required to meet the standards required by Section 404 of the Sarbanes-Oxley Act. We will
incur additional costs in order to improve our internal control over financial reporting and comply with Section 404, including
increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff. Ultimately,
our efforts may not be adequate to comply with the requirements of Section 404. If we are unable to implement and maintain adequate
internal control over financial reporting or otherwise to comply with Section 404, we may be unable to report financial information
on a timely basis, may suffer adverse regulatory consequences, may have violations of the applicable national securities exchange
listing rules and may breach covenants under our credit facilities.
The significant obligations related
to being a public company will continue to require a significant commitment of additional resources and management oversight that
will increase our costs and might place a strain on our systems and resources. As a result, our management’s attention might
be diverted from other business concerns. In addition, we might not be successful in implementing and maintaining controls and
procedures that comply with these requirements. If we fail to maintain an effective internal control environment or to comply with
the numerous legal and regulatory requirements imposed on public companies, we could make material errors in, and be required to
restate, our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial
statements and sanctions imposed on us by the SEC.
Kemiao Garment Holding Group is a
company that uses innovative proprietary products and technology to promote agriculture and fashion. In addition we
have expanded our business plan to include acquisition of evolving opportunities in these industries. In summary, Kemiao
Garment Holding Group is focused on making strategic investments and providing consumer products the fashion and
agriculture industries.
Results of Operations for Neon Bloom,
Inc.—Comparison of the Years Ended December 31, 2017 and 2016
Revenue
We had no revenues from operations
during either 2018 or 2017.
General and Administrative Expense
General and Administrative Expenses
were Nil for the year ended December 31, 2018 compared to Nil for the year ended December 31, 2017, an increase of $0.
Stock compensation expense
During the year ended December 31,
2018, we incurred Nil on non-cash stock compensation expense from the issuance of common stock for services. There was no stock
issued for services in the prior year.
Net Loss
We had a net loss of Nil for the year
ended December 31, 2018 compared to Nil for the year ended December 31, 2017.
Liquidity and Capital Resources
As of December 31, 2018, we had $0
of cash, no liabilities and an accumulated deficit of $6,997,567. We used $0 of cash in operations for the year ended December
31, 2018 and received net proceeds from financing of $0.
The financial statements accompanying
this Report have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities
and commitments in the normal course of our business. As reflected in the accompanying financial statements, we have not yet generated
any revenue, had a net loss of Nil and have a accumulated stockholders’ deficit of $6,997,567 as of December 31, 2018. These
factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is
dependent on our ability to raise additional funds and implement our business plan. The financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going concern.
We neither rent
nor own any properties. We utilize the office space and equipment of our management at no cost. Management estimates such amounts
to be immaterial. We currently have no policy with respect to investments or interests in real estate, real estate mortgages or
securities of, or interests in, persons primarily engaged in real estate activities.
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Item 4.
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Security Ownership of Certain
Beneficial Owners and Management
|
(a) Security ownership of certain beneficial
owners.
The following table
sets forth, as of July 30, 2019, the number of shares of common stock owned of record and beneficially by our executive officer,
director and persons who beneficially own more than 5% of the outstanding shares of our common stock.
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial Ownership
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
Yufang Zhu (1) (2) (3)
Room 2959 Floor 29, Shanghai Tower, 501 Yincheng Middle Rd, Pudong, 200120, China
|
|
36,000,000
Common Stock
|
|
|
57.586%
|
|
|
|
|
|
|
|
|
World Capital Holding Ltd
Room 2959 Floor 29, Shanghai Tower, 501 Yincheng Middle Rd, Shanghai, 200120, China
|
|
4,000,000
Common Stock
|
|
|
6.398%
|
|
|
|
|
|
|
|
|
Jinlin Guo
Room 16 Building E, Jiahua Estate Liuta, Shenzhen, China
|
|
4,380,350
Common Stock
|
|
|
7.007%
|
|
|
|
|
|
|
|
|
Guo Jin Tong Investment (HK) Ltd
Unit D 16/F Chuk Plaza 250 Hennessy Rd, Hongkong,
China
|
|
3,600,600
Common Stock
|
|
|
5.760%
|
|
(1)
|
Yufang Zhu serves as an
Officer (CEO) and Director of the Company.
