As filed with the Securities and Exchange Commission on
July 22, 2021
Registration No. 333-257302
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
NEW MOMENTUM CORPORATION
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(Exact name of
registrant as specified in its charter)
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Nevada
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|
2080
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88-0435998
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(State or Other
Jurisdiction of
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(Primary Standard
Industrial
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(IRS Employer
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Incorporation or
Organization)
|
|
Classification
Number)
|
|
Identification
Number)
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New Momentum
Corporation
Room 1303, 13/F,
Technology Plaza
651 King’s
Road
North Point,
Hong Kong
+852
2911-0119
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(Address, including zip
code, and telephone number, including area code, of registrant’s
principal executive offices)
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Leung Tin Lung David
President and Chief Executive Officer
New Momentum Corporation
Room 1303, 13/F, Technology Plaza
651 King’s Road
North Point, Hong Kong
+852 2911-0119
(Address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Thomas E. Puzzo, Esq.
Law Offices of Thomas E. Puzzo, PLLC
3823 44th Ave. NE
Seattle, Washington 98105
Telephone No.: (206) 522-2256
Approximate date of proposed sale to the public: As soon as
practicable and from time to time after the effective date of this
Registration Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated
filer
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☐
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Accelerated filer
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☐
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Non-accelerated
filer
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☒
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Smaller reporting
company
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☒
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Emerging growth
company
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☒
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant Section 7(a)(2)(B) of the Exchange Act.
☒
Calculation of Registration Fee
Title of
Securities To Be Registered
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Amount to be
Registered
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Proposed Maximum
Offering
Price Per
Share
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Proposed Maximum
Aggregate
Offering
Price
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Registration
Fee
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Common Stock, par value $0.001 per share,
issuable pursuant to Investment Agreement (1)
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5,000,000
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(1)
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$
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1.000
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(3)
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$
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5,000,000
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$
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545.50
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Common Stock, par value $0.001 per share,
issuable upon conversion of 10% Convertible Note (2)
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182,617
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(2)
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$
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1.00
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(3)
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$
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182,617
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$
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19.92
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Total
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5,182,617
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(3)
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$
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1.000
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(3)
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$
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5,182,617
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$
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565.42
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_____________
(1)
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Represents the number
of shares of common stock of the Registrant that we will put (“Put
Shares”) to Strattner Alternative Credit Fund LP, a Delaware
limited partnership (“Strattner”), pursuant to that
certain Investment Agreement (the “Investment Agreement”) by
and between Strattner and the Registrant, effective on April 16,
2021. In the event that adjustment provisions of the Investment
Agreement require the Company to issue more shares than are being
registered in this registration statement, for reasons other than
those stated in Rule 416 of the Securities Act, the Company will
file a new registration statement to register those additional
shares.
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(2)
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Represents the number
of shares of common stock of the Registrant underlying that certain
10% Convertible Note (the “Note”), dated October 27, 2020, and made
to EMA Financial, LLC. The Note is due July 27, 2021, and carries
interest at a rate of 10% per annum.
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(3)
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This offering price has
been estimated solely for the purpose of computing the registration
fee in accordance with Rule 457(c) of the Securities Act on the
basis of the average of the high and low prices of the common stock
of the Company as reported on the Pink tier of the OTC Markets
Group, Inc. on June 15, 2021.
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In the event of stock splits, stock dividends, or similar
transactions involving the Registrant’s common stock, the number of
Shares registered shall, unless otherwise expressly provided,
automatically be deemed to cover the additional securities to be
offered or issued pursuant to Rule 416 promulgated under the
Securities Act of 1933, as amended (the “Securities Act”).
The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until
the Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION ON JULY 22, 2021
NEW MOMENTUM CORPORATION
5,182,617 SHARES OF COMMON STOCK
This prospectus relates to the resale of shares of our common
stock, par value $0.001 per share, by (i) Strattner Alternative
Credit Fund LP (“Strattner”) of 5,000,000 Put Shares that we will
put to Strattner pursuant to the Investment Agreement, and (ii)
182,617 shares of common stock underlying that certain 10%
Convertible Note (the “Note”), dated October 27, 2020, and made to
EMA Financial, LLC, a Delaware limited liability company (“EMA
Financial”). Strattner and EMA Financial are collectively referred
to herein as the “Selling Security Holders.”
The Investment Agreement with Strattner provides that Strattner is
committed to purchase up to $5,000,000 of our common stock. We may
draw on the facility from time to time, as and when we determine
appropriate in accordance with the terms and conditions of the
Investment Agreement.
The terms and conditions of the Note provide registration rights
for the shares (the “Note Shares”) underlying the Note to EMA
Financial.
The Selling Security Holders are “underwriters” within the meaning
of the Securities Act in connection with the resale of our common
stock under the Investment Agreement and the Note. No other
underwriter or person has been engaged to facilitate the sale of
shares of our common stock in this offering. This offering will
terminate on October 22, 2022. The per share purchase price for the
Put Shares shall be equal to 85% of volume weighted average price
(“VWAP”) for the five (5) consecutive trading days including and
immediately after the date on which the Company submits a put
notice to Strattner.
The conversion price of the Note Shares is equal to the lower of:
(i) the lowest closing price of the Common Stock during the
preceding twenty (20) trading day period ending on the latest
complete trading day prior to the Issue Date of this Note or (ii)
55% of the lowest trading price for the Common Stock on the
Principal Market during the twenty (20) consecutive trading days
including and immediately preceding the Conversion Date.
We will not receive any proceeds from the sale of the shares of
common stock offered by the Selling Security Holders. We may
receive proceeds of up to $5,000,000 from the sale of our Put
Shares under the Investment Agreement. The proceeds will be used
for working capital or general corporate purposes. We will bear all
costs associated with this registration.
Our common stock is quoted on the OTCQB tier of the OTC
Markets Group, Inc. (the “OTC Markets”) under the symbol “NNAX.”
The shares of our common stock registered hereunder are being
offered for sale by Selling Security Holders at prices established
on the OTC Markets during the term of this offering. On
May 25, 2021, the last day that our common stock traded on the OTC
Markets, the closing price of our common stock was $1.00 per share.
These prices will fluctuate based on the demand for our common
stock.
Investing in our Common Stock involves a high degree of
risk. See “Risk Factors” to read about factors you should consider
before buying shares of our Common Stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The information in this Prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission becomes
effective. This Prospectus is not an offer to sell these securities
and we are not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted or would be unlawful
prior to registration or qualification under the securities laws of
any such state.
The following table of contents has been designed to help you find
information contained in this prospectus. We encourage you to read
the entire prospectus.
TABLE OF CONTENTS
PART I - INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS
SUMMARY
You should read the following summary together with the more
detailed information and the financial statements appearing
elsewhere in this Prospectus. This Prospectus contains
forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors,
including those set forth under “Risk Factors” and elsewhere in
this Prospectus. Unless the context indicates or suggests
otherwise, references to “we,” “our,” “us,” the “Company,”
“GridIron” or the “Registrant” refer to New Momentum Corporation, a
Nevada corporation and its wholly owned subsidiary, GridIron
Ventures, Inc., a Nevada corporation.
OUR COMPANY
Overview of New Momentum
We intend to develop travel services businesses, including
“Gagfare,” an online ticketing platform that provides travelers a
“Book Now, Pay Later” business model allowing travelers to secure
the best fares and reserve flights well ahead of time. The Company
intends to also become the driving force behind a bold new
hospitality concept that takes nature lovers and intrepid travelers
to exciting new and established destinations. The Company intends
to curate a collection of boutique properties, each with a focus on
diving, sustainability, conservation, and cultural authenticity,
offering a thoroughly contemporary travel experience that is
intrinsically linked to the destination, its heritage and its
culture.
Our fiscal year-end date is December 31.
Our board of directors consists of one person: Leung Tin Lung
David. Mr. Leung also serves as our sole officer, holding the
offices of President, Secretary and Treasurer.
Our principal administrative offices are located at Room 1303,
13/F, Technology Plaza, 651 King’s Road, North Point, Hong Kong.
Our website is www.gagfare.com. We do not incorporate the
information on or accessible through our website into this
Prospectus, and you should not consider any information on, or that
can be accessed through, our websites a part of this
Prospectus.
Recent Developments
Share Exchange Agreement
On July 6, 2020, the Company entered into a Share Exchange
Agreement (the “Share Exchange Agreement”), by and among the
Company, Nemo Holding Company Limited, a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding. The holders of the common stock of Nemo Holding
consisted of 29 stockholders.
Under the terms and conditions of the Share Exchange Agreement, the
Company offered, sold and issued 10,000,000 shares of common stock
in consideration for all the issued and outstanding shares in Nemo
Holding. Leung Tin Lung David, the Company’s sole officer and
director, became the beneficial holder of 6,000,000 common shares,
or 60%, of the issued and outstanding shares of Nemo Holding. The
effect of the issuance of the 10,000,000 shares issued under the
Share Exchange Agreement represents 10.8% of the issued and
outstanding shares of common stock of the Company.
Immediately prior to the closing of the transactions under the
Share Exchange Agreement, Mr. Leung was the holder of 233,813,213
shares of common stock, or 75.2%, of the issued and outstanding
shares of common stock of the Company. Giving effect to the closing
of the transactions under the Share Exchange Agreement, Mr. Leung
acquired 6,000,000 shares of common stock of the Company, by virtue
of his 60% beneficial ownership of Nemo Holding. The remaining 28
common shareholders of Nemo Holding acquired 4,000,000 shares of
common stock under the Share Exchange Agreement, by virtue of their
aggregate of 40% beneficial ownership of Nemo Holding.
As a result of the share exchange, Nemo Holding became a
wholly-owned subsidiary of the Company.
The share exchange transaction with Nemo Holding was treated as a
reverse acquisition, with Nemo Holding as the acquiror and the
Company as the acquired party. Unless the context suggests
otherwise, when we refer in this Form 8-K 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 Nemo Holding.
10% Convertible Note
On October 27, 2020, the Registrant offered and sold the Note,
dated October 27, 2020, to EMA Financial for aggregate proceeds of
$33,000. As of June 9, 2021, there was $35,000 in principal and
$2,042 in interest due and owing under the Note. The Note is due
July 27, 2021, and carries interest at a rate of 10% per annum. The
conversion price of the Note Shares is equal to the lower of: (i)
the lowest closing price of the Common Stock during the preceding
twenty (20) trading day period ending on the latest complete
trading day prior to the Issue Date of this Note or (ii) 55% of the
lowest trading price for the Common Stock on the Principal Market
during the twenty (20) consecutive trading days including and
immediately preceding the Conversion Date. We will not receive any
proceeds from the sale of the shares of common stock offered by EMA
Financial. The terms and conditions of the Note provide
registration rights for the Note Shares.
Stock Purchase Agreement
On April 13, 2021, the Company entered into a Stock Purchase
Agreement with Leung Tin Lung David, the Company’s sole director,
President, and majority stockholder, pursuant to which the Company
sold to Mr. Leung one share of Series A Preferred Stock in exchange
for 169,000,000 shares of common stock of the Company. The Company
subsequently canceled and returned to its authorized capital stock
the 169,000,000 shares of common stock purchased from Mr. Leung.
The holder of the one share of Series A Preferred Stock (i) has
voting power equal to 110% of the total voting rights of the
Company’s common stock, (ii) the right to appoint a designee to the
board of directors, and (ii) requires the consent of the holder of
the Series A Preferred Stock for any major corporate actions,
including but not limited to changing the Articles of Incorporation
or Bylaws of the Company, changing the business of the Company,
issuing securities and or nominating a person as President or Chief
Executive Office of the Company. As a result, Mr. Leung has
controlling voting power in all matters submitted to our
stockholders for approval including:
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·
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The election of our
board of directors;
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·
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The amendment of our
Articles of Incorporation or bylaws;
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·
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The adoption of
measures that could delay or prevent a change in control or impede
a merger, takeover or other business combination involving us.
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As a result of his ownership and position, Mr. Leung is able to
substantially influence all matters requiring stockholder approval,
including the election of directors and approval of significant
corporate transactions. Mr. Leung’s stock ownership may discourage
a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium
over our stock price.
Investment Agreement with Strattner Alternative Credit Fund
LP
On April 16, 2021, the Company entered into an Investment Agreement
dated as of April 16, 2021 (the “Investment Agreement”) with
Strattner. The Investment Agreement provides that, upon the terms
and subject to the conditions set forth therein, Strattner is
committed to purchase up to $5,000,000 (the “Total Commitment”)
worth of the Company’s common stock, $0.001 par value, over the
36-month term of the Investment Agreement.
From time to time over the term of the Investment Agreement,
commencing on the trading day immediately following the date on
which the initial registration statement is declared effective by
the Securities and Exchange Commission (the “Commission”), as
further discussed below, the Company may, in its sole discretion,
provide Strattner with draw down notices (each, a “Draw Down
Notice”) to purchase a specified dollar amount of the Put Shares
(the “Draw Down Amount”) over a 10 consecutive trading day period,
commencing on the trading day specified in the applicable Draw Down
Notice (the “Pricing Period”), with each draw down subject to the
limitations discussed below. The maximum amount of Shares requested
to be purchased pursuant to any single Draw Down Notice cannot
exceed 200% of the average daily trading volume of the Company’s
common stock for the ten trading days immediately preceding the
date of the Draw Down Notice (the “Maximum Draw Down Amount”).
Once presented with a Draw Down Notice, Strattner is required
to purchase the number of Put Shares underlying the Draw Down
Notice. The per share purchase price for the Shares subject to a
Draw Down Notice shall be equal to 85% of the arithmetic average of
the lowest VWAPs during the applicable Pricing Period Each purchase
pursuant to a draw down shall reduce, on a dollar-for-dollar basis,
the Total Commitment under the Investment Agreement.
