UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal period ended March
31, 2015
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________
to ________
Commission File
Number: 000-54748
EBULLION, INC.
(Exact name
of registrant as specified in its charter)
Delaware |
|
46-2323674 |
(State
or other jurisdiction of
incorporation or organization) |
|
(I.R.S.
Employer
Identification No.) |
eBullion, Inc.
80 Broad Street, 5th Floor
New York, New York 10004
(Address of
principal executive offices) (Zip Code)
(212) 837-7858
(Registrant’s
telephone number, including area code)
(Former name,
former address and former fiscal year, if changed since last report)
Securities registered pursuant to
Section 12(b) of the Act: |
|
Name of each exchange on which registered |
(Title of Class) |
|
|
None |
|
|
Securities registered pursuant to
Section 12 (g) of the Act: Common Stock, $0.001 par value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
¨ No
x
Indicate
by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of issuer’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive
data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x
No ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated file, a non-accelerated file, or a smaller reporting company. See the definitions
of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check one):
|
Large accelerated filer |
¨ |
Accelerated filer |
o |
|
Non-accelerated filer |
¨ |
Smaller reporting company |
x |
|
(Do not check if a smaller reporting company) |
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
No x
The
aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of October 9, 2014,
was approximately $6,977,684 based on $0.07, the price at which the registrant’s common stock was last sold on that date,
as adjusted for its stock split. The registrant has provided this information as of October 9, 2015 because that was the first
day that its common stock was publicly traded and its common stock was not publicly traded as of the last business day of its
most recently completed second fiscal quarter.
As of March 31, 2015, the issuer had
512,600,000 shares of common stock outstanding.
Documents incorporated by reference: None
FORM 10-K
TABLE OF CONTENTS
PART I
Forward-Looking Statements
Many of the matters discussed within
this report include forward-looking statements on our current expectations and projections about future events. In some cases you
can identify forward-looking statements by terminology such as “may,” “should,” “potential,”
“continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,”
“estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions
and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control,
that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. Such
risks and uncertainties include the risks noted under “Item 1A Risk Factors.” We do not undertake any obligation
to update any forward-looking statements. Unless the context requires otherwise, references to “we,” “us,”
“our,” and “eBullion,” refer to eBullion, Inc. and its subsidiaries.
Overview
Since April 3, 2013, through our subsidiary
Man Loong Bullion Company Limited, a Hong Kong limited liability company (“Man Loong”), we have been an electronic
trading member of the Chinese Gold and Silver Exchange Society (“CGSE”), a self-regulatory organization registered
in Hong Kong which acts as an exchange for the trading of gold and silver. Man Loong holds a Type AA License with the CGSE, which
it uses to provide an electronic trading platform which customers of its agents can use to place trades in a CGSE price contract
for Kilo Gold and Loco London Gold and Silver via the electronic trading platform or a telephonic transaction system. The agents’
customers can access their account to check their gain/loss on their trading position 24 hours a day 7 days a week through Man
Loong’s electronic trading platform. Man Loong contracts with independent agents, each with their own customers that seek
to place trades for gold and silver price contracts with the CGSE using Man Loong’s electronic trading platform, which is
linked to the CGSE’s electronic trading platform by reason of Man Loong’s membership in the CGSE. All transactions
and technologies used to execute trades are consummated and located at Man Loong’s principal offices in Hong Kong. The various
independent sales agents who use Man Loong’s services, together with the agents’ customer base, are located in Hong
Kong and in the People’s Republic of China. Neither we, nor Man Loong, conducts business in the United States or has agents,
or any agreements with agents, or facilitate trades with any customers of agents that reside in the United States.
The electronic trading platform, which
is located in Hong Kong, is licensed by Man Loong from True Technology Company Limited (“True Technology”), a company
organized under the laws of Hong Kong, and owned by Mr. Kee Yuen Choi, our Chief Executive Officer and 49.5% stockholder and Mr.
Hak Yim Wong, one of our directors and stockholders. The electronic trading platform provides the various independent
sales agents and their customers with CGSE price quotations on gold and silver price contracts, on a Loco London basis, as well
as information updates on the gold and silver market, based on an evaluation of third-party market pricing sources such as Reuters
or Bloomberg. The electronic trading platform also provides an agent’s customers with up-to-date market data, trade reports
and gain/ loss reports to assist them in evaluating their portfolio and effecting trades. In addition, the electronic
trading platform communicates and confirms all of the trades that are placed by Man Loong agents and their customers with the CGSE
and provides the agents and their customers with confirmation codes which confirm execution of the trades.
Man Loong’s membership in the
CGSE allows it to provide its electronic trading platform to facilitate trades on behalf of the agents’ customers and/or
the agents themselves, who can purchase trading positions in gold and/or silver on the CGSE, without Man Loong being required to
become a counterparty to the trade or having to purchase or sell, as principal, any of the gold or silver subject to the price
contract being traded. Man Loong merely operates an electronic trading platform which it licenses from True Technology that allows
agents’ customers to directly place trades and become the actual counterparty to the trade for a price contract, which is
a product created by the CGSE for electronic trading that does not involve the physical transfer or delivery of any actual gold
or silver.
The process for effectuating trades
on Man Loong’s platform are as follows: (i) orders are placed by the agents’ customers on the trading platform; (ii)
the platform, which has a direct connection with the GCSE, communicates the order to the CGSE; (iii) the GCSE matches the trade
with a counterparty in the market, which counterparty is unknown to Man Loong, its agents’ and their customers; (iv) the
CGSE then confirms the trade and returns an official confirmation number to the customer through Man Loong’s trading platform.
The customer can use the confirmation code to verify on the CGSE website the completion of its trade. The trading position represented
by the gold or silver price contract remains open until the customer places a trade order using the same procedures set forth in
the preceding sentence, to close the open position. Man Loong, through its platform helps facilitate the trade as an
official member of the CGSE and earns a commission for its services. Moreover, the gold or silver price contracts do not involve
the physical transfer or delivery of any actual gold or silver as there is no physical asset securing the price contract.
Man Loong enters into an agency agreement
with each agent for which it processes trades pursuant to which the agent agrees to pay a commission to Man Loong for each trade
that Man Loong processes and the agent acknowledges that Man Loong has no responsibility for any trading losses suffered by it
or its customers for the trades executed on their behalf. Man Loong does not accept customers directly without an agent representative
and does not enter into agreements directly with customers for the placement of trades. Although the agent remains directly responsible
to Man Loong for any trading losses, to help ensure that the respective agent’s customers understand: (i) their assumption
of trading risk; (ii) their obligations to their respective agents and (iii) that Man Loong does not have any responsibility for
any of their trading losses, Man Loong requires that each agent representative’s client for whom Man Loong is requested to
process a trade to complete and sign a form acknowledging these risks and obligations prior to commencing trading activity. Any
customer that seeks to open a trading account directly with Man Loong is assigned to an agent and is required to execute an agreement
with an agent prior to placing a trade. Man Loong receives a commission from the agents ranging from $20 to $40 per trade processed
by it regardless of the purchase price paid or received for the gold or silver contract and the agent assumes the sole responsibility
to Man Loong and the CGSE for payment of the purchase price of the gold or silver contract traded by it or its customers and for
any loss recognized on those trades.
The agents often use Man Loong’s
offices and conference rooms as a physical place to meet with existing and potential customers, and Man Loong provides a dedicated
investment center where agents and their customers can access the electronic trading platform to place and process price contract
orders for gold, and silver and obtain up-to-date market data, trade reports and gain/ loss reports to assist them in evaluating
their portfolio and effecting trades.
All of Man Loong’s revenue is
derived from the commissions it receives on each trade for which it processes through the electronic trading platform it licenses
from True Technology. For our fiscal years ended March 31, 2015 and 2014, Man Loong’s revenue was approximately $3.1 million
and $3.0 million, respectively, and its net income was $0.5 million and $0.02 million, respectively.
Our principal offices are located at
80 Broad Street, New York, New York 10004, (212) 837-7858. Man Loong currently has one office in Hong Kong. Man
Loong’s principal executive offices are located at 8/F, Tower 5, China Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Hong
Kong. The telephone number at Man Loong’s principal executive office is +852-2155-3999. All of Man Loong’s transactions
and the technologies, including the servers that carry out these transactions, are all processed and located in Hong Kong.
Our Corporate History and Background
We were incorporated under the laws
of the State of Delaware on January 28, 2013. We were initially formed to develop software for use in on-line trading of gold and
silver contracts. Since the acquisition of Man Loong, our business development focus has been, and we expect will continue to be,
solely on increasing Man Loong’s market share for the on-line trading of gold and silver contracts within the Hong Kong market
while developing a business model for the on-line trading of gold and silver contracts by Man Loong in the People’s Republic
of China.
Acquisition of Man Loong
On April 3, 2013, we entered into a
Contribution Agreement with the shareholders of Man Loong, whereby we acquired 100% of the issued and outstanding capital stock
of Man Loong from its stockholders, in exchange for 507,600,000 newly issued shares of our common stock, par value $0.0001. After
the transaction, Man Loong became our wholly owned subsidiary.
In March 2015, we increased the number
of our authorized shares from 500,000,000 to 1,000,000,000. The par value of our shares remained unchanged at $.0001. We also
effected a 10 for 1 stock split, whereby we exchanged 10 of our shares for every 1 share issued at outstanding before the split.
Following the share split, we have 512,600,000 shares issued and outstanding. All share and per share amounts for the prior year
have been retroactively restated to give effect of the 10 for 1 share split.
As a result of the acquisition, we have
assumed the business and operations of Man Loong. Man Loong, which was incorporated in 1974 in Hong Kong and was re-registered
in 2007 under Hong Kong law as a limited liability company, was organized to facilitate the trading of precious metals contracts.
Man Loong initially provided an electronic trading platform that offered one-stop electronic trading in Hong Kong, and in 2010,
expanded its services to include the trading for its agent’s customers and not as principal, of gold and silver contracts
in mainland China. Man Loong currently has one office in Hong Kong and 10 independent agents in mainland China located in Shanghai,
Guangdong and Fujian provinces.
The acquisition of Man Loong was treated
for accounting purposes as a reverse merger with eBullion acquiring 100% of the outstanding common stock of Man Loong in exchange
for 507,600,000 newly issued shares of our common stock, par value $.0001. Unless the context suggests otherwise, when we refer
in this prospectus to business and financial information for periods prior to the consummation of the reverse acquisition, we are
referring to the business and financial information of Man Loong. For accounting purposes, the reverse merger of eBullion, Inc.
with Man Loong has been treated as a recapitalization with no adjustment to the historical book and tax basis of either companies’
assets or liabilities.
Our Corporate Structure Our primary
business operations are conducted through our Hong Kong operating subsidiary, Man Loong. For ease of reference, below is a chart
that presents our current corporate structure.
Our principal executive offices are
located at 80 Broad Street, New York, New York 10004 and Man Loong’s principal offices are located at 8/F, Tower 5, China
Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Hong Kong. The telephone number at our principal executive offices is (212) 837-7858
and Man Loong’s principal executive office is +852-2155-3999. All of our transactions and the technologies, including the
servers that carry out these transactions, are all executed and located in Hong Kong.
Investing in our common stock involves
a high degree of risk. In addition to the risks related to our business set forth in this Form 10-K and the other information included
and incorporated by reference in this Form 10-K, you should carefully consider the risks described below before purchasing our
common stock. Additional risks, uncertainties and other factors not presently known to us or that we currently deem immaterial
may also impair our business operations.
RISKS RELATED TO OUR BUSINESS
Restricted access to Man Loong’s
website, could lead to significant operating disruptions, a negative customer experience or the loss of agents and their customers.
If any enterprises or professional organizations,
including governmental agencies, blocked access to Man Loong’s website or the Internet generally for a number of reasons
including due to security or confidentiality concerns or regulatory reasons, or if any government of any jurisdiction
in which we or Man Loong are considered to be carrying on business in may block or suspend internet transmission capabilities,
Man Loong’s business would experience significant operating disruptions because our revenues are generated through the commissions
Man Loong receives for the trades placed through the electronic trading platform it licenses from True Technology which requires
internet transmission capabilities to operate. If these entities were to block or limit access to Man Loong’s
website or adopt policies restricting its ability to provide its agents’ customers accurate and up-to-date information, the
functionality of Man Loong’s electronic trading platform could be negatively impacted, which could adversely affect its ability
to retain and attract commission business from agents and their customers.
All of our revenue is based upon
Man Loong’s trade commissions which are themselves influenced by trading volume and volatility and economic conditions that
are beyond our control.
Any volatility in the global financial
markets has an impact on Man Loong’s commissions and therefore its revenue. Our revenue is influenced by the general level
of trading activity in the gold and silver market because all of our revenue is derived from the commission Man Loong receives
on each trade that it facilitates, which is a fixed commission of $20-40 per trade. Our revenue and operating results may vary
significantly from period to period primarily due to movements and trends in the world’s currency markets, volatility in
the market price of gold and silver and fluctuations in trading levels. Man Loong has generally experienced greater trading volume
in periods of volatile markets as during such periods there tends to be increased trading. Recently, Man Loong experienced lower
levels of trading volume due to a reduction in the short term volatility of gold and silver prices, and its commission revenues
were negatively affected. Like other financial services firms, our business and profitability and Man Loong’s are directly
affected by elements that are beyond our and its control, such as economic and political conditions, broad trends in business and
finance, changes in the volume of transactions, changes in supply and demand for precious metals, movements in currency exchange
rates, changes in the financial strength of market participants, legislative and regulatory changes, changes in the markets in
which such transactions occur, changes in how such transactions are processed and disruptions due to terrorism, war or extreme
weather events. Any one or more of these factors, or other factors, may adversely affect our business and results of operations
and cash flows. As a result, period-to-period comparisons of our operating results may not be meaningful and our future operating
results may be subject to significant fluctuations or declines.
Competitive trading systems could
force Man Loong to reduce its commissions and negatively impact revenue.
Any increased competition to Man Loong’s
platform through the development of faster or more capable execution programs could reduce the volume of trades or force Man Loong
to reduce its commission on each trade to continue to attract commission business from the various sales agents seeking to
use Man Loong to process their customers' trades on the CGSE. In addition, new and enhanced alternative trading systems
have emerged as an option for individual and institutional investors to carry out proprietary trades, which also could result in
reduced commissions.
All of our revenue and operating
profits are derived from Man Loong’s role as a service provider. In its role as a service provider, Man Loong derives a fixed
amount of commission from each trade that it facilitates.
Man Loong may also experience reduced
trade volumes from competition from computer-generated buy and sell programs and other technological advances and regulatory changes
in the precious metals market that may continue to tighten spreads on precious metals transactions. In addition, new and enhanced
alternative trading systems have emerged as an option for individual and institutional investors to avoid directing their trades
through retail trade facilitators, which could result in reduced revenue derived from our precious metal trade facilitation business.
Man Loong may also face price competition from its competitors.
Man Loong may be exposed to unidentified
or unexpected risks if its risk management policies and procedures are not effective.
Man Loong relies on a combination of
technical and human controls and supervision to protect it against certain risks. Man Loong’s policies, procedures and
practices are used to identify, monitor and control a variety of risks, including risks related to human error, hardware and software
errors, market movements, fraud and money-laundering, are established and reviewed by its management. Man Loong’s
approach is discretionary by nature and applied on a case by case basis and developed internally by Man Loong based on historical
market behavior and standard industry practices. These risk management methods may not adequately prevent losses and may not protect
Man Loong against all risks or less than anticipated, in which case our business, financial condition and results of operations
and cash flows may be materially adversely affected.
These methods may also be subject to
error and failure and therefore may not adequately prevent losses due to technical errors or if testing and quality control practices
are not effective in preventing software or hardware failures. Additionally, although Man Loong has risk-management policies, control
systems and compliance manuals set in place, there can be no guarantee given that such policies, systems, and manuals will be effectively
applied in every circumstance by our staff. These methods include the installation of technology that rejects trades from the customers
of agents unless they maintain a minimum amount of cash on deposit with the agent or Man Loong in their bank accounts in order
to ensure settlement of the purchase price of gold or silver price contracts and the payment of their trading losses, if any, to
the customer’s agent who is counterparty to the trade. For example, employees could override the system and either reduce
minimum account balances to an insufficient amount or theoretically waive such requirement, thereby exposing our agents to the
risk of nonpayment of the purchase price of gold or silver price contracts and their customers trading losses, if any, and exposing
us to a claim by the agent based on our failure to follow our own risk management guidelines. Under certain circumstances Man Loong
may elect, in consultation with the affected agents, to adjust its risk-management policies to allow for an increase in risk tolerance
such as reduction of minimum account balances, especially with long term customers, which could expose its agents to the risk of
greater losses. The agents typically require that all of their customers maintain a minimum balance of $1,289 USD in the agents’
or Man Loong’s segregated bank account and, as an accommodation to its agents, Man Loong monitors the customer’s total
net trading position. Each of the agents’ customers enter into an agreement with their agent that directs the agent to either
deposit funds into an account maintained by the agent or Man Loong’s segregated bank account and authorizes the agent to
withdraw money from such accounts as needed to cover losses and pay associated fees. If at any time the agent’s customer’s
unrealized trading losses are 80% or more of the deposit balance in the customer’s account, Man Loong’s system alerts
Man Loong to request an increase in the agent’s customer’s deposit balance. Typically, the agent’s customer’s
trading account is frozen until the deposit balance is increased. In the event the unrealized trading losses equal the deposit
balance, the agent’s customer’s trading account is immediately frozen and closed, the system closes the trading positions
with the CGSE and the deposit balance maintained in Man Loong’s account is paid to the agent so that the agent can fund any
trading losses with the CGSE. If the agent does not cover its customer’s trading losses with the CGSE, Man Loong will still
not be responsible for any trading losses and the agent will likely lose its right to engage in future trading through the CGSE
pending funding of the open loss position. Deviations from such policies could subject Man Loong’s agents to risk.
We do not own the trading platform
upon which our business operates and if the license was terminated our business would experience significant operating disruptions.
Man Loong licenses the software that
is utilized to run its electronic trading platform from True Technology, an entity owned by our Chief Executive Officer and one
of our directors and shareholders pursuant to the terms of a license agreement that can be terminated by True Technology at any
time. Although Man Loong’s agreement with True Technology prohibits True Technology from licensing the technology that it
develops for Man Loong to any other third party and we believe that we could take the customized version of the technology and
migrate it to another platform or that alternative software programs are available or could be developed by other third parties
or eventually by Man Loong in house, such migration or the development of any such programs would be costly and may not be available
in a timely manner. In addition, True Technology can license or sublicense the underlying software, without the enhancements or
modifications to third parties without the consent of Man Loong. The termination of the license agreement would likely result in
suspension of Man Loong’s internet transmission capabilities and its business would experience significant operating disruptions
if the license agreement were terminated.
Man Loong also relies on True Technology’s
computer systems or third-party service and software providers, including trading platforms, back-office systems, internet service
providers and communications facilities. Deterioration in the performance or quality of work from third party service providers,
could adversely affect Man Loong’s business. If Man Loong’s arrangement with any third party is terminated, it may
not be able to find an alternative systems or a services provider on a timely basis or on commercially reasonable terms. This could
have a material adverse effect on our business, financial condition and results of operations and cash flows.
Our business is substantially
dependent upon our licensed trading platform. Any disruption or corruption of the trading platform or our inability to maintain
technological superiority in our industry could have a material adverse effect on our business, financial condition and results
of operations and cash flows.
Our business is substantially dependent
upon Man Loong’s licensed electronic trading platform, which Man Loong relies upon to accurately and timely receive and process
internal and external data. If the trading platform were to fail to function properly for any reason, Man Loong could
suffer from trade errors and therefore it would be forced to suspend operations until such time as the disruptions were fixed.
Man Loong’s ability to facilitate transactions successfully and provide high quality customer service depends on the efficient
and uninterrupted operation of its computer and communications hardware and software systems. Computer systems are vulnerable to
damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer
viruses, intentional acts of vandalism, computer denial-of-service attacks and other similar events. If Man Loong’s systems
fail to perform, it could experience periodic interruptions and disruptions in operations, slower response times or decreased customer
satisfaction.
In order to remain competitive, Man
Loong’s electronic trading platform is under continuous development and redesign. However, with any newly developed technology
Man Loong runs the ongoing risk that failures may occur and result in service interruptions or other negative consequences such
as slower quote aggregation, slower trade execution, erroneous trades, or mistaken risk-management information.
We believe Man Loong’s technology
has provided Man Loong with a competitive advantage relative to many of its competitors. If its competitors develop more advanced
technologies, it may be required to devote substantial resources to the development of more advanced technology to remain competitive.