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|
|
(2)
|
Kemiao garment holding group is controlled by Yufang Zhu. Ownership of the three million (3,000,000) Preferred shares issued, equates to voting rights of twenty (20) common shares for every one (1) Preferred share, totaling sixty million (60,000,000) shares. Therefore, Preferred shares give Yufang Zhu effective voting control of Kemiao on a fully dilutive basis.
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|
|
(3)
|
Kemiao Garment Holding Group is controlled by Yufang Zhu. Ownership of the two hundred thousand (200,000) Preferred A shares issued has no conversion rights, and voting rights of five hundred (500) common shares for every one (1) Preferred A share, This gives Mr. Zhu one hundred million (100,000,000) shares and voting control of the Company on a fully dilutive basis.
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|
Item 5.
|
Directors and Executive Officers
|
A. Identification of Directors and Executive Officers.
Our Officers and directors and additional information concerning
them are as follows:
Name
|
|
Age
|
|
|
Position
|
Yanping S. Sheng
|
|
|
57
|
|
|
CEO, President, Secretary, Treasurer, Director
|
|
|
|
|
|
|
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Jimmy P. Lee
|
|
|
36
|
|
|
Director
|
Yanping Sheng, President and Director
Graduated from
Tsinghua University with the degree of EMBA in Risk Management. Serve as chairman of the board of World Financial Holding Group,
a listed company in the United States, and senior executive of several listed companies.
We believe that
Mr. Sheng’s experience in underwriting and finance qualifies Mr. Sheng’s to serve as an officer and director for our
Company.
Jimmy P. Lee,
Director
Graduated from
University at Albany with a Bachelor degree in Accounting, and received his CPA license in NY. Mr. Lee has over 10 years of experience
in public accounting where he has worked for multiple public CPA firms in New York City involving audits and accounting for reverse
mergers and IPO entities listing on Nasdaq NYSE and OTC Markets. Since 2010, Mr. Lee has managed his own CPA Firm providing accounting
and advisory services to firms located in China and Malaysia. Mr. Lee as an enthusiastic entrepreneur, well versed with both US
and Asia markets, and with expertise in going public, mergers and acquisitions brings great values to the firm.
B. Significant Employees. None.
C. Family Relationships. None.
D. Involvement in Certain Legal Proceedings.
There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders of decrees material
to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during
the past ten years.
E. The Board of Directors acts as the
Audit Committee, and the Board has no separate committees. The Company has no qualified financial expert at this time because it
has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this
time to hire such expert. The Company intends to continue to search for a qualified individual for hire.
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Item 6.
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Executive Compensation
|
For the past five
years, no sole officer or director has received any cash remuneration. Our officer and director will receive no payment per month
beginning on April 1, 2019. No remuneration of any nature has been paid for on account of services rendered by a director in such
capacity to date. Our officer and director intend to devote all of his time to Kemiao Garment Holding Group and its subsidiaries.
The Company for
the benefit of its employees has adopted no retirement, pension, profit sharing, stock option or insurance programs or other similar
programs.
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Item 7.
|
Certain Relationship and Related
Transactions, and Director Independence
|
We utilize the office
space and equipment of our management at no cost.
Mr. Sheng is our
CEO and President. He is not deemed to be independent under applicable rules. We have not established any committees of the Board
of Directors.
Except as set forth
above, there have been no related party transactions, or any other transactions or relationships required to be disclosed.
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Item 8.
|
Legal Proceedings
|
Presently, there
are not any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject,
and no such proceedings are known to the Registrant to be threatened or contemplated against it.
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Item 9.
|
Market Price and Dividends
on the Registrant’s Common Equity and Related Stockholder Matters
|
(a) Market information.
Our Common Stock
is not trading on any stock exchange. However it is currently quoted on OTC Markets under the symbol AIVI and there is no established
public trading market for the class of common equity.
(b) Holders.
As of 30th
June 2019, there are approximately 452 holders of an aggregate of 62,515,334 shares of our Common Stock issued and outstanding.
(c) Dividends.
We have not paid
any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future. It is the president
intention of management to utilize all available funds for the development of the Registrant’s business.
(d) Securities authorized for issuance
under equity compensation plans.
None.