The Company is prohibited from issuing a Draw Down Notice if (i)
the amount requested in such Draw Down Notice exceeds the Maximum
Draw Down Amount, (ii) the sale of Shares pursuant to such Draw
Down Notice would cause the Company to issue or sell
or Strattner to acquire or purchase an aggregate dollar value
of Shares that would exceed the Total Commitment, or (iii) the sale
of Shares pursuant to the Draw Down Notice would cause the Company
to sell or Strattner to purchase an aggregate number of shares
of the Company’s common stock which would result in beneficial
ownership by Strattner of more than 9.99% of the Company’s
common stock (as calculated pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder). The Company cannot make more than one draw
down in any Pricing Period and must allow 10 days to elapse between
the completion of the settlement of any one draw down and the
commencement of a Pricing Period for any other draw down.
Additionally, the Company paid to Strattner a commitment fee
equal in the form of 250,000 restricted shares of the Company’s
common stock (the “Initial Commitment Shares”).
Registration Rights Agreement with Strattner Alternative Credit
Fund LP
In connection with the execution of the Investment Agreement, on
April 16, 2021, the Company and Strattner also entered into a
Registration Rights Agreement (the “Registration Rights
Agreement”). Pursuant to the Registration Rights Agreement, the
Company has agreed to file an initial registration statement
(“Registration Statement”) with the Commission to register an
agreed upon number of Put Shares, on or prior to July 16, 2021 (the
“Filing Deadline”) and have it declared effective on or before the
150th calendar day the Company has filed the Registration Rights
Agreement (the “Effectiveness Deadline”).
If at any time all of the Registrable Securities (as defined in the
Registration Rights Agreement) are not covered by the initial
Registration Statement, the Company has agreed to file with the
Commission one or more additional Registration Statements so as to
cover all of the Registrable Securities not covered by such initial
Registration Statement, in each case, as soon as practicable, but
in no event later than the applicable filing deadline for such
additional Registration Statements as provided in the Registration
Rights Agreement.
We are a “Smaller Reporting Company”
We are a “smaller reporting company,” meaning that we are not an
investment company, an asset-backed issuer, or a majority-owned
subsidiary of a parent company that is not a smaller reporting
company and have (i) a public float of less than $250 million or
(ii) annual revenues of less than $100 million during the most
recently completed fiscal year and no public float, or a public
float of less than $700 million. As a “smaller reporting company,”
the disclosure we will be required to provide in our SEC filings
are less than it would be if we were not considered a “smaller
reporting company.” Specifically, “smaller reporting companies” are
able to provide simplified executive compensation disclosures in
their filings; are exempt from the provisions of Section 404(b) of
the Sarbanes-Oxley Act of 2002 requiring that independent
registered public accounting firms provide an attestation report on
the effectiveness of internal control over financial reporting; are
not required to conduct say-on-pay and frequency votes until annual
meetings; and have certain other decreased disclosure obligations
in their SEC filings, including, among other things, being
permitted to provide two years of audited financial statements in
annual reports rather than three years. Decreased disclosures in
our SEC filings due to our status as a “smaller reporting company”
may make it harder for investors to analyze the Company’s results
of operations and financial prospects.
Emerging Growth Company
We are an ‘‘emerging growth company’’ within the meaning of the
federal securities laws. For as long as we are an emerging growth
company, we will not be required to comply with the requirements
that are applicable to other public companies that are not
“emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure
obligations regarding executive compensation in our periodic
reports and proxy statements and the exemptions from the
requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute
payments not previously approved. We intend to take advantage of
these reporting exemptions until we are no longer an emerging
growth company. For a description of the qualifications and other
requirements applicable to emerging growth companies and certain
elections that we have made due to our status as an emerging growth
company, see “Risk Factors—Risks Related to this Offering and
our Common Stock – We are an ‘emerging growth company’ and we
cannot be certain if the reduced disclosure requirements applicable
to emerging growth companies will make our common stock less
attractive to investors” on page 8 of this prospectus.
Our fiscal year end is December 31. Our audited financial
statements for the quarter ended March 31, 2021, were prepared
assuming that we will continue our operations as a going concern.
Our accumulated loss for the period from March 15, 2016 (inception)
to the fiscal quarter ended March 31, 2021 was $4,594,253. For the
three months ended March 31, 2021, we earned revenues of $338,949,
from ticketing sales, with the cost of such revenue being
$337,826.
Due to the uncertainty of our ability to meet our current operating
and capital expenses, our independent auditors have included a
going concern opinion in their report on our audited financial
statements for the period ended December 31, 2020. The notes to our
financial statements contain additional disclosure describing the
circumstances leading to the issuance of a going concern opinion by
our auditors.
THE OFFERING
This Prospectus relates to the resale of up to 5,182,617 shares of
our Common Stock, issuable to Strattner, pursuant to that certain
Investment Agreement (the “Investment Agreement”), dated April 16,
2021, by and between the Company and to Strattner, and 182,617
shares of common stock underlying that certain 10% Convertible Note
(the “note”), dated October 27, 2020, and made to EMA
Financial.
The Offering
Common Stock offered by Selling Security
Holders:
|
|
This Prospectus relates
to the resale of 5,000,000 shares of our Common Stock, issuable to
the Selling Security Holders.
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|
|
|
Common Stock outstanding before the
Offering:
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171,418,500 shares of
Common Stock as of the date of this Prospectus.
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Common Stock outstanding after the
Offering:
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176,601,117 shares of
Common Stock (1)
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Terms of the
Offering:
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The Selling Security
Holders will determine when and how it will sell the Common Stock
offered in this Prospectus. The prices at which the Selling
Security Holders may sell the shares of Common Stock in this
Offering will be determined by the prevailing market price for the
shares of Common Stock or in negotiated transactions.
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Termination of the
Offering
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The Offering will
conclude upon such time as all of the Common Stock has been sold
pursuant to the Registration Statement.
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Trading Market
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Our Common Stock is
subject to quotation on the OTC Markets under the symbol
“NNAX.”
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Use of proceeds
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The Company is not
selling any shares of the Common Stock covered by this Prospectus.
As such, we will not receive any of the Offering proceeds from the
registration of the shares of Common Stock covered by this
Prospectus. See “Use of Proceeds.”
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|
|
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Risk Factors
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|
The Common Stock
offered hereby involves a high degree of risk and should not be
purchased by investors who cannot afford the loss of his/her/its
entire investment. See “Risk Factors”.
|
(1) This total reflects the number of shares of Common Stock that
will be outstanding assuming that the Selling Security Holders
purchase all of the 5,000,000 shares of our common stock under the
Investment Agreement.
SUMMARY FINANCIAL INFORMATION
The tables and information below are derived from our audited
financial statements for the fiscal year ended December 31, 2020,
and our unaudited financial statements for the three months ended
March 31, 2021. Our working capital deficit as at March 31, 2021
was $(255,890).
|
|
For
the
Fiscal
Year
December
31,
2020
|
|
|
|
|
|
Financial
Summary (Audited)
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|
|
|
Cash and Deposits
|
|
$ |
42,512 |
|
Total Assets
|
|
|
108,137 |
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Total Liabilities
|
|
|
308,096 |
|
Total Stockholder’s
Equity (Deficit)
|
|
$ |
(199,959 |
) |
|
|
For the
Fiscal
Year ended
December 31,
2020
|
|
|
|
|
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Consolidated Statements
of Expenses and Net Loss
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|
|
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Total Operating
Expenses
|
|
$ |
4,175,996 |
|
Net Loss for the
Period
|
|
$ |
(4,148,947 |
) |
|
|
For the Fiscal
Quarter ended March 31,
2021
|
|
|
|
|
|
Financial
Summary (Unaudited)
|
|
|
|
Cash and Deposits
|
|
$ |
42,512 |
|
Total Assets
|
|
|
108,137 |
|
Total Liabilities
|
|
|
308,096 |
|
Total Stockholder’s
Equity (Deficit)
|
|
$ |
(199,959 |
) |
|
|
For the three
months ended November 30,
2019
|
|
|
|
|
|
Total Operating
Expenses
|
|
$ |
38,359 |
|
Net Loss for the
Period
|
|
$ |
(39,408 |
) |
RISK FACTORS
An investment in our common stock involves a number of very
significant risks. You should carefully consider the following
known material risks and uncertainties in addition to other
information in this prospectus in evaluating our company and its
business before purchasing shares of our company’s common stock.
You could lose all or part of your investment due to any of these
risks.
RISKS RELATING TO OUR
COMPANY
Our auditors have expressed substantial doubt about our
ability to continue as a going concern.
Our audited financial statements for the period from March 15, 2016
(inception) through December 31, 2020 were prepared assuming that
we will continue our operations as a going concern. Our
wholly-owned subsidiary, Nemo Holding Company Limited, was
incorporated on April 16, 2016, and does not have a history of
earnings. As a result, our independent accountants in their audit
report have expressed substantial doubt about our ability to
continue as a going concern. Continued operations are dependent on
our ability to complete equity or debt financings or generate
profitable operations. Such financings may not be available or may
not be available on reasonable terms. Our financial statements do
not include any adjustments that may result from the outcome of
this uncertainty.
If our estimates related to future expenditures are
erroneous or inaccurate, our business will fail and you could lose
your entire investment.
Our success is dependent in part upon the accuracy of our
management’s estimates of our future cost expenditures for legal
and accounting services (including those we expect to incur as a
publicly reporting company), for website marketing and development
expenses, and for administrative expenses, which management
estimates to be approximately $10,000,000 over the next twelve
months. If such estimates are erroneous or inaccurate, or if we
encounter unforeseen costs, we may not be able to carry out our
business plan, which could result in the failure of our business
and the loss of your entire investment.
If we are not able to develop our business as
anticipated, we may not be able to generate revenues or achieve
profitability and you may lose your investment.
Our wholly-owned subsidiary, Nemo Holding Company Limited, was
incorporated on April 16, 2020, and our net loss for the period
from inception (March 15, 2016) to March 31, 2021 was $(1,495,983).
We have few customers, and we have not earned substantive revenues
to date. Our business prospects are difficult to predict because of
our limited operating history, and unproven business strategy. Our
primary business activities will be focused on the
commercialization of licensing our New Momentum brand. Although we
believe that our business plan has significant profit potential, we
may not attain profitable operations and our management may not
succeed in realizing our business objectives. If we are not able to
develop out business as anticipated, we may not be able to generate
revenues or achieve profitability and you may lose your entire
investment.
Potential disputes related to the existing agreement
pursuant to which we purchased the intellectual property rights
underlying our business could result in the loss of rights that are
material to our business.
The acquisition of the intellectual property of New Momentum, by
way of the Share Exchange Agreement, by and among the Company, New
Momentum Corporation, and the holders of common stock of New
Momentum, is of critical importance to our business and involves
complex legal, business, and scientific issues. Although we have
clear title to and no restrictions to use our intellectual
property, disputes may arise regarding the Share Exchange
Agreement, including but not limited to, the breaches of
representations or other interpretation-related issues. If disputes
over intellectual property that we have acquired under the Share
Exchange Agreement prevent or impair our ability to maintain our
current intellectual property, we may be unable to successfully
develop and commercialize our business.
We expect to suffer losses in the immediate future that
may cause us to curtail or discontinue our
operations.
We expect to incur operating losses in future periods. These losses
will occur because we do not yet have substantive revenues to
offset the expenses associated with the development of brand and
our business operations, generally. We cannot guarantee that we
will ever be successful in generating revenues in the future. We
recognize that if we are unable to generate revenues, we will not
be able to earn profits or continue operations. There is no history
upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide investors with no assurance
that we will generate any operating revenues or ever achieve
profitable operations. If we are unsuccessful in addressing these
risks, our business will almost certainly fail.
We may not be able to execute our business plan or stay
in business without additional funding.
Our ability to generate future operating revenues depends in part
on whether we can obtain the financing necessary to implement our
business plan. We will likely require additional financing through
the issuance of debt and/or equity in order to establish profitable
operations, and such financing may not be forthcoming. As widely
reported, the global and domestic financial markets have been
extremely volatile in recent months. If such conditions and
constraints continue or if there is no investor appetite to finance
our specific business, we may not be able to acquire additional
financing through credit markets or equity markets. Even if
additional financing is available, it may not be available on terms
favorable to us. At this time, we have not identified or secured
sources of additional financing. Our failure to secure additional
financing when it becomes required will have an adverse effect on
our ability to remain in business.
Any significant disruption in our website and mobile
application presence or services could result in a loss of
customers.
Our plans call for our customers to access our service through our
website, www.gagfare.com and our mobile applications. Our
reputation and ability to attract, retain and serve our customers
will be dependent upon the reliable performance of our website,
network infrastructure and fulfillment processes (how we deliver
services purchased by our customers). Prolonged or frequent
interruptions in any of these systems could make our website
unavailable or unusable, which could diminish the overall
attractiveness of our subscription service to existing and
potential customers.
Our servers will likely be vulnerable to computer viruses, physical
or electronic break-ins and similar disruptions, which could lead
to interruptions and delays in our service and operations and loss,
misuse or theft of data. It is likely that our website will
periodically experience directed attacks intended to cause a
disruption in service, which is not uncommon for web-based
businesses. Any attempts by hackers to disrupt our website service
or our internal systems, if successful, could harm our business, be
expensive to remedy and damage our reputation. Efforts to prevent
hackers from entering our computer systems are expensive to
implement and may limit the functionality of our services. Any
significant disruption to our website or internal computer systems
could result in a loss of subscribers and adversely affect our
business and results of operations.
Our connections to the airline booking systems may be interrupted
and causing delays or unavailability to search and book the flight
tickets, which may affect the user experiences and trust
significantly.
