Item 1. Business.
Our Company
Ando Holdings Ltd., formerly known as PC Mobile Media Corp. was formed in the state of Nevada on August 22, 2015. After thorough discussion and analysis on the mobile billboard industry, the Company has decided to terminate its plans in the industry. The Company is currently pursuing business opportunities in Hong Kong. The Company acquired 4 companies during the financial year of 2019, which were Ando Automobile Technology Limited, Ando Capital Investment Limited, Xian Ando Industrial Company Limited and Xian Ando Factoring Commercial Company Limited.
Our corporate structure is set forth below:
A list of our subsidiaries, affiliates and VIE entities together with a brief description of their business is set forth below:
Name (Domicile)
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Business
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Ando Holdings Limited (Nevada, United States)
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Provides financial services and being an investment holding company
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Ando Automobile Technology Limited (Hong Kong)
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Intends to develop in automobile agency services
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Ando Capital Investment Limited (Hong Kong)
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Provides insurance products of Sun Life Hong Kong Limited
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Xian Ando Industrial Company Limited (Xian, China)
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Being an investment holding company to hold Xian Ando Commercial Factoring Company Limited
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Xian Ando Commercial Factoring Company Limited (Xian, China)
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Intends to develop in factoring business in Xian, China
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On June 28, 2017 Mr. Paul Conforte, President and the holder of an aggregate of 8,000,000 shares of Common Stock of PC Mobile Media Corp., representing approximately 66.67% of the issued and outstanding Shares of the Company, sold all 8,000,000 Shares to 12 purchasers. On the same day Mr. Conforte resigned all positions, including Chairman of the Board. Lam Chi Kwong Leo was appointed Chairman of the Board and Chief Executive Officer. Lee Hiu Lan was appointed as Secretary, Treasurer, and Chief Financial Officer. Chan Tung Ngai and Hu Jiasheng were both appointed as a Director. The appointments were effective on June 28, 2017.
On September 5, 2017, the amendment to the Companys articles of incorporation was declared effective in the State of Nevada. The amendment changed the name of the Company from PC Mobile Media Corp. to Ando Holdings Ltd. While as of September 25, 2017, FINRA accepted the name change and issued a new trading symbol for the Company. The new trading symbol for the Company is ADHG.
On November 29, 2018, the Company acquired Ando Automobile Technology Limited from Lam Chi Kwong Leo with a cash consideration of $1,282. The Company intends this fully owned subsidiary to operate as an automobile trading company, trading in foreign-made automobiles to be shipped to Chinese buyers directly. As of September 30, 2019, this subsidiary had no operation.
On February 1, 2019, the Company entered into a securities purchase agreement with accredited investors, Lin Su Hui, pursuant to which the Company issued promissory notes for an aggregate of $50,000, with an interest rate of 10% per annum. The outstanding balance of the Notes would be paid within one year beginning February 1, 2019, which is February 1, 2020. We filed a Form 8-K on February 5, 2019.
On September 30, 2019, the Company and Ando Capital Investment Limited, a limited liability company incorporated in Hong Kong (ACIL) and Mr. Lam Chi Kwong Leo, a permanent Hong Kong resident, a major shareholder of the Company, our director and Chief Executive Officer and the sole shareholder of ACIL, entered into the a set of agreements, collectively named as the Variable Interest Entity or VIE Agreements, pursuant to which the Company has contractual rights to control and operate the business of ACIL (the VIE). ACIL currently has insurance business and has been our VIE for our future business expansion and development in Hong Kong.
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ACIL has two wholly owned subsidiaries, namely Xian Ando Holdings Company Limited and Xian Ando Commercial Factoring Company Limited. We filed a Form 8-K on October 4, 2019.
The VIE Agreements are as follows:
1) Exclusive Business Cooperation Agreement: Pursuant to the Exclusive Business Cooperation Agreement, ADHG serves as the exclusive provider of financial support, technical support, consulting services and management services to ACIL. In consideration of such services, ACIL has agreed to pay a service fee to ADHG, which is based on the time of services rendered multiplied by the corresponding rate, plus amount of the services fees or ratio decided by the board of directors of ADHG. The Agreement has a term of 10 years but may be extended ADHG in its discretion.