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Item 10.
|
Recent Sale of Unregistered
Securities
|
On December 24,
2018, Mr. Glass entered into a Stock Purchase Agreement with World Capital Holding, Ltd., whereby World Capital Holding, Ltd. purchased
40,000,000 shares of restricted common stock, the controlling block of stock, for the purchase price of $100,000. Of the 40,000,000
shares of restricted common stock, 36,000,000 shares were issued to Ms. YuFang Zhu, and 4,000,000 shares were issued to World Capital
Holding, Ltd., respectively.
The restricted
shares were sold in a private transaction pursuant to Rule 144 of the ’33 Securities Act. As of this date, the shares have
not been registered.
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Item 11.
|
Description of Registrant’s
Securities to be Registered
|
(a) Common.
We
are authorized by our Certificate of Incorporation to issue an aggregate of 100,000,000 shares of capital stock, of which 90,000,000
are shares of common stock, Par Value $0.001 per share (the “Common Stock”) and 10,000,000 are shares of preferred
stock, Par Value $0.001 per share (the “Preferred Stock”). As of 30th June 2019, there are 62,515,334 shares
of Common Stock.
Common Stock
All outstanding
shares of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to
one vote per share on all matter submitted to a vote of stockholders of the Company. All stockholders are entitled to share equally
dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available. In the event
of liquidation, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities.
The stockholders do not have cumulative or preemptive rights.
Preferred Stock
Our
Certificate of Incorporation authorizes the issuances of up to 10,000,000 shares of Preferred Stock with designations, rights and
preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion, voting, or other rights, which could adversely affect
the voting power or, other rights of the holders of the Common Stock. In the event of issuance, the Preferred Stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.
At
this time there are no designated classes of Preferred Stock. The shares of Preferred
Stock shall have no redemption rights.
The description of certain matters
relating to the securities of the Company is a summary and is qualified in its entirely by the provisions of the Company’s
Certificate of Incorporation and By-Laws, copies of which have been filed as exhibits to this Form 10.
(b) Debt Securities.
None.
(c) Other Securities To Be Registered.
None.
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Item 12.
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Indemnification of Directors
and Officers
|
Our Officers and
Directors are indemnified as provided by the Nevada corporate law and our Bylaws. We have agreed to indemnify all of our directors
and certain officers against certain liabilities, including liabilities under the Securities Act of 1933. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant
to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director,
officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the adjudication of such issue.
We have been advised
that in the opinion of the Securities Exchange Commission indemnification for liabilities arising under the Securities Act against
public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities
being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit
question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed
by the court’s decision.
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Item 13.
|
Financial Statements and
Supplementary Data
|
KEMIAO GARMENT HOLDING GROUP
CONSOLIDATED
FINANCIAL STATEMENTS
(Audited)
Report of Independent Registered Public
Accounting Firm
To the shareholders and the board of directors
of Kemiao Garment Holding Group
Opinion on the Financial Statements
We have audited the accompanying balance
sheets of Kemiao Garment Holding Group (the "Company") as of December 31, 2018 and 2017, the related statements of operations,
stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
Substantial Doubt about the Company’s
Ability to Continue as a Going Concern
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the
Company’s minimal activities raise substantial doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor
since 2019
Lakewood, CO
August 23, 2019
KEMIAO GARMENT
HOLDING GROUP
CONSOLIDATED
BALANCE SHEETS
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December 31,
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2018
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2017
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ASSETS
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Current Assets:
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Cash
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$
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–
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$
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–
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Total Assets
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$
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–
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$
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–
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
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Accounts payable
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$
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–
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$
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–
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Total Current Liabilities
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–
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–
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Total Liabilities
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–
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–
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Commitments and contingencies
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–
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–
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Stockholders' Equity (Deficit):
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Common Stock, par value $0.001, 90,000,000 shares authorized; 62,515,334 and 62,515,334 shares issued and outstanding, respectively.