Technology changes rapidly in our business and if we
fail to anticipate or successfully implement new technologies or
the manner in which use our products and services, the quality,
timeliness and competitiveness of our products and services will
suffer.
Rapid technology changes in our industry require us to anticipate,
sometimes years in advance, which technologies we must implement
and take advantage of in order to make our products and services
competitive in the market. Therefore, we must start our product
development with a range of technical development goals that we
hope to be able to achieve. We may not be able to achieve these
goals, or our competition may be able to achieve them more quickly
and effectively than we can. In either case, our products and
services may be technologically inferior to our competitors’, less
appealing to consumers, or both. If we cannot achieve our
technology goals within the original development schedule of our
products and services, then we may delay their release until these
technology goals can be achieved, which may delay or reduce revenue
and increase our development expenses. Alternatively, we may
increase the resources employed in research and development in an
attempt to accelerate our development of new technologies, either
to preserve our product or service launch schedule or to keep up
with our competition, which would increase our development
expenses. Any such failure to adapt to, and appropriately allocate
resources among, emerging technologies would harm our competitive
position, reduce our market share and significantly increase the
time we take to bring our product to market.
Our potential customers will require a high degree of
reliability in the delivery of our services, and if we cannot meet
their expectations for any reason, demand for our products and
services will suffer.
Our success depends in large part on our ability to assure
generally error-free services, uninterrupted operation of our
network and software infrastructure, and a satisfactory experience
for our customers’ end users when they use Internet-based
communications services. To achieve these objectives, we depend on
the quality, performance and scalability of our products and
services, the responsiveness of our technical support and the
capacity, reliability and security of our network operations. We
also depend on third parties over which we have no control. For
example, our ability to serve our customers is based solely on our
network access agreement with one service provider and on that
service provider’s ability to provide reliable Internet access. Due
to the high level of performance required for critical
communications traffic, any failure to deliver a satisfactory
experience to end users, whether or not caused by our own failures
could reduce demand for our products and services.
If we fail to promote and maintain our brand in an
effective and cost-efficient way, our business and results of
operations may be harmed.
We believe that developing and maintaining awareness of our brand
effectively is critical to attracting new and retaining existing
customers. Successful promotion of our brand and our ability to
attract customers depends largely on the effectiveness of our
marketing efforts and the success of the channels we use to promote
our services. It is likely that our future marketing efforts will
require us to incur significant additional expenses. These efforts
may not result in increased revenues in the immediate future or at
all and, even if they do, any increases in revenues may not offset
the expenses incurred. If we fail to successfully promote and
maintain our brand while incurring substantial expenses, our
results of operations and financial condition would be adversely
affected, which may impair our ability to grow our business.
Declines or disruptions in the travel industry could
adversely affect our business and financial
performance.
Our financial results and prospects are almost entirely dependent
upon the sale of travel services. Travel, including accommodation
(including hotels, motels, resorts, homes, apartments and other
unique places to stay), rental car and airline ticket reservations,
is significantly dependent on discretionary spending levels. As a
result, sales of travel services tend to decline during general
economic downturns and recessions and times of political or
economic uncertainty as consumers engage in less discretionary
spending, are concerned about unemployment or inflation, have
reduced access to credit or experience other concerns or effects
that reduce their ability or willingness to travel.
Perceived or actual adverse economic conditions, including slow,
slowing or negative economic growth, high or rising unemployment
rates, inflation and weakening currencies, and concerns over
government responses such as higher taxes or tariffs, increased
interest rates and reduced government spending, could impair
consumer spending and adversely affect travel demand.
These and other macro-economic uncertainties, such as oil prices,
geopolitical tensions and differing central bank monetary policies,
have led to significant volatility in the exchange rates between
the U.S. Dollar and the Euro, the British Pound Sterling and other
currencies. Significant fluctuations in foreign currency exchange
rates, stock markets and oil prices can also impact consumer travel
behavior. For example, although lower oil prices may lead to
increased travel activity as consumers have more discretionary
funds and airline fares decrease, declines in oil prices may be
indicative of broader macro-economic weakness, which in turn could
negatively affect the travel industry, our business and results of
operations. Conversely, higher oil prices may result in higher
airfares and decreased travel activity, which can negatively affect
our business and results of operations.
The uncertainty of macro-economic factors and their impact on
consumer behavior, which may differ across regions, makes it more
difficult to forecast industry and consumer trends and the timing
and degree of their impact on our markets and business, which in
turn could adversely affect our ability to effectively manage our
business and adversely affect our results of operations.
In addition, events beyond our control, such as oil prices, stock
market volatility, terrorist attacks, unusual or extreme weather or
natural disasters such as earthquakes, hurricanes, tsunamis,
floods, fires, droughts and volcanic eruptions, travel-related
health concerns including pandemics and epidemics such as
coronaviruses, Ebola and Zika, political instability, changes in
economic conditions, wars and regional hostilities, imposition of
taxes, tariffs or surcharges by regulatory authorities, changes in
trade policies or trade disputes, changes in immigration policies,
travel-related accidents or increased focus on the environmental
impact of travel, have previously and may in the future disrupt
travel, limit the ability or willingness of travelers to visit
certain locations or otherwise result in declines in travel demand
and adversely affect our business and results of operations.
Because these events or concerns, and the full impact of their
effects, are largely unpredictable, they can dramatically and
suddenly affect travel behavior by consumers, and therefore demand
for our services and our relationships with travel service
providers and other partners, any of which can adversely affect our
business and results of operations. Certain jurisdictions,
particularly in Europe, are considering regulations intended to
address the issue of “overtourism,” including by restricting access
to city centers or popular tourist destinations or limiting
accommodation offerings in surrounding areas, such as by
restricting construction of new hotels or the renting of homes or
apartments. Such regulations could adversely affect travel to, or
our ability to offer accommodations in, such markets, which could
negatively impact our business, growth and results of operations.
The United States has implemented or proposed, or is considering,
various travel restrictions and actions that could affect U.S.
trade policy or practices, which could also adversely affect travel
to or from the United States.
As a result of the recent coronavirus outbreak, the travel industry
to experience, and continue to experience, a significant decline in
travel demand and increase in customer cancellations predominantly
related to travel to, from or in China and certain other Asian
markets, though concerns about the coronavirus are also negatively
impacting travel demand (and therefore our business) generally.
Some countries have implemented travel bans or restrictions and
some airlines have suspended or limited flights to or from China.
In addition, like many other companies, we have instructed or
allowed employees in high-risk areas to work from home or not
report to work, which, especially if this persists for a prolonged
period of time, may have an adverse impact on our employees,
ability to service travelers, operations and systems. The ultimate
extent of the coronavirus outbreak and its impact on travel in
currently affected countries or more broadly is unknown and
impossible to predict with certainty. As a result, the full extent
to which the coronavirus will impact our business and results of
operations is unknown. However, decreased travel demand resulting
from the outbreak has had a negative impact, and is likely to have
a negative and material impact, on our business, growth and results
of operations. In addition, we may incur additional customer
service costs in connection with servicing travelers affected by
the outbreak, which would also have a negative impact on our
results of operations.
The loss of the services of Leung Tin Lung David, our
sole director and officer, and majority shareholder, or our failure
to timely identify and retain competent personnel could negatively
impact our ability to develop our website and sell our
services.
We are highly dependent on Leung Tin Lung David, who is our sole
director and officer, and controlling stockholder. The development
of our business will continue to place a significant strain on our
limited personnel, management, and other resources. Our future
success depends upon the continued services of our executive
officers who are developing our business, and on our ability to
identify and retain competent consultants and employees with the
skills required to execute our business objectives. The loss of the
services of Jing Li or our failure to timely identify and retain
competent personnel would negatively impact our ability to develop
our business and license our brand, which could adversely affect
our financial results and impair our growth.
Leung Tin Lung David, our President and sole
director, beneficially owns approximately
or has the right to vote 41.3% of our outstanding common stock and
100% of our Series A Preferred Stock, which has voting power
equal to 110% of our issued and outstanding common stock. As a
result, Mr. Leung has a substantial voting power in all matters
submitted to our stockholders for approval
including:
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Election of our board
of directors;
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Removal of any of our
directors or officers;
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Amendment of our
Articles of Incorporation or Bylaws;
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Adoption of measures
that could delay or prevent a change in control or impede a merger,
takeover or other business combination involving us.
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As a result of his ownership and position, Mr. Leung is able to
substantially influence all matters requiring stockholder approval,
including the election of directors and approval of significant
corporate transactions. In addition, the future prospect of sales
of significant amounts of shares held by him could affect the
market price of our common stock if the marketplace does not
orderly adjust to the increase in shares in the market and the
value of your investment in our company may decrease. Mr. Leung’s
stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which
in turn could reduce our stock price or prevent our stockholders
from realizing a premium over our stock price.
We are an independent travel services, with little
experience in the market, and failure to successfully compensate
for this inexperience may adversely impact our operations and
financial position.
We operate as an independent business, whose existence is
predicated on the brand name Gagfare, and we have no substantial
tangible assets in a highly competitive industry. We have little
operating history, no customer base and little revenue to date.
This makes it difficult to evaluate our future performance and
prospects. Our business must be considered in light of the risks,
expenses, delays and difficulties frequently encountered in
establishing a new business in an emerging and evolving industry
characterized by intense competition, including:
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our business model and
strategy are still evolving and are continually being reviewed and
revised;
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we may not be able to
raise the capital required to develop our initial customer base and
reputation;
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we may not be able to
successfully implement our business model and strategy; and
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our management consists
is conducted by one persons, Leung Tin Lung David, our President
and a director.
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We cannot be sure that we will be successful in meeting these
challenges and addressing these risks and uncertainties. If we are
unable to do so, our business will not be successful and the value
of your investment in our company will decline.
Our failure to protect our intellectual property and
proprietary technology may significantly impair our competitive
advantage.
Our success and ability to compete depends in large part upon
protecting our proprietary technology. We rely on a combination of
patent, trademark and trade secret protection, nondisclosure and
nonuse agreements to protect our proprietary rights. The steps we
have taken may not be sufficient to prevent the misappropriation of
our intellectual property, particularly in foreign countries where
the laws may not protect our proprietary rights as fully as in the
United States. The patent and trademark law and trade secret
protection may not be adequate to deter third party infringement or
misappropriation of our patents, trademarks and similar proprietary
rights.
We may in the future initiate claims or litigation against third
parties for infringement of our proprietary rights in order to
determine the scope and validity of our proprietary rights or the
proprietary rights of our competitors. These claims could result in
costly litigation and the diversion of our technical and management
personnel.
We may face costly intellectual property infringement
claims, the result of which would decrease the amount of cash we
would anticipate to operate and complete our business
plan.
We anticipate that from time to time we will receive communications
from third parties asserting that we are infringing certain
copyright, trademark and other intellectual property rights of
others or seeking indemnification against alleged infringement. If
anticipated claims arise, we will evaluate their merits. Any claims
of infringement brought of third parties could result in protracted
and costly litigation, damages for infringement, and the necessity
of obtaining a license relating to one or more of our products or
current or future technologies, which may not be available on
commercially reasonable terms or at all. Litigation, which could
result in substantial cost to us and diversion of our resources,
may be necessary to enforce our patents or other intellectual
property rights or to defend us against claimed infringement of the
rights of others. Any intellectual property litigation and the
failure to obtain necessary licenses or other rights could have a
material adverse effect on our business, financial condition and
results of operations.
We incur costs associated with SEC reporting
compliance, which may significantly affect our financial
condition.
The Company made the decision to become an SEC “reporting company”
in order to comply with applicable laws and regulations. We incur
certain costs of compliance with applicable SEC reporting rules and
regulations including, but not limited to attorneys’ fees,
accounting and auditing fees, other professional fees, financial
printing costs and Sarbanes-Oxley compliance costs in an amount
estimated at approximately $50,000 per year. On balance, the
Company determined that the incurrence of such costs and expenses
was preferable to the Company being in a position where it had very
limited access to additional capital funding.
We may be required to incur significant costs and
require significant management resources to evaluate our internal
control over financial reporting as required under Section 404 of
the Sarbanes-Oxley Act, and any failure to comply or any adverse
result from such evaluation may have an adverse effect on our stock
price.
As a smaller reporting company as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, we are required to
evaluate our internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).
Section 404 requires us to include an internal control report with
our Annual Report on Form 10-K. This report must include
management’s assessment of the effectiveness of our internal
control over financial reporting as of the end of the fiscal year.
This report must also include disclosure of any material weaknesses
in internal control over financial reporting that we have
identified. Failure to comply, or any adverse results from such
evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the trading price
of our equity securities. Achieving continued compliance with
Section 404 may require us to incur significant costs and expend
significant time and management resources. No assurance can be
given that we will be able to fully comply with Section 404 or that
we and our independent registered public accounting firm would be
able to conclude that our internal control over financial reporting
is effective at fiscal year-end. As a result, investors could lose
confidence in our reported financial information, which could have
an adverse effect on the trading price of our securities, as well
as subject us to civil or criminal investigations and penalties. In
addition, our independent registered public accounting firm may not
agree with our management’s assessment or conclude that our
internal control over financial reporting is operating
effectively.
We may not be able to meet the internal control
reporting requirements imposed by the SEC resulting in a possible
decline in the price of our common stock and our inability to
obtain future financing.
As directed by Section 404 of the Sarbanes-Oxley Act, the SEC
adopted rules requiring each public company to include a report of
management on the company’s internal controls over financial
reporting in its annual reports. Although the Dodd-Frank Wall
Street Reform and Consumer Protection Act exempts companies with a
public float of less than $250 million from the requirement that
our independent registered public accounting firm attest to our
financial controls, this exemption does not affect the requirement
that we include a report of management on our internal control over
financial reporting and does not affect the requirement to include
the independent registered public accounting firm’s attestation if
our public float exceeds $250 million.