The gold and silver market is characterized by rapidly changing technology, evolving industry standards and changing trading systems,
practices and techniques. Man Loong may not be able to keep up with these rapid changes in the future, develop new technology,
realize a return on amounts invested in developing new technologies or remain competitive in the future.
Man Loong’s systems have in the
past experienced disruptions in operations, which it believes will continue to occur from time to time. As of the date hereof,
we have not been notified of any claim against Man Loong alleging harm caused to third parties by this disruption and customers
of its agents have continued to actively place precious metals trading orders through their respective trading accounts. However,
we can provide no assurance that we will not receive any claims in the future in connection with this disruption.
To mitigate the risk of trading disruptions,
Man Loong has a mirror server setup in a secured server room in its headquarters office in Hong Kong. The
mirror server has the same trading software installed as the production server. If there are any network problems with
the production server, the network connection will be switched to the mirror server to minimize, if not avoid entirely any downtime
of the trading systems. In addition, Man Loong has two IT specialists and one operations manager to continuously monitor
the server status and ensure the resumption of operations should it ever become necessary.
Man Loong’s IT department is working
with IT security consultants to strengthen and protect its network from intentional attacks. Man Loong has also established a separate
department to monitor its networks and to identify and minimize human errors, such as clerical mistakes and incorrectly placed
trades, as well as intentional misconduct, such as unauthorized trading, mischief and fraud. Despite any precautions it may take,
any systems failure that causes an interruption in its services or decreases the responsiveness of its services could, among other
consequences, impair its reputation, damage its brand name and materially adversely affect its and our business, financial condition
and results of operations and cash flows.
Due to the fact that Man Loong’s
cost structure is largely fixed, it may not be able to respond to changes in revenue.
A substantial portion of Man Loong’s
expenses are fixed expenses for which it has payment commitments regardless of its revenue. These expenses include office
lease costs, trade platform rent, hosting facilities and security and staffing costs. If demand for Man Loong’s
services declines and, as a result, its revenues decline, it may not be able to adjust its cost structure on a timely basis and
its profitability and cash flows may be materially adversely affected.
Our revenue is dependent upon
Man Loong’s ability to attract and retain the agents with whom its customers have accounts.
Our revenue is dependent upon Man Loong’s
ability to retain and attract agents. Man Loong’s customer base is primarily comprised of agents who have been
retained by individual customers who trade in gold and silver price contracts. Although Man Loong offers products and tailored
services designed to educate, support and retain its agents, its efforts to attract new agents, and those agents’ ability
to attract new customers or reduce the attrition rate of its existing agents and their customers may not be successful. If Man
Loong is unable to maintain or increase its agent retention rates or generate a substantial number of new agents in a cost-effective
manner, its business, financial condition and results of operations and cash flows would likely be adversely affected.
The number of agents and their customers remained approximately constant during the years ended March 31, 2015 and 2014 which resulted
in a relatively small increase in revenues for the year ended March 31, 2015. Although Man Loong has spent significant
financial resources on support services for agents and their customers, marketing expenses and related expenses and plans to continue
to do so, these efforts may not be cost-effective at attracting new agents. In particular, we believe that costs for customer support
services and rates for desirable advertising and marketing placements, including online, search engine, print and television advertising,
are likely to increase in the foreseeable future, and Man Loong may be disadvantaged relative to its larger competitors in its
ability to expand or maintain its customer support capabilities, and advertising and marketing commitments.
Man Loong currently has 3 agents in
Hong Kong which cover three main geographic areas, including Hong Kong Island, Kowloon and the New Territories. In mainland
China, Man Loong has 10 agents located in Shanghai and Guangdong and Fujian provinces. Each of Man Loong’s agents
in Hong Kong have between 100 – 150 customers and its agents in China each have between 100 and 600 customers.
Any future expansion or acquisitions
may result in significant transaction expenses, integration and consolidation risks and risks associated with entering new markets,
and we may be unable to profitably operate our consolidated company.
Our growth strategy includes the penetration
of new markets in the future. Any future markets that we enter may result in significant transaction expenses and present
new risks associated with entering additional markets or offering new products and integrating the acquired companies. We
may not have sufficient management, financial and other resources to integrate our operations in the new markets with our current
operations and we may be unable to profitably operate our expanded company. Additionally, any new businesses that we may acquire,
once integrated with our existing operations, may not produce expected or intended results.
Some of the new markets may be in emerging
growth countries. To compete successfully in these emerging markets, we must continue to design, develop, and sell new
and enhanced precious metals electronic trading programs and services that are culturally acceptable to these emerging markets.
Any emerging market that we attempt to penetrate will have risks of potential entrenched local competition, higher credit risks,
cultural differences, less developed and established local financial and banking infrastructure, reduced protection of intellectual
rights, inability to enforce contracts in some jurisdictions, difficulties and costs associated with staffing and managing foreign
operations, including reliance on newly hired local personnel, currency and tax laws that may prevent or restrict the transfer
of capital and profits among our various operations around the world; and time zone, language and cultural differences among personnel
in different areas of the world. We may also have difficulty in complying with the diverse regulatory requirements of multiple
jurisdictions, which may be more burdensome, not clearly defined, and subject to unexpected changes, potentially exposing us to
significant compliance costs and regulatory penalties
Our Hong Kong operating subsidiary,
Man Loong, facilitates the trading of gold and silver price contracts in Hong Kong and China. Price contracts in gold
and silver are not and may not be offered in the U.S. by us, including by our non-U.S. subsidiary, and are not eligible for resale
to U.S. residents. Neither we, nor Man Loong, conducts business in the United States or has agents, or any agreements with agents,
or facilitate trades with customers of agents that reside in the United States.
Man Loong may be unable to respond
to agents and their customers’ demands for new services and products and our business, financial condition and results of
operations and cash flows may be materially adversely affected.
Man Loong’s agents and their customers
may demand new services provided by Man Loong’s electronic trading platform. If Man Loong fails to identify these demands
from agents and their customers or update its services accordingly, any new services and products provided by its competitors may
render its existing services and products less competitive. Man Loong is currently dependent upon a third party for the development
of enhancements to its trading platform. The software developer is not our employee and we cannot control the timing
or amount of resources they devote to our programs. Our future success will depend, in part, on Man Loong’s ability
to respond to agents’ and their customers’ demands for new services and products on a timely and cost-effective basis
and to adapt to address the increasingly sophisticated requirements and varied needs of our agents’ customers and prospective
customers. We may not be successful in developing, introducing or marketing new services and products. In addition, Man Loong’s
new service and product enhancements may not achieve market acceptance. Any failure on our part or Man Loong’s to anticipate
or respond adequately to customer requirements, or any significant delays in the development, introduction or availability of new
services, products or service or product enhancements could have a material adverse effect on our business, financial condition
and results of operations and cash flows.
We depend on our key personnel,
the loss of whom would impair our ability to compete.
We and Man Loong are highly dependent
on the employment services of Kee Yuen Choi, our and Man Loong’s Chief Executive Officer. The loss of Mr. Choi’s services
could adversely affect us. We and Man Loong are also dependent on the other members of our management. The loss of the service
of any of these persons could seriously harm our product development and commercialization efforts. In addition, research, product
development and commercialization will require additional skilled personnel in areas such as software and electronic technical
support, customer support and marketing and retention of personnel, particularly for employees with technical expertise, is uncertain.
If we are unable to hire, train and retain a sufficient number of qualified employees, our ability to conduct and expand our business
could be seriously reduced. The inability to retain and hire qualified personnel could also hinder the planned expansion of our
business and may result in us relocating some or all of our operations.
We have identified material weaknesses in our internal
controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses
will not occur in the future.
If our internal control over financial reporting or our disclosure
controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file
our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and
may lead to a decline in our stock price. Our most recent evaluation of our internal controls resulted in our conclusion that our
disclosure controls and procedures and that our internal controls over financial reporting were not effective. Effective internal
controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed,
have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. In our case, our failure to achieve and maintain an effective internal control
environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose
confidence in our reported financial information, which could in turn have a material adverse effect on our stock price.
Our Chief Executive Officer beneficially
owns and controls a substantial portion of our outstanding common stock, which may limit your ability and the ability of our other
stockholders, whether acting alone or together, to propose or direct the management or overall direction of our Company.
Mr. Choi, acts as our Chief Executive
Officer and Chairman of our Board of Directors, and through his control of approximately 49.5% of our outstanding common stock,
controls the Company and important matters relating to us. As a result of his positions and his control of our common stock,
Mr. Choi controls the outcome of all matters submitted to our shareholders for approval, including the election of our directors,
our business strategy and our day-to-day operations. In addition, Mr. Choi’s ownership of our common stock
and control of the Company could discourage the acquisition of our common stock by potential investors and could have an anti-takeover
effect, preventing a change in control of the Company and possibly depressing the trading price of our common stock. There
can be no assurance that conflicts of interest will not arise with respect to Mr. Choi’s ownership and control of the
Company or that any conflicts will be resolved in a manner favorable to the other shareholders of the Company.
Man Loong’s operations will
be dependent upon its ability to protect our intellectual property, which could be costly.
Our success will depend in part upon
protecting any technology we or Man Loong uses or may develop from infringement, misappropriation, duplication and discovery, and
avoiding infringement and misappropriation of third party rights. Man Loong’s intellectual property is essential to its business,
and its ability to compete effectively with other companies depends on the proprietary nature of its technologies. Man Loong does
not have patent protection for its electronic trading platform. Man Loong relies upon trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop, maintain and strengthen its competitive position. Although Man Loong has confidentiality
provisions in the agreements with our employees and independent contractors, there can be no assurance that that such agreements
can fully protect its intellectual property, be enforced in a timely manner or that any such employees or consultants will not
violate their agreements with Man Loong.
Furthermore, Man Loong may have to take
legal action in the future to protect its trade secrets or know-how, or to defend them against claimed infringement of the rights
of others. Any legal action of that type could be costly and time-consuming to Man Loong, and there can be no assure that such
actions will be successful. The invalidation of key proprietary rights which we or Man Loong own or unsuccessful outcomes in lawsuits
to protect our of Man Loong’s intellectual property may have a material adverse effect on our or Man Loong’s business,
financial condition and results of operations.
If we or Man Loong cannot adequately
protect our or its intellectual property rights, our or its competitors may be able to compete more directly with us or Man Loong,
which could adversely affect our or Man Loong’s competitive position and, as a result, our and Man Loong’s business,
financial condition and results of operations.
We may incur substantial liabilities
and may be required to limit commercialization of our electronic trading platform in response to product liability lawsuits.
We or Man Loong could be the subject
of complaints or litigation from agents or their customers alleging product quality or operational concerns. Litigation or adverse
publicity resulting from these allegations could materially and adversely affect our business, regardless of whether the allegations
are valid or whether we are liable. Neither we nor Man Loong currently have product liability insurance coverage, and even
if there was such coverage, there would be no assurance that such coverage would be sufficient to properly protect us. Further,
claims of this type, whether substantiated or not, may divert our financial and management resources from revenue generating activities
and the business operation.
We are an “emerging growth
company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth
companies could make our common stock less attractive to investors.
We are an “emerging growth company,”
as defined in the Jumpstart Our Business Startups Act enacted in April 2012, and, for as long as we continue to be an emerging
growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. We could remain an emerging growth company until the earliest of : (i)
the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day
of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective
registration statement; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous
three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot predict if investors
will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less
attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock
and our stock price may be more volatile.
Under Section 107(b) of the Jumpstart
Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as
those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised
accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies
that are not emerging growth companies.
As a result of us becoming a public
company, we are subject to additional reporting and corporate governance requirements that will require additional management time,
resources and expense.
We are obligated to file with the U.S.
Securities and Exchange Commission annual and quarterly information and other reports that are specified in the U.S. Securities
Exchange Act of 1934. We will also become subject to other reporting and corporate governance requirements under the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations promulgated thereunder, all of which will impose significant compliance
and reporting obligations upon us.
Our internal controls over financial
reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness,
which could have a significant and adverse effect on our business and reputation.
As a newly public reporting company,
we will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow
our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial
reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Our independent registered public
accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section
404(b) of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC,
or the date we are no longer an emerging growth company. Our management is required to report on our internal controls over financial
reporting under Section 404 commencing in fiscal year 2015. If we fail to achieve and maintain the adequacy of our internal controls,
we would not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance
with Section 404. At such time, our independent registered public accounting firm may issue a report that is adverse in the event
it is not satisfied with the level at which our controls are documented, designed or operating. Moreover, our testing, or the subsequent
testing by our independent registered public accounting firm, that must be performed may reveal other material weaknesses or that
the material weaknesses described above have not been fully remediated. If we do not remediate the material weaknesses described
above, or if other material weaknesses are identified or we are not able to comply with the requirements of Section 404 in a timely
manner, our reported financial results could be materially misstated or could subsequently require restatement, we could receive
an adverse opinion regarding our internal controls over financial reporting from our independent registered public accounting firm
and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and
management resources, and the market price of our stock could decline.
Future sales of our common stock
by our existing shareholders could cause our stock price to decline.
The Company will have a significant
number of restricted shares that will become eligible for sale shortly. We currently have 512,600,000 shares of our common stock
outstanding, all of which are restricted securities. Of such amount, the shares registered in our registration statement became
eligible for sale immediately upon the effectiveness of that registration statement. All of the remaining shares became eligible
for resale under Rule 144 within ninety days of us being a reporting company under Section 13 or 15 of the Securities Exchange
Act of 1934 (the “Exchange Act”), subject to certain restrictions. If our shareholders sell substantial amounts of
our common stock in the public market at the same time, the market price of our common stock could decrease significantly due to
an imbalance in the supply and demand of our common stock. Even if they do not actually sell the stock, the perception in the public
market that our shareholders might sell significant shares of our common stock could also depress the market price of our common
stock.
A decline in the price of shares of
our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other
equity securities, and may cause you to lose part or all of your investment in our shares of common stock.
Shareholders do not have pre-emptive
rights, which will cause them to experience dilution if we issue additional securities.
We may issue and sell additional shares
of our authorized but previously unissued shares of common stock, preferred stock, or common stock warrants on such terms and
conditions as our Board of Directors, in its sole discretion, may determine without consent of our shareholders. Our shareholders
do not have pre-emptive rights to acquire additional shares should we in the future issue or sell additional securities. Thus,
we are not required to offer any existing shareholder the right to purchase his or her pro rata portion of any future issuance
of securities and, therefore, upon the issuance of any additional securities by us hereafter, our shareholders will not be able
to maintain their then existing pro rata ownership in our outstanding shares of common stock, preferred stock, or common stock
warrants without additional purchases of securities at the price then set internally by us.
In March 2015, we increased the number
of our authorized shares from 500,000,000 to 1,000,000,000. The par value of our shares remained unchanged at $.0001. We also
effected a 10 for 1 stock split, whereby we exchanged 10 of our shares for every 1 share issued at outstanding before the split.
Following the share split, we have 512,600,000 shares issued and outstanding. All share and per share amounts for the prior year
have been retroactively restated to give effect of the 10 for 1 share split.
Effecting a forward stock
split and an increase in our authorized number of shares of common stock may not result in increased liquidity in the trading of
our stock and could have certain anti-takeover effects.
There is no guarantee that the liquidity
in the trading of our common stock after our forward stock split will increase. In addition, any additional issuance of common
stock could, under certain circumstances, have the effect of delaying or preventing a change in control by increasing the number
of outstanding shares entitled to vote and by increasing the number of votes required to approve a change in control. The
issuance of the additional authorized shares recently approved by our board of directors and shareholders could render more difficult
or discourage an attempt to obtain control of eBullion by means of a tender offer, proxy contest, merger or otherwise. The
ability of the board of the directors to issue such additional shares of common stock could discourage an attempt by a party to
acquire control of our company by tender offer or other means. Such issuances could therefore deprive stockholders of
benefits that could result from such an attempt, such as the realization of a premium over the market price that such an attempt
could cause.
In the event of a breach of law
by us or a breach of a contractual obligation our shareholders will have little or no recourse because all of our assets, as well
as our officers and directors, are located in Hong Kong.
Investors in our Company will have little
recourse in the event of a breach of law or contractual obligation that has an adverse effect upon our operations because of the
inherent difficulties in enforcing their rights since all of our assets are located in Hong Kong. Inasmuch as our officers and
directors reside outside of the United States, investors located in the United States may have difficulty enforcing their rights
against such person if he were to breach his duties. In addition, it may not be possible to effect service of process in Hong Kong
and uncertainty exists as to whether the courts in Hong Kong would recognize or enforce judgments of U.S. courts obtained against
our officers and directors predicated on the civil liability provisions of the securities laws of the U.S. or any state thereof,
or to be competent to hear original actions brought in Hong Kong against us or such person predicated upon the securities laws
of the United States or any state thereof.
We do not expect to pay dividends
on our common stock in the foreseeable future.
Although Man Loong has paid dividends
to its private stockholders in the past, we do not expect to pay dividends on common stock for the foreseeable future, and we may
never pay dividends. Consequently, the only opportunity for investors to achieve a return on their investment may be
if an active trading market develops and investors are able to sell their shares for a profit or if our business is sold at a price
that enables investors to recognize a profit. We currently intend to retain any future earnings to support the development and
expansion of our business and do not anticipate paying cash dividends for the foreseeable future. Our payment of any future dividends
will be at the discretion of our Board of Directors after taking into account various factors, including but not limited to our
financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party
to at the time. In addition, our ability to pay dividends on our common stock may be limited by state law. Accordingly, we cannot
assure investors any return on their investment, other than in connection with a sale of their shares or a sale of our business.
At the present time there is a limited trading market for our shares. Therefore, holders of our securities may be unable to sell
them. We cannot assure investors that an active trading market will develop or that any third party will offer to purchase our
business on acceptable terms and at a price that would enable our investors to recognize a profit.
Our lack of an independent audit
committee and audit committee financial expert at this time may hinder our board of directors’ effectiveness in fulfilling
the functions of the audit committee without undue influence from management and until we establish such committee will prevent
us from obtaining a listing on a national securities exchange.
Although our common stock is not listed
on any national securities exchange, for purposes of independence we use the definition of independence applied by NASDAQ.
Currently, we have no independent audit committee. Our full board of directors functions as our audit committee and is comprised
of four directors, one of whom are considered to be "independent" in accordance with the requirements set forth
in NASDAQ Listing Rule 5605(a)(2). An independent audit committee plays a crucial role in the corporate governance process, assessing
our company's processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal
and independent audit processes. The lack of an independent audit committee may prevent the board of directors from being independent
from management in its judgments and decisions and its ability to pursue the responsibilities of an audit committee without
undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable
to attract and retain qualified, independent directors, the management of our business could be compromised. An independent audit
committee is required for listing on any national securities exchange, therefore until such time as we meet the audit committee
independence requirements of a national securities exchange we will be ineligible for listing on any national securities exchange.
Our board of directors acts as
our compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board
members and other officers may not be commensurate with our financial performance.
A compensation committee consisting
of independent directors is a safeguard against self-dealing by company executives. Our board of directors acts as the compensation
committee and determines the compensation and benefits of our executive officers, administers our employee stock and benefit plans,
and reviews policies relating to the compensation and benefits of our employees. Our lack of an independent compensation committee
presents the risk that our executive officer on the board may have influence over his personal compensation and benefits levels
that may not be commensurate with our financial performance.
Limitations on director and officer
liability and indemnification of our company’s officers and directors by us may discourage stockholders from bringing suit
against an officer or director.
Our company’s certificate of incorporation
and bylaws provide, with certain exceptions as permitted by governing state law, that a director or officer shall not be personally
liable to us or our stockholders for breach of fiduciary duty as a director or officer, except for acts or omissions which involve
intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage stockholders
from bringing suit against a director or officer for breach of fiduciary duty and may reduce the likelihood of derivative litigation
brought by stockholders on our behalf against a director or officer.
We are responsible for the indemnification
of our officers and directors.
Should our officers and/or directors
require us to contribute to their defense, we may be required to spend significant amounts of our capital. Our certificate of incorporation
and bylaws also provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances,
against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association
with or activities on behalf of our Company. This indemnification policy could result in substantial expenditures, which we may
be unable to recoup. If these expenditures are significant, or involve issues which result in significant liability for our key
personnel, we may be unable to continue operating as a going concern.
Our common stock may be thinly
traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise
desire to liquidate your shares.