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62,515
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62,515
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Additional paid-in capital
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6,935,052
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6,935,052
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Accumulated deficit
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(6,997,567
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)
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(6,997,567
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)
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Total Stockholders' Equity
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–
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–
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Total Liabilities and Stockholders' Equity
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$
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–
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$
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–
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The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Years Ended December 31,
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2018
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2017
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Operating Expenses:
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General and administrative
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$
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–
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$
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–
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Total operating expenses
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–
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–
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Loss from operations
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–
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–
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Net Loss
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$
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–
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$
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–
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Loss per share, basic and diluted
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$
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–
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$
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–
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Weighted average common shares outstanding, basic and diluted
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|
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62,515,334
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|
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62,515,334
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The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
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Common
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Common
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Paid in
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Accumulated
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Shares
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Stock
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Capital
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Deficit
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Total
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Balance, December 31, 2016
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|
|
62,515,334
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|
|
$
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62,515
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|
|
$
|
6,935,052
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|
|
$
|
(6,997,567
|
)
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$
|
–
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Net loss for the year
ended December 31, 2016
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–
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–
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–
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–
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–
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Balance, December 31, 2017
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62,515,334
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62,515
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|
|
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6,935,052
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(6,997,567
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)
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–
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Net loss for the year
ended December 31, 2017
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–
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–
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–
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–
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–
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Balance, December 31, 2018
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|
|
65,515,334
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|
|
$
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62,515
|
|
|
$
|
6,935,052
|
|
|
$
|
(6,997567
|
)
|
|
$
|
–
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the Years Ended
December 31,
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2018
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2017
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Cash flows from operating activities:
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|
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|
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Net Loss
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$
|
–
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$
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–
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Adjustments to reconcile net loss to net cash used in operating activities:
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Net cash used in operating activities
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|
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–
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|
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–
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Cash flows from investing activities:
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–
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|
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–
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Cash flows from financing activities:
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–
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|
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–
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Net increase (decrease) in cash
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|
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–
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|
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–
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Cash, beginning of year
|
|
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–
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|
|
|
–
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|
Cash, end of year
|
|
$
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–
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|
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$
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–
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|
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|
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Supplemental disclosure of cash flow information:
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Cash paid for taxes
|
|
$
|
–
|
|
|
$
|
–
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|
Cash paid for interest
|
|
$
|
–
|
|
|
$
|
–
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|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
Formerly Aivtech
International Group Co.
NOTES TO FINANCIAL
STATEMENTS
As of and for the year ended December
31, 2018 and 2017
NOTE 1 - ORGANIZATION AND OPERATIONS
Kemiao Garment Holding Group formerly known as AIVtech International
Group Co. (the “Company”) is a corporation organized under the laws of the State of Nevada.
On April 18, 2016, the Eighth District Court of Clark County
of Nevada granted the Application for Appointment of Custodian as a result of the absence of a functioning board of directors and
the revocation of the Company’s charter. The order appointed a custodian to take any Corporation actions on behalf of the
Company that would further the interests of its shareholders.
On January 24, 2019, a change of control occurred with respect
to the Company to better reflect its new business direction.
The Company intends to acquire private corporations that are
involved in IT apparel ecosystem platform and fashion intelligent manufacturing industry that are organized under the laws of the
Republic of China. Upon consummation, the Company, through its wholly-owned subsidiary, will be involved in manufacturing, R&D,
sales, and service in fashion related industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The Company’s financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible
for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and
detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded
transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner
to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company
for the respective periods being presented.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported period.
The Company’s significant estimates include income taxes
provision and valuation allowance of deferred tax assets; the fair value of financial instruments; the carrying value and recoverability
of long-lived assets, including the values assigned to an estimated useful lives of computer equipment; and the assumption that
the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due
to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult
to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently
available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews,
and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Carrying value, recoverability and impairment of long-lived
assets
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting
Standards Codification for its long-lived assets. The Company’s long-lived assets, which include computer equipment are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets
by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets
over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess
of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected
future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but
the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived
assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the following to be some examples of important
indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical
or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall
strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy;
(iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the
Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets
for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
The impairment charges, if any, is included in operating expenses
in the accompanying consolidated statements of operations.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the Related
parties include a) affiliates of the Company; b) Entities for which investments in their equity securities would be required, absent
the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts
that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f)
other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g) Other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material
related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course
of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements
is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved description of
the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which
income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions
on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that used in the preceding period; amounts due from
or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements
are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail
to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result
in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived
merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be
accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency
is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability,
and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed
unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information
available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position,
results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect
the Company’s business, financial position, and results of operations or cash flows.
Revenue recognition
The Company adopted ASU 2014-09, Topic 606 on January 1, 2018,
using the modified retrospective method. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts.