While we expect to expend significant resources in developing the
necessary documentation and testing procedures required by Section
404 of the Sarbanes-Oxley Act, there is a risk that we may not be
able to comply timely with all of the requirements imposed by this
rule. Regardless of whether we are required to receive a positive
attestation from our independent registered public accounting firm
with respect to our internal controls, if we are unable to do so,
investors and others may lose confidence in the reliability of our
financial statements and our stock price and ability to obtain
equity or debt financing as needed could suffer.
In addition, in the event that our independent registered public
accounting firm is unable to rely on our internal controls in
connection with its audit of our financial statements, and in the
further event that it is unable to devise alternative procedures in
order to satisfy itself as to the material accuracy of our
financial statements and related disclosures, it is possible that
we would be unable to file our Annual Report on Form 10-K with the
SEC, which could also adversely affect the market for and the
market price of our common stock and our ability to secure
additional financing as needed.
We face risks related to the Novel Coronavirus
(COVID-19) which could significantly disrupt our development,
operations, sales, and financial results.
Our business will be adversely impacted by the effects of the Novel
Coronavirus (COVID-19). In addition to global macroeconomic
effects, the Novel Coronavirus (COVID-19) outbreak and any other
related adverse public health developments will cause disruption to
our operations and sales activities. Our third-party vendors,
third-party distributors, and our customers have been and will be
disrupted by worker absenteeism, quarantines and restrictions on
employees’ ability to work, office and factory closures,
disruptions to ports and other shipping infrastructure, border
closures, or other travel or health-related restrictions. Depending
on the magnitude of such effects on our activities or the
operations of our third-party vendors and third-party distributors,
the supply of our products will be delayed, which could adversely
affect our business, operations and customer relationships. In
addition, the Novel Coronavirus (COVID-19) or other disease
outbreak will in the short-run and may over the longer term
adversely affect the economies and financial markets of many
countries, resulting in an economic downturn that will affect
demand for our products and services and impact our operating
results. There can be no assurance that any decrease in sales
resulting from the Novel Coronavirus (COVID-19) will be offset by
increased sales in subsequent periods. Although the magnitude of
the impact of the Novel Coronavirus (COVID-19) outbreak on our
business and operations remains uncertain, the continued spread of
the Novel Coronavirus (COVID-19) or the occurrence of other
epidemics and the imposition of related public health measures and
travel and business restrictions will adversely impact our
business, financial condition, operating results and cash flows. In
addition, we have experienced and will experience disruptions to
our business operations resulting from quarantines,
self-isolations, or other movement and restrictions on the ability
of our employees to perform their jobs that may impact our ability
to develop and design our products and services in a timely manner
or meet required milestones or customer commitments.
It will be extremely difficult to acquire jurisdiction
and enforce liabilities against our officers, directors and assets
outside the United States.
Substantially all of our assets are currently located outside of
the United States. Additionally, our sole director and officer
resides outside of the United States, in Hong Kong. As a result, it
may not be possible for United States investors to enforce their
legal rights, to effect service of process upon our directors or
officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and
officers under Federal securities laws. Moreover, we have been
advised Hong Kong and the PRC do not have a treaty providing for
the reciprocal recognition and enforcement of judgments of courts
with the United States.
RISKS ASSOCIATED WITH OUR
SECURITIES
The price of our shares of common stock may not reflect
our value and there can be no assurance that there will be an
active market for our shares of common stock either now or in the
future.
Although our common stock is quoted on the OTC Markets, our shares
of common stock trade sporadically, and the price of our common
stock, if traded, may not reflect our value. There can be no
assurance that there will be an active market for our shares of
common stock either now or in the future. Market liquidity will
depend on the perception of our operating business and any steps
that our management might take to bring us to the awareness of
investors. There can be no assurance given that there will be any
awareness generated. Consequently, investors may not be able to
liquidate their investment or liquidate it at a price that reflects
the value of the business. As a result holders of our securities
may not find purchasers our securities should they to sell
securities held by them. Consequently, our securities should be
purchased only by investors having no need for liquidity in their
investment and who can hold our securities for an indefinite period
of time.
If a more active market should develop, the price of our shares of
common stock may be highly volatile. Because there may be a low
price for our shares of common stock, many brokerage firms may not
be willing to effect transactions in our securities. Even if an
investor finds a broker willing to effect a transaction in the
shares of our common stock, the combination of brokerage
commissions, transfer fees, taxes, if any, and any other selling
costs may exceed the selling price. Further, many lending
institutions will not permit the use of such shares of common stock
as collateral for any loans.
We expect to experience volatility in our stock price,
which could negatively affect stockholders’
investments.
Although our common stock is quoted on the OTC Markets under
the symbol “NNAX”, there is a limited public market for our common
stock. No assurance can be given that an active market will develop
or that a stockholder will ever be able to liquidate its shares of
common stock without considerable delay, if at all. Many brokerage
firms may not be willing to effect transactions in the securities.
Even if a purchaser finds a broker willing to effect a transaction
in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may
exceed the selling price. Furthermore, our stock price may be
impacted by factors that are unrelated or disproportionate to our
operating performance. These market fluctuations, as well as
general economic, political and market conditions, such as
recessions, interest rates or international currency fluctuations
may adversely affect the market price and liquidity of our common
stock.
In the past, securities class action litigation has often been
brought against a company following periods of volatility in the
market price of its securities. Due to the volatility of our common
stock price, we may be the target of securities litigation in the
future. Securities litigation could result in substantial costs and
divert management’s attention and resources.
Stockholders should also be aware that, according to SEC Release
No. 34-29093, the market for “penny stock”, such as our common
stock, has suffered in recent years from patterns of fraud and
abuse. Such patterns include (1) control of the market for the
security by one or a few broker-dealers that are often related to
the promoter or issuer; (2) manipulation of prices through
prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask
differential and markups by selling broker-dealers; and (5) 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. Our management is aware of the
abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical
limitations to prevent the described patterns from being
established with respect to our securities. The occurrence of these
patterns or practices could increase the future volatility of our
share price.
Our common stock is subject to the “penny stock” rules
of the SEC and the trading market in our securities is limited,
which makes transactions in our stock cumbersome and may reduce the
value of an investment in our stock.
Under U.S. federal securities legislation, our common stock will
constitute “penny stock”. Penny stock is any equity security that
has a market price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless
exempt, the rules require that a broker or dealer approve a
potential investor’s account for transactions in penny stocks, and
the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve an investor’s
account for transactions in penny stocks, the broker or dealer must
obtain financial information and investment experience objectives
of the person, and make a reasonable determination that the
transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters
to be capable of evaluating the risks of transactions in penny
stocks. The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight
form sets forth the basis on which the broker or dealer made the
suitability determination. Brokers may be less willing to execute
transactions in securities subject to the “penny stock” rules. This
may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading and
about the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities
and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.
FINRA sales practice requirements may also limit a
stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, the
Financial Industry Regulatory Authority (“FINRA”) has adopted rules
that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending
speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain
information about the customer’s financial status, tax status,
investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability
that speculative low priced securities will not be suitable for at
least some customers. The FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and
have an adverse effect on the market for our shares.
Certain restrictions on the extent of puts may have
little, if any, effect on the adverse impact of our issuance of
shares in connection with the Investment Agreement, and as such,
Strattner may sell a large number of shares, resulting in
substantial dilution to the value of shares held by existing
stockholders.
Strattner has agreed to refrain from holding an amount of shares
which would result in Strattner owning more than 9.99% of the
then-outstanding shares of our common stock at any one time. These
restrictions, however, do not prevent Strattner from selling shares
of common stock received in connection with a put, and then
receiving additional shares of common stock in connection with a
subsequent put. In this way, Strattner could sell more than 9.99%
of the outstanding common stock in a relatively short time frame
while never holding more than 9.99% at one time.
Because Strattner will be paying less than the
then-prevailing market price for our common stock, your ownership
interest may be diluted and the value of our common stock may
decline by exercising the put right pursuant to the Investment
Agreement.
The common stock to be issued to Strattner pursuant to the
Investment Agreement will be purchased at a price equal to the
lowest of 85% of the lowest closing bid price of our common stock
reported by Bloomberg Finance L.P. in a five consecutive trading
day period commencing with the date a put notice is delivered.
Because the put price is lower than the prevailing market price of
our common stock, to the extent that the put right is exercised,
your ownership interest may be diluted. Strattner has a financial
incentive to sell our common stock immediately upon receiving the
shares to realize the profit equal to the difference between the
discounted price and the market price. If Strattner sells the
shares, the price of our common stock could decrease. If our stock
price decreases, Strattner may have a further incentive to sell the
shares of our common stock that it holds. These sales may have a
further adverse impact on our stock price.
The Investment Agreement’s pricing structure may
result in dilution to our stockholders.
Pursuant to the Investment Agreement, Strattner committed to
purchase, subject to certain conditions, up to $5,000,000 of our
common stock over a sixteen-month period. If we sell shares to
Strattner under the Investment Agreement, it will have a dilutive
effect on the holdings of our current stockholders, and may result
in downward pressure on the price of our common stock. If we draw
down amounts under the Investment Agreement, we will issue shares
to Strattner at a discount. If we draw down amounts under the
Investment Agreement when our share price is decreasing, we will
need to issue more shares to raise the same amount than if our
stock price was higher. Issuances in the face of a declining share
price will have an even greater dilutive effect than if our share
price were stable or increasing, and may further decrease our share
price.
We may not be able to access sufficient funds pursuant
to the terms of the Investment Agreement.
Our ability to put shares to Strattner and obtain funds pursuant to
the terms of the Investment Agreement is limited, including
restrictions on when we may exercise our put rights, restrictions
on the amount we may put to Strattner at any one time, which is
determined in part by the trading price of our common stock, and a
limitation on Strattner’s obligation to purchase if such purchase
would result in Strattner beneficially owning more than 9.99% of
our common stock. Accordingly, we may not be able to access
sufficient funds when needed.
If we issue additional shares in the future, whether in
connection with a financing or in exchange for services or rights,
it will result in the dilution of our existing
stockholders.
Our articles of incorporation authorize the issuance of up to
500,000,000 shares of common stock with a par value of $0.001 per
share, and 175,000,000 shares have been designated as “blank check”
preferred stock. As of the date of this Prospectus, the Company had
171,418,500 shares of common stock issued and outstanding.
Accordingly, we may issue up to an additional 325,000,000 shares of
common stock. Our Board of Directors may choose to issue some or
all of such shares to acquire one or more companies or properties,
to fund our overhead and general operating requirements and in
exchange for services rendered to the Company. Such issuances may
not require the approval of our stockholders. We have previously
issued shares of our common stock in exchange for services provided
to the Company and for certain rights, including as consideration
for intellectual property rights. Any future issuances may reduce
the book value per share and may contribute to a reduction in the
market price of the outstanding shares of our common stock. If we
issue any such additional shares in the future, such issuance will
reduce the proportionate ownership and voting power of all current
stockholders.
State securities laws may limit secondary trading,
which may restrict the states in which and conditions under which
you can sell the shares offered by this
prospectus.
Secondary trading in common stock sold in this offering will not be
possible in any state until the common stock is qualified for sale
under the applicable securities laws of the state or there is
confirmation that an exemption, such as listing in certain
recognized securities manuals, is available for secondary trading
in the state. If we fail to register or qualify, or to obtain or
verify an exemption for the secondary trading of, the common stock
in any particular state, the common stock could not be offered or
sold to, or purchased by, a resident of that state. In the event
that a significant number of states refuse to permit secondary
trading in our common stock, the liquidity for the common stock
could be significantly impacted thus causing you to realize a loss
on your investment.
The Company does not intend to seek registration or qualification
of its shares of common stock the subject of this offering in any
State or territory of the United States. Aside from a “secondary
trading” exemption, other exemptions under state law and the laws
of US territories may be available to purchasers of the shares of
common stock sold in this offering,
Anti-takeover effects of certain provisions of Nevada
state law hinder a potential takeover of us.
Though not now, we may be or in the future we may become subject to
Nevada’s control share law. A corporation is subject to Nevada’s
control share law if it has more than 200 stockholders, at least
100 of whom are stockholders of record and residents of Nevada, and
it does business in Nevada or through an affiliated corporation.
The law focuses on the acquisition of a “controlling interest”
which means the ownership of outstanding voting shares sufficient,
but for the control share law, to enable the acquiring person to
exercise the following proportions of the voting power of the
corporation in the election of directors:
(i) one-fifth or more but less than one-third, (ii) one-third or
more but less than a majority, or (iii) a majority or more. The
ability to exercise such voting power may be direct or indirect, as
well as individual or in association with others.
The effect of the control share law is that the acquiring person,
and those acting in association with it, obtains only such voting
rights in the control shares as are conferred by a resolution of
the stockholders of the corporation, approved at a special or
annual meeting of stockholders. The control share law contemplates
that voting rights will be considered only once by the other
stockholders. Thus, there is no authority to strip voting rights
from the control shares of an acquiring person once those rights
have been approved. If the stockholders do not grant voting rights
to the control shares acquired by an acquiring person, those shares
do not become permanent non-voting shares. The acquiring person is
free to sell its shares to others. If the buyers of those shares
themselves do not acquire a controlling interest, their shares do
not become governed by the control share law.
If control shares are accorded full voting rights and the acquiring
person has acquired control shares with a majority or more of the
voting power, any stockholder of record, other than an acquiring
person, who has not voted in favor of approval of voting rights is
entitled to demand fair value for such stockholder’s shares.
Nevada’s control share law may have the effect of discouraging
takeovers of the corporation.