2) Loan Agreement: Pursuant to the Loan Agreement, ADHG granted interest-free loans of Hong Kong Dollars Seventy Eight Thousand (HK$78,000), which is equivalent to United States Dollars Ten Thousand (US$10,000) to the shareholders of the ACIL for the sole purpose of increasing the registered capital of the ACIL. These loans are eliminated with the capital of ACIL during consolidation.
3) Share Pledge Agreement: Pursuant to the Share Pledge Agreement, the shareholders of ACIL pledged to ADHG a first security interest in all of their equity interests in ACIL to secure ACILs timely and complete payment and performance of its obligations under the Exclusive Business Cooperation Agreement. During the term of the Share Pledge Agreement, the pledgors agreed, among other things, not to transfer, place or permit the existence of any security interest or other encumbrance on their interest in ACIL without the prior written consent of ADHG. The pledge shall remain in effect until 10 years after the obligations under the business cooperation agreement will have been fulfilled. However, upon the full payment of the consulting and service fees under the Exclusive Business Cooperation Agreement and upon the termination of ACILs obligations under the Exclusive Business Cooperation Agreement, the Share Pledge Agreement shall be terminated and ADHG shall terminate this agreement as soon as reasonably practicable.
4) Power of Attorney: Pursuant to the Power of Attorney, Messrs. Lam Chi Kwong Leo, as the sole shareholder of ACIL, granted to the ADHG the right to (i) attend shareholders meetings of ACIL (ii) exercise all shareholder rights (including voting rights) with respect to such equity interests in ACIL and (iii) designate and appoint on behalf of such shareholders the legal representative, directors, supervisors, and other senior management members of ACIL. The Power of Attorney is irrevocable and is continuously valid from the date of execution of such Power of Attorney, so long as such persons remain shareholders of ACIL.
5) Exclusive Option Agreement: Pursuant to the Exclusive Option Agreement, the shareholders of ACIL granted to the ADHG an irrevocable and exclusive right and option to purchase all of their equity interests in ACIL. The purchase price shall be equal to the capital paid in by the shareholders, adjusted pro rata for the purchase of less than all of the equity interests. The Agreement is effective for a term of 10 years, and may be renewed at ADHGs election.
For the year ended September 30, 2019, we generated $89 revenue and had $75,645 in expenses for a net loss of $78,750. For the year ended September 30, 2018, we generated $769 in revenue and had $32,172 in expenses for a net loss of $31,428.
We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, which became law in April 2012. Under the JOBS Act, emerging growth companies, can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Our principal executive offices are located at Room 1107, 11/F, Lippo Sun Plaza, 28 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong. Our telephone number is +852 23519122. We were incorporated under the laws of the State of Nevada on August 22, 2015. Our fiscal year end is September 30.
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Principal Business
The Company is currently pursuing business opportunities in Hong Kong. The Company acquired 4 companies during this financial year of 2019, which were Ando Automobile Technology Limited, Ando Capital Investment Limited, Xian Ando Industrial Company Limited and Xian Ando Factoring Commercial Company Limited. As of December 30, 2019, Ando Capital Investment Limited is the only operating company while it provides insurance planning services and sells the insurance products of Sun Life Hong Kong Limited to potential prospects.
Government Regulation
We provide our services initially in Hong Kong and China. We target those customers from Hong Kong and China doing international business and plan to provide our insurance and factoring services to meet their needs for coverage and short-term liquidity.
The following regulations are the laws and regulations that may be applicable to us:
Hong Kong
Our businesses located in Hong Kong are subject to the general laws in Hong Kong governing businesses, including labor, occupational safety and health, general corporations, intellectual property and other similar laws. Because our website is maintained through the server in Hong Kong, we expect that we will be required to comply with the rules of regulations of Hong Kong governing the data usage and regular terms of service applicable to our potential customers. As the information of our potential customers is preserved in Hong Kong, we will need to comply with the Hong Kong Personal Data (Privacy) Ordinance (Cap 486).
The Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong. It covers a comprehensive range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave, Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment Protection, Termination of Employment Contract, Protection Against Anti-Union Discrimination.
An employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (Cap 485). These include enrolling all qualifying employees in Mandatory Provident Fund (MPF) schemes and making MPF contributions for them. Except for exempt persons, employer should enroll both full-time and part-time employees who are at least 18 but under 65 years of age in an MPF scheme within the first 60 days of employment. The 60-day employment rule does not apply to casual employees in the construction and catering industries.
We are required to make MPF contributions for our Hong Kong employees once every contribution period (generally the wage period). Employers and employees are each required to make regular mandatory contributions of 5% of the employees relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly-paid employee, the minimum and maximum relevant income levels are $7,100 and $30,000 respectively. As of December 30, 2019, we have no employee employed under our Hong Kong subsidiaries.
We are in compliance with the above applicable ordinances and regulations in Hong Kong and have not involved any lawsuit or prosecuted by the local authority resulting from any breach of the ordinances and regulations.
Peoples Republic of China (China or the PRC)
A portion of our acquired businesses are located in China and subject to the general laws in China governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws.
Employment Contracts
The Employment Contract Law was promulgated by the National Peoples Congress Standing Committee on June 29, 2007 and took effect on January 1, 2008. The Employment Contract Law governs labor relations and employment contracts (including the entry into, performance, amendment, termination and determination of employment contracts) between domestic enterprises (including foreign-invested companies), individual economic organizations and private non-enterprise units (collectively referred to as the employers) and their employees.
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a. Execution of employment contracts
Under the Employment Contract Law, an employer is required to execute written employment contracts with its employees within one month from the commencement of employment. In the event of contravention, an employee is entitled to receive double salary for the period during which the employer fails to execute an employment contract. If an employer fails to execute an employment contract for more than 12 months from the commencement of the employees employment, an employment contract would be deemed to have been entered into between the employer and employee for a non-fixed term.
b. Right to non-fixed term contracts
Under the Employment Contract Law, an employee may request a non-fixed term contract without an employers consent to renew. In addition, an employee is also entitled to a non-fixed term contract with an employer if he has completed two fixed term employment contracts with such employer; however, such employee must not have committed any breach or have been subject to any disciplinary actions during his employment. Unless the employee requests to enter into a fixed term contract, an employer who fails to enter into a non-fixed term contract pursuant to the Employment Contract Law is liable to pay the employee double salary from the date the employment contract is renewed.
c. Compensation for termination or expiry of employment contracts
Under the Employment Contract Law, employees are entitled to compensation upon the termination or expiry of an employment contract. Employees are entitled to compensation even in the event the employer (i) has been declared bankrupt; (ii) has its business license revoked; (iii) has been ordered to cease or withdraw its business; or (iv) has been voluntarily liquidated. Where an employee has been employed for more than one year, the employee will be entitled to such compensation equivalent to one months salary for every completed year of service. Where an employee has been employed for less than one year, such employee will be deemed to have completed one full year of service.
d. Trade union and collective employment contracts
Under the Employment Contract Law, a trade union may seek arbitration and litigation to resolve any dispute arising from a collective employment contract; provided that such dispute failed to be settled through negotiations. The Employment Contract Law also permits a trade union to enter into a collective employee contract with an employer on behalf of all the employees.
Where a trade union has not been formed, a representative appointed under the recommendation of a high-level trade union may execute the collective employment contract. Within districts below county level, collective employment contracts for industries such as those engaged in construction, mining, food and beverage and those from the service sector, etc., may be executed on behalf of employees by the representatives from the trade union of each respective industry. Alternatively, a district-based collective employment contract may be entered into.
As a result of the Employment Contract Law, all of our employees have executed standard written employment agreements with us. We have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.
On October 28, 2010, the National Peoples Congress of China promulgated the Peoples Republic of China (PRC) Social Insurance Law, which became effective on July 1, 2011. In accordance with the PRC Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Fund and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay the social insurance for its employees in accordance with the rates provided under relevant regulations and shall withhold the social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employers compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. Under the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.