The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations
in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that
a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in
the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The adoption of Topic 606 has no impact on revenue amounts recorded
on the Company’s financial statements as the Company has not generate any revenues.
Income Tax Provisions
The Company follows Section 740-10-30 of the FASB Accounting
Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities
are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in
effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in the Statements of Income and Comprehensive Income in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting
Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses
the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial
statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits
of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest
benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also
provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section
260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding
shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding
common shares assumes that the Company incorporated as of the beginning of the first period presented.
The Convertible Preferred Stocks, warrants and stock options
are not included in potentially dilutive shares outstanding for the period ended December 31, 2018 and 2017 as these would have
an anti-dilutive impact on earnings per share.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting
Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating,
investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect
method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects
of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and
payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash
flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation
of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing
activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation
of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company
had an accumulated deficit at December 31, 2018 of $5,590,025 without any revenues. These factors among others raise substantial
doubt about the Company’s ability to continue as a going concern.
While the Company has not commenced operations and generate
revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management
intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being
taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going
concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional
funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to further implement its business plan and generate revenues.
The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – STOCKHOLDERS’ DEFICIT
Common Stock
On May 12, 2010, in connection with the Share Exchange consummated,
the Company issued 10,375,000 shares of common stock.
On December 29, 2010, the Company entered into a subscription
agreement with certain accredited investors in connection with a private placement offering:
|
(1)
|
The Company agreed to issue to these investors to 2,513,334 shares of common stock, at par value of $.001 and purchase price
of $3.00 per share, for aggregate gross proceeds of $7,540,000.
|
|
(2)
|
The Company also agreed to issue to the investors an aggregate of 2,513,334 shares of its common stock (the “Make Good
Shares”), on a pro rata basis, for the benefit of the investors if the following make good targets set forth in the subscription
agreement are not met.
|
|
a)
|
With respect to the fiscal year ending December 31, 2010, if the Company did not achieve $0.44 in earnings per share, then
one-half of the Make Good Shares will be distributed to the investors on a pro rata basis.
|
|
b)
|
With respect to the fiscal year ending December 31, 2011, if $0.60 in earnings per share is not achieved, then the other one-half
of the Make Good Shares will be distributed to the investors on a pro rata basis.
|
As of December 31, 2010, the Company is not required to issue
the Make Good Shares as the basic EPS for the year ended December 31, 2010 was $0.66.
On April 20, 2016, pursuant to the Nevada Court Order granting
appointment of a custodian to the Company, the Company issued 40,000,000 shares of common stock to the appointed custodian.
Warrants
In connection with the private placement offering on December
29, 2010, the Company issued to the investors five-year Series A Warrants to purchase up to an additional 251,334 shares of common
stock at an exercise price of $4.00 and issued warrants to the placement agent to purchase a total of 50,267 shares of common stock
at an exercise price of $4.00 per share. The warrants of 301,601 shares have expired and became non-exercisable prior to December
31, 2018 and 2017.
NOTE 6 – INCOME TAX
On December 22, 2017, the President of the United States signed
into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changes U.S. tax law by, among
other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a transition tax on deemed
repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a
maximum of 34% to a flat 21% rate, effective January 1, 2018. As a result of the reduction in the U.S. corporate income tax rate
from 34% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax assets.
Net deferred tax
assets consist of the following components as of December 31:
|
|
2018
|
|
|
2017
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
NOL Carryover
|
|
$
|
0
|
|
|
$
|
0
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Less valuation allowance
|
|
|
(6,997,567
|
)
|
|
|
(6,997,567
|
)
|
Net deferred tax assets
|
|
$
|
–
|
|
|
$
|
–
|
|
The income tax
provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing
operations for the period ended December 31, due to the following:
|
|
|
2018
|
|
|
|
2017
|
|
Book loss
|
|
$
|
–
|
|
|
$
|
–
|
|
Other nondeductible expenses
|
|
|
–
|
|
|
|
–
|
|
Valuation allowance
|
|
|
–
|
|
|
|
–
|
|
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company has accumulated approximately $6,997,567 of net
operating losses (“NOL”) carried forward to offset future taxable income. In assessing the realization of deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has
established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more
likely than not that all of the deferred tax asset will not be realized.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events to the date the
financial statements were issued and has determined that there are no items to disclose or require adjustments other than the events
disclosed below.