In addition to the control share law, Nevada has a business
combination law which prohibits certain business combinations
between Nevada corporations and “interested stockholders” for three
years after the “interested stockholder” first becomes an
“interested stockholder,” unless the corporation’s board of
directors approves the combination in advance. For purposes of
Nevada law, an “interested stockholder” is any person who is (i)
the beneficial owner, directly or indirectly, of ten percent or
more of the voting power of the outstanding voting shares of the
corporation, or (ii) an affiliate or associate of the corporation
and at any time within the three previous years was the beneficial
owner, directly or indirectly, of ten percent or more of the voting
power of the then outstanding shares of the corporation. The
definition of the term “business combination” is sufficiently broad
to cover virtually any kind of transaction that would allow a
potential acquiror to use the corporation’s assets to finance the
acquisition or otherwise to benefit its own interests rather than
the interests of the corporation and its other stockholders.
The effect of Nevada’s business combination law is to potentially
discourage parties interested in taking control of us from doing so
if it cannot obtain the approval of our board of directors.
Because we do not intend to pay any cash dividends on
our common stock, our stockholders will not be able to receive a
return on their shares unless they sell them.
We intend to retain any future earnings to finance the development
and expansion of our business. We do not anticipate paying any cash
dividends on our common stock in the foreseeable future. Unless we
pay dividends, our stockholders will not be able to receive a
return on their shares unless they sell them. Stockholders may
never be able to sell shares when desired. Before you invest in our
securities, you should be aware that there are various risks. You
should consider carefully these risk factors, together with all of
the other information included in this annual report before you
decide to purchase our securities. If any of the following risks
and uncertainties develop into actual events, our business,
financial condition or results of operations could be materially
adversely affected.
USE OF PROCEEDS
Selling Security Holders may sell all of the common stock offered
by this Prospectus from time-to-time. We will not receive any
proceeds from the sale of those shares of common stock.
We will pay for expenses of this offering, except that the Selling
Security Holders will pay any broker discounts or commissions or
equivalent expenses and expenses of its legal counsel applicable to
the sale of its shares.
DETERMINATION OF THE OFFERING
PRICE
There currently is a limited public market for our common stock.
The Selling Security Holders may sell their shares in the
over-the-counter market or otherwise, at market prices prevailing
at the time of sale, at prices related to the prevailing market
price, or at negotiated prices.
SELLING SECURITY
HOLDERS
This Prospectus relates to the resale of up to (i) 5,000,000 shares
of our Common Stock, issuable to Strattner, pursuant to that
certain Investment Agreement (the “Investment Agreement”), dated
April 16, 2021, by and between the Company and Strattner, and (ii)
182,617 shares of common stock underlying the Note, issuable to EMA
Financial.
The Investment Agreement
Pursuant to that certain Investment Agreement (the “Investment
Agreement”), dated April 16, 2021, by and between the Company and
Strattner, pursuant to which Strattner is committed to purchase up
to $5,000,000 to purchase the Company’s common stock. We may draw
on the facility from time to time, as and when we determine
appropriate in accordance with the terms and conditions of the
Investment Agreement.
This offering relates to the resale of up to an aggregate of
$5,000,000 in put shares (“Put Shares”) that we may put to
Strattner pursuant to the Investment Agreement. Assuming the resale
of all 5,000,000 shares offered in this prospectus as Put Shares,
this would constitute approximately 2.9% of our outstanding common
stock, such 2.9% figure being calculated using the number of our
outstanding common stock on a fully diluted basis. It is likely
that the number of shares offered in this registration statement is
insufficient to allow us to receive the full amount of proceeds
under the Investment Agreement.
The maximum amount of common stock that the Company shall be
entitled to put to Strattner under any applicable put notice shall
be an amount of shares up to or equal to 200% of the average of the
daily trading volume of our common stock for the ten (10)
consecutive trading days immediately prior to the applicable date
on which we make our put to Strattner, so long as such amount is at
least $5,000 and does not exceed $250,000, as calculated by
multiplying the number of shares under our put by the average daily
volume weighted average price for the 10 consecutive trading days
immediately prior the to the applicable date we submit our put to
Strattner.
The Company shall not be entitled to submit a notice of put to
Strattner until after the previous put closing has been completed.
The Company may not deliver a notice of a put to Strattner on or
earlier of the tenth (10th) trading day immediately following the
preceding date on which the Company last submitted a put to
Strattner.
The volume weighted average prices of the common stock of the
Company on the OTC Markets of $1.00 per share for the 10 trading
days prior to June 21, 2021, is $0.39. At such a price, we will be
able to receive up to $1,950,000 in gross proceeds, assuming the
sale of the entire 5,000,000 Put Shares being registered hereunder
pursuant to the Investment Agreement.
The amount of $5,000,000 was selected based on our potential use of
funds over the effective time period to acquire targeted
businesses, including their intellectual property, and scale our
business at a rapid rate. Our ability to receive the full amount is
largely dependent on the daily dollar volume of stock traded during
the effective period. Based strictly on the current daily trading
dollar volume up to June 21, 2021, we believe it is unlikely that
we will be able to receive the entire $5,000,000. We are not
dependent on receiving the full amount to execute our business.
In order to sell shares to Strattner under the Investment
Agreement, during the Commitment Period, the Company must deliver
to Strattner a written put notice on any trading day (the “Put
Date”), setting forth the dollar amount to be invested by Strattner
(the “Put Notice”). For each share of our common stock purchased
under the Investment Agreement, Strattner will pay of the
arithmetic average of the lowest VWAPs reported by Bloomberg
Finance L.P. in a five consecutive trading day period commencing
with the date a put notice is delivered (the “Valuation Period”).
The Company may, at its sole discretion, issue a Put Notice to
Strattner and Strattner will then be irrevocably bound to acquire
such shares.
The Investment Agreement provides that the number of Put Shares to
be sold to Strattner shall not exceed the number of shares that
when aggregated together with all other shares of the Company’s
common stock which Strattner is deemed to beneficially own, would
result in Strattner owning more than 9.99% of the Company’s
outstanding common stock. The Investment Agreement provides that
any provision of the Investment Agreement may be amended or waived
only by an instrument in writing signed by the party to be charged
with enforcement. The Company and Strattner have entered into an
enforceable oral agreement that neither will amend or waive any
provision in the Investment Agreement that alters the pricing
mechanism or the 9.99% ownership cap which will result in the
transaction becoming ineligible to be made on a shelf basis under
Rule 415(a)(1)(i).
If, during the term of the Agreement, the Company (i) subdivides or
combines the common stock; (ii) pays a dividend in shares of common
stock or makes any other distribution of shares of common stock;
(iii) issues any options or other rights to subscribe for or shares
of common stock and the price per share is less than closing price
in effect immediately prior to such issuance; (iv) issues any
securities convertible into shares of common stock and the
consideration per share for which shares of common stock may at any
time thereafter be issuable pursuant to the terms of such
convertible securities shall be less that the closing price in
effect immediately prior to such issuance; (v) issue shares of
common stock otherwise than as provided in the foregoing
subsections (i) through (iv) at a price per share less than the
closing price in effect immediately prior to such issuance, or
without consideration; or (vi) makes a distribution of its assets
or evidences of its indebtedness to the holders of common stock as
a dividend in liquidation or by way of return of capital or other
than as a dividend payable out of earnings or surplus legally
available for dividends under applicable law (collectively, a
“Valuation Event”), then a new Valuation Period shall begin on the
trading day immediately after the occurrence of such Valuation
Event and end on the fifth trading day thereafter.
We are relying on an exemption from the registration requirements
of the Securities Act and/or Rule 506 of Regulation D promulgated
thereunder. The transaction involves a private offering, Strattner
is an “accredited investor” and/or qualified institutional buyer
and Strattner has access to information about us and its
investment.
Assuming the sale of the entire $5,000,000 in Put Shares being
registered hereunder pursuant to the Investment Agreement, we will
be able to receive $5,000,000 in gross proceeds. Neither the
Investment Agreement nor any rights or obligations of the parties
under the Investment Agreement may be assigned by either party to
any other person.
There are substantial risks to investors as a result of the
issuance of shares of our common stock under the Investment
Agreement. These risks include dilution of stockholders,
significant decline in our stock price and our inability to draw
sufficient funds when needed.
Strattner will periodically purchase our common stock under the
Investment Agreement and will, in turn, sell such shares to
investors in the market at the prevailing market price. This may
cause our stock price to decline, which will require us to issue
increasing numbers of common shares to Strattner to raise the same
amount of funds, as our stock price declines.
10% Convertible Note
On October 27, 2020, the Registrant offered and sold the Note,
dated October 27, 2020, to EMA Financial for aggregate proceeds of
$33,000. As of June 9, 2021, there was $35,000 in principal and
$2,042 in interest due and owing under the Note. The Note is due
July 27, 2021, and carries interest at a rate of 10% per annum. The
conversion price of the Note Shares is equal to the lower of: (i)
the lowest closing price of the Common Stock during the preceding
twenty (20) trading day period ending on the latest complete
trading day prior to the Issue Date of this Note or (ii) 55% of the
lowest trading price for the Common Stock on the Principal Market
during the twenty (20) consecutive trading days including and
immediately preceding the Conversion Date. We will not receive any
proceeds from the sale of the shares of common stock offered by the
Selling Security Holders. The terms and conditions of the Note
provide registration rights for the Note Shares.
The Selling Security Holders Table
The following table sets forth the names of the Selling Security
Holders, the number of shares of common stock beneficially owned by
each Selling Security Holders as of the date hereof and the number
of shares of common stock being offered by each Selling Security
Holders. The shares being offered hereby are being registered to
permit public secondary trading, and the Selling Security Holders
may offer all or part of the shares for resale from time to time.
However, the Selling Security Holders are under no obligation to
sell all or any portion of such shares nor are the Selling Security
Holders obligated to sell any shares immediately upon effectiveness
of this prospectus. All information with respect to share ownership
has been furnished by the Selling Security Holders. The “Amount
Beneficially Owned After Offering” column assumes the sale of all
shares offered.
To our knowledge, the none of the Selling Security Holders is a
broker-dealer or an affiliate of a broker-dealer. We may require
the Selling Security Holders to suspend the sales of the shares of
our common stock being offered pursuant to this Prospectus upon the
occurrence of any event that makes any statement in this Prospectus
or the related registration statement untrue in any material
respect or that requires the changing of statements in those
documents in order to make statements in those documents not
misleading.
Name of Selling
Security Holders
|
|
Shares
Beneficially Owned Prior to Offering(1)
|
|
|
Amount
Beneficially Owned After Offering
|
|
|
Number of Shares
to Be Owned by Selling Security Holders After the Offering and
Percent of Total Issued and Outstanding
Shares(1)
|
|
|
|
|
|
|
#
of Shares(2)
|
|
|
% of
Class(2)
|
|
Strattner Alternative
Credit Fund LP (3)
|
|
|
0 |
|
|
|
5,000,000 |
|
|
|
0 |
* |
EMA Financial, LLC
(4)
|
|
|
0 |
|
|
|
182,617 |
|
|
|
0 |
* |
_________
* Less than 1%
(1)
|
Beneficial ownership is
determined in accordance with Securities and Exchange Commission
rules and generally includes voting or investment power with
respect to shares of Common Stock. Shares of Common Stock subject
to options and warrants currently exercisable, or exercisable
within 60 days, are counted as outstanding for computing the
percentage of the person holding such options or warrants but are
not counted as outstanding for computing the percentage of any
other person.
|
(2)
|
We have assumed that
the Selling Security Holder will sell all of the shares being
offered in this offering.
|
(3)
|
Strattner Capital
Management Limited, a Hong Kong entity, is the general partner of
Strattner Alternative Credit Fund LP and has voting and investment
power over the shares beneficially owned by Strattner Alternative
Credit Fund LP. Timo Strattner has voting and investment power over
the shares beneficially owned by Strattner Capital Management
Limited.
|
(4)
|
EMA Group, LLC (“EMA Group”) is the
investment manager of EMA Financial, LLC. Felicia Preston is the
managing member of EMA Group, and she has voting and investment
power over the shares beneficially owned by EMA Group.
|
PLAN OF
DISTRIBUTION
This prospectus relates to the resale of shares of our common
stock, par value $0.001 per share, by the Selling Security Holders,
including (i) 5,000,000 Put Shares that we will put to Strattner,
and (ii) 182,617 Note Shares issuable to EMA Financial.
We will not receive any proceeds from the sale of the shares of
common stock offered by the Selling Security Holders. We may
receive proceeds of up to $5,000,000 from the sale of our Put
Shares under the Investment Agreement.
The Selling Security Holders may, from time to time sell any or all
of their shares of common stock on any market or trading facility
on which the shares are traded or in private transactions. These
sales may be at fixed or negotiated prices. The Selling Security
Holders may use any one or more of the following methods when
selling shares:
|
·
|
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
the purchaser;
|
|
·
|
block trades in which
the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal;
|
|
·
|
facilitate the
transaction;
|
|
·
|
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
·
|
an exchange
distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately negotiated
transactions;
|
|
·
|
broker-dealers may
agree with the Selling Security Holders to sell a specified number
of such shares at a stipulated price per share;
|
|
·
|
a combination of any
such methods of sale; and
|
|
·
|
any other method
permitted pursuant to applicable law.
|
The Selling Security Holders may also sell securities under Rule
144 under the Securities Act of 1933, if available, rather than
under this Prospectus.
The Selling Security Holders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the
shares directly to market makers acting as principals and/or
broker-dealers acting as agents for themselves or their customers.
Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Security
Holders and/or the purchasers of shares for whom such
broker-dealers may act as agents or to whom they sell as principal
or both, which compensation as to a particular broker-dealer might
be in excess of customary commissions. Market makers and block
purchasers purchasing the shares will do so for their own account
and at their own risk. It is possible that the Selling Security
Holders will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per
share which may be below the then market price. The Selling
Security Holders cannot assure that all or any of the shares
offered in this prospectus will be issued to, or sold by, the
Selling Security Holders. In addition, the Selling Security Holders
and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus are “underwriters” as that
term is defined under the Securities Act or the Exchange Act, or
the rules and regulations under such acts. In such event, any
commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities
Act.
Discounts, concessions, commissions and similar selling expenses,
if any, attributable to the sale of shares will be borne by a
Selling Security Holders. The Selling Security Holders may agree to
indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
The Selling Security Holders may from time to time pledge or grant
a security interest in some or all of the shares of common stock
owned by them, and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and
sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus
under Rule 424(b)(3) or any other applicable provision of the
Securities Act amending the list of Selling Security Holders to
include the pledgee, transferee or other successors in interest as
Selling Security Holders under this prospectus.
The Selling Security Holders also may transfer the shares of common
stock in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the
shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act
amending the list of Selling Security Holders to include the
pledgee, transferee or other successors in interest as a Selling
Security Holders under this prospectus.
We are required to pay all fees and expenses incident to the
registration of the shares of common stock. Otherwise, all
discounts, commissions or fees incurred in connection with the sale
of our common stock offered hereby will be paid by the Selling
Security Holders.
The Selling Security Holders acquired or will acquire the
securities offered hereby in the ordinary course of business and
have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock,
nor is there an underwriter or coordinating broker acting in
connection with a proposed sale of shares of common stock by any
Selling Security Holders. We will file a supplement to this
prospectus if a Selling Security Holders enters into a material
arrangement with a broker-dealer for sale of common stock being
registered. If the Selling Security Holders use this prospectus for
any sale of the shares of common stock, it will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Exchange Act,
may apply to sales of our common stock and activities of the
Selling Security Holders. The Selling Security Holders will act
independently of us in making decisions with respect to the timing,
manner and size of each sale.
We will pay all expenses incident to the registration, offering and
sale of the shares of our common stock to the public hereunder
other than commissions, fees and discounts of underwriters,
brokers, dealers and agents. If any of these other expenses exists,
we expect the Selling Security Holders to pay those expenses. We
estimate that the expenses of the offering to be borne by us will
be approximately $30,000. We will not receive any proceeds from the
resale of any of the shares of our common stock by the Selling
Security Holders.
DESCRIPTION OF
SECURITIES
General
The following summary includes a description of material provisions
of our capital stock.
Authorized and Outstanding Securities
The Company is authorized to issue 500,000,000 shares of common
stock, par value $0.001 per share, and 175,000,000 shares of
Preferred Stock, par value $0.001 per share, and one (1) of which
is designated as Series A Preferred Stock, par value $0.001 per
share. As of June 21, 2021, there were issued and outstanding
171,418,500 shares of our common stock, and one (1) share of our
Series A Preferred Stock.
Common Stock
The holders of our common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of
common stock do not have cumulative voting rights. Holders of
common stock are entitled to share ratably in dividends, if any, as
may be declared from time to time by the board of directors in its
discretion from funds legally available therefore. In the event of
a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of
common stock have no preemptive rights to purchase the Company’s
common stock. There are no conversion or redemption rights or
sinking fund provisions with respect to the common stock.
Series A Preferred Stock
On March 11, 2021, the Company designated a class of preferred
stock titled, Series A Preferred Stock, with a par value of $0.001
per share, and consisting of one share. The Series A preferred
carries voting rights equal to 110% of the total voting rights of
the outstanding common stock and voting power of the Company, and
has the right to appoint one director of the Company.
Additionally, the one share of Series A Preferred Stock contains
protective provisions, which precludes the Company from taking the
certain actions without the approval of the holder of the share of
Series A Preferred Stock. More specifically, so long as any shares
of Series A Preferred Stock are outstanding, the Company shall not,
without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the
then outstanding shares of Series A Preferred Stock, voting as a
separate class:
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(a)
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amend the Articles of
Incorporation or, unless approved by the Board of Directors,
including by the Series A Director, amend the Company’s Bylaws;
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(b)
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change or modify the
rights, preferences or other terms of the Series A Preferred Stock,
or increase or decrease the number of authorized shares of Series A
Preferred Stock;
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(c)
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reclassify or
recapitalize any outstanding equity securities, or, unless approved
by the Board of Directors, including by the Series A Director,
authorize or issue, or undertake an obligation to authorize or
issue, any equity securities or any debt securities convertible
into or exercisable for any equity securities (other than the
issuance of stock-options or securities under any employee option
or benefit plan);
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(d)
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authorize or effect any
transaction constituting a “Deemed Liquidation” under the Articles,
or any other merger or consolidation of the Company;
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(e)
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increase or decrease
the size of the Board of Directors as provided in the Bylaws of the
Company or remove the Series A Director (unless approved by the
Board of Directors, including the Series A Director);
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(f)
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declare or pay any
dividends or make any other distribution with respect to any class
or series of capital stock (unless approved by the Board of
Directors, including the Series A Director);
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(g)
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redeem, repurchase or
otherwise acquire (or pay into or set aside for a sinking fund for
such purpose) any outstanding shares of capital stock (other than
the repurchase of shares of Common Stock from employees,
consultants or other service providers pursuant to agreements
approved by the Board of Directors under which the Company has the
option to repurchase such shares at no greater than original cost
upon the occurrence of certain events, such as the termination of
employment) (unless approved by the Board of Directors, including
the Series A Director);
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(h)
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create or amend any
stock option plan of the Company, if any (other than amendments
that do not require approval of the stockholders under the terms of
the plan or applicable law) or approve any new equity incentive
plan;
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(i)
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replace the President
and/or Chief Executive Officer of the Company (unless approved by
the Board of Directors, including the Series A Director);
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(j)
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transfer assets to any
subsidiary or other affiliated entity (unless approved by the Board
of Directors, including the Series A Director);
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(k)
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issue, or cause any
subsidiary of the Company to issue, any indebtedness or debt
security, other than trade accounts payable and/or letters of
credit, performance bonds or other similar credit support incurred
in the ordinary course of business, or amend, renew, increase or
otherwise alter in any material respect the terms of any
indebtedness previously approved or required to be approved by the
holders of the Series A Preferred Stock (unless approved by the
Board of Directors, including the Series A Director);
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(l)
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modify or change the
nature of the Company’s business;
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(m)
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acquire, or cause a
Subsidiary of the Company to acquire, in any transaction or series
of related transactions, the stock or any material assets of
another person, or enter into any joint venture with any other
person (unless approved by the Board of Directors, including the
Series A Director); or
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(n)
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sell, transfer,
license, lease or otherwise dispose of, in any transaction or
series of related transactions, any material assets of the Company
or any Subsidiary outside the ordinary course of business (unless
approved by the Board of Directors, including the Series A
Director).
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Additionally, as long as any shares of Series A Preferred Stock
remain outstanding, the holders of a majority of the shares of
Series A Preferred Stock represented at a duly called special or
annual meeting of such stockholders or by an action by written
consent for that purpose shall be entitled to elect a special
director to the board of directors.
Dividends
Dividends, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and financial conditions.
The payment of dividends, if any, will be within the discretion of
our board of directors. We intend to retain earnings, if any, for
use in its business operations and accordingly, the board of
directors does not anticipate declaring any dividends in the
foreseeable future.
Warrants
We have no warrants issued or outstanding.
Convertible Note
On October 27, 2020, the Registrant offered and sold the Note,
dated October 27, 2020, to EMA Financial for aggregate proceeds of
$33,000. As of June 9, 2021, there was $35,000 in principal and
$2,042 in interest due and owing under the Note. The Note is due
July 27, 2021, and carries interest at a rate of 10% per annum. The
conversion price of the Note Shares is equal to the lower of: (i)
the lowest closing price of the Common Stock during the preceding
twenty (20) trading day period ending on the latest complete
trading day prior to the Issue Date of this Note or (ii) 55% of the
lowest trading price for the Common Stock on the Principal Market
during the twenty (20) consecutive trading days including and
immediately preceding the Conversion Date. We will not receive any
proceeds from the sale of the shares of common stock offered by the
Selling Security Holders.
Registration Rights
In connection with the execution of the Investment Agreement, on
April 16, 2021, the Company and Strattner also entered into the
Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, the Company has agreed to file the Registration
Statement with the Commission to register an agreed upon number of
Put Shares, on or prior to the Filing Deadline and have it declared
effective on or before the Effectiveness Deadline.
We must use commercially reasonable best efforts to keep such
registration statement continuously effective until all registrable
securities covered by such registration statement (i) have been
sold, thereunder or pursuant to Rule 144, or (ii) may be sold
without volume or manner-of-sale restrictions pursuant to Rule 144,
as determined by the counsel to the Company pursuant to a written
opinion letter to such effect.
The terms and conditions of the Note provide registration rights
for the Note Shares.
All fees and expenses incident to the performance of or compliance
with, the Financing Rights Agreement by the Company shall be borne
by the Company
Transfer Agent and Registrar
Our transfer agent is Action Stock Transfer Corporation, whose
address is 2469 E. Fort Union Blvd., Suite 214, Salt Lake City,
Utah, and whose telephone number is (801) 274-1088.
Indemnification of Officers and Directors
Subsection 7 of Section 78.138 of the Nevada Revised Statutes (the
“Nevada Law”) provides that, subject to certain very limited
statutory exceptions, a director or officer is not individually
liable to the corporation or its stockholders or creditors for any
damages as a result of any act or failure to act in his or her
capacity as a director or officer, unless it is proven that the act
or failure to act constituted a breach of his or her fiduciary
duties as a director or officer and such breach of those duties
involved intentional misconduct, fraud or a knowing violation of
law. The statutory standard of liability established by Section
78.138 controls even if there is a provision in the corporation’s
articles of incorporation unless a provision in the Company’s
Articles of Incorporation provides for greater individual
liability.
Subsection 1 of Section 78.7502 of the Nevada Law empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (any such person, a
“Covered Person”), against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the Covered Person in connection with such
action, suit or proceeding if the Covered Person is not liable
pursuant to Section 78.138 of the Nevada Law or the Covered Person
acted in good faith and in a manner the Covered Person reasonably
believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or
proceedings, had no reasonable cause to believe the Covered
Person’s conduct was unlawful.
Subsection 2 of Section 78.7502 of the Nevada Law empowers a
corporation to indemnify any Covered Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such
person acted in the capacity of a Covered Person against expenses,
including amounts paid in settlement and attorneys’ fees actually
and reasonably incurred by the Covered Person in connection with
the defense or settlement of such action or suit, if the Covered
Person is not liable pursuant to Section 78.138 of the Nevada Law
or the Covered Person acted in good faith and in a manner the
Covered Person reasonably believed to be in or not opposed to the
best interests of the Company. However, no indemnification may be
made in respect of any claim, issue or matter as to which the
Covered Person shall have been adjudged by a court of competent
jurisdiction (after exhaustion of all appeals) to be liable to the
corporation or for amounts paid in settlement to the corporation
unless and only to the extent that the court in which such action
or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances
the Covered Person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
Section 78.7502 of the Nevada Law further provides that to the
extent a Covered Person has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred
to in Subsection 1 or 2, as described above, or in the defense of
any claim, issue or matter therein, the corporation shall indemnify
the Covered Person against expenses (including attorneys’ fees)
actually and reasonably incurred by the Covered Person in
connection with the defense.
Subsection 1 of Section 78.751 of the Nevada Law provides that any
discretionary indemnification pursuant to Section 78.7502 of the
Nevada Law, unless ordered by a court or advanced pursuant to
Subsection 2 of Section 78.751, may be made by a corporation only
as authorized in the specific case upon a determination that
indemnification of the Covered Person is proper in the
circumstances. Such determination must be made (a) by the
stockholders, (b) by the board of directors of the corporation by
majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding, (c) if a majority vote
of a quorum of such non-party directors so orders, by independent
legal counsel in a written opinion, or (d) by independent legal
counsel in a written opinion if a quorum of such non-party
directors cannot be obtained.
Subsection 2 of Section 78.751 of the Nevada Law provides that a
corporation’s articles of incorporation or bylaws or an agreement
made by the corporation may require the corporation to pay as
incurred and in advance of the final disposition of a criminal or
civil action, suit or proceeding, the expenses of officers and
directors in defending such action, suit or proceeding upon receipt
by the corporation of an undertaking by or on behalf of the officer
or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to
be indemnified by the corporation. Subsection 2 of Section 78.751
further provides that its provisions do not affect any rights to
advancement of expenses to which corporate personnel other than
officers and directors may be entitled under contract or otherwise
by law.
Subsection 3 of Section 78.751 of the Nevada Law provides that
indemnification pursuant to Section 78.7502 of the Nevada Law and
advancement of expenses authorized in or ordered by a court
pursuant to Section 78.751 does not exclude any other rights to
which the Covered Person may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his
or her official capacity or in another capacity while holding his
or her office. However, indemnification, unless ordered by a court
pursuant to Section 78.7502 or for the advancement of expenses
under Subsection 2 of Section 78.751 of the Nevada Law, may not be
made to or on behalf of any director or officer of the corporation
if a final adjudication establishes that his or her acts or
omissions involved intentional misconduct, fraud or a knowing
violation of the law and were material to the cause of action.
Additionally, the scope of such indemnification and advancement of
expenses shall continue for a Covered Person who has ceased to be a
director, officer, employee or agent of the corporation, and shall
inure to the benefit of his or her heirs, exe
Section 78.752 of the Nevada Law empowers a corporation to purchase
and maintain insurance or make other financial arrangements on
behalf of a Covered Person for any liability asserted against such
person and liabilities and expenses incurred by such person in his
or her capacity as a Covered Person or arising out of such person’s
status as a Covered Person whether or not the corporation has the
authority to indemnify such person against such liability and
expenses.