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The Ministry of Human Resources and Social Security promulgated the Interim Provisions on Labor Dispatch on January 24, 2014. The Interim Provisions on Labor Dispatch, which became effective on March 1, 2014, sets forth that labor dispatch should only be applicable to temporary, auxiliary or substitute positions. Temporary positions shall mean positions subsisting for no more than six months, auxiliary positions shall mean positions of non-major business that serve positions of major businesses, and substitute positions shall mean positions that can be held by substitute employees for a certain period of time during which the employees who originally hold such positions are unable to work as a result of full-time study, being on leave or other reasons. The Interim Provisions further provides that, the number of the dispatched workers of an employer shall not exceed 10% of its total workforce, and the total workforce of an employer shall refer to the sum of the number of the workers who have executed labor contracts with the employer and the number of workers who are dispatched to the employer.
Foreign Exchange Control and Administration
Foreign exchange in China is primarily regulated by:
The Foreign Currency Administration Rules (1996), as amended; and
The Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.
Under the Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest and royalty payments, and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however, is subject to the approval of SAFE or its local counterpart.
Under the Administration Rules for the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterpart.
As an offshore holding company with a PRC subsidiary, we may (i) make additional capital contributions to our PRC subsidiaries, (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (iii) make loans to our PRC subsidiaries or consolidated affiliated entities, or (iv) acquire offshore entities with business operations in China in offshore transactions. However, most of these uses are subject to PRC regulations and approvals. For example:
Capital contributions to our PRC subsidiaries, whether existing or newly established ones, must be approved by the Ministry of Commerce or its local counterparts;
Loans by us to our PRC subsidiaries, each of which is a foreign-invested enterprise, to finance their activities cannot exceed statutory limits and must be registered with SAFE or its local branches; and
Loans by us to our consolidated affiliated entities, which are domestic PRC entities, must be approved by the National Development and Reform Commission and must also be registered with SAFE or its local branches.
On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or Circular 142. On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or Circular 19, which became effective on June 1, 2015, to regulate the conversion by foreign invested enterprises, or FIEs, of foreign currency into RMB by restricting how the converted RMB may be used. Circular 19 requires that RMB converted from the foreign currency-dominated capital of a FIE shall be managed under the Accounts for FX settlement and pending payment. The expenditure scope of such Accounts includes expenditure within the business scope, payment of funds for domestic equity investment and RMB deposits, repayment of the RMB loans after completed utilization and so forth. A FIE shall truthfully use its capital
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by itself within the business scope and shall not, directly or indirectly, use its capital or RMB converted from the foreign currency-dominated capital for (i) expenditure beyond its business scope or expenditure prohibited by laws or regulations, (ii) disbursing RMB entrusted loans (unless permitted under its business scope), repaying inter-corporate borrowings (including third-party advance) and repaying RMB bank loans already refinanced to any third party. Where a FIE, other than a foreign-invested investment company, foreign-invested venture capital enterprise or foreign-invested equity investment enterprise, makes domestic equity investment by transferring its capital in the original currency, it shall obey the current provisions on domestic re-investment. Where such a FIE makes domestic equity investment by its RMB conversion, the invested enterprise shall first go through domestic re-investment registration and open a corresponding Accounts for FX settlement and pending payment, and the FIE shall thereafter transfer the conversion to the aforesaid Account according to the actual amount of investment. In addition, according to the Regulations of the Peoples Republic of China on Foreign Exchange Administration, which became effective on August 5, 2008, the use of foreign exchange or RMB conversion may not be changed without authorization.
Violations of the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will always be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Currently, we are in compliance with the above applicable ordinances and regulations in China and have not involved any lawsuit or prosecuted by the local authority resulting from any breach of the ordinances and regulations.
As of December 30, 2019, we havent commenced our factoring business plan in China and there is no employee employed under our China subsidiaries.
Insurance
We do not current maintain property, business interruption and casualty insurance. As our business matures, we expect to obtain such insurance in accordance with customary industry practices in Hong Kong and China, as applicable.
Seasonality
Our businesses are not subject to seasonality.
Research and Development
We have not spent any funds on research and development activities in connection with our business.
Personnel
As of September 30, 2019, we employed two persons on a part-time basis, who are our CEO, Mr Lam Chi Kwong Leo and our CFO, Ms. Lee Hiu Lan. None of our employees is subject to a collective bargaining agreement. We believe that our relationship with our employees is good.