On May 13, 2019, the Board of Directors and majority shareholders
of the Company approved a Name change of the Company from Aivtech International Group Co., to Kemiao Garment Holding Group.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED
BALANCE SHEETS
|
|
Six Months Ended
|
|
|
|
June 30,
2019
|
|
|
|
June 30
|
|
|
Dec. 31
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
–
|
|
|
$
|
–
|
|
Total Assets
|
|
$
|
–
|
|
|
$
|
–
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Due to Related Party
|
|
$
|
10,916
|
|
|
|
$
|
|
Total Current Liabilities
|
|
|
10,916
|
|
|
|
|
|
Total Liabilities
|
|
|
10,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 75,000,000 shares authorized; 62,515,334 issued and outstanding, respectively
|
|
|
62,515
|
|
|
|
62,515
|
|
Additional paid-in capital
|
|
|
6,935,052
|
|
|
|
6,935,052
|
|
Accumulated deficit
|
|
|
(7,008,483
|
)
|
|
|
6,997,567
|
|
Total Stockholders' Equity
|
|
|
(10,916
|
)
|
|
|
–
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
–
|
|
|
$
|
–
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Six Months Ended
June 30, 2019
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
$
|
4,791
|
|
|
$
|
4,791
|
|
General and administrative
|
|
|
6,125
|
|
|
|
6,125
|
|
Total operating expenses
|
|
|
10,916
|
|
|
|
10,916
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(10,916
|
)
|
|
|
(10,916
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(10,916
|
)
|
|
$
|
(10,916
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
62,515,334
|
|
|
|
62,515,334
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Common
|
|
|
|
Par Value,
|
|
|
|
Paid in
|
|
|
|
Accumulated
|
|
|
|
Shareholder
|
|
|
|
|
Shares
|
|
|
|
$0.001
|
|
|
|
Capital
|
|
|
|
Deficit
|
|
|
|
Deficit
|
|
Balance, December 31, 2018
|
|
|
62,515,334
|
|
|
$
|
62,515
|
|
|
$
|
6,935,052
|
|
|
$
|
(6,997567
|
)
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for six months ended June 30, 2018
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(10,916
|
)
|
|
|
(10,916
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2019
|
|
|
62,515,334
|
|
|
$
|
62,515
|
|
|
$
|
6,935,052
|
|
|
$
|
(7,008,483
|
)
|
|
$
|
(10,916
|
)
|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For
the Six Months
Ended June 30
|
|
|
|
|
Dec. 31
|
|
|
|
June 30
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
–
|
|
|
$
|
(10,916)
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
–
|
|
|
|
(10,916)
|
|
Cash flows from investing activities:
|
|
|
–
|
|
|
|
–
|
|
Cash flows from financing activities:
|
|
|
–
|
|
|
|
10,916
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
–
|
|
|
|
–
|
|
Cash, beginning of year
|
|
|
–
|
|
|
|
–
|
|
Cash, end of year
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
Cash paid for interest
|
|
$
|
–
|
|
|
$
|
–
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
KEMIAO GARMENT HOLDING
GROUP
Formerly Aivtech
International Group Co.
NOTES TO FINANCIAL
STATEMENTS
As of six months ended June 30, 2019
NOTE 1 - ORGANIZATION AND OPERATIONS
Kemiao Garment Holding Group formerly known as AIVtech International
Group Co. (the “Company”) is a corporation organized under the laws of the State of Nevada.
On April 18, 2016, the Eighth District Court of Clark County
of Nevada granted the Application for Appointment of Custodian as a result of the absence of a functioning board of directors and
the revocation of the Company’s charter. The order appointed a custodian to take any Corporation actions on behalf of the
Company that would further the interests of its shareholders.
On January 24, 2019, a change of control occurred with respect
to the Company to better reflect its new business direction.
The Company intends to acquire private corporations that are
involved in IT apparel ecosystem platform and fashion intelligent manufacturing industry that are organized under the laws of the
Republic of China. Upon consummation, the Company, through its wholly-owned subsidiary, will be involved in manufacturing, R&D,
sales, and service in fashion related industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The Company’s financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible
for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and
detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded
transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner
to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company
for the respective periods being presented.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported period.