The Bylaws of the Company provide for indemnification of Covered
Persons substantially identical in scope to that permitted under
the Nevada Law. Such Bylaws provide that the expenses of directors
and officers of the Company incurred in defending any action, suit
or proceeding, whether civil, criminal, administrative or
investigative, must be paid by the Company as they are incurred and
in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of such
director or officer to repay all amounts so advanced if it is
ultimately determined by a court of competent jurisdiction that the
director or officer is not entitled to be indemnified by the
Company.
DESCRIPTION OF
BUSINESS
Our Corporate History and Background
The Company was incorporated on July 1, 1999, under the laws of the
State of Nevada, under the name “Han Logistics, Inc.” On August 6,
2015, the Company changed its name to “Eason Education Kingdom
Holdings, Inc.” On June 18, 2020, the Company changed its name to
New Momentum Corporation.
Amee Han Lombardi served as President, Secretary, Treasurer and a
director from July 1, 1999 until her resignation on February 13,
2015. Michael Vardakis served as a director from April 19, 2012
until his resignation on February 13, 2015. On February 13, 2015,
Kin Hon Chu was appointed a director, Law Wai Fan was appointed
Chief Executive Officer, Cheng Kin Ning was appointed Chief
Financial Officer, and Marie Huen Lai Chun was appointed Chief
Operating Officer. On April 27, 2020, Leung Tin Lung David acquired
approximately 233,813,213, or approximately 75.2%, of the issued
and outstanding shares of common stock of the Company on such
date.
On May 27, 2020, Chu Kin Hon resigned a director; Law Wai Fan
resigned as Chief Executive Officer and President; Cheng Kin Ning
resigned as Chief Financial Officer, Secretary and Treasurer; and
Marie Huen Lai Chun resigned as Chief Operating Officer, of the
Company. Effective May 27, 2020, Leung Tin Lung David was appointed
as President, Secretary, and Treasurer and a Director of the
Company. Mr. Leung is currently the sole director and officer of
the Company.
Reverse Acquisition of Nemo Holding
On July 6, 2020, the Company entered into a Share Exchange
Agreement (the “Share Exchange Agreement”), by and among the
Company, Nemo Holding Company Limited, a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding. The holders of the common stock of Nemo Holding
consisted of 29 stockholders.
Under the terms and conditions of the Share Exchange Agreement, the
Company offered, sold and issued 10,000,000 shares of common stock
in consideration for all the issued and outstanding shares in Nemo
Holding. Leung Tin Lung David, the Company’s sole officer and
director, is the beneficial holder of 6,000,000 common shares, or
60%, of the issued and outstanding shares of Nemo Holding. The
effect of the issuance of the 10,000,000 shares issued under the
Share Exchange Agreement represents 10.8% of the issued and
outstanding shares of common stock of the Company.
Immediately prior to the closing of the transactions under the
Share Exchange Agreement, Mr. Leung was the holder of 233,813,213
shares of common stock, or 75.2%, of the issued and outstanding
shares of common stock of the Company. Giving effect to the closing
of the transactions under the Share Exchange Agreement, Mr. Leung
acquired 6,000,000 shares of common stock of the Company, by virtue
of his 60% beneficial ownership of Nemo Holding. The remaining 28
common shareholders of Nemo Holding acquired 4,000,000 shares of
common stock under the Share Exchange Agreement, by virtue of their
aggregate of 40% beneficial ownership of Nemo Holding.
As a result of the share exchange, Nemo Holding became a
wholly-owned subsidiary of the Company.
The share exchange transaction with Nemo Holding was treated as a
reverse acquisition, with Nemo Holding as the acquiror and the
Company as the acquired party. Unless the context suggests
otherwise, when we refer in this Form 8-K 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 Nemo Holding.
As of March 19, 2020, there were 340,268,500 shares of the
Registrant’s common stock, par value $0.001 per share, outstanding.
Mr. Leung is presently the beneficial holder of 233,813,213 shares
of common stock, or 68.7%, of the issued and outstanding shares of
common stock of Nemo Holding, making him the controlling
stockholder of the Company.
Organization & Subsidiaries
We have one operating subsidiary, Nemo Holding Company Limited., a
British Virgin Islands corporation.
Overview of Nemo Holding
Our wholly owned subsidiary, Nemo Holding was incorporated on April
16, 2020, in the British Virgin Islands.
The business of Nemo Holding is now the principal business of the
Company. Nemo Holding has developed and operates an online
ticketing platform named Gagfare.com, which provides a ticketing
system for individuals and agencies to search, book and issue
flight tickets and other services. The Company also offers its
services through its app, Gagfare.
Nemo Holding principal administrative offices are located at Room
1303, 13/F, Technology Plaza, 651 King’s Road, North Point, Hong
Kong, and our telephone number is +852 2911-0119. Our website is
www.gagfare.com.
Summary Financial Information
The tables and information below are derived from our unaudited
financial statements as of March 31, 2021.
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March
31,
2021
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Financial Summary
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Cash and Cash
Equivalents
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$ |
45,512 |
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Total Assets
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108,137 |
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Total Liabilities
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308,096 |
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Total Stockholders’
Equity (Deficit)
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$ |
(199,959 |
) |
Nemo Holding Company Limited has developed and operates an online
ticketing platform, named Gagfare.com, which provides a ticketing
system for individuals and agencies to search, book and issue
flight tickets and other services.
Being the pioneer to provide “book-now-pay-later” option for
securing flight ticket reservations, Gagfare enables travelers to
search flights directly with over 500 airlines globally, and
securing a confirmed, impartial airfare on their desired flight,
instantly. With a unique and first time ever ‘book-now-pay-later’
solution provides by Gagfare, travelers can now pay only $2.00 to
secure up to nine flight seats, well in advance in schedule, on
their desired flight. Travelers don’t have to pay the rest of the
fare until closer to their travel date.
The business mission of Gagfare is to let customers to “get a good
fare.” Gagfare taps into multiple global distribution systems
specifically for flight reservations, enables customers to be able
to search and book their flights directly in the airlines’ own
reservation systems. This gives travelers access to the best
available promotional deals they may never encounter anywhere else
online. Gagfare ensures to offer the best available airfare, on any
given travel day, on any given flight, on any of the world’s
leading airlines.
Travelers are using many of the existing online travel booking
sites are spending lots of time searching and comparing for flight
ticket options, and being rushed to pay the full ticket price as
early as the platforms want. Often travelers may find out the
selected flight fare options may no longer be available when they
want to make the purchase. Advance booking is not available in most
online travel booking sites today.
With user-friendly web and mobile application interfaces, Gagfare
enables instant access to hundreds of thousands of flights around
the world. Customers can also choose from their favorite airlines
or search for alternate route options. Travelers can book
itineraries with multiple stops, and check for their bookings
through the airline official booking web sites by using the Gagfare
booking reference information. Gagfare user just needs to pay $2.00
through multiple popular online payment methods to secure the best
seats on their best flight choice instantly. A reminder will be
sent through email to the customer when it is time to pay the
flight ticket fare and issue the flight ticket.
In the future, Gagfare will also tap into the booking of travel
packages, cruises, trains and buses tickets, hotels, theme parks,
sports and event tickets as well, giving a one-stop travel and
entertainment booking center for the consumers worldwide.
Revenue and User Model
Gagfare plans that its revenue will be derived from online flight
ticket booking and ticket issuance.
For each advance booking that user makes through the Gagfare’s
state of the art book-now-pay-later solution, a non-refundable
$2.00 booking fee is paid to Gagfare. The booking fee will not
apply to the flight ticket payment at ticket issuance.
When user has decided to issue the booked flight plan, full payment
for the tickets will be made for ticket issuance. Gagfare may still
get a market ticket price margin from the ticket issuance
transactions, depending on the type of ticket offering from the
ticket source which the user has chosen.
Gagfare will also provide advertising spots on the web and mobile
application platforms, for travel related businesses to advertise
on the platforms, which will bring a stream of advertising income
to the platform.
While the technology already developed and operational, Gagfare
will later expand into the other ticketing markets, include travel
packages, cruises, trains and buses, hotel rooms, theme parks,
sports and even tickets, apply similar search, book and buy ticket
business model and mechanisms which is already applied to flight
tickets.
Intellectual Property
We rely on a combination of trademark laws, trade secrets,
confidentiality provisions and other contractual provisions to
protect our proprietary rights, which are primarily our brand
names, product designs and marks. We do not own any patents.
Pursuant to a Cooperation Agreement, dated February 1, 2016, by and
between Gagfare Limited, a Hong Kong corporation and wholly owned
subsidiary of the Company, and JJ Explorer Tours Limited, a Hong
Kong corporation (“JJ Explorer”), controlled by Leung Tin Lung
David, JJ Explorer develops and maintains website and mobile
application platforms the Company uses in the operation of its
business in exchange for 50% of the net earnings the Company earns
through its Gagfare website and mobile application platforms for a
term of five years.
Government Regulation and Approvals
We are not aware of any governmental regulations or approvals
required for any of our services or products. We do not believe
that we are subject to any government regulations relating to the
ownership and licensing of our intellectual property.
Employees
As of the date hereof, we have 1 non-employee officer, Leung Tin
Lung David, who operates our company. The Company also uses 19
independent contractor consultants and advisors in connection with
its operations.
Competition
We operate in the travel industry and face strong competition in
terms of distribution, brand recognition, taste, quality, price,
availability, and product positioning. The market is highly
fragmented, and the resources of our competitors may increase due
to mergers, consolidations or alliances, and we may face new
competitors in the future. Our main competitors include a plethora
of internet-based travel websites. Furthermore, we face competition
from producers of other beverages. In addition, as we seek to
expand our market share and to penetrate into new markets, we may
have difficulty competing. From time to time in response to
competitive and customer pressures or to maintain market share, we
may be forced to reduce our selling prices or increase or
reallocate spending on marketing, advertising, or promotions in
order to compete. These types of actions could decrease our profit
margins. Such pressures may also restrict our ability to increase
our selling prices in response to raw material and other cost
increases. In light of the strong competition that we currently
face, and which may intensify in the future, there can be no
assurance that we will be able to increase the sales of our
products or even maintain our past levels of sales, or that our
profit margins will not be reduced. If we are unable to increase
our product sales or to maintain our past levels of sales and
profit margins, our business, financial condition, results of
operations and prospects may be materially and adversely
affected.
Description of Properties
Our executive offices are located at Room 1303, 13/F, Technology
Plaza, 651 King’s Road, North Point, Hong Kong, and our telephone
number is +852 2911-0119. We do not own any real estate or other
physical properties.
Bankruptcy or Similar Proceedings
We have never been subject to bankruptcy, receivership or any
similar proceeding.
Reports to Security Holders
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and accordingly, file current and
periodic reports, proxy statements and other information with the
SEC. We have also filed with the Commission a Registration
Statement on Form S-1, under the Securities Act of 1933, as
amended, with respect to the securities offered by this prospectus.
This prospectus, which forms a part of the registration statement,
does not contain all the information set forth in the registration
statement, as permitted by the rules and regulations of the
Commission. You may obtain copies of our reports from the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549, on official business days during the hours of 10 A.M. to 3
P.M. or on the SEC’s website, at www.sec.gov. You may obtain
information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.
PROPERTIES
Our executive offices are
located at Room 1303, 13/F, Technology Plaza, 651 King’s Road,
North Point, Hong Kong.
LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a
party or in which any director, officer or affiliate of the
Company, any owner of record or beneficially of more than 5% of any
class of voting securities of the Company, or security holder is a
party adverse to the Company or has a material interest adverse to
the Company.
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
Since July 27, 2020, our common stock has been quoted on the OTCQB
and/or OTC Pink tiers of the OTC Markets Group Inc., under the
symbol “NNAX.” Between August 26, 2015 and July 26, 2020, our
common stock was quoted on the OTCQB and/or OTCPink, tiers under
the stock symbol “EKKH.” On May 25, 2021, the last day that our
shares of common stock traded, the closing bid price for
our common stock was $1.00.
Stockholders
As of the date of this Prospectus, there were 171,418,500 shares of
common stock issued and outstanding held by approximately 121
stockholders of record, and one (1) share of our Series A Preferred
Stock held by one stockholder of record.
Transfer Agent
Our transfer agent is Action Stock Transfer Corporation, whose
address is 2469 E. Fort Union Blvd., Suite 214, Salt Lake City,
Utah, and whose telephone number is (801) 274-1088.
Dividends
We have not paid dividends to date and do not anticipate paying any
dividends in the foreseeable future. Our Board of Directors intends
to follow a policy of retaining earnings, if any, to finance our
growth. The declaration and payment of dividends in the future will
be determined by our Board of Directors in light of conditions then
existing, including our earnings, financial condition, capital
requirements and other factors.
Recent Sales of Unregistered Securities
None.
Securities Authorized for Issuance Under Equity
Compensation Plans
We have not established any compensation plans under which equity
securities are authorized for issuance.
SECURITIES AUTHORIZED UNDER EQUITY COMPENSATION
PLANS
On October 19, 2020, the Company approved its 2020 Stock Incentive
Plan (the “Plan”) and authorized the Leung Tin Lung David, the
Company’s President, to issue up to 20,000,000 shares of common
stock under the Plan. As of the date of this Prospectus, 19,400,000
shares of common stock are issued under the Plan, and 600,000
shares of common stock are remaining authorized shares for issuance
under the Plan.