Currently, there is a limited trading
market for our common stock, which is traded on the OTCBB. We cannot predict the extent to which investors’ interests will
lead to an active trading market for our common stock or whether the market price of our common stock will be volatile. If an active
trading market does not develop, investors may have difficulty selling any of our common stock that they buy. There may be limited
market activity in our stock and we are likely to be too small to attract the interest of many brokerage firms and analysts. We
cannot give you any assurance that an active public trading market for our common stock will develop or be sustained. Our trading
volume is limited by the fact that many major institutional investment funds, including mutual funds as well as individual investors,
follow a policy of not investing in OTCBB stocks and certain major brokerage firms restrict their brokers from recommending OTCBB
stocks because they are considered speculative, volatile, thinly traded and the market price of the common stock may not accurately
reflect the underlying value of our Company. The market price of our common stock could be subject to wide fluctuations in response
to quarterly variations in our revenues and operating expenses, announcements of new products or services by us, significant sales
of our common stock, including “short” sales, the operating and stock price performance of other companies that investors
may deem comparable to us, and news reports relating to trends in our markets or general economic conditions.
The application of the “penny
stock” rules to our common stock could limit the trading and liquidity of the common stock, adversely affect the market price
of our common stock and increase your transaction costs to sell those shares.
As long as the trading price of our
common stock is below $5 per share, the open-market trading of our common stock will be subject to the “penny stock”
rules, unless we otherwise qualify for an exemption from the “penny stock” definition. The “penny stock”
rules impose additional sales practice requirements on certain broker-dealers who sell securities to persons other than established
customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse). These regulations, if they apply, require the delivery, prior to any transaction involving
a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain
brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special
written suitability determination regarding such a purchaser and receive such purchaser’s written agreement to a transaction
prior to sale. These regulations may have the effect of limiting the trading activity of our common stock, reducing the liquidity
of an investment in our common stock and increasing the transaction costs for sales and purchases of our common stock as compared
to other securities. The stock market in general and the market prices for penny stock companies in particular, have experienced
volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations
may adversely affect the price of our stock, regardless of our operating performance. Stockholders should be aware that, according
to Securities and Exchange Commission (“SEC”) Release No. 34-29093, the market for penny stocks has suffered in recent
years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers;
and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these
patterns or practices could increase the volatility of our share price.
We may not be able to attract
the attention of major brokerage firms, which could have a material adverse impact on the market value of our common stock.
The trading market for our common stock
will rely in part on the research and reports that equity research analysts publish about us and our business. We do not control
these analysts. However, security analysts of major brokerage firms may not provide coverage of our common stock since there is
no incentive to brokerage firms to recommend the purchase of our common stock, which may adversely affect the market price of our
common stock. If equity research analysts do provide research coverage of our common stock, the price of our common stock could
decline if one or more of these analysts downgrade our common stock or if they issue other unfavorable commentary about us or our
business. If one or more of these analysts ceases coverage of our company, we could lose visibility in the market, which in turn
could cause our stock price to decline.
Our management has limited experience
managing a public company.
At the present time, none of our management
has experience in managing a public company. This may hinder our ability to establish effective controls and systems
and comply with all applicable requirements attendant to being a public company. If compliance problems result,
these problems could have a material adverse effect on our business, financial condition or results of operations.
As a public company, we will incur significant
legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, or
Sarbanes-Oxley Act, and the Dodd-Frank Act of 2010, as well as rules subsequently implemented by the SEC, have imposed various
new requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel
will need to devote a substantial amount of time to our new compliance requirements. Moreover, these requirements will increase
our legal, accounting and financial compliance costs and will make some activities more time-consuming and costly. For example,
we expect it will be difficult and more expensive for us to obtain director and officer liability insurance. These requirements
could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board
committees or as executive officers.
RISKS RELATED TO REGULATION
Litigation and regulatory investigations
may result in significant financial losses and harm to our reputation.
We face significant risk of litigation,
regulatory investigations and similar actions in the ordinary course of our business, including the risk of lawsuits and other
legal actions relating to unauthorized transactions, error transactions, breach of data privacy laws, breach of fiduciary or other
duties. Any such action may include claims for substantial or unspecified compensatory damages, as well as civil, regulatory or
criminal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, any remain
unknown for significant periods of time. We may be also subject to various regulatory inquiries, such as information requests and
book and records examinations, from regulators and other authorities in the geographical markets in which we operate.
A substantial liability arising from
a law suit judgment or a significant regulatory action against us or a disruption in our business arising from adverse adjudications
in proceedings against our directors, officers or employees could have a material adverse effect on our business, financial condition
and results or operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could
suffer significant harm to our reputation, which could materially affect our prospects and future growth, including our ability
to attract new agents as customers, retain current agents and their customers, and recruit and retain employees and agents.
Compliance with rules and regulations
in our geographical markets could have a material adverse effect on our business, financial condition and results of operation.
As a data user we and Man Loong are
prohibited from doing or engaging in any practice that contravenes the data privacy laws, rules and regulations that regulate the
use of customer data in the markets in which we or Man Loong are engaged. In Hong Kong, Man Loong is governed by the Personal Data
(Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) Compliance with these laws, rules and regulations may restrict Man Loong’s
business activities, require us to incur increased expenses and devote considerable time to compliance efforts.
In addition, we or Man Loong may also
be required to qualify to do business in certain foreign countries where we have agents and where their customers are residing.
We and Man Loong are required to comply with the laws and regulations of each country in which we conduct business, including laws
and regulations currently in place or which may be enacted related to Internet services available to their citizens from service
providers located elsewhere. Although we have systems in place to block trades initiated from countries in North America, there
can be no guarantee that such systems will be free from failure. Any failure to develop effective compliance and reporting systems
could result in regulatory penalties in the applicable jurisdiction, which could have a material adverse effect on our business,
financial condition and results of operations and cash flows.
Presently all transactions for price
contracts on gold and silver are executed and completed over Man Loong’s electronic trading platform or telephone transaction
system located in Hong Kong although its agents and their customers may not reside in Hong Kong. Agents and their customers may
access Man Loong’s electronic trading platform via the Internet from anywhere in the world to monitor their account and throughout
most of Asia to execute trades, but all instructions are first communicated to Man Loong for approval and then the resulting trade
is executed in Hong Kong. The acceptance of a customer order by internet in a jurisdiction other than Hong Kong may require Man
Loong to comply with the laws of that jurisdiction and failure to comply may have a material negative impact on our financial condition
and business results.
Without local PRC registration,
licensing or authorization, we may be subject to possible enforcement action and sanction for our operations in the PRC if our
operations are deemed to have violated PRC regulations.
When permitted, we promote our services
to agents outside of Hong Kong, including to agents in mainland China where our industry is separately regulated. The regulatory
rules and procedures for engaging in our business in China are complex and are not as clear as those in many other jurisdictions
and so we have not sought licensing from PRC government authorities to conduct business operations in China. We do work with third
party agents to promote and introduce our services to individuals and businesses in China. Our PRC legal counsel has advised us
that our activities in China are in compliance with PRC law because such activities are purely promotional and never involve the
conduct of any business transactions in China. We cannot assure you that PRC rules and regulations will not change such that we
can no longer engage in such promotional activities or offer our precious metals trading services to PRC residents online. In such
case, we may be subject to fines, penalties, or sanctions or may be required to cease such offerings to PRC residents all together.
These restrictions may limit our ability to increase revenues and would have a material adverse effect on our results of operations.
If Man Loong were to fail to comply
with the requirements of the CGSE, Man Loong could lose its ability to process client trades, which would have an adverse material
effect on our revenues, financial condition and cash flows.
Man Loong must comply with the minimum
working capital and other requirements of the CGSE to continue our present business operations as an officially designated electronics
trading member of the CGSE, a self-regulatory organization registered in Hong Kong. If we were to fall out of compliance
with the CGSE’s requirements for its members, Man Loong could lose its ability to facilitate any trades of gold or silver
for customers of its agents, and potentially lose its membership in the CGSE, all of which would have an adverse material effect
on our revenues, financial condition and cash flows. The constitution of the CGSE requires its members to have a minimum working
capital, defined as cash plus precious metals, of approximately $193,000 and minimum assets of $643,000. The CGSE also requires
its members to submit a quarterly liquidity capital report, in order to ensure that the bank balances exceed or equal the balance
of customer deposits, as well as comply with a code of conduct which is established by CGSE. As of March 31, 2015 and 2014, Man
Loong had $2.5 million and $0.8 million in cash, respectively, and $3.2 million and $2.5 million, respectively, in total assets. We
were in compliance with these requirements as of March 31, 2015 and 2014.
Our growth may be limited by various
restrictions and we remain at risk that we may be required to cease operations if we become subject to regulation by local government
bodies.
We currently have only a limited presence
in a number of significant markets and may not be able to gain a significant presence there unless and until regulatory barriers
to international firms in certain of those markets are modified. Consequently, we cannot assure you that our international expansion
will continue and that we will be able to develop our business in emerging markets as we currently plan. Furthermore, we may be
subject to possible enforcement action and sanction if we are determined to have previously offered, or currently offer, our services
in violation of local government’s regulations. In these circumstances, we are exposed to sanction by local enforcement agencies
and our contracts with agents may be unenforceable. We may also be required to cease the conduct of our business with agents in
the relevant jurisdiction and/or we may determine that compliance with the regulatory requirements for continuance of the business
is too onerous to justify making the necessary changes to continue that business.
Procedures and requirements of
the Patriot Act may expose us to significant costs or penalties.
As participants in the financial services
industry, we are, and our subsidiaries are, subject to laws and regulations, including the Patriot Act of 2001, that require that
we know our agents’ customers and monitor transactions for suspicious financial activities. The cost of complying with the
Patriot Act and related laws and regulations is significant. We face the risk that our policies, procedures, technology and personnel
directed toward complying with the Patriot Act are insufficient and that we could be subject to significant criminal and civil
penalties due to noncompliance. Such penalties could have a material adverse effect on our business, financial condition and results
of operations and cash flows. In addition, as an online financial services provider worldwide, we may face particular difficulties
in identifying our agents’ customers and monitoring their activities.
Item 1B. |
Unresolved Staff Comments |
None.
Man Loong leases approximately
10,000 square feet at 8/F, Tower 5, China Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Hong Kong, where Man Loong’s corporate
head office is located. On December 1, 2012, Man Loong entered into a lease for the office space which expires on November 30,
2015. The monthly lease payments this facility is approximately $47,236. We believe the facility is in good
condition and adequate to meet our current and anticipated requirements. We lease offices space at 80 Broad Street,
New York, New York 10004 on a month-to-month basis for a monthly fee of $219.
Item 3. |
Legal Proceedings |
From time to time, we may become involved
in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent
uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial
condition or operating results.
Item 4. |
Mine Safety Disclosures |
Not applicable.
PART II
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities |
Price Range of Common Stock |
Our common
stock trades on the OTC Bulletin board since October 9, 2014 under the symbol EBML. Prior to that date, there was no active
market for our common stock. The following table sets forth the high and low sale prices for our common stock for the periods indicated.
| |
High | | |
Low | |
Fiscal Year 2015 | |
| | |
| |
First Quarter | |
$ | N/A | | |
| N/A | |
Second Quarter | |
$ | N/A | | |
| N/A | |
Third Quarter | |
| 0.13 | | |
| 0.05 | |
Fourth Quarter | |
| 0.16 | | |
| 0.07 | |
The last reported sale price of our
common stock on the OTC Bulletin board on June 23, 2015 was $0.109 per share. As of March 31, 2015, there were approximately 50
holders of record of our common stock.
Dividend Policy
We have never paid any cash dividends
on our common stock to date, and do not anticipate paying such cash dividends in the foreseeable future. Whether we declare and
pay dividends is determined by our Board of Directors at their discretion, subject to certain limitations imposed under Delaware
corporate law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations,
financial condition, cash requirements and other factors deemed relevant by our Board of Directors. In the past, Man Loong has
paid dividends to its members. For the year ended March 31, 2015 and 2014 Man Loong paid no dividends.
Equity Compensation Plan Information
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities
None.
Item 6. |
Selected Financial Data |
Not applicable because we are a smaller reporting company.
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis
is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated.
The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In
addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those
anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports
filed and to be filed with the Securities and Exchange Commission.
Overview
On April 3, 2013, we entered into a
Contribution Agreement with the shareholders of Man Loong, whereby we acquired 100% of the issued and outstanding capital stock
of Man Loong from its stockholders, in exchange for 507,600,000 newly issued shares of our common stock, with a par value of $0.0001.
After the transaction, Man Loong became our wholly owned subsidiary.
This share exchange transaction (the
“Merger”) was accounted for as a recapitalization whereby Man Loong was the acquirer for financial reporting purposes
and eBullion was the acquired company. Consequently, the assets and liabilities and the operations that are reflected
in the historical financial statements prior to the Merger will be those of Man Loong and will be recorded at the historical cost
basis. The consolidated financial statements after completion of the Merger include the assets and liabilities of eBullion
and Man Loong, historical operations of Man Loong and operations of eBullion from the closing date of the Merger. Common
stock and the corresponding capital amounts of the Company pre-merger have been retroactively restated as capital stock shares
reflecting the exchange ratio in the Merger. In conjunction with the Merger, Man Loong received no cash and assumed
no liabilities of eBullion.
In March 2015, we increased the
number of our authorized shares from 500,000,000 to 1,000,000,000. The par value of our shares remained unchanged at $.0001. We
also effected a 10 for 1 stock split, whereby we exchanged 10 of our shares for every 1 share issued at outstanding before the
split. Following the share split, we have 512,600,000 shares issued and outstanding. All share and per share amounts for the prior
year have been retroactively restated to give effect of the 10 for 1 share split.
Since April 3, 2013, through our subsidiary,
Man Loong, we have been engaged in the precious metals trading business, facilitating the execution of gold and silver price contracts
for customers of its agents via an electronic trading platform which we license from an affiliated company, True Technology. In
facilitating trades of these price contracts, Man Loong acts in its capacity as an officially designated electronics trading member
of the Chinese Gold and Silver Exchange Society, or the “CGSE”, in Hong Kong. Man Loong holds a Type AA License which
it uses to engage in the electronic trading of Kilo Gold and Loco London Gold and Silver. The electronic trading platform that
Man Loong licenses from True Technology provides its agents’ customers with CGSE price quotations on gold and silver price
contracts, on a Loco London basis, as well as information updates on the gold and silver market, based on an evaluation of third-party
market pricing sources such as Reuters or Bloomberg. Man Loong’s agents’ customer base is located primarily in China
where it works through independent agents, and in Hong Kong where it has one office and maintains its trading platforms. Man Loong
has 3 agents in Hong Kong which cover three main geographic areas, including Hong Kong Island, Kowloon and the New Territories.
In mainland China, Man Loong has 10 agents located in Shanghai and Guangdong and Fujian provinces. Each of our agents in Hong Kong
have between 100 and 150 customers and our agents in China each have between 100 and 600 customers.
Man Loong’s membership in the
CGSE allows it to facilitate trades on behalf of nonmembers who execute trades to buy and/or sell gold and/or silver price contracts
without it being required to become a counterparty to the trade or to purchase or sell any gold or silver being traded as a principal.
Man Loong facilitates the trades that are placed using its electronic trading platform. Man Loong provides agents and their customers
with access to its electronic trading platform which has a direct connection to the CGSE. Man Loong enters into an agency agreement
with each agent for which it facilitates trades pursuant to which the agent agrees to pay a commission to Man Loong for each trade
that Man Loong facilitates and the agent agrees to take all responsibility for trade losses. The agents often use Man Loong’s
offices and conference rooms as a physical place to meet with customers and Man Loong provides a dedicated investment center where
agents and their customers can access the electronic trading platform to place and process contract orders for gold, and silver
and obtain up-to-date market data, trade reports and gain/ loss reports to assist them in evaluating their portfolio and effecting
contract trades.
Man Loong provides its agents and their
customers, with access to its electronic trading platform to place and process price contract orders for gold and silver, which
price contracts do not involve the physical transfer or delivery of any actual gold, silver or other precious metals. The
electronic trading platform also provides an agent’s customers with up-to-date market data, trade reports and gain/ loss
reports to assist them in evaluating their portfolio and effecting price contract trades. Man Loong’s agents assume all of
the portfolio trading risk of their price contract orders. Man Loong merely supplies the trading platform that processes
the trade as a member of the CGSE and receives a commission. The electronic trading platform communicates and confirms all of the
trades that are placed by Man Loong to the CGSE and the CGSE, through the electronic trading platform, provides both the customers
of the agents and the agents with confirmation codes which confirm execution of the trades placed through the electronic platform.
Man Loong receives a brokerage commission
per trade ranging from $20 to $40 regardless of the purchase price paid or received for the gold or silver traded and the agent
assumes the sole responsibility for settlement of the purchase price of the gold or silver traded and for any resulting gain or
loss recognized on those trades.
All of our revenue has been derived
by Man Loong from the commission it receives on each trade executed through its electronic trade platform or telephone transaction
system. Man Loong calculates and charges the agents account a flat fee of between $20 - $40 when each trade is closed
and invoices those agents for their commission at the end of each month. Payment terms for commissions are net 30 days. The
typical fee is $40 per trade; however, for agents whose customers execute a large number of trades, Man Loong will discount the
fee to as low as $20 per trade. Man Loong evaluates its commission fee on an annual basis and adjusts it accordingly
based upon its operational costs, which include the fees to run its electronic trading platform, the fees associated with the
maintenance of its office, the fees that are charged by the CGSE and its employee costs.
Man Loong is not a counterparty in
the trades executed by our agents’ customers on our trading platforms, instead it charges a commission which ranges from
$20 to $40 for each completed trade. Man Loong’s revenue is dependent upon the amount of commission it generates which in
turn is dependent upon the number of agents it has and trade volume as opposed to the price of the commodities. Man Loong’s
revenues increase as it adds new contracted agents and as those agents increase the number of their customers. If Man Loong has
fewer agents, its revenue will suffer. In addition, past trends indicate that at times of price volatility, in the prices of gold
and silver, Man Loong’s agents’ customers tend to increase the number of trades that they execute across Man Loong’s
trading platforms. The number of agents and their customers remained substantially unchanged during the years ended March 31,
2015 and 2014 which resulted in a relatively small increase in revenues of $96,169 or 3.2%. During the years ended
March 31, 2015 and 2014 the price of gold remained in its current trading range of approximately $1,200 per ounce. The price of
silver remained in its current trading range of approximately $15 per ounce. The recent lack of volatility of gold and silver
prices could result in less trade revenue as it has in the past.
Results of Operations for the Years
Ended March 31, 2015 and March 31, 2014
Man Loong’s revenue was $3,060,058
and $2,963,889 for the years ended March 31, 2015 and 2014, respectively, an increase of $96,169 or 3.2%. All of our revenue was
derived from commissions on trades placed through our trading platform and telephone transaction system. During the years ended
March 31, 2015 and 2014, the number of agents and their customers remained approximately constant. Further, the market prices
of gold and silver remained in their current trading ranges of approximately $1,200 and $15 per ounce respectively. These factors
resulted in a relatively small increase in revenue for the year ended March 31, 2015.
Total expenses were $2,505,540 for
the year ended March 31, 2015 as compared to $2,909,257 for the year ended March 31, 2014, a decrease of $403,717 or 13.9%. Approximately
66% of our total expenses for the year ended March 31, 2015 were attributed to general and administrative expenses compared to
70% for the year ended March 31, 2014. One of Man Loong’s largest general and administrative expense historically has been
its marketing expense, which includes payment made to agents for their provision of sales, marketing and customer support services.
Marketing expense was $296,072 or 12% of Man Loong’s total expenses for the year ended March 31, 2015 and $758,762 or 26%
of Man Loong’s total expenses for the year ended March 31, 2014. The decrease in marketing expenses for the year ended March
31, 2015 as compared to the prior year was the result of Man Loong decreasing headcount and adopting other cost controls in its
marketing area. Man Loong’s three other large expenses were (i) its occupancy costs for the rent and management
fees paid for its offices which was $591,452 or 24% of Man Loong’s total expenses for the year ended March 31, 2015 and
$591,652 or 20% of its total expenses for the year ended March 31, 2014; (ii) its legal and professional fees which were $210,362
or 8% of its total expenses for the year ended March 31, 2015 compared to $183,747 or 6% of its total expenses for the year ended
March 31, 2014, and (iii) its trading platform hosting and rent which was $188,357 or 8% of its total expenses for the year ended
March 31, 2015 and $141,204 or 5% of its total expenses for the year ended March 31, 2014. For the years ended March 31, 2015
and 2014, employee compensation and benefits was $773,132 and $792,498, respectively, a decrease of 19,366 or 2%. Employee compensation
and benefits expense was 31% and 27% of Man Loong’s total expenses for the years ended March 31, 2015 and 2014, respectively.
Man Loong’s other income was
$118,305 for the year ended March 31, 2015 compared to $439 for the year ended March 31, 2014, an increase of $117,866. The increase
in other income for the year ended March 31, 2015 was due to rental income charged for a portion of Man Loong’s office facility
which is leased on a short term lease arrangement. Agreed sublease rental payments were $11,350 per month from April 1, 2014 until
January 1, 2015, when the rent was reduced to $4,514 per month. The lease arrangement expired on March 31, 2015. Though not subject
to a formal lease agreement, in April 2015, Man Loong extended the lease arrangement for a further 2 months, with agreed rental
payments of $4,514 per month.