The Company’s significant estimates include income taxes
provision and valuation allowance of deferred tax assets; the fair value of financial instruments; the carrying value and recoverability
of long-lived assets, including the values assigned to an estimated useful lives of computer equipment; and the assumption that
the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due
to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult
to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently
available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews,
and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Carrying value, recoverability and impairment of long-lived
assets
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting
Standards Codification for its long-lived assets. The Company’s long-lived assets, which include computer equipment are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets
by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets
over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess
of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected
future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but
the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived
assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the following to be some examples of important
indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical
or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall
strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy;
(iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the
Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets
for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
The impairment charges, if any, is included in operating expenses
in the accompanying consolidated statements of operations.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the Related
parties include a) affiliates of the Company; b) Entities for which investments in their equity securities would be required, absent
the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts
that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f)
other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g) Other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material
related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course
of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements
is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved description of
the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which
income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions
on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that used in the preceding period; amounts due from
or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements
are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail
to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result
in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived
merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be
accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency
is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability,
and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed
unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information
available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position,
results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect
the Company’s business, financial position, and results of operations or cash flows.
Revenue recognition
The Company adopted ASU 2014-09, Topic 606 on January 1, 2018,
using the modified retrospective method. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts.
The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations
in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that
a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in
the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The adoption of Topic 606 has no impact on revenue amounts recorded
on the Company’s financial statements as the Company has not generate any revenues.
Income Tax Provisions
The Company follows Section 740-10-30 of the FASB Accounting
Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities
are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in
effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in the Statements of Income and Comprehensive Income in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting
Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses
the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial
statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits
of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest
benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also
provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section
260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding
shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding
common shares assumes that the Company incorporated as of the beginning of the first period presented.
The Convertible Preferred Stocks, warrants and stock options
are not included in potentially dilutive shares outstanding for the period ended December 31, 2018 and 2017 as these would have
an anti-dilutive impact on earnings per share.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting
Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating,
investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect
method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects
of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and
payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash
flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation
of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing
activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation
of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company
had an accumulated deficit at June 30, 2019 of $7,008,483 without any revenues. These factors among others raise substantial doubt
about the Company’s ability to continue as a going concern.
While the Company has not commenced operations and generate
revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management
intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being
taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going
concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional
funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to further implement its business plan and generate revenues.
The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – STOCKHOLDERS’ DEFICIT
Common Stock
On April 20, 2016, pursuant to the Nevada Court Order granting
appointment of a custodian to the Company, the Company issued 40,000,000 shares of common stock to the appointed custodian
As of June 30, 2019, the Company has 62,515,334 shares issued
and outstanding.
Warrants
In connection with the private placement offering on December
29, 2010, the Company issued to the investors five-year Series A Warrants to purchase up to an additional 251,334 shares of common
stock at an exercise price of $4.00 and issued warrants to the placement agent to purchase a total of 50,267 shares of common stock
at an exercise price of $4.00 per share. The warrants of 301,601 shares have expired and became non-exercisable prior to December
31, 2018 and 2017.
NOTE 6 – INCOME TAX
On December 22, 2017, the President of the United States signed
into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changes U.S. tax law by, among
other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a transition tax on deemed
repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a
maximum of 34% to a flat 21% rate, effective January 1, 2018. As a result of the reduction in the U.S. corporate income tax rate
from 34% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax assets.
The Company has accumulated approximately $7,008,483 of net
operating losses (“NOL”) carried forward to offset future taxable income. In assessing the realization of deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has
established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more
likely than not that all of the deferred tax asset will not be realized.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events to the date the
financial statements were issued and has determined that there are no items to disclose or require adjustments.
Item 14.
|
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
|
None
Item 15.
|
Financial Statements and Exhibits
|
SIGNATURES
Pursuant to the requirements of Section 12
of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
KEMIAO GARMENT HOLDING GROUP
|
|
|
|
|
|
Date: August 27, 2019
|
By:
|
/s/ Shinpang Sheng
|
|
|
Name:
|
Shinpang Sheng
|
|
|
Title:
|
CEO
|
|
EXHIBIT INDEX