Man Loong’s net income was $537,299
for the year ended March 31, 2015, compared to $24,423 for the year ended March 31, 2014 an increase of $512,876 or 2,100%. The
increase was primarily the result of Man Loong’s increase in commissions received on trades placed through our trading platform
and telephone transaction system, increase in rental income and a decrease in marketing expense and employee compensation and
benefits expense, offset in part by an increase in legal and professional and trade platform rent expense for the year ended December
31, 2015 as compared to the prior year.
Liquidity
During the year ended March 31, 2014,
eBullion completed its first private placement by selling 500,000 pre-split (5,000,000 post-split) common shares for net proceeds
of $240,044. Substantially all of Man Loong’s operations and growth have been funded from cash flows from operations. Cash
flows generated by Man Loong supplemented by new equity investment in eBullion will be used to 1) attract new agents and their
customers by improving the capabilities of our electronic trading platforms as well as expand capabilities to allow trading on
customers’ smart phones, 2) expand our business by opening investment centers in China’s largest cities and markets
for gold and silver price contract trading, and 3) expand our operations into emerging markets throughout Asia.
In July 2013,
Man Loong loaned eBullion Trade Company Limited (“eBullion Trade”) $997,049 (RMB 6,100,000). eBullion Trade is a development
stage entity pursuing a license in the Peoples’ Republic of China for the purpose of engaging in trading silver contracts
as an electronic trading member of the Guangdong Precious Metal Exchange (“GPME”). We determined that the loan to eBullion
Trade gave us a variable interest in eBullion Trade and that eBullion Trade was a variable interest entity (“VIE”)
because the equity investor of eBullion Trade on the date of the loan lacked sufficient equity at risk to finance its activities
without the loan. However, we determined that we were not the primary beneficiary of the VIE, because Man Loong did not have the
power to direct the activities of the VIE that significantly impacted its economic performance. Accordingly, we did not consolidated
eBullion Trade into its consolidated financial statements.
The loan was
unsecured, bore no interest and matured on April 17, 2014. Under terms of the loan, in the event that eBullion Trade’s GPME
application was approved, it had the option to repay the loan in cash or by transferring 100% of its outstanding stock to Man Loong.
In April 2014, eBullion Trade informed Man Loong that it intended to repay the loan in cash in accordance with the terms of the
loan agreement, and the loan was repaid in full on May 2, 2014.
Man Loong expects to further expand
its access to the Chinese market by attracting additional customers and agents through its relationship with eBullion Trade. Inasmuch
Chinese law only authorizes the electronic trading of silver in Guangdong province, Man Loong intends through its relationship
with eBullion, to expand its access to the Chinese market by the receipt of referrals from eBullion Trade for the electronic trading
of gold, a trading activity in which it will not be engaged. No assurance can be given however, if and when we will derive any
referral business from eBullion Trade.
Subsequent
to year end, Man Loong loaned Global Long Inc. Limited (“Global Long”) HKD$6,000,000 (USD$776,197). Global Long is
registered in Hong Kong and through its subsidiaries in the Peoples Republic of China, is engaged in trading silver contracts
as an electronic trading member of the Guangdong Precious Metal Exchange. The loan bears interest at a 6% annual rate, matures
on its 5th anniversary and is secured by a first right of claim on a bank deposit held by a subsidiary of Global Long. Under terms
of the loan, interest is payable to Man Loong quarterly and Global Long has the right to repay the loan at any time before the
maturity date. Until all principal and accrued interest are repaid on the loan, Global Long may not enter into additional borrowings
without Man Loong’s written permission, and upon certain events of default, the Loan becomes due on demand.
To date, eBullion has funded its operations
from cash flows generated from operations. As of March 31, 2015 eBullion had cash totaling $2,513,423, total assets of $3,184,692,
total liabilities of $273,544 and working capital of $2,452,025. Net cash provided by operations for the year ended March 31,
2015 was $707,833 as compared to $254,543 for the year ended March 31, 2014. The increase in net cash provided by operations for
the year ended March 31, 2015 included net income of $537,299, an increase in customer deposits of $53,613, a decrease in deposits
and prepaid expenses of $2,459, a decrease in prepaid income taxes of $54,950 and an increase in income taxes payable of $105,787
offset by an increase in in commissions receivable of $84,170, a decrease in accounts payable and accrued expenses of $32,399
and an increase in deferred income taxes of $10,372. Net cash provided by (used in) investing activities was $997,500 and $(1,047,958)
for the years ended March 31, 2015 and 2014, respectively. The increase in net cash provided by investing activities for the year
ended March 31, 2015 was primarily due to the repayment of the eBullion Trade note receivable. Net cash provided by financing
activities was $0 and $184,720 for the years ended March 31, 2015 and 2014, respectively. The decrease in net cash provided by
financing activities resulted primarily from the fact that we did not engage in any financing transactions during the year ended
March 31, 2015 as opposed to the year ended March 31, 2014 for which financing activities included the proceeds of eBullion’s
private placement of $240,044, offset in part by an increase in bank overdraft of $55,324.
As of March 31, 2015 and for the year
then ended, Man Loong’s customer deposits increased from $38,990 at March 31, 2014 to $92,613 at March 31, 2015 an increase
of $53,623 or 138%. Man Loong has been working with its agents and their customers to reduce the number of customers who hold
the minimum deposit required to secure the customer’s account from trading losses with Man Loong instead of with the customer’s
agent. However, Man Loong will continue to offer this service to customers who request it, and expects the number of
customers who hold minimum deposit funds in its accounts to increase in the future if that service is requested by Man Loong’s
agents and their customers.
As of March 31, 2015 and for the year
then ended, Man Loong’s commission receivables increased from $34,125 at March 31, 2014 to $118,298 at March 31, 2015 an
increase of $84,173 or 247%. Man Loong has been working with its agents to improve the payment times of commissions accrued but
unpaid at the end of each month. Commissions receivable represent commissions to be collected from agents for their
customers’ trades executed across Man Loong’s electronic trade platform and telephone transaction system. Commissions
receivable are typically remitted to Man Loong within 30 days of trade execution. The Company has not historically incurred credit
losses on these commissions receivable. As of March 31, 2015, we had no reserve for credit losses nor have we incurred any bad
debts for the years ended March 31, 2015 and 2014.
No dividends were declared or paid in
the years ended March 31, 2015 and 2014 and none are expected to be paid for the foreseeable future.
Commitments
eBullion is committed to paying
a monthly fee of approximately $3,868 until March 31, 2015 to True Technology, a company owned by Messrs. Choi and Wong, for the
hosting services and use of the trading platform that is the cornerstone of its business. Additionally, in December
2012, Man Loong entered into a lease for its new office space, which lease expires in December 2015 and provides for monthly payments
of approximately $47,236, an increase of approximately $21,000 per month from its prior lease.
Subsequent to year end, the trading
platform lease with True Technology was renewed for two (2) years with monthly payment of approximately $3,868 until March 31,
2017.
At the exchange rate in effect at March
31, 2015, future annual minimum lease payments, including maintenance and management fees, for non-cancellable operating leases
and trading platform rental and hosting fees, are as follows:
Year ending March 31: |
2016 | |
| 381,712 | |
| |
| | |
| |
$ | 381,712 | |
In December 2012, we entered into a
new lease agreement on approximately 10,000 square feet of office space which replaced its existing office facilities. Man
Loong occupied the new space in January 2013. Under terms of the lease, Man Loong paid approximately $192,000 in lease
deposits and is committed to lease and management fee payments of approximately $47,236 per month for 33 months. The
lease expires in November 2015 and so the amounts in the above table include office lease and management fee payments for eight
months.
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
Not applicable because we are a smaller
reporting company.
Item
8. |
Financial Statements and Supplemental Data |
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders of eBullion, Inc.:
We have audited the accompanying consolidated
balance sheets of eBullion, Inc. (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements
of comprehensive income, changes in shareholders’ equity and cash flows for each of the years then ended. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at March
31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the two years in the period ended
March 31, 2015, in conformity with accounting principles generally accepted in the United States of America.
/s/ Anton & Chia LLP
June 26, 2015
Newport Beach, California
eBullion, Inc.
Consolidated Balance
Sheets
For the Years Ended
March 31, 2015 and 2014
(Expressed in US dollars)
| |
2015 | | |
2014 | |
ASSETS | |
| | | |
| | |
Current Assets: | |
| | | |
| | |
Cash | |
$ | 2,513,423 | | |
$ | 808,039 | |
Commissions receivable | |
| 118,298 | | |
| 34,125 | |
Deposits and prepaid expenses | |
| 52,452 | | |
| 58,368 | |
Prepaid income taxes | |
| 41,396 | | |
| 96,305 | |
Loan receivable from eBullion Trade | |
| - | | |
| 997,049 | |
Total current assets | |
| 2,725,569 | | |
| 1,993,886 | |
| |
| | | |
| | |
Noncurrent Assets: | |
| | | |
| | |
Deposits and prepaid expenses | |
| 223,470 | | |
| 219,913 | |
Equipment, net | |
| 225,131 | | |
| 305,842 | |
Deferred income taxes | |
| 10,522 | | |
| 150 | |
Total noncurrent assets | |
| 459,123 | | |
| 525,905 | |
| |
| | | |
| | |
Total assets | |
$ | 3,184,692 | | |
$ | 2,519,791 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 35,048 | | |
| 66,658 | |
Customer deposits | |
| 92,613 | | |
| 38,990 | |
Income taxes | |
| 145,883 | | |
| 40,091 | |
Total current liabilities | |
| 273,544 | | |
| 145,739 | |
| |
| | | |
| | |
Total liabilities | |
| 273,544 | | |
| 145,739 | |
| |
| | | |
| | |
Commitments | |
| | | |
| | |
Shareholders’ Equity | |
| | | |
| | |
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 512,600,000 shares issued and outstanding (1) | |
| 51,260 | | |
| 51,260 | |
Additional paid in capital (1) | |
| 1,477,404 | | |
| 1,477,404 | |
Retained earnings | |
| 1,383,704 | | |
| 846,405 | |
Accumulated other comprehensive loss | |
| (1,220 | ) | |
| (1,017 | ) |
Total shareholders’ equity | |
| 2,911,148 | | |
| 2,374,052 | |
Total liabilities and shareholders’ equity | |
$ | 3,184,692 | | |
$ | 2,519,791 | |
| (1) | The capital accounts of the Company have been restated to reflect the 10 for 1 stock split which
was effective in March 2015. See Note 12 for further discussion. |
The accompanying notes are an integral part
of these consolidated financial statements.
eBullion, Inc.
Consolidated Statements
of Comprehensive Income
For the Years Ended
March 31, 2015 and 2014
(Expressed in US dollars)
| |
2015 | | |
2014 | |
REVENUES | |
| | |
| |
| |
| | |
| |
Commission revenue | |
$ | 3,060,058 | | |
$ | 2,963,889 | |
| |
| | | |
| | |
EXPENSES | |
| | | |
| | |
General and administrative | |
| 1,651,742 | | |
| 2,036,420 | |
Employee compensation and benefits | |
| 773,132 | | |
| 792,498 | |
Depreciation and amortization | |
| 80,666 | | |
| 80,339 | |
Total expenses | |
| 2,505,540 | | |
| 2,909,257 | |
| |
| | | |
| | |
INCOME FROM OPERATIONS | |
| 554,518 | | |
| 54,632 | |
| |
| | | |
| | |
OTHER INCOME | |
| | | |
| | |
Rental income | |
| 115,689 | | |
| - | |
Interest income, net | |
| 2,616 | | |
| 439 | |
Total other income | |
| 118,305 | | |
| 439 | |
| |
| | | |
| | |
INCOME BEFORE INCOME TAXES | |
| 672,823 | | |
| 55,071 | |
| |
| | | |
| | |
INCOME TAX PROVISION (BENEFIT) | |
| | | |
| | |
Current | |
| 145,896 | | |
| 40,091 | |
Deferred | |
| (10,372 | ) | |
| (9,443 | ) |
Total income tax provision | |
| 135,524 | | |
| 30,648 | |
| |
| | | |
| | |
NET INCOME | |
| 537,299 | | |
| 24,423 | |
| |
| | | |
| | |
OTHER COMPREHENSIVE INCOME (LOSS) | |
| | | |
| | |
Foreign currency translation | |
| (203 | ) | |
| 1,231 | |
COMPREHENSIVE INCOME | |
$ | 537,096 | | |
$ | 25,654 | |
| |
| | | |
| | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |
| | | |
| | |
Basic and diluted (1) | |
| 512,600,000 | | |
| 512,600,000 | |
| |
| | | |
| | |
BASIC AND DILUTED EARNINGS PER COMMON SHARE | |
| | | |
| | |
Basic and diluted earnings per common share | |
$ | 0.00 | | |
$ | 0.00 | |
| (1) | The Company’s weighted average common shares outstanding for both basic and diluted earnings
per share have been restated for the effects of the 10 for 1 stock split which was effective in March 2015. See Note 12 for further
discussion. |
The accompanying notes are an integral part of these consolidated financial statements.
eBullion, Inc. |
Consolidated Statement of Changes in Shareholders’
Equity
For the Years Ended
March 31, 2015 and 2014 |
(Expressed in US dollars) |
| |
Common Stock | | |
Additional | | |
| | |
Accumulated Other | | |
Total | |
| |
Number of | | |
| | |
Paid in | | |
Retained | | |
Comprehensive | | |
Shareholders’ | |
| |
Shares | | |
Par Value | | |
Capital | | |
Earnings | | |
Income (Loss) | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| |
BALANCE, March 31, 2013 (1) | |
| 507,600,000 | | |
$ | 50,760 | | |
$ | 1,258,918 | | |
$ | 821,982 | | |
$ | (2,248 | ) | |
$ | 2,129,412 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Proceeds from private placement (1) | |
| 5,000,000 | | |
| 500 | | |
| 239,544 | | |
| - | | |
| - | | |
| 240,044 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Recapitalization | |
| - | | |
| - | | |
| (21,058 | ) | |
| - | | |
| - | | |
| (21,058 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| - | | |
| - | | |
| - | | |
| 24,423 | | |
| - | | |
| 24,423 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,231 | | |
| 1,231 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, March 31, 2014 (1) | |
| 512,600,000 | | |
$ | 51,260 | | |
$ | 1,477,404 | | |
$ | 846,405 | | |
$ | (1,017 | ) | |
$ | 2,374,052 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| - | | |
| - | | |
| - | | |
| 537,299 | | |
| - | | |
| 537,299 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| (203 | ) | |
| (203 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, March 31, 2015 (1) | |
| 512,600,000 | | |
$ | 51,260 | | |
$ | 1,477,404 | | |
$ | 1,383,704 | | |
$ | (1,220 | ) | |
$ | 2,911,148 | |
| (1) | The capital accounts of the Company have been restated to reflect the 10 for 1 stock split which
was effective in March 2015. See Note 12 for further discussion. |
The accompanying notes are an integral part
of these consolidated financial statements.
eBullion, Inc.
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2015 and 2014
(Expressed in US dollars)
| |
2015 | | |
2014 | |
OPERATING ACTIVITIES: | |
| | |
| |
Net income | |
$ | 537,299 | | |
$ | 24,423 | |
Adjustments to reconcile net income to net cash provided by
operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 80,666 | | |
| 80,339 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Commissions receivable | |
| (84,170 | ) | |
| 356,620 | |
Deposits and prepaid expenses | |
| 2,459 | | |
| 76,910 | |
Accounts payable and accrued liabilities | |
| (32,399 | ) | |
| 56,313 | |
Customer deposits | |
| 53,613 | | |
| (230,697 | ) |
Prepaid income taxes | |
| 54,950 | | |
| (96,304 | ) |
Income taxes payable | |
| 105,787 | | |
| (3,618 | ) |
Deferred income taxes | |
| (10,372 | ) | |
| (9,443 | ) |
Net cash provided by operating activities | |
| 707,833 | | |
| 254,543 | |
| |
| | | |
| | |
INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of equipment | |
| - | | |
| (50,921 | ) |
Loan receivable from eBullion Trade | |
| 997,500 | | |
| (997,037 | ) |
Net cash provided by (used in) investing activities | |
| 997,500 | | |
| (1,047,958 | ) |
| |
| | | |
| | |
FINANCING ACTIVITIES: | |
| | | |
| | |
Bank overdraft | |
| - | | |
| (55,324 | ) |
Net proceeds from private placement | |
| - | | |
| 240,044 | |
Net cash provided by financing activities | |
| - | | |
| 184,720 | |
| |
| | | |
| | |
NET INCREASE (DECREASE) IN CASH | |
| 1,705,333 | | |
| (608,695 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | |
| 51 | | |
| 1,104 | |
Cash, beginning of period | |
| 808,039 | | |
| 1,415,630 | |
Cash, end of period | |
$ | 2,513,423 | | |
$ | 808,039 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |
| | | |
| | |
Cash paid during the period for income taxes | |
| 241,054 | | |
| 140,013 | |
The accompanying notes are an integral part
of these consolidated financial statements.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
1. |
Nature of Operations and Basis of Presentation |
eBullion, Inc. (“eBullion” or
“the Company”) was incorporated in Delaware on January 28, 2013. On April 3, 2013, the Company’s shareholders
exchanged 100% of their shares for 100% of the shares of Man Loong Bullion Company Limited (“Man Loong”) a company
which was incorporated in Hong Kong in 1974, and in 2007, was re-registered under Hong Kong law as a limited liability company.
Upon completion of this transaction, Man Loong became a 100% owned subsidiary of eBullion. This transaction was accounted for
as a reverse take-over.
The Company provides trading services for gold and silver trading positions on Man Loong’s
proprietary, 24-hour electronic trading platform, and its telephone transaction system located in Hong Kong. The Company is licensed
through the Chinese Gold and Silver Exchange Society (“CGSE”) a self-regulatory organization located in Hong Kong
which acts as an exchange for the trading of Kilo gold and Loco London gold and silver price indices quoted on the London Metals
Exchange.
The Company is not a counter party for trades entered through its trading platform and telephone transaction
system, and instead, contracts with agents who pay Man Loong a fixed commission on each trade that the Company executes for its
agents and their customers.
Basis of Presentation
The Company’s consolidated financial statements are expressed in U.S. Dollars and are presented in accordance with U.S. GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s and Man Loong’s fiscal year end is March 31.
Principles of Consolidation
The consolidated financial statements as of March 31, 2015 and 2014, and for the years then ended, include the accounts of eBullion and its wholly owned subsidiary, Man Loong. All significant intercompany transactions have been eliminated.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies |
Use of Estimates
The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Changes in these estimates are recorded when known. Significant estimates made by management include:
|
· |
Valuation of assets and liabilities |
|
· |
Useful lives of equipment |
|
· |
Accounting for transactions with variable interest entities |
|
· |
Other matters that affect the reported amounts
and disclosures of contingencies in the consolidated financial statements. |
Actual results could differ from those estimates.
Reclassifications
Certain
reclassifications have been made to amounts reported in the previous periods to conform to the current presentation. Such reclassifications
had no effect on net income.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies - continued |
Revenue Recognition
The Company recognizes revenue in
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1)
persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed
and determinable; and (4) collectability is reasonably assured. The Company is not a counter party for trades executed through
its trading platform and telephone transaction system and, instead, recognizes revenue to the extent of the flat-fee commission
it receives on each trade processed for its agents and their customers.
Advertising
Advertising costs are
incurred for the production and communication of advertising, as well as other marketing activities. The Company expenses the
cost of advertising as incurred. The Company did not capitalize any production costs associated with advertising for the years
ended March 31, 2015 and 2014. The total amount charged to advertising expense was $65,213 and $1,702 for the years ended
March 31, 2015 and 2014, respectively.
Cash and cash
equivalents
Cash and cash equivalents
consist primarily of cash on deposit, certificates of deposits, money market accounts, and investment grade commercial paper that
are readily convertible to cash and purchased with original maturities of three months or less. As of March 31, 2015 and
2014, the Company had no cash equivalents.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies - continued |
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements”,
defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The carrying amounts reported in the balance sheets for cash, commissions and related party
receivables, loan receivable from eBullion Trade, bank overdraft, accounts payable and accrued expenses and customer deposits qualify
as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and their current market rate of interest.
The standard establishes a fair value
hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs
(Level 3 measurement). The three levels of the fair value hierarchy defined by the standard are as follows:
Level 1 - Quoted prices are available
in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions
for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1
primarily consists of financial instruments such as exchange-traded derivatives, listed equities and U.S. government treasury securities.
Level 2 - Pricing inputs are other than
quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily
industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility
factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.
Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived
from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in
this category include non-exchange-traded derivatives such as over the counter forwards, options and repurchase agreements.
Level 3 - Pricing inputs include significant
inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies
that result in management’s best estimate of fair value from the perspective of a market participant. Level 3 instruments
include those that may be more structured or otherwise tailored to customers’ needs.
Commissions Receivable
Commissions receivable represent commissions
to be collected from agents for their customers’ trades executed across Man Loong’s electronic trade platform and telephone
transaction system through the balance sheet date. Commissions receivable are typically remitted to the Company within 30 days
of trade execution. The Company has not historically incurred credit losses on these commissions receivable. As of March 31, 2015
and 2014, the Company has no reserve for credit losses nor has it incurred any bad debts for the years then ended.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies – continued |
Deposits and Prepaid Expenses
The Company records
goods and services paid for but not received until a future date as deposits and prepaid expenses. These primarily include deposits
and prepayments for occupancy related expenses. Deposit or prepaid expenses which will be realized more
than 12 months past the balance sheet date are classified as non-current assets in the accompanying consolidated balance sheets.
Equipment
Equipment is stated at cost. The cost of an asset consists
of its purchase price and any directly attributable costs of bringing the asset to its present working condition and location
for its intended use.
Equipment is depreciated using the straight-line method
over the estimated useful lives of the assets as follows:
Office equipment |
5 years |
Furniture and fixtures |
5 years |
Computer equipment |
5 years |
Expenditures for maintenance and repairs
are charged to expense as incurred. Additions, renewals and betterments are capitalized.
Gain or loss on disposal of equipment
is the difference between net sales proceeds and the carrying amount of the relevant assets, if any, and is recognized as income
or loss in the accompanying consolidated statements of comprehensive income.
eBullion, Inc.. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies – continued |
Variable Interest
Entity
A variable interest entity (“VIE”) is a legal entity, other than an individual, used for business purposes
that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities,
or (b) the equity investors lack any one of the following three criteria:
|
· |
The power to direct activities that most significantly impact the entity’s economic performance |
|
· |
The obligation to absorb the expected losses of the entity |
|
· |
The right to receive the expected residual returns. |
A VIE is required to be consolidated by a reporting entity if it has a controlling financial interest in the VIE. A reporting entity is deemed to have a controlling financial interest in a VIE if it both has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive economic benefits from the VIE that could potentially be significant to the VIE.
Reporting Currency and Foreign Currency Translation
As of and for the years ended March 31, 2015 and 2014, the accounts
of the Company were maintained in their functional currencies, which is the U.S. dollar for eBullion and the Hong Kong dollar
("HK dollar") for Man Loong. The financial statements of Man Loong have been translated into U.S. dollars
which is its reporting currency. All assets and liabilities of Man Loong are translated at the exchange rate on the balance
sheet date, shareholders’ equity is translated at historical rates and the statements of comprehensive income, and statements
of cash flows are translated at the weighted average exchange rate for the periods. The resulting translation adjustments for
the period are reported under other comprehensive income and accumulated translation adjustments are reported as a separate component
of shareholders’ equity.
Foreign exchange rates used:
|
| |
2015 | | |
2014 | |
|
| |
| | |
| |
|
Year-end USD/HK$ exchange rate | |
| 7.7542 | | |
| 7.7570 | |
|
Average USD/HK$ exchange rate | |
| 7.7535 | | |
| 7.7571 | |
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies – continued |
Long-Lived Assets
The
Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such review. The
carrying value of a long-lived assets is considered impaired when the anticipated undiscounted cash flow from such an asset is
separately identifiable and is less than the carrying value. In that event, a loss is recognized in the amount by which the carrying
value exceeds the fair market value of the long-lived asset. The Company has identified no such impairment losses.
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities at March 31, 2015 and 2014 primarily consist of accrued statutory bonus payable to employees in Hong Kong, audit fees payable to the Company’s auditors and accountants and legal fees payable to the Company’s legal counsel.
Customer Deposits
Customer deposits at March 31, 2015 and 2014 were
accepted pursuant to the Company’s agreements with certain of its independent agents. Under terms of those agreements, the
Company accepts margin deposits for certain of the agents’ customers who prefer that the Company hold those deposits. If
an agent’s customer suffers a trading loss equaling 80% or more of the customers’ deposit balance, the customer is
required to increase the balance of his deposit or the customer’s trading position is closed and the remaining deposit balance
is remitted to the agent in order to fund the customer’s trading losses.
Accordingly, the Company had no risk of
loss related to customer deposits at March 31, 2015 and 2014.
Accumulated Other Comprehensive Income (Loss)
The Company’s accumulated other comprehensive income
(loss) as March 31, 2015 and 2014 consist of adjustments resulting from translating Man Loong’s functional currency, the
HK dollar, to its reporting currency, the U.S. dollar.
Rental Income
Rental income consists of rent charged for a portion of Man Loong’s office facility which is leased on a short term lease
arrangement. Agreed rental payments were $11,350 per month from April 1, 2014 until January 1, 2015, when the rent was reduced
to $4,514 per month. The lease arrangement expired on March 31, 2015. Though not subject to a formal lease agreement, in April
2015, Man Loong extended the lease arrangement for a further 2 months, with agreed rental payments of $4,514 per month. For the
years ended March 31, 2015 and 2014, Man Loong recognized $115,689 and $0, respectively of rental income in the accompanying statements
of comprehensive income.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies - continued |
Income Taxes
The Company utilizes ASC 740, Income Taxes, which requires the 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 income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company has adopted the provisions of the interpretation, of ASC 740, Accounting for Uncertainty in Income Taxes. The Company did not have any material unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing the interpretation. The Company files income tax returns in the United States and we are subject to federal income tax examinations for the fiscal years ended March 31, 2015 and 2014. Man Loong files income tax returns in Hong Kong and is no longer subject to tax examinations by tax authorities for years before 2007. At March 31, 2015, Man Loong had no uncertain tax positions.
We have not provided
for U.S. income and foreign withholding taxes on approximately $696,000 of Man Loong’s undistributed earnings for the year
ended March 31, 2015, because such earnings have been retained and reinvested by Man Loong. The Company does not intend to require
Man Loong to pay dividends for the foreseeable future and so additional income taxes and applicable withholding taxes that would
result from the repatriation of such earnings are not practicably determinable.
Earnings per Share
The Company computes
earnings per share (“EPS”) in accordance with ASC 260, Earnings Per Share. ASC 260 requires companies
with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted
average common shares outstanding during the period.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a
per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had
been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes
the estimated impact of the exercise of contracts to purchase common stocks using the treasury stock method and the potential
shares of converted common stock associated with the convertible debt using the if-converted method.
Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
The Company does not have any securities that may potentially dilute its basic earnings per share.
Effective March 12, 2015, the Company effected a 10 for 1 stock split, whereby it exchanged 10 of its shares for every 1 share issued at outstanding before the split. Following the share split, the Company has 512,600,000 shares issued and outstanding. All share and per share amounts for the prior period have been retroactively restated to give effect of the 10 for 1 share split.
Comprehensive Income
Comprehensive income
is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains
or losses resulting from translating Man Loong’s functional currency, the HK dollar, to its reporting currency, the U.S.
dollar.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies - continued |
Recently Adopted Accounting Standards
In March
2014, we adopted ASU 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for Cumulative Translation Adjustments
Upon Derecognition of Certain Subsidiaries or Groups of Assets Within a Foreign Entity or an Investment in a Foreign Entity.
ASU 2013-05 requires entities to release the entire balance of cumulative translation adjustment to the entity’s investment
in a foreign entity when there is a; 1) sale of the subsidiary or group of net assets within the foreign entity; 2) loss of controlling
financial interest in an investment in a foreign entity; or, 3) a step acquisition of a foreign entity such that the reporting
entity changes from the equity method to consolidation of the foreign entity. ASU 2013-05 was effective for fiscal periods beginning
after December 15, 2013. The adoption of ASU 2013-05 did not have a material effect on the Company’s consolidated financial
statements.
In March 2014, we adopted ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force).
The amendments in ASU 2013-11 state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented
in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss,
or a tax credit carryforward, with certain exceptions. ASU 2013-11 applies to all entities that have unrecognized tax benefits
when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments
in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The
adoption of this update did not have a material effect on the Company’s consolidated financial statements.
Recent
Accounting Pronouncements
In February 2015, the FASB issued ASU 2015-02 Consolidations (Topic 810) Amendments to
the Consolidation Analysis. ASU 2015-02 simplifies consolidation accounting for VIEs by placing more emphasis on the risk
of loss and simplifying the application of related party guidance when determining whether a controlling financial interest in
a VIE exists. ASU 2015-02 also simplifies consolidation analysis for public and private companies in several industries
that typically make use of limited partnerships. ASU 2015-02 is effective for years beginning after December 15, 2015 and
early adoption is permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated
financial statements.
In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments
When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12
requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated
as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of
the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will
be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already
been rendered. ASU 2014-12 is effective for fiscal years, and interim periods within those years, beginning after December 15,
2015, and early adoption is permitted. The adoption of ASU 2014-12 is not expected to have a material effect on the Company’s
consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires the Company to
recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which
the company expects to be entitled in exchange for those goods or services. The Company is evaluating its existing revenue recognition
policies to determine whether any contracts in the scope of the guidance will be materially affected by the new requirements.
The effects may include identifying performance obligations in existing arrangements, estimating the amount of variable consideration
to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09
is effective beginning with the first quarter of the Company's 2018 fiscal year. Early adoption is not permitted.
The adoption of ASU 2014-09 is not expected to have a material effect on the Company’s consolidated financial statements.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
2. |
Summary of Significant Accounting Policies - continued |
|
|
Recent Accounting Pronouncements,
Continued
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American
Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on
the Company’s present or future consolidated financial statements.
3. |
Deposits and Prepaid Expenses |
|
|
|
Deposits and prepaid expenses consisted of the following as of March 31, 2015 and 2014: |
|
| |
2015 | | |
2014 | |
|
Current | |
| | |
| |
|
Prepaid rent and occupancy expenses | |
$ | 52,452 | | |
$ | 58,368 | |
|
| |
| 52,452 | | |
| 58,368 | |
|
Noncurrent | |
| | | |
| | |
|
Rent and occupancy deposits | |
| 223,470 | | |
| 219,913 | |
|
Total deposits and prepaid expenses | |
$ | 223,470 | | |
$ | 278,281 | |
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
4. |
Loan receivable from eBullion Trade |
In July 2013,
the Company’s wholly-owned subsidiary Man Loong, loaned eBullion Trade Company Limited (“eBullion Trade”) $997,049
(RMB 6,100,000). eBullion Trade is a development stage entity pursuing a license in the Peoples’ Republic of China for the
purpose of engaging in trading silver contracts as an electronic trading member of the Guangdong Precious Metal Exchange (“GPME”).
The Company
determined that the loan to eBullion Trade gave the Company a variable interest in eBullion Trade and that eBullion Trade is a
variable interest entity (“VIE”) because the equity investor of eBullion Trade on the date of the loan lacked sufficient
equity at risk to finance its activities without the loan. However, the Company determined that it was not the primary beneficiary
of the VIE, because Man Loong did not have the power to direct the activities of the VIE that significantly impacted its economic
performance. Accordingly, the Company has not consolidated eBullion Trade into its consolidated financial statements.
The loan was unsecured,
bore no interest and matured on April 17, 2014. Under terms of the loan, in the event that eBullion Trade’s GPME application
was approved, it had the option to repay the loan in cash or by transferring 100% of its outstanding stock to Man Loong.
In April
2014, eBullion Trade informed Man Loong that it intended to repay the loan in cash in accordance with the terms of the loan agreement,
and the loan was repaid in full on May 2, 2014.
Equipment, including leasehold improvements, consisted of the following as of March 31, 2015 and 2014:
|
| |
2015 | | |
2014 | |
|
Office equipment | |
$ | 305,557 | | |
$ | 305,557 | |
|
Computer equipment | |
| 41,546 | | |
| 41,546 | |
|
Furniture and fixtures | |
| 56,117 | | |
| 56,117 | |
|
| |
| 403,220 | | |
| 403,220 | |
|
Less: Accumulated depreciation | |
| (178,089 | ) | |
| (97,378 | ) |
|
Equipment, net | |
$ | 225,131 | | |
$ | 305,842 | |
Depreciation expense was $80,666 and $80,339 for the years ended March 31, 2015 and 2014, respectively, and was recorded as depreciation and amortization expense in the accompanying consolidated statements of comprehensive income.
Customer deposits were $92,613 and $38,990 at March 31, 2015 and 2014, respectively, and were recorded as a current liability in the accompanying consolidated balance sheets.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
7. |
General and Administrative Expenses |
General and administrative expenses consist of the following for
the years ended March 31, 2015 and 2014.
|
| |
2015 | | |
2014 | |
|
Marketing expenses | |
$ | 296,072 | | |
$ | 758,762 | |
|
Trading platform rent | |
| 188,357 | | |
| 141,204 | |
|
Transportation | |
| 68,302 | | |
| 98,681 | |
|
Internet | |
| 24,186 | | |
| 18,680 | |
|
Travel and entertainment | |
| 34,159 | | |
| 67,030 | |
|
Computers and software | |
| 36,786 | | |
| 39,686 | |
|
Legal and professional | |
| 210,362 | | |
| 182,747 | |
|
Licenses | |
| 3,165 | | |
| 5,021 | |
|
Occupancy | |
| 591,452 | | |
| 591,652 | |
|
Advertising | |
| 69,668 | | |
| 1,702 | |
|
Other taxes | |
| 1,050 | | |
| - | |
|
Other | |
| 128,183 | | |
| 131,256 | |
|
Total general and administrative expense | |
$ | 1,651,742 | | |
$ | 2,036,421 | |
Income before income taxes as shown in the accompanying consolidated statements of comprehensive income is
summarized below for the years ended March 31, 2015 and 2014.
|
| |
2015 | | |
2014 | |
|
United States | |
$ | (158,746 | ) | |
$ | (135,963 | ) |
|
Hong Kong | |
| 831,569 | | |
| 191,034 | |
|
Income before income taxes | |
$ | 672,823 | | |
$ | 55,071 | |
Under Hong Kong Profits Tax Law the
Company is subject to profits tax at a statutory rate of 16.5% on income reported in its statutory financial statements after appropriate
tax adjustments.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
8. |
Income Taxes, Continued |
The income tax provision (benefit)
consists of the following for the years ended March 31, 2015 and 2014:
|
| |
2015 | | |
2014 | |
|
Current: | |
| | |
| |
|
United States | |
$ | - | | |
$ | - | |
|
Hong Kong | |
| 145,896 | | |
| 40,091 | |
|
Total current provision | |
| 145,896 | | |
| 40,091 | |
|
| |
| | | |
| | |
|
Deferred: | |
| | | |
| | |
|
United States | |
| - | | |
| - | |
|
Hong Kong | |
| (10,372 | ) | |
| (9,443 | ) |
|
Total deferred benefit | |
| (10,372 | ) | |
| (9,443 | ) |
|
| |
| | | |
| | |
|
Total income tax provision | |
$ | 135,524 | | |
$ | 30,648 | |
The reconciliation of the income tax
provision to the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes is as follows:
|
| |
2015 | | |
2014 | |
|
Income tax provision at the U.S. statutory tax rate | |
$ | 228,759 | | |
$ | 18,724 | |
|
Valuation allowance on U.S. net operating loss carryforwards | |
| 53,974 | | |
| 46,227 | |
|
Impact of foreign operations | |
| (145,525 | ) | |
| (33,431 | ) |
|
Other | |
| (1,684 | ) | |
| (872 | ) |
|
Income tax provision | |
$ | 135,524 | | |
$ | 30,648 | |
At March 31, 2015, we had U.S. net
operating loss carryforwards of approximately $316,000 which expire in 2035. Based on the available evidence, it is uncertain
whether future U.S. taxable income will be sufficient to offset the estimated net loss carryforwards, accordingly, we have recorded
a valuation allowance of approximately $107,000 as of March 31 2015.
As March 31, 2015 and 2014, the Company’s
and Man Loong’s differences between the book and tax basis of equipment gave rise to deferred income tax assets of $10,372
and $9,443, respectively which are recorded as noncurrent in the accompanying consolidated balance sheets. The Company had no other
differences between the book and tax basis of assets and liabilities as March 31, 2015 and 2014.
As a result of the implementation
of ASC 740, Accounting for Income Taxes, the Company recognized no material adjustment to unrecognized tax benefits. The
Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in the accompanying
statements of comprehensive income. The Company has incurred no interest or penalties during the years ended March 31, 2015 and
2014.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
Earnings per share (“EPS”) information for
the year ended March 31, 2015 and 2014 was determined by dividing net income for the period by the weighted average number of
both basic and diluted shares of common stock and common stock equivalents outstanding.
As of and for the year ending March 31, 2015 and 2014, the Company
did not have any securities that may potentially dilute the basic earnings per share. Therefore basic and diluted earnings per
share for the respective periods are the same.
|
| |
2015 | | |
2014 | |
|
Numerator | |
| | |
| |
|
Net income attributable to common shareholders | |
$ | 537,299 | | |
$ | 24,423 | |
|
| |
| | | |
| | |
|
Denominator | |
| | | |
| | |
|
Weighted average shares of common stock (basic and diluted) | |
| 512,600,000 | | |
| 512,600,000 | |
|
| |
| | | |
| | |
|
Basic and diluted earnings per share | |
$ | 0.00 | | |
$ | 0.00 | |
10. |
Related Party Transactions and Balances |
The Company engaged in related party transactions with certain shareholders, and a company under common control as described below.
On May 27, 2011,
the Company entered into an agreement with a company under common control, True Technology Company Limited (“True
Technology”), under which True Technology hosts the Company’s servers and provides a connection between the
customer’s servers and the internet using True Technology’s public network connections. The fee for these
services was $12,894 per month through April 2013 when the fee was reduced to $3,868 per month and is recorded as trading
platform rent as a component of general and administrative expenses. Included in trading platform rental fees in the
accompanying statements of comprehensive income for the years ended March 31, 2015 and 2014, are rental fees which were paid
to True Technology of $46,430 and $46,409 respectively.
Included in employee compensation and benefits in the accompanying consolidated statements of comprehensive income for the years ending March 31, 2015 and 2014, are salaries and director compensation of $46,430 and $55,175 respectively, which were paid to two of the Company’s shareholders.
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
The Company leases office space under non-cancellable operating lease agreements that expire on various dates through 2016.
In December 2012, the Company entered into a new lease agreement on approximately 10,000 square feet of office space which replaced its existing office facilities. The Company occupied the new space in January 2013. Under terms of the lease, the Company paid approximately $192,000 in lease deposits and is committed to lease and management fee payments of approximately $46,647 per month for 29 months.
In May 27, 2011, the Company entered into an agreement with True Technology, a company under common control under which True Technology hosts the Company’s servers and provides a connection between the customer’s servers and the internet using True Technology’s public network connections. The fees paid to True Technology are approximately $12,894 per month for 12 months after which the fees were reduced to $3,868 per month for 24 months. Subsequent to year end, the trading platform lease with True Technology was renewed for 2 years with monthly payment of approximately $3,868 until March 31, 2017.
Future annual minimum lease payments, including maintenance and management fees, for non-cancellable operating leases and trading
platform fees, are as follows:
Years ending March 31,
eBullion, Inc. |
Notes to Consolidated Financial Statements |
For the Years Ended March 31, 2015 and 2014 |
(Expressed in US Dollars) |
On April 3, 2013, the Company issued 507,600,000 of its
common stock as founder shares in exchange for 100% of Man Loong’s outstanding shares to complete the Merger.
Subsequent to the Merger, the Company issued 5,000,000
shares of common stock, with par value $0.0001 to various investors for total cash proceeds of $240,044.
Effective March 12, 2015, eBullion increased the number
of its authorized shares from 500,000,000 to 1,000,000,000. The par value of the Company’s shares remained unchanged at $.0001.
The Company also effected a 10 for 1 stock split, whereby it exchanged 10 of its shares for every 1 share issued at outstanding
before the split. Following the share split, the Company has 512,600,000 shares issued and outstanding. All share and per share
amounts for the prior period have been retroactively restated to give effect of the 10 for 1 share split.
On April 3, 2015, Man Loong loaned Global Long Inc.
Limited (“Global Long”) HKD$6,000,000. Global Long is registered in Hong Kong and through its subsidiaries in the
Peoples Republic of China, is engaged in trading silver contracts as an electronic trading member of the Guangdong Precious Metal
Exchange. The loan bears interest at a 6% annual rate, matures on its 5th anniversary and is secured by a first right
of claim on a bank deposit held by a subsidiary of Global Long. Under terms of the loan, interest is payable to Man Loong quarterly
and Global Long has the right to repay the loan at any time before the maturity date. Until all principal and accrued interest
are repaid on the loan, Global Long may not enter into additional borrowings without Man Loong’s written permission, and
upon certain events of default, the Loan becomes due on demand.
Item 9. |
Changes In and Discussions with Accountants on Accounting and Financial Disclosures |
None.
Item 9A. |
Controls and Procedures |
Disclosure Controls and Procedures
The Company has adopted and maintains
disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed
in the reports filed under the Exchange Act, such as this Form 10-K, is collected, recorded, processed, summarized and reported
within the time periods specified in the rules of the SEC. The Company’s disclosure controls and procedures are also designed
to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.
As required under Exchange Act Rule 13a-15, the Company’s management, including the Chief Executive Officer and the Company’s
Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of
the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial
Officer concluded that due to a lack of segregation of duties that the Company’s disclosure controls and procedures are ineffective
to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and
that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive
Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Subject to receipt
of additional financing or revenue generated from operations, the Company intends to retain additional individuals to remedy the
ineffective controls.
Management’s Report on Internal
Control over Financial Reporting
The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15. The
Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management
and Board of Directors regarding the preparation and fair presentation of published financial statements. Management
conducted an assessment of the Company’s internal control over financial reporting based on the framework and criteria established
by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (“COSO”). The
COSO framework requires rigid adherence to control principles that require sufficient and adequately trained personnel to operate
the control system. The Company has insufficient accounting personnel for it to be able to segregate duties as
required by COSO or to maintain all reference material required to ensure Company personnel are properly advised or trained to
operate the control system. Based on the assessment, management concluded that, as of March 31, 2015, the Company’s
internal control over financial reporting is ineffective based on those criteria.
The Company’s management, including
its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures
and its internal control processes will prevent all error and all fraud. A control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of
a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of error or fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error
or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people,
or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Changes in Internal Control
There has been no change in our internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our year
ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
This annual report does not include
an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of
the SEC that permit the Company to provide only management’s report in this annual report.
Item 9B. |
Other Information |
None.
PART III
Item 10. |
Directors, Executive Officers and Corporate Governance |
The following table sets forth the name,
age and position held by each of our executive officers and directors.
Name |
|
Age |
|
Office(s) Held |
Kee Yuen Choi |
|
61 |
|
President, Chief Executive Officer and Director |
Chui Chui Li |
|
32 |
|
Chief Financial Officer, Treasurer, Secretary and Director |
Hak Yim Wong |
|
65 |
|
Director |
Joseph Havlin |
|
62 |
|
Director |
Kee Yuen Choi, President,
Chief Executive Officer and Director
Mr. Choi has served as the Company’s
President, Chief Executive Officer and Director since April 3, 2013 and has served in the same positions at Man Loong since 2007. Mr.
Choi was also one of the founders of the predecessor of Man Loong 35 years ago with over 35 years of experience in Gold and Silver
trading business. Mr. Choi is well-recognized in The Chinese Gold and Silver Trading Exchange Society in Hong Kong.
Mr. Choi specialized in Gold and Silver trading clearing services and foreign exchange clearing services. Mr. Choi is also
the owner of True Technology. With over 35 years of experience, Mr. Choi helps the company to monitor potential market
risk and to lead the company’s future business development and growth.
Mr. Choi has been associated with the
Company’s operating subsidiary since inception and brings to the Board extensive knowledge of the Gold and Silver trading
business. He has a vast knowledge of the industry and brings to the Board significant executive leadership and operational
experience.
Chui Chui Li, Chief Financial
Officer, Treasurer, Secretary and Director
Ms. Li has served as the Company’s
Chief Financial Officer, Treasurer, Secretary and Director since April 3, 2013.Ms. Li is an accountant and has also served as the
Accounting Manager for Man Loong since June 2007. As Accounting Manager, Ms. Li has been responsible for preparation
of financial reports, maintaining accounting records and supervising the accounting staff.
Ms. Li’s accounting knowledge
adds significant financial experience to the Company’s board. Her knowledge of the specific financial position
of the Company’s operating subsidiary aids the board in its financial decision making.
Hak Yim Wong, Director
Mr. Wong has been a director of the
Company since April 3, 2013. Mr. Wong was one of the founders of Man Loong 35 years ago with over 35 years of experience
in Gold and Silver trading business. For the past five years, Mr. Wong has been semi-retired and worked for Man Loong on
a part time basis as a liaison with the CGSE. Mr. Wong was one of the first group of professionals to receive the membership
of The Chinese Gold and Silver Trading Exchange Society in Hong Kong. Mr. Wong experienced the up and down of Gold and Silver
trading market in the past 35 years and brought his professional experience to help Man Loong survive in the business for 35 years.
Mr. Wong is also the owner of True Technology, the entity from which the Company licenses its trading platform.
Mr. Wong has been associated with the
Company’s operating subsidiary since inception and brings to the Board extensive knowledge of the Gold and Silver trading
business. He has a vast knowledge of the industry and brings to the Board significant executive leadership and operational
experience.
Joseph Havlin, Director
Mr. Havlin has been a director of the
Company since April 3, 2013 and has served the Company as a financial advisor since December 2012. Mr. Havlin is a certified
public accountant with over 30 years’ experience serving companies in the mining, manufacturing, retail, high-technology,
entertainment, hospitality, newspapers and distribution industries. Mr. Havlin has been a director of Azarga Uranium
Corp. a uranium exploration company listed on the TSX since October 2014 and was previously a director of Azarga Resources from
2012. Mr. Havlin is also a Director of Black Range Minerals Limited, a uranium exploration and technology company listed
on the ASX, from March 2014 to present. Previously, Mr. Havlin was Director and CFO of Alpha Prime Investment Limited,
a coal exploration, development and mining company from 2008 to 2010. From March 2004 until December 2005 and then from January 2008
until October 2008 he was a partner at Baker Tilly Hong Kong, a company that provided US GAAP and SEC reporting advice to
companies in Hong Kong and China. Prior thereto, Mr. Havlin held various positions with several national accounting
firms and served as Chief Financial Officer for several companies located in China and the United States.
Mr. Havlin brings a strong start-up
and finance background to the Company, and adds significant strategic, business and financial experience. His experience
as a certified public accountant and his knowledge of US GAAP and SEC rules provide him with a broad understanding of issues faced
by public companies and of the financial markets and the financing opportunities available to us.
Term of Office
Our directors hold office until the
next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers
are appointed by our board of directors and hold office until removed by the board.
Item 11. |
Executive Compensation |
The following table sets forth all compensation
awarded, earned or paid for services rendered to Man Loong’s principal executive officer and principal financial officer
during each of the fiscal years ended March 31, 2015 and 2014. No executive officer of Man Loong was awarded or earned compensation
in excess of $100,000.
Summary Compensation Table
Name
and Principal Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Option
Awards ($) | | |
Non-Equity
Incentive Plan Compensation
($) | | |
Nonqualified
Deferred Compensation
Earnings ($) | | |
All
Other Compensation ($) | | |
Total
($) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Kee
Yuen Choi President, | |
| 2015 | | |
| 30,954 | | |
| - | | |
|
- | | |
|
- | | |
|
- | | |
|
- | | |
| 30,954 | |
Chief Executive Officer | |
| 2014 | | |
| 18,047 | | |
| 21,658 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 39,705 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Chui
Chui Li | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Chief
Financial Officer,
| |
| 2015 | | |
| 55,330 | | |
| 1,435 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 56,765 | |
Treasurer, Secretary | |
| 2014 | | |
| 50,276 | | |
| 2,362 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 52,638 | |
On April 1, 2013, we acquired Man Loong
in a transaction that was structured as a share exchange and in connection with that transaction Mr. Choi became our Chairman,
President and Chief Executive Officer and Ms. Li became our Chief Financial Officer and Secretary. Prior to the effective date
of the exchange transaction Mr. Choi and Ms. Li served in the same capacity at Man Loong. The bonus set forth above for Ms. Li
was not set forth in her employment agreement and was paid to Ms. Li for her work in connection with the filing of the Registration
Statement on Form S-1. In January 2014, Mr. Choi was paid a bonus of HK$168,000 (US$21,658) that was not set forth in his employment
agreement for his work in connection with the retention of two new agents during 2013. The compensation in this table includes
the amount Mr. Choi and Ms. Li received from Man Loong. All of the compensation received by Mr. Choi was for services performed
in his role as Chief Executive Officer and President of Man Loong. We have not paid any of our executive officers any compensation
in addition to the compensation they receive from Man Loong.
Employment Agreements
Man Loong enters into a standard agreement
with each of its employees. The agreement specifies the employees’ position, working hours and salary. The
agreement also requires 14 days’ notice for termination after the initial month of employment or payment by the terminating
party of an equivalent amount of wages in lieu of notice. The agreement also contains confidentiality provisions and
non-compete and non-solicitation provision for six months after termination.
On June 1, 2007, Man Loong entered into
an employment agreement with Mr. Choi to serve as its Chief Executive Officer for an annual salary of HK$120,000 (US$15,473 for
2013). In January 2014, Mr. Choi entered into a new employment agreement with Man Loong to continue to serve as its Chief Executive
Officer for an annual salary of HK$240,000 (US$30,940). Additionally on January 31, 2014, Mr. Choi was paid a bonus of HK$168,000
(US$21,658). Mr. Choi is entitled to an extra month’s salary after completion of one year. The agreement also requires 14
days’ notice for termination after the initial month of employment or payment by the terminating party of an equivalent amount
of wages in lieu of notice. The agreement also contains confidentiality provisions and non-compete and non-solicitation provision
for six months after termination.
On June 1, 2007, Man Loong entered into
an employment agreement with Ms. Li to serve as its Chief Financial Officer, Treasurer and Secretary for an annual salary of HK$338,000
(US$43,557). Ms. Li was entitled to an extra month’s salary after completion of one year. The agreement also requires
14 days’ notice for termination after the initial month of employment or payment by the terminating party of an equivalent
amount of wages in lieu of notice. The agreement also contains confidentiality provisions and non-compete and non-solicitation
provision for six months after termination.
Outstanding Equity Awards at Fiscal
Year End
For the years ended March 31, 2015 and
2014, no director or executive officer has received compensation from us pursuant to any compensatory or benefit plan.
Director Compensation
The following table sets forth information for the fiscal
year ended March 31, 2015 and 2014 regarding the compensation of Man Loong’s directors.
| |
Fees
Earned
Paid in | | |
Option | | |
Other | | |
| |
Name | |
Cash | | |
Awards | | |
Compensation | | |
Total | |
Hak Yim Wong | |
| | |
| | |
| | |
| |
2015 | |
$ | 15,477 | | |
$ | - | | |
$ | - | | |
$ | 15,477 | |
2014 | |
| 15,472 | | |
| - | | |
| - | | |
| 15,472 | |
Other than as set forth above no member
of our Board of Directors received any compensation for his services as a director. However, during the years ended
March 31, 2015 and 2014; , Mr. Havlin has received $11,009 and $24,524 respectively for financial consulting services and for advising
us on the preparation of US GAAP financial statements, the preparation of SEC related filings and assisting with completing the
audits of our financial statements and those of Man Loong pursuant to the terms of a pursuant to the terms of a financial
advisory agreement that Man Loong entered into with Mr. Havlin in December 2012 that provides for the payment of an hourly fee
for the performance of such services. Mr. Wong receives an annual payment from Man Loong for services as a director of Man Loong
of HK120,000 (US$15,477 and $15,470 for 2015 and 2014, respectively) per year, which is payable quarterly.
Corporate Governance
Leadership Structure
Our Chief Executive Officer also serves
as our Chairman of the Board. Our Board of Directors does not have a lead independent director. Our Board of Directors
has determined its leadership structure was appropriate and effective for us given our stage of development.
Board Committees
We presently do not have an audit committee,
compensation committee or nominating committee or committee performing similar functions, as our management believes that until
this point it has been premature at the early stage of our management and business development to form an audit, compensation or
nominating committee.
Director Independence
Although our common stock is not listed
on any national securities exchange, for purposes of independence we use the definition of independence applied by The NASDAQ
Stock Market. The Board has determined that Mr. Wong is “independent” in accordance with such definition.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers, directors and persons who beneficially own more than 10 percent of a registered class of our equity securities,
to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such officers,
directors and persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file with the
SEC.
Based solely on a review of the copies
of such forms that were received by us, or written representations from certain reporting persons that no Form 5s were required
for those persons, we are not aware of any failures to file reports or report transactions in a timely manner during the year
ended March 31, 2015.
Code of Ethics
We have long maintained a Code of Conduct
which is applicable to all of our directors, officers and employees. We undertake to provide a printed copy of these codes free
of charge to any person who requests. Any such request should be sent to our principal executive offices attention: Corporate
Secretary.
Outstanding Equity Awards at Fiscal Year End
The table below summarizes all unexercised options, stock
that has not vested, and equity incentive plan awards for each named executive officer as of March 31, 2015.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END (1) |
| |
OPTION
AWARDS | |
STOCK
AWARDS | |
Name | |
Number
of Securities Underlying Unexercised Options (#) Exercisable | |
Number
of Securities Underlying Unexercised Options (#) Unexercisable | | |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | |
Option
Exercise Price ($) | | |
Option
Expiration Date | | |
Number
of Shares or Units of Stock That Have Not Vested (#) | | |
Market
Value of Shares or Units of Stock That Have Not Vested ($) | | |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Kee
Yuen Choi | |
- | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of
March 31, 2015, information with respect to the securities holdings of: (i) our officers and directors; and (ii) all persons which,
pursuant to filings with the SEC and our stock transfer records, we have reason to believe may be deemed the beneficial owner of
more than five percent (5%) of our common stock. The securities "beneficially owned" by an individual are determined
in accordance with the definition of "beneficial ownership" set forth in the regulations promulgated under the Exchange
Act and, accordingly, may include securities owned by or for, among others, the spouse and/or minor children of an individual and
any other relative who resides in the same home as such individual, as well as other securities as to which the individual has
or shares voting or investment power or which each person has the right to acquire within 60 days through the exercise of options
or otherwise. Beneficial ownership may be disclaimed as to certain of the securities. This table has been prepared based on the
number of shares outstanding totaling 512,600,000, adjusted individually as shown below.
Name and Address of Beneficial Owner (2) | |
| Amount and Nature of Beneficial Ownership | | |
| Percentage of Class Beneficially Owned (1) | |
Kee Yuen Choi(3) | |
| 253,840,000 | | |
| 49.5 | % |
Hak Yim Wong | |
| 18,781,200 | | |
| 3.7 | % |
| |
| | | |
| | |
Chui Chui Li(4) | |
| 100,000 | | |
| * | | |
|
Joseph Havlin | |
| 100,000 | | |
| * | | |
|
All directors and executive officers as a group (5 persons) | |
| 272,821,200 | | |
| 53.2 | % |
Name and Address of Beneficial Owner (2) | |
Amount and Nature of Beneficial Ownership | | |
Percentage of Class Beneficially Owned
(1) | |
Man Hap Dennis Yim | |
| 59,389,200 | | |
| 11.6 | % |
Yuen Fay Tse | |
| 25,158,530 | | |
| 4.9 | % |
Lai Keung Chan | |
| 140,097,600 | | |
| 27.3 | % |
All other shareholders with over 5% ownership as a group (2 persons) | |
| 224,645,330 | | |
| 43.8 | % |
* Less than 1%
(1) |
Percentage of class beneficially owned is calculated by dividing the amount and nature of beneficial ownership by the total shares of common stock outstanding plus the shares subject to warrants and options that are currently exercisable or exercisable within 60 days of March 31, 2015. |
(2) |
Unless otherwise set forth herein, the address of each beneficial owner is 80 Broad Street, 5 th Floor, New York, New York 10004 |
(3) |
Includes 40,000 shares of common stock owned by Mr . Choi’s wife, Sin Yin Cheung. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
● |
On April 3, 2013, we acquired Man Loong from its five shareholders, whereby we acquired 100% of the issued and outstanding capital stock of Man Loong, in exchange for 507,600,000 shares of our common stock. Kee Yuen Choi, our Chief Executive Officer and a director and the Chief Executive Officer and a director of Man Loong, Hak Yim Wong, our director and a director of Man Loong, Lai Keung Chan, our director and a shareholder of Man Loong, Man Hap Dennis Yim, a shareholder of ours and Man Loong’s and Yuen Fay Tse, a shareholder of ours and Man Loong’s, exchanged 5,076,000, 375,624, 2,801,952, 1,187,784 and 710,640 shares of common stock of Man Loong for 253,840,000, 18,781,200, 140,097,600, 59,389,200 and 25,158,530 shares of our common stock |
|
|
● |
Man Loong’s electronic precious metals trading platform was developed for its use by True Technology Company Limited, an IT services provider owned by Mr. Choi, our Chief Executive Officer and a 49.5% stockholder and Mr Wong, a director and a 3.7% stockholder. Man Loong pays True Technology, a monthly flat fee for the license of the trading platform which has been customized to our specifications and hosting services. On May 27, 2011, Man Loong entered into an agreement with True Technology Company Limited for the license of the trading platform it uses and the provision of hosting services by True Technology Company Limited for an aggregate monthly fee of $12,894. On April 1, 2013, Man Loong entered into a new agreement with True Technology Company Limited for the license of the technology as well as the provision of hosting services until March 31, 2015 for a monthly fee of approximately $3,868. The hosting services include physical space to house a computer system owned by True Technology Company Limited and a connection of Man Loong’s server to the internet using True Technology Company Limited’s public network connections. The agreement is subject to termination by True Technology Company Limited at any time upon provision of written notice. For the years ended March 31, 2015 and 2014, Man Loong paid True Technology $46,430 and $46,409, respectively for the use of the platform and hosting services. Subsequent to year end, the trading platform lease with True Technology was renewed for 2 years with monthly payments of approximately $3,868 until March 31, 2017. |
|
|
● |
Included in Man Loong’s financial statements line item “employee compensation and benefits” for the years ended March 31, 2015 and 2014 are salaries paid to Mr. Choi of $30,954 and $39,705, respectively and directors’ compensation paid to Mr. Wong of $15,477 and $15,472, respectively. In January 2014, Mr. Choi entered into a new employment contract pursuant to which his annual salary was increased to HK$240,000 (US$30,940) and to provide an annual bonus of HK$20,000 (US$2,578). Additionally on 31 January 2014, Mr. Choi was paid a bonus of HK$168,000 (US$21,658). |
● |
In December 2012, Man Loong entered into a consulting agreement with Mr. Havlin for the provision by Mr. Havlin of financial advisory services for an hourly fee of $120 per hour to be increased to $150 per hour on mutual agreement. The agreement can be terminated by Man Loong with 7 days’ notice prior to the end of any month and the agreement can be terminated by Mr. Havlin upon 30 days’ notice. During the years ended March 31, 2015 and 2014, Man Loong paid Mr. Havlin $11,009 and $24,524, respectively for financial consulting services advising us on the preparation of US GAAP financial statements, the preparation of SEC related filings and assisting with completing the audits of our financial statements and those of Man Loong. |
Item 14. |
Principal Accountant Fees and Services |
Anton & Chia, LLP serves as our
independent registered public accounting firm.
Independent Registered Public Accounting
Firm Fees and Services
The following table sets forth the aggregate
fees including expenses billed to us for the years ended March 31, 2015 and 2014 by our auditors.
| |
March 31, 2015 | | |
March 31, 2014 | |
Audit fees and expenses (1) | |
$ | 36,635 | | |
$ | 25,807 | |
Taxation preparation fees (2) | |
| - | | |
| - | |
Audit related fees (3) | |
| - | | |
| - | |
Other fees (4) | |
| - | | |
| - | |
| |
$ | 36,635 | | |
$ | 25,807 | |
(1) |
Audit fees and expenses were for professional services rendered for the audit and reviews of the consolidated financial statements of the Company, professional services rendered for issuance of consents and assistance with review of documents filed with the SEC. The 2015 balance includes a provision for the 2015 audit as well as the expense incurred for the 2014 audit. |
(2) |
Taxation preparation fees were fees for professional services rendered to file our federal and state tax returns |
(3) |
We incurred fees to our independent auditors of $-0- for audit related fees during the fiscal years ended March 31, 2015 and 2014. |
(4) |
We incurred fees to our independent auditors of $-0- for other fees during the fiscal years ended March 31, 2015 and 2014. |
Audit Committee’s Pre-Approval
Practice.
Prior to our engagement of our independent
auditor, such engagement was approved by our board of directors. The services provided under this engagement may include audit
services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Pursuant
our requirements, the independent auditors and management are required to report to our board of directors at least quarterly regarding
the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services
performed to date. Our board of directors may also pre-approve particular services on a case-by-case basis. All audit-related fees,
tax fees and other fees incurred by us for the year ended March 31, 2015, were approved by our board of directors.
PART IV
Item 15. |
Exhibits and Financial Statement Schedules and Reports on Form 8-K |
(a)(1) |
The following financial statements are included in this Annual Report on Form 10-K for the fiscal year ended March 31, 2015. |
|
1. |
Independent Auditor’s Report |
|
|
|
|
2. |
Consolidated Balance Sheets as of March 31, 2015 and 2014 |
|
|
|
|
3. |
Consolidated Statements of Comprehensive Income for the years ended March 31, 2015 and 2014 |
|
|
|
|
4. |
Consolidated Statements of Changes in Shareholders’ Equity for the years ended March 31, 2015 and 2014 |
|
|
|
|
5. |
Consolidated Statements of Cash Flows for the years ended March 31, 2015 and 2014 |
|
|
|
|
6. |
Notes to Consolidated Financial Statements |
(a)(2) |
All financial statement schedules have been omitted as the required information is either inapplicable or included in the Consolidated Financial Statements or related notes. |
(a)(3) |
The following exhibits are either filed as part of this report or are incorporated herein by reference: |
3.1 |
Certificate of Incorporation dated January 28, 2013 (Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
3.2 |
By-Laws(Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.1 |
Contribution Agreement dated April 3, 2013(Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.2 |
Lease Agreement (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.3 |
Software Development License and Maintenance Agreement dated April 1, 2013 between True Technology Company and Man Loong Bullion Company Limited (Incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.4 |
Standard Form of Customer Agency Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.5 |
Agency Agreement dated January 1, 2010, between Man Loong Bullion Company Limited and Mr. Wong Hak Yim (Incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on April 19, 2013) |
10.6 |
Schedule to Form of Agency Agreement (Incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on November 1, 2013) |
10.7 |
Form of Employment Agreement (Incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on October 2, 2013) |
10.8 |
Employment Agreement between Man Loong and Mr. Choi (Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on October 2, 2013) |
10.9 |
Employment Agreement between Man Loong and Ms. Li (Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on October 2, 2013) |
10.10 |
Agreement between Man Loong and Joseph Havlin (Incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on August 28, 2013) |
10.11 |
Trading Account Form (Incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on December 23, 2013) |
10.12 |
Loan Agreement between Man Loong Bullion Company and eBullion Trade Company Limited (Incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on December 23, 2013) |
10.13
|
Employment Agreement
between Man Loong and Mr. Choi dated January 31, 2014(Incorporated by reference to Exhibit 10.13 to the Company’s Registration
Statement on Form S-1 (File No. 333-188003) filed with the Securities and Exchange Commission on June 6, 2014)* |
10.14 |
Loan Agreement effective April 3, 2015 between Man Loong and Global Long Limited (1) |
10.15 |
Servers
and Network Lease entered into April 1, 2015 between True Technology Company Limited and Man Loong (1) |
14 |
Code
of Ethics (1) |
31.1 |
Certification of Kee Yuen Choi, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) (1) |
31.2 |
Certification of Chui Chui Li, Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (1) |
32.1 |
Certification of Kee Yuen Choi, Chief Executive Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002(1) |
32.2 |
Certification Chui Chui Li, Chief Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002(1) |
|
|
101. |
INS XBRL Instance Document(1) |
|
|
101. |
SCH XBRL Taxonomy Extension Schema Document(1) |
|
|
101. |
CAL XBRL Taxonomy Extension Calculation Linkbase Document(1) |
|
|
101. |
DEF XBRL Taxonomy Extension Definition Linkbase Document(1) |
|
|
101. |
LAB XBRL Taxonomy Extension Label Linkbase Document(1) |
|
|
101. |
PRE XBRL Taxonomy Extension Presentation Linkbase Document(1) |
* Management contract
or compensatory plan or arrangement required to be identified pursuant to Item 15(a) (3) of this report.
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Kee Yuen Choi |
|
Chief Executive Officer |
|
June
26, 2015 |
Kee Yuen Choi |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Chui Chui Li |
|
Chief Financial Officer |
|
June
26, 2015 |
Chui Chui Li |
|
|
|
|
Pursuant to the requirements of the
Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Date:
June 26, 2015 |
|
By: |
/s/ Kee Yuen Choi |
|
|
|
Chief Executive Officer and Director |
|
|
|
Date: June 26,
2015 |
|
By: |
/s/ Chui Chui Li |
|
|
|
Chief Financial Officer and Director |
|
|
|
Date: June 26,
2015 |
|
By: |
/s/ Hak Yim Wong |
|
|
|
Hak Yim Wong
Director |
Date:
June 26, 2015 |
|
By: |
/s/ Joseph Havlin |
|
|
|
Joseph Havlin |
|
|
|
Director |
|
27
Exhibit 10.14
LOAN
AGREEMENT
This
Loan Agreement ("Agreement") is made and effective the 3rd of April, 2015
BETWEEN: |
Man
Loong Bullion Company Limited, (“Lender”) with its registered address located at 8/F, Tower 5, China Hong
Kong City, Tsim Sha Tsui, Hong Kong |
AND: |
GLOBAL
LONG INC LIMITED ("Borrower"), with its registered address located at Rm C, 2/F., Capital Trade Centre, 62 Tsun
Yip Street, Kwun Tong Hong Kong SAR. |
WHEREAS:
A. |
The
Borrower has requested the Lender to make available a loan facility (“Loan”) of HKD$6,000,000 and the Lender agreed
to grant such amount to the Borrower. |
The
Borrower may draw the Loan in one or more drawdowns during the period of 12 months from the date of this Agreement by giving the
Lender 5 business days’ prior notice, specifying the drawdown date, amount and disbursement instructions for the funds to
be drawn.
Within
5 years from the date of receipt of funds on each drawdown, Borrower promises to pay to the Lender the sum of each drawdown together
with unpaid interest and other charges. On the 5th anniversary of the date of this Agreement all unpaid principal and
interest matures and are due and payable to the Lender.
The
Borrower agrees to pay to the Lender on the first day of each quarter, interest at 6% per annum on the balance of the Loan plus
accrued and unpaid interest and other charges outstanding during the previous quarter. Payment of interest will be in Hong Kong
Dollars and will be paid to the Lender in accordance with disbursement instructions provided by the Lender no later than 5 business
days prior to the due date of each payment of interest.
The
Borrower grants Lender the first right of claim to its RMB$5,000,000 fixed deposit held in Borrower’s bank account (account
information below). Prior to receiving any drawdown on the Loan, Borrower will take all actions necessary to make Lender an authorized
signatory on the Borrower’s bank account with transaction limits so as to aloe Lender to transfer the full balance of the
account. So long as there is an outstanding loan and unpaid interest balance under this Agreement, Borrower may not withdraw any
funds from that account without the express written permission of the Lender. Any funds removed from the account before this Loan
is repaid in full will first be paid to the Lender until all principal and interest on the Loan are repaid. Within 5 business
days following the complete repayment of all outstanding loan and interest balances, Lender will take all actions necessary to
remove Lender from Borrower’s bank account as an authorized signatory.
Account
Holder: Shanhun (wholely owned subsidiary of GLOBAL LONG INC LIMITED)
Beneficiary
Bank: China Construstion Bank
Bank
Address: GuangDong Branch
SWIFT:
PCBCCNBJGDX
Account
Number: 44001531405053008458
Until
all principal and interest are repaid on the Loan, Borrower agrees not enter into any other loans with any party without the written
permission of the Lender. Borrower agrees that all other such loans entered into with Lender’s permission will be subordinate
with respect to payment of principal, interest and other charges due on this Loan.
6. |
Remittance
of Loan proceeds |
The
proceeds from this loan will be remitted to the following account:
Account
Holder: Ko Wai Ling
Beneficiary
Bank: HSBC Hong Kong
Bank
Address: 1 Queen’s Road Central, Hong Kong
SWIFT:
HSBCHKHHHKH
Account
Number: 548-121755-001
Borrower
has the right, but not the obligation, to repay the whole principal balance of this Loan plus unpaid interest at any time after
the 1st anniversary of the date of this Agreement.
Lender
has the right at any time to assign this Agreement to any party on written notice to the Borrower. Borrower may not assign this
Agreement to any party without written permission of the Lender.
9. |
Payment
default interest |
After
the 5th anniversary of the date of this Agreement, the Borrower shall pay interest on the unpaid amount of principal plus unpaid
interest from such due date and until the payment of said sum in full at 15% per annum.
If
repayment of outstanding principal or interest is not paid within 30 days of any due date, Borrower agrees to pay a late charge
of 2% of the total amount to be paid. For avoidance of doubt, Late Charges apply to payment of principal and interest on maturity
of the Loan and to payment of interest on quarterly interest payment due dates.
The
following events shall constitute an Event of Default under this Agreement:
| (a) | The
Borrower breaches any material covenant of this Agreement in any material respect. |
|
(b) |
The
Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed. |
|
(c) |
Bankruptcy,
reorganization, insolvency proceeding, liquidation proceedings or other proceedings or relief under any bankruptcy law or
any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against
the Borrower and if so instituted are not dismissed within 45 days of initiation. |
|
(d) |
A
final judgment or judgments for the payment of money in excess of HKD$600,000 in the aggregate shall have been rendered by
a court against Borrower and the same shall not be discharged (or provision shall not made for such discharge), or a stay
of execution thereof shall not have been procured, within 45 days or such longer period during which the execution of the
same shall have been stayed, or an appeal taken therefrom and the execution thereof stayed during such appeal. |
12. |
remedies
on an event of defaul |
On
occurrence of an Event of Default, Lender may demand immediate payment of the entire remaining unpaid balance of this loan, without
giving further notice, and Borrower shall pay interest at 15% per annum on the unpaid amount of principal and unpaid interest
from the date of Default until all unpaid principal and interest due on the Loan is repaid.
Notices
required to be given to a party to this Agreement shall be in writing and may be delivered personally, sent by registered mail
or by email, in each case addressed to the party at its address set out below or to such other address as a party may from time
to time notify the other party.
Lender:
Man
Loong Bullion Company Limited
8/F,
Tower 5, China Hong Kong City
Tsim
Sha Tsui, Hong Kong
Choi
Kee Yuen
852-2155-3999
Borrower:
GLOBAL
LONG INC LIMITED
Rm
C, 2/F., Capital Trade Centre, 62 Tsun Yip Street,
Kwun
Tong Hong Kong
Address
Ko
Wai Ling
852-8206-1801
This
Agreement shall be governed by and construed in accordance with the laws of Hong Kong and subject to the non-exclusive jurisdiction
of the Hong Kong courts.
If
any provision of this Agreement is held for any reason to be unenforceable, the remainder of this Agreement shall, nevertheless
remain in full force and effect.
This
Agreement may be executed in any number of counterparts, each of which is an original and all of which together evidence the same
Agreement.
IN
WITNESS WHEREOF this Agreement has been executed on the date first above written.
LENDER
Man Loong Bullion Company Limited |
|
BORROWER
GLOBAL LONG INC LIMITED |
|
|
|
/s/ Choi
Kee Yuen |
|
/s/
Ko
Wai Ling |
Authorized
Signature |
|
Authorized
Signature |
|
|
|
Choi
Kee Yuen, Direct, CEO |
|
Ko
Wai Ling, Director |
Print
Name and Title |
|
Print
Name and Title |
4
Exhibit 10.15
SERVERS AND NETWORK LEASE
BETWEEN
True Technology Company Limited
AND
Man Loong Bullion Company Limited
DEDICATED SERVERS HOSTING & NETWORK
LEASE AGREEMENT
This Agreement, entered into this 1 day of April,
2015 by and between 31 day of March, 2017
Service Fee: HKD $30,000.00 / MONTHLY
Customer: |
Man Loong
Bullion Company Limited |
Address: |
Floor 8, Tower 5, China Hong Kong City, 33 Canton Road, TST, Kowloon, Hong Kong |
Telephone: |
+852 21553999 |
Fax: |
+852 251553993 |
e-mail: |
online@manloong.com |
|
1. AGREEMENT
1.1. In consideration of the mutual covenants contained herein,
the parties agree as follows:
2. PURPOSE
2.1. The purpose of this Agreement is to define
the terms under which True Technology Company Limited will provide Customer with Hosting Services, defined as:
a) Physical space within True
Technology Company Limited’s service to house a True Technology Company Limited-owned and supplied computer system and such
other equipment as may be required and identified within this Agreement, hereinafter Customer’s Server,
b) Limited physical access
to Customer’s Server and
c) A connection of the Customer’s
Server to the Internet using True Technology Company Limited’s public network connections.
d) Trading software license for
user to execute trades in gold and silver markets through company trading platform
e) Trading software enhancement
or customization based on software development requirements defined by the customer. The customer owns the intellectual property
of the customized version of the trading software. True Technology will not share the customer’s customized software with
any third party without the written approval from the customer.
f) Customer will pay the cost
for software enhancement or customization on top of monthly service fee. The hourly rate for software enhancement or customization
is $150 USD per hour. Additional fee will be billed to the customer at the end of each month.
A - Servers Hosting and Rental:
|
- |
Rack Rental x 1 |
|
- |
Server Rental Dell R710 with Intel Xeon E5645 / 24GB RAM / 18TB HDD x 4 |
|
- |
Server Rental Dell R410 with Intel Xeon E5645 / 24GB RAM / 12TB HDD x 2 |
|
- |
Firewall Rental Fortinet Fortigate 200B equipped with UTM Services x 2 |
B - Software / Trading platform
Licenses:
|
- |
Servers Operation System Licenses Included |
|
- |
Trading Software Licenses Bundle Included unlimited users to access the software in the same server concurrently |
C - Network Lease Service:
|
- |
Dedicated Internet Port with 30/30MB 16 Fixed IP Address |
|
- |
Dedicated Metro Lease Line with 10/10MB 2 Fixed IP Address |
D - Support Services:
|
- |
Regular maintenance support and helpdesk and software update |
|
- |
Software enhancement based on customer’s software enhancement requirements |
2.2. This Agreement may include additional
exhibits for services such as monitoring, managed services, backup service, managed firewall services and Operating System maintenance.
Such exhibits, once executed, shall become a part of this Agreement and incorporated herein.
3. EFFECTIVENESS, TERM AND RENEWAL
3.1. This Agreement shall become effective
when signed by a duly authorized officer of True Technology Company Limited. This Customer Agreement shall remain in effect until
the services provided herein are terminated, changed or canceled as allowed by the terms and conditions as contained herein.
4. CUSTOMER’S SERVER AND USE RESPONSIBILITIES
4.1. Customer’s Server may provide services
to Customer and/or its’ customers, or the general public, for any legal purpose whatsoever, provided that:
4.2. Customer’s Server may deliver,
only those network services specifically disclosed and agreed to herein. Customer’s server shall not be used as a mail relay
and Customer shall ensure that such service is shutdown and,
4.3. Customer’s Server shall not
exceed the agreed-to Bandwidth limits, or provide services to others which results in use in excess of the agreed to
Bandwidth, regardless of whether such use is in the ordinary course of business or results from any unauthorized hacking or
use of Customer’s Server. Should Customer exceed its allotted Bandwidth, for any reason, Customer shall pay for such
additional Bandwidth, at the rate and terms defined in the current True Technology Company Limited price list, and
4.4. Customer shall not utilize its Server
for the delivery of unsolicited email (spamming) or the spreading of viruses and,
4.5. Customer is expressly prohibited from,
and shall not use the Server or True Technology Company Limited’s network to, violate the security of any computer (or)
network, crack passwords or security encryption codes, or transfer or serve any illegal material(s).
4.6. All services provided by True Technology
Company Limited under this Agreement extend to the Customer only, and do not extend to any other person, corporation or entity,
regardless of their relationship with Customer and under no circumstances will True Technology Company Limited be obliged to support
third parties.
4.7. Customer may resell space on the Customer’s
Server as well as its bandwidth to third parties, provided that Customer does NOT:
a) allow third party to
access administration or root accounts,
b) use such service to provide dial-in
or general Internet TCP/IP Access,
c) provide or divulge login names
or passwords, provided to Customer by True Technology Company Limited, to third parties and
d) allow any such use which is in
violation of this Agreement.
4.8. Customer and all other third parties
accessing or using Customer’s Server shall abide by all of the rules, regulations and policies of True Technology Company
Limited, as well as other networks and computer systems accessed via the Customer’s server, whether operated by True Technology
Company Limited, its suppliers or others. If the Customer is unsure of those policies, it is the Customer’s responsibility
to ascertain said policies. Customer agrees to indemnify and hold True Technology Company Limited harmless from any claims resulting
from the Customer’s use of the service that damages either the Customer or another party or parties.
5. CUSTOMER RESPONSIBILITIES FOR EQUIPMENT, APPLICATIONS AND
DATA
5.1. The Customer is totally responsible for
the ongoing stability and the operation of the Customer’s application and server. True Technology Company Limited staff
will maintain the server stability on the best effort.
5.2. Unless contracted by separate Agreement,
in writing, under no circumstances shall True Technology Company Limited assume responsibility for the loss of information on
the Customer’s Server. The Customer is responsible for secure backup of all data on Customer’s Server, and is responsible
for rebuilding their environment in the event of loss of this information caused by failure of the server, or by any act, by any
party, whether accidental or intentional. The customer has the option of hiring True Technology Company Limited for restoration
of services at an additional fee. The customer is responsible for providing True Technology Company Limited with a reliable 24-hour
contact to notify in the event of failure or downtime for maintenance.
5.3. Customer shall provide True Technology
Company Limited with a list, and replacement value, detailing any and all additional equipment and software that is installed,
or to be installed, on Customer’s Server by True Technology Company Limited.
5.4. Customer shall fully insure additional
software and hardware installed on Customer’s server against all risk of loss, including without limitation, theft, fire,
water and earthquake damage. Customer is advised to purchase business interruption insurance to protect against lost revenue from
Customer’s server in case of prolonged disruption of services or catastrophe.
5.5. True Technology will not license the
customized software that we license to any third parties.
6. PAYMENT AND CHARGES
6.1. The Customer is responsible for any and
all fixed and accumulative charges for their account as, defined in the current True Technology Company Limited price list.
6.2. The account setup fee and first month
(30 days) service are charged immediately upon the execution of this Agreement. Once the Customer’s Server is installed
and operational, the thirty (30) day period begins. Thereafter, hosting fees are billed on a monthly basis. The first such invoice
may include appropriate charges or credits to prorate the service period to the end of the month. Incidental support or additional
fees will be charged as the service is performed.
6.3. Invoices for Hosting Services are invoiced
and payable in advance for the term of the Hosting Services. Hosting Services are subject to suspension for any account thirty
(30) or more days past due and become subject to a re-activation fee. True Technology Company Limited may impose a late charge
on invoiced amounts over 30 days outstanding equal to 1.5% per month of the unpaid until the entire balance is paid in full.
6.4. True Technology Company Limited agrees
to notify Customer at least ninety (30) days in advance of any price increase which affects any services provided to Customer
under this Agreement.
7. LIMITATION OF LIABILITY
7.1. True Technology Company Limited exercises
no control whatsoever over the content of the information passing through its network. True Technology Company Limited makes no
warranties of any kind, whether expressed or implied, for the service(s) it is providing. True Technology Company Limited also
disclaims any warranty of merchantability or fitness for a particular purpose. True Technology Company Limited will not be responsible
for any damage you suffer. This includes the loss of data resulting from delays, non-deliveries, miss-deliveries, or service interruptions
caused by its own negligence, omission or your errors or omissions. Use of any information obtained via True Technology Company
Limited's network is at your own risk. True Technology Company Limited specifically denies any responsibility for the accuracy
or quality of information obtained through its services.
7.2. True Technology Company Limited's
liability hereunder for any losses or damages suffered by Customer or its customers with respect to the products and services
or any other item under this Customer Agreement, whether direct or indirect, from any cause whatsoever, shall be limited to
the amount paid by Customer to True Technology Company Limited for products and services ordered hereunder for a single
billing period only. True Technology Company Limited shall not be liable for any lost profits or for any claim or demand
against the Customer by any other party based on any expressed, implied or claimed warranties by True Technology Company
Limited not specifically set forth in this Agreement.
7.3. IN NO EVENT SHALL TRUE TECHNOLOGY COMPANY
LIMITED BE LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF TRUE TECHNOLOGY COMPANY LIMITED HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
7.4. No action, regardless of form, arising
out of this or any other True Technology Company Limited Agreement or the transactions contemplated herein or therein, may be
brought by Customer more than one (1) year after the cause of action has occurred.
7.5. Customer shall indemnify, defend and
hold harmless True Technology Company Limited, its directors, employees and agents from any action brought against them by any
third-party in connection with this Agreement, or any other Agreement between Customer and a third-party from any claims resulting
from the use of the service by you or any of your customers or others throughout your chain of distribution, including end-users.
Customer shall pay all damages and reasonable attorney fees arising as a result of Customer's use or misuse of any rights granted
herein.
8. COMPLIANCE WITH LAWS
8.1. Customer shall at all times comply with
all applicable laws and regulations of the Hong Kong SAR and all other governmental entities governing, restricting or otherwise
pertaining to the use, distribution, exporting or import of data, products, services and/or technical data.
8.2. True Technology Company Limited's network
may only be used for lawful purposes. Transmission of any material in violation of any Hong Kong SAR, or other governmental regulation
is prohibited. This includes, but is not limited to, copyrighted material, material legally judged to be threatening or obscene,
or material protected by trade secret.
9. TERMINATION
9.1. True Technology Company Limited shall
have the right to immediately suspend or terminate this Agreement during any investigation of Acceptable Use Policy or Agreement
violations, misrepresentation of the services offered by Customer’s Server, inappropriate use, use of excessive system or
network resources which adversely affects the performance, security or reliability of the True Technology Company Limited network,
or nonpayment of service fees. In the event that True Technology Company Limited suspends or cancels service, True Technology
Company Limited will make a reasonable effort to notify the emergency contact supplied by the Customer, prior to the actual event.
9.2. True Technology Company Limited shall
have the right to suspend or terminate this Agreement for any reason, by providing the Customer with written notice.
9.3. The Customer must cancel with written
notice sent to the address of True Technology Company Limited in this Agreement. Customer agrees that True Technology Company
Limited has the right to delete all data, files or other information that is stored on the Customer’s servers, on behalf
of Customer, if either the Customer or True Technology Company Limited cancels this account, for any reason.
10. MISCELLANEOUS PROVISIONS
10.1. This Customer Agreement is being executed
by Customer at the address provided for herein, and by True Technology Company Limited in Hong Kong SAR.
10.2. If any sentence, paragraph, clause or
combination of the same in this Customer Agreement is held by a court or other governmental body of competent jurisdiction to
be unenforceable, invalid or illegal in any jurisdiction, such sentence, paragraph, clause or combination shall be deemed deleted
from this Customer Agreement and the remainder of this Customer Agreement shall remain binding on the parties as if such unenforceable,
invalid or illegal sentence, paragraph, clause or combination had not been contained herein.
10.3. In the event litigation is required
to force compliance with, or address any breach of this Agreement, the parties agree that the prevailing party shall be entitled
to attorneys' fees and costs actually incurred.
10.4. Relationship. Nothing in this Customer
Agreement or to be done pursuant to its terms and conditions is intended to, or shall, create a partnership or joint venture,
for tax purposes or otherwise, between True Technology Company Limited and Customer. Customer is and shall remain fully and solely
responsible for all of its employees and assumes full responsibility for all costs and liabilities incurred in connection with
the termination of such employees for any reason whatsoever.
11. MODIFICATION
11.1. This Agreement shall constitute the
entire Agreement between Customer and True Technology Company Limited pertaining to Customer’s server. This Agreement shall
not be modified or altered except by a written instrument duly executed by Customer and by an authorized officer of True Technology
Company Limited.
Francisco M Xavier. |
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TSANG CHI MING |
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Print/Type Name |
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Print/Type Name |
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General Manager |
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I.T. Consultant |
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Title/Date |
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Title/Date |
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6
Exhibit 14
CODE OF BUSINESS CONDUCT AND ETHICS
JUNE 2014
The Board of Directors of
eBullion, Inc., a Delaware corporation (“eBullion”), has adopted this Code of Business Conduct and Ethics to:
|
● |
promote honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest; |
|
● |
promote full, fair, accurate, timely and understandable disclosure; |
|
● |
promote compliance with applicable laws and governmental rules and regulations; |
|
● |
ensure the protection of eBullion’s legitimate business interests, including corporate opportunities, assets and confidential
information; and |
All directors, officers
and employees of eBullion are expected to be familiar with this Code and to adhere to those principles and procedures set forth
in this Code that apply to them.
From time to time, eBullion
may waive some provisions of this Code. Any waiver, however, may be made only by the Board of Directors and must be promptly disclosed
as required by the listing requirements of the OTC Bulletin Board.
I. | Honest and Candid Conduct |
Each director, officer and
employee owes a duty to eBullion to act with integrity. Integrity requires, among other things, being honest and candid. Deceit
and subordination of principle are inconsistent with integrity.
Each director, officer and
employee must:
|
● |
Act with integrity, including being honest and candid while still maintaining the confidentiality of information where required
or consistent with eBullion’s policies; |
|
● |
Observe both the form and spirit of laws and governmental rules and regulations, accounting standards and eBullion policies; and |
|
● |
Adhere to a high standard of business ethics. |
II. | Raising Ethical Issues |
Maintaining ethical standards,
including appropriate disclosure and internal accounting controls, is the responsibility of every member of the eBullion family.
Early identification and resolution of the ethical issues that may arise are critical to maintaining our commitment to world-class
business practices.
eBullion personnel are expected
to treat compliance with ethical standards as a critical element of their responsibilities. Although this Code addresses a wide
range of business practices and procedures, it cannot anticipate every issue that may arise. If you are unsure of what to do in
any situation, you should seek additional guidance and information before you act. You should use your judgment and common sense;
if something seems unethical or improper it probably is. If you have any questions regarding the best course of action in a particular
situation, or if you suspect a possible violation of a law, regulation or eBullion ethical standard, you should promptly contact
one or more of the following:
| ● | Your Human Resources representative; or |
| | |
| ● | The eBullion’s Code of Business Conduct and Ethics Contact Person shall be Joseph Havlin. |
You should feel free to contact either
someone in your business unit or someone at the corporate level, whichever you believe is more appropriate. If you raise an ethical
issue and you believe the issue has not been properly addressed, you should raise it with another of the contacts listed above.
eBullion strongly encourages
personnel to raise possible ethical issues. eBullion has adopted a Non-Retaliation Policy which specifically prohibits any retaliatory
action against any individual for raising legitimate concerns or questions regarding ethics matters or for reporting suspected
violations.
III. | Protecting eBullion’s Corporate Assets and Records |
You are responsible for
safeguarding the tangible and intangible assets of eBullion and its customers, suppliers and distributors that are under your control.
eBullion’s assets must not be used for personal benefit except where permitted by eBullion in line with local practices and
laws. Assets include cash, business plans, customer information, supplier information, distributor information, intellectual property
(computer programs, models and other items), physical property and services.
Misappropriation of corporate
assets is a breach of your duty to eBullion and may constitute an act of fraud against eBullion. Similarly, carelessness or waste
in regard to corporate assets is also a breach of your duty to eBullion.
eBullion has strict policies
regarding the use of its telephone, e-mail and voice-mail systems. Each is a business communication tool and users are obligated
to use these tools in a responsible, effective and lawful manner. Violations of eBullion’s policies regarding these tools
can result in corrective action up to and including discharge.
Additionally, the records,
data and information owned, used and managed by eBullion must be accurate and complete. You are personally responsible for the
integrity of the information, reports and records under your control. Records must be maintained in sufficient detail as to reflect
accurately eBullion’s transactions. Financial statements must always be prepared in accordance with generally accepted accounting
principles and fairly present, in all material respects, the financial condition and results of eBullion.
You must use common sense
and observe standards of good taste regarding content and language when creating business records and other documents (such as
e-mail) that may be retained by eBullion or a third party. You should keep in mind that at a future date, eBullion or a third party
may be in a position to rely on or interpret the document with the benefit of hindsight and/or the disadvantage of imperfect recollections.
You are required to cooperate
fully with appropriately authorized internal and external investigations. Making false statements to or otherwise misleading internal
or external auditors, eBullion counsel, eBullion representatives or regulators can be a criminal act that can result in severe
penalties. You must never withhold or fail to communicate information that raises ethical questions and thus should be brought
to the attention of higher levels of management.
You are prohibited from
destroying any records that are potentially relevant to a violation of law or any litigation or any pending, threatened or foreseeable
government investigation or proceeding.
eBullion is also committed
to accuracy in tax-related records, and to tax reporting in compliance with the overall intent and letter of applicable laws. Tax
returns must be filed on a timely basis and taxes due paid on time.
IV. |
Conflicts of Interest with eBullion |
A “conflict of interest”
occurs when an individual’s private interest interferes or appears to interfere with the interests of eBullion. A conflict
of interest can arise when a director, officer or employee takes actions or has interests that may make it difficult to perform
his or her eBullion work objectively and effectively. For example, a conflict of interest would arise if a director, officer or
employee, or a member of his or her family, receives improper personal benefits as a result of his or her position in eBullion.
Any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest should be discussed
with the Human Resources representative.
In particular, clear conflict
of interest situations involving directors, executive officers and other employees who occupy supervisory positions or who have
discretionary authority in dealing with third parties may include the following:
| ● | any significant ownership interest in any supplier or customer; |
| ● | any consulting or employment relationship with any supplier, customer or competitor; |
| ● | any outside business activity that detracts from an individual’s ability to devote appropriate
time and attention to his or her responsibilities with eBullion; |
| ● | the receipt of non-nominal gifts or excessive entertainment from any company with which eBullion
has current or prospective business dealings; |
| ● | being in the position of supervising, reviewing or having any influence on the job evaluation,
pay or benefit of any immediate family member; and |
| ● | selling anything to eBullion or buying anything from eBullion, except on the same terms and conditions
as unrelated third parties are permitted to so purchase or sell. |
Such situations, if material,
should always be discussed with the Human Resources representative.
Service to eBullion should
never be subordinated to personal gain and advantage. Conflicts of interest should, whenever possible, be avoided. Anything that
would present a conflict for a director, officer or employee would likely also present a conflict if it is related to a member
of his or her family.
IV. | eBullion’s Disclosure Process |
Each director, officer or
employee involved in eBullion’s disclosure process is required to be familiar with and comply with eBullion’s disclosure
controls and procedures and internal control over financial reporting, to the extent relevant to his or her area of responsibility,
so that eBullion’s public reports and documents filed with the Securities and Exchange Commission (“SEC”) comply
in all material respects with the applicable federal securities laws and SEC rules. In addition, each such person having direct
or supervisory authority regarding these SEC filings or eBullion’s other public communications concerning its general business,
results, financial condition and prospects should, to the extent appropriate within his or her area of responsibility, consult
with other eBullion officers and employees and take other appropriate steps regarding these disclosures with the goal of making
full, fair, accurate, timely and understandable disclosure.
Each director, officer or
employee who is involved in eBullion’s disclosure process must:
| ● | Familiarize himself or herself with the disclosure requirements applicable to eBullion as well
as the business and financial operations of eBullion. |
| ● | Not knowingly misrepresent, or cause others to misrepresent, facts about eBullion to others, whether
within or outside eBullion, including to eBullion’s independent auditors, governmental regulators and self-regulatory organizations. |
| ● | Properly review and critically analyze proposed disclosure for accuracy and completeness (or, where
appropriate, delegate this task to others). |
V. | Reporting and Accountability |
The Board of Directors is
responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret
this Code in any particular situation. Any director, officer or employee who becomes aware of any existing or potential violation
of this Code is required to notify the Code of Ethics Contact Person promptly. Failure to do so itself is a violation of this Code.
Any questions relating to
how this Code should be interpreted or applied should be addressed to the Code of Ethics Contact Person. A director, officer or
employee who is unsure of whether a situation violates this Code should discuss the situation with the Code of Ethics Contact Person
to prevent possible misunderstandings and embarrassment at a later date.
Each director, officer or
employee must:
|
● |
Notify the Code of Ethics Contact Person promptly of any existing or potential violation of this Code. |
|
● |
Not retaliate against any other director, officer or employee for reports of potential violations that are made in good faith. |
The Board of Directors shall
take all action they consider appropriate to investigate any violations reported to them. If a violation has occurred, eBullion
will take such disciplinary or preventive action as it deems appropriate.
VI. | eBullion’s Corporate Opportunities |
Directors, officers and
employees owe a duty to eBullion to advance eBullion’s business interests when the opportunity to do so arises. Directors,
officers, and employees are prohibited from taking (or directing to a third party) a business opportunity that is discovered through
the use of corporate property, information or position, unless eBullion has already been offered the opportunity and turned it
down. More generally, directors, officers and employees are prohibited from using corporate property, information or their position
for personal gain and from competing with eBullion.
Sometimes the line between
personal and eBullion benefits is difficult to draw, and sometimes there are both personal and eBullion benefits in certain activities.
Directors, officers and employees who intend to make use of Brands property or services in a manner not solely for the benefit
of eBullion should consult beforehand with the Code of Ethics Contact Person.
In carrying out eBullion’s
business, directors, officers and employees often learn confidential or proprietary information about eBullion, its customers,
and suppliers. Directors, officers and employees must maintain the confidentiality of all information so entrusted to them, except
when disclosure is authorized or legally mandated. Confidential or proprietary information of eBullion, and of other companies,
includes any non-public information that would be harmful to the relevant company or useful or helpful to competitors if disclosed.
IX. |
Fair Dealing with Customers and Others |
We have a history of succeeding
through honest business competition. We do not seek competitive advantages through illegal or unethical business practices. Each
director, officer and employee of eBullion should endeavor to deal fairly with eBullion’s customers, service providers, suppliers,
competitors and employees. No director, officer or employee should take unfair advantage of anyone through manipulation, concealment,
abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
X. |
Media, Publishing and Public Appearances |
eBullion employees may be
approached for interviews or comments by the news media from time to time and in such instances should immediately contact eBullion’s
Chief Executive Officer or his designated representative. Only contact people designated by the Chief Executive Officer may comment
to news reporters on eBullion policy or events relevant to eBullion.
All inquiries from the media
relating to eBullion should be referred to eBullion’s Chief Executive Officer or his designated representative. Only officially
designated spokespersons may provide comments for the media.
XI. |
Gifts and Entertainment |
Accepting Gifts and Entertainment
In general, you should not
accept gifts or the conveyance of anything of value (including entertainment) from current or prospective eBullion customers or
suppliers. Moreover, you should never accept a gift in circumstances in which it could even appear to others that your business
judgment has been compromised.
Gifts may only be accepted
from current or prospective eBullion customers or suppliers when permitted under applicable law if they are: (1) noncash gifts
of nominal value; or (2) customary and reasonable meals and entertainment at which the giver is present, such as the occasional
business meal or sporting event. Any gift which appears to be of more than a nominal value must be reported to the Human Resources
Manager of eBullion, and may be returned to the source.
Giving Gifts and Providing Entertainment
If a gift could be seen
by others as a consideration for an official or business favor, you must not give the gift. Appropriate entertainment may be offered
to customers by persons authorized to do so, subject to the applicable business expense reimbursement requirements.
The United States and other
countries, states and many local jurisdictions have laws restricting gifts (e.g., meals, entertainment, transportation, lodging
or other things of value) that may be provided to government officials. In addition, the U.S. Foreign Corrupt Practices Act of
1977 (“FCPA”) outlines very serious provisions against bribery, including the payment, or promise of payment, of anything
of value to foreign officials (including any person employed by or representing a foreign government, officials of a foreign political
party, officials of public international organizations and candidates for foreign office). Payment made indirectly through a consultant,
contractor or other intermediary is also prohibited.
Political Activities and Contributions
You have the right to voluntarily
participate in the political process. No one at eBullion may require you to contribute to, support or oppose any political group
or candidate. If you choose to participate in the political process, you must do so as an individual, not as a representative of
eBullion. You may not work on a political fundraiser or other campaign activity while at work or use company property for these
activities. Any overt, visible and partisan political activity that could cause someone to believe that your actions reflect the
views or position of eBullion requires the prior approval of eBullion’s Chief Executive Officer.
Lobbying
eBullion encourages every
employee to take an active interest in government processes. Any participation in a political process, however, is to be undertaken
as an individual – not as a representative of eBullion. You must not engage in lobbying activities on behalf of eBullion.
Insider Trading
eBullion has adopted a Corporate
Trading Policy and is available upon request. This policy and the laws of the United States and many other countries prohibit trading
in the securities (including equity securities, convertible securities, options, bonds and any stock index containing the security)
of any company while in possession of material, nonpublic information (also known as “inside information”) regarding
eBullion. This prohibition applies to transactions for your personal account. A personal account is any account in which you have
a financial or beneficial interest, or the power to affect or the ability to influence trading or investment decisions, either
directly or indirectly. Personal accounts typically include accounts of spouses, domestic partners, children and other members
of your household, and accounts over which you have investment discretion.
If you believe you have
come into possession of inside information, you may not execute any trade in the securities of the subject company without first
consulting with eBullion’s Chief Financial Officer, who will then determine whether such trade would violate eBullion’s
Corporate Trading Policy or applicable laws. The definition of “material, nonpublic information” is broad. Information
is “material” (and hence, potentially subject to the prohibition on insider trading) if there is a substantial likelihood
that a reasonable investor would consider the information important in determining whether to trade in a security, or if the information,
if made public, likely would affect the market price of a company’s securities. Information may be material even if it relates
to future, speculative or contingent events, and even if it is significant only when considered in combination with publicly available
information. Information is considered to be “nonpublic” unless it has been publicly disclosed, and adequate time has
passed for the securities markets to digest the information. Examples of adequate disclosure include public filings with securities
regulatory authorities and the issuance of press releases.
It is also illegal in the
United States and many other countries to “tip” or pass on inside information to any other person if you know or reasonably
suspect that the person receiving such information from you will misuse information by trading in securities or passing such information
on further, even if you do not receive any monetary benefit from the tippee.
Personal Investments in eBullion Securities
eBullion supports employee
stock ownership. Investments in eBullion securities for personal accounts should be made with a long-term orientation and as part
of a broader investment strategy. In order to comply with applicable law and avoid the appearance of impropriety, certain general
restrictions apply to all transactions in eBullion securities.
Additionally, directors
and officers are subject to reporting and other legal restrictions regarding their personal trading of eBullion securities. You
are responsible for knowing and abiding by any eBullion policies regarding eBullion securities that may be applicable to you.
XIII. |
Related Party Business Dealings |
You must notify your supervisor
of any business relationship or proposed business relationship or proposed business transaction eBullion may have with any company
in which you or a related party has a direct or indirect interest or from which you or a related party may derive a benefit, or
where a related party member is employed, if such a relationship or transaction might give rise to the appearance of a conflict
of interest (for example, if you or a family member own or control property of significant value that eBullion is either purchasing
or leasing).
This requirement generally
excludes any interest that exists solely as a result of your ownership of less than 1% of the outstanding publicly traded equity
securities of such company.
XIV. |
Commitment to the Environment |
eBullion is committed to
conducting business in an environmentally responsible manner that protects human health, natural resources and the global environment.
The U.S. and many other countries have laws and regulations relating to environmental protections. Environmental risks or opportunities
that may arise out of our operations should be identified and managed in accordance with these laws and regulations. Questions
regarding environmental concerns should be directed to eBullion’s environmental and regulatory affairs department or to
eBullion’s Chief Executive Officer.
Conclusion
We at eBullion aspire to
the highest standards of moral and ethical conduct - - working to earn the trust of our customers, day in and day out. In the thousands
of decisions we make and actions we take every day, we affirm our commitment to this Code of Business Conduct and Ethics and to
deliver value to our customers, our people, our shareholders and our communities.
* * * * *
10
Exhibit
31.1
CERTIFICATION
PURSUANT TO RULE 13a-14 OR
RULE
15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kee Yuen
Choi, certify that:
1. |
I
have reviewed this Annual Report on Form 10-K of eBullion, Inc.; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
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4. |
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
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a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
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b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
and |
|
|
|
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c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and |
|
|
|
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions): |
|
|
|
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b) |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: June
26, 2015
|
/s/ Kee
Yuen Choi |
|
Chief
Executive Officer |
Exhibit
31.2
CERTIFICATION
PURSUANT TO RULE 13a-14 OR
RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Chui Chui Li, certify that:
1. |
I
have reviewed this Annual Report on Form 10-K of eBullion, Inc.; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
|
a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
and |
|
|
|
|
c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and |
|
|
|
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
|
|
|
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b) |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: June
26, 2015
|
/s/ Chui
Chui Li |
|
Chief
Financial Officer |
Exhibit
32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of eBullion, Inc., a Delaware corporation (the “Company”), on Form 10-K for the
period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Kee Yuen Choi, Chief Executive Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
|
(1) |
The
Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
|
/s/
Kee Yuen Choi |
|
Chief
Executive Officer |
|
June
26, 2015 |
Exhibit
32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of eBullion, Inc., a Delaware corporation (the “Company”), on Form 10-K for the
period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Chui Chui Li, Chief Financial Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
|
(1) |
The
Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
|
/s/
Chui Chui Li |
|
Chief
Financial Officer |
|
June
26, 2015 |
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