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Cautionary Statement Regarding Forward-Looking
Information
The statements in this registration statement that are not reported
financial results or other historical information are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended. These
statements appear in a number of different places in this report
and can be identified by words such as “estimates”, “projects”,
“expects”, “intends”, “believes”, “plans”, or their negatives or
other comparable words. Also look for discussions of strategy that
involve risks and uncertainties. Forward-looking statements
include, among others, statements regarding our business plans and
availability of financing for our business.
OVERVIEW
The Company was incorporated in the State of Nevada on July 1,
1999, and established a fiscal year end of December 31.
Going Concern
To date the Company has little operations or revenues and
consequently has incurred recurring losses from operations. No
revenues are anticipated until we complete the financing we
endeavor to obtain, as described in the Form 10-K, and implement
our initial business plan. The ability of the Company to continue
as a going concern is dependent on raising capital to fund our
business plan and ultimately to attain profitable operations.
Accordingly, these factors raise substantial doubt as to the
Company’s ability to continue as a going concern.
Our activities have been financed from related-party loans and the
proceeds of share subscriptions. During October 2015, the Company
raised a total of $300,500 in cash from offerings of our common
stock. We have no outstanding loans.
The Company plans to raise additional funds through debt or equity
offerings. There is no guarantee that the Company will be able to
raise any capital through this or any other offerings.
PLAN OF OPERATION
We are an early stage corporation and have generated revenues of
$338,949 and $237,980 from our business for the three months ended
March 31, 2021 and for the year ended December 31, 2020,
respectively. We have developed and operate an online ticketing
platform named Gagfare.com, which provides a ticketing system for
individuals and agencies to search, book and issue flight tickets
and other services. During the 12 months following the date of
filing of this Prospectus, will be focused on attempting to raise
$10,000,000 of funds to expand our business. We have no assurance
that future financing will materialize. If that financing is not
available, we may be unable to continue. However, if such public
financing is not available, we could fail to satisfy our future
cash requirements. We have no assurance that future financing will
materialize. If that financing is not available we may be unable to
continue. Management believes that if subsequent private placements
are successful, we will be able to generate sales revenue within
the following twelve months thereof. However, additional equity
financing may not be available to us on acceptable terms or at all,
and thus we could fail to satisfy our future cash requirements.
If we are unsuccessful in raising the additional proceeds through a
private placement offering we will then have to seek additional
funds through debt financing, which would be highly difficult for
an early-stage company to secure. Therefore, the Company is highly
dependent upon the success of the anticipated private placement
offering and failure thereof would result in the Company having to
seek capital from other sources such as debt financing, which may
not even be available to the Company. However, if such financing
were available, because we are an early stage company, it would
likely have to pay additional costs associated with high risk loans
and be subject to an above market interest rate. At such time these
funds are required, management would evaluate the terms of such
debt financing and determine whether the business could sustain
operations and growth and manage the debt load. If we cannot raise
additional proceeds via a private placement of its common stock or
secure debt financing it would be required to cease business
operations. As a result, investors in our common stock would lose
all of their investment.
With new investors joining, the Company is operating a travel
services businesses, which includes an online ticketing platform
Gagfare, which provides to travelers a “Book Now, Pay Later”
business model, for travelers to secure the best fares and reserve
flights well ahead of time. The Company will also become the
driving force behind a bold new hospitality concept that takes
nature lovers and intrepid travelers to exciting new and
established destinations. The curated collection of boutique
properties, each with a focus on diving, sustainability,
conservation, and cultural authenticity, offers a thoroughly
contemporary travel experience that is intrinsically linked to the
destination, its heritage and its culture.
RESULTS OF OPERATIONS
Comparison of the Three Months ended March 31, 2021 and
2020
As of March 31, 2021, we suffered from a working capital deficit of
$225,890. As a result, our continuation as a going concern is
dependent upon improving our profitability and the continuing
financial support from our stockholders or other capital sources.
Management believes that the continuing financial support from the
existing shareholders and external financing will provide the
additional cash to meet our obligations as they become due. Our
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets and liabilities that may result in the Company not being
able to continue as a going concern.
The following table sets forth certain operational data for the
three months ended March 31, 2021 and 2020:
|
|
Three Months
Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
$ |
338,949 |
|
|
$ |
20 |
|
Cost of revenue
|
|
|
(337,826 |
) |
|
|
- |
|
Gross profit
|
|
|
1,123 |
|
|
|
20 |
|
Total operating expenses
|
|
|
(38,359 |
) |
|
|
(3,538 |
) |
Other (expense) income
|
|
|
(2,172 |
) |
|
|
10,295 |
|
(Loss) income before Income Taxes
|
|
|
(39,408 |
) |
|
|
6,777 |
|
Income tax expense
|
|
|
- |
|
|
|
- |
|
Net (loss) income
|
|
|
(39,408 |
) |
|
|
6,777 |
|
Revenue. We generated revenues of $338,949 and $20 for the
three months ended March 31, 2021 and 2020.
Cost of Revenue. Cost of revenue for the three months
ended March 31, 2021 and 2020, was $337,826 and $0, respectively.
Cost of revenue increased primarily as a result of the increase in
our business volume.
Gross Profit. We achieved a gross profit of $1,123 and $20
for the three months ended March 31, 2021 and 2020, respectively.
The increase in gross profit is primarily attributable to the
increase in our business volume.
General and Administrative Expenses (“G&A”). We
incurred G&A expenses of $38,359 and $3,538 for the three
months ended March 31, 2021 and 2020, respectively. The increase in
G&A is primarily attributable to the increase in business
volume..
Income Tax Expense. Our income tax expenses for the three
months ended March 31, 2021 and 2020 were $0.
Net Loss. During the three months ended March 31, 2021, we
incurred a net loss of $39,408, as compared to a net profit of
$6,777 for the three months ended March 31, 2020.
Liquidity and Capital Resources
As of March 31, 2021, we had cash and cash equivalents of $42,512,
accounts receivable of $487, deposits, prepayments and other
receivables of $19,897.
We believe that our current cash and other sources of liquidity
discussed below are adequate to support general operations for at
least the next 12 months.
|
|
Three Months
Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Net cash (used in) provided by operating
activities
|
|
$ |
(34,466 |
) |
|
$ |
7,041 |
|
Net cash provided by investing activities
|
|
|
- |
|
|
|
- |
|
Net cash provided by financing activities
|
|
|
12,117 |
|
|
|
220 |
|
Net Cash (Used In) Provided By Operating Activities.
For the three months ended March 31, 2021, net cash used in
operating activities was $34,466, which consisted primarily of a
net loss of $39,408, offset by a depreciation of right-of-use asset
of $5,038, amortization of convertible note discount of $667, an
increase in accounts receivables of $113, an increase in lease
liabilities of $632 and a decrease in accrued liabilities and other
payables of $1,282.
For the three months ended March 31, 2020, net cash provided by
operating activities was $6,989, which consisted primarily of a net
profit of $6,777, offset by an increase in accounts receivables of
$21 and an increase in accrued liabilities and other payable of
$285.
We expect to continue to rely on cash generated through financing
from our existing shareholders and private placements of our
securities, however, to finance our operations and future
acquisitions.
Net Cash Provided By Investing Activities.
For the three months ended March 31, 2021 and 2020, there are no
net cash provided by investing activities.
Net Cash Provided By Financing Activities.
For the three months ended March 31, 2021, net cash provided by
financing activities was $12,117 consisting primarily of $6,774
payment of lease liabilities, offset by $18,891 advances from
directors.
For the three months ended March 31, 2020, net cash provided by
financing activities was $220 consisting primarily of $2,564
repayment to related companies of the Company, offset by $2,784
advances from directors.
COVID-19
We continue to evaluate the impact of the COVID-19 pandemic on the
industry and our Company and have concluded that while it is
reasonably possible that the virus could have a negative effect on
our financial position and results of our operations, the specific
impact is not readily determinable as of the date of this filing.
Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements for the three months ended
March 31, 2021.
Subsequent Events
None through date of this filing.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on
accounting or financial disclosure matters.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
The following table sets forth the names and ages of our current
directors and executive officers, the principal offices and
positions held by each person:
Name
|
|
Age
|
|
Positions
|
|
|
|
|
|
Leung Tin Lung
David
|
|
58
|
|
President, Chief
Executive Officer, Secretary, Treasurer and Director
|
Leung Tin Lung David
President, Secretary, Treasurer and Director
Mr. Leung, age 58, has served as our President, Secretary,
Treasurer and sole Director since May 27, 2020. He was appointed
Chief Executive Officer on April 16, 2021. Mr. Leung is a
long-term veteran in the travel industry, with many years of
experience working with government and travel trade partners. He is
the founder and has been the Managing Director of JJ
Explorer Tour Limited, a position he has held since 2007. From 2011
until 2017, Mr. Leung was the Marketing Representative of
Philippine Department of Tourism, Hong Kong and Macau. Mr. Leung
graduated from the University of Minnesota in 1984. Mr. Leung’s
background in the travel industry led to our conclusion that he
should serve as a director in light of our business and
structure.
Director Qualifications
We believe that our directors should have the highest professional
and personal ethics and values, consistent with our values and
standards. They should have broad experience at the policy-making
level in business or banking. They should be committed to enhancing
stockholder value and should have sufficient time to carry out
their duties and to provide insight and practical wisdom based on
experience. Their service on other boards of public companies
should be limited to a number that permits them, given their
individual circumstances, to perform responsibly all director
duties for us. Each director must represent the interests of all
stockholders. When considering potential director candidates, the
Board also considers the candidate’s character, judgment,
diversity, age and skills, including financial literacy and
experience in the context of our needs and the needs of the
Board.
Term of Office
All directors hold office until the next annual meeting of the
stockholders of the Company and until their successors have been
duly elected and qualified. The Company’s Bylaws provide that the
Board of Directors will consist of no less than three members.
Officers are elected by and serve at the discretion of the Board of
Directors.
Director Independence
Our board of directors is currently composed of one member, and
such member does not qualify as an independent director in
accordance with the published listing requirements of the NASDAQ
Global Market (the Company has no plans to list on the NASDAQ
Global Market). The NASDAQ independence definition includes a
series of objective tests, such as that the director is not, and
has not been for at least three years, one of our employees and
that neither the director, nor any of his family members has
engaged in various types of business dealings with us. In addition,
our board of directors has not made a subjective determination as
to our director that no relationships exist which, in the opinion
of our board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director, though such subjective determination is required by the
NASDAQ rules. Had our board of directors made these determinations,
our board of directors would have reviewed and discussed
information provided by our director and us with regard to our
director’s business and personal activities and relationships as
they may relate to us and our management.
Certain Legal Proceedings
To our knowledge, our directors and executive officers have not
been involved in any of the following events during the past ten
years:
|
·
|
Any bankruptcy petition
filed by or against such person or any business of which such
person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time;
|
|
·
|
Any conviction in a
criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
|
·
|
Being subject to any
order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting his
involvement in any type of business, securities or banking
activities or to be associated with any person practicing in
banking or securities activities;
|
|
·
|
Being found by a court
of competent jurisdiction in a civil action, the SEC or the
Commodity Futures Trading Commission to have violated a Federal or
state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated;
|
|
·
|
Being subject of, or a
party to, any Federal or state judicial or administrative order,
judgment decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of any Federal or
state securities or commodities law or regulation, any law or
regulation respecting financial institutions or insurance
companies, or any law or regulation prohibiting mail or wire fraud
or fraud in connection with any business entity; or
|
|
·
|
Being subject of or
party to any sanction or order, not subsequently reversed,
suspended, or vacated, of any self-regulatory organization, any
registered entity or any equivalent exchange, association, entity
or organization that has disciplinary authority over its members or
persons associated with a member.
|
Significant Employees and Consultants
As of the date of this Prospectus, the Company has no significant
employees, other than its officers and directors acting in such
capacity. The Company is managed by Leung Tin Lung David, our sole
director and officer.
Audit Committee and Conflicts Of Interest
Since we do not have an audit, compensation or governance and
nominating committee comprised of independent directors, the
functions that would have been performed by such committees are
performed by our directors. The Board of Directors has not
established an audit committee and does not have an audit committee
financial expert, nor has the Board of Directors established a
nominating committee. The Board is of the opinion that such
committees are not necessary since the Company is an early stage
company and has only one director, and to date, such director has
been performing the functions of such committees. Thus, there is a
potential conflict of interest in that our sole director and
officer has the authority to determine issues concerning management
compensation, nominations, and audit issues that may affect
management decisions.
Family Relationships
There are no family relationships among our directors or officers.
Other than as described above, we are not aware of any other
conflicts of interest with any of our executive officers or
directors.
Stockholder Communications with the Board Of
Directors
We have not implemented a formal policy or procedure by which our
stockholders can communicate directly with our Board of Directors.
Nevertheless, every effort has been made to ensure that the views
of stockholders are heard by the Board of Directors or individual
directors, as applicable, and that appropriate responses are
provided to stockholders in a timely manner. We believe that we are
responsive to stockholder communications, and therefore have not
considered it necessary to adopt a formal process for stockholder
communications with our Board. During the upcoming year, our Board
will continue to monitor whether it would be appropriate to adopt
such a process.
Code of Ethics
The Company has not adopted a code of ethics that applies to its
principal executive officers, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions. The Company has not adopted a code of ethics
because it has only commenced operations.
Employment Agreements
On April 16, 2021, the Company entered
into an Employment Agreement (the “Employment Agreement”) with
Leung Tin Lung David, our President and Chief Executive Officer and
sole director.
The Employment Agreement provides that Mr. Leung shall act as the
Company’s Chief Executive Officer at an initial annual base salary
of $240,000. Mr. Leung’s monthly base salary shall increase by
$30,000 per month, which is equivalent to $360,000 on an annualized
basis, at the time that the Company closes on a Qualified
Financing. For the purposes of the Employment Agreement, a
“Qualified Financing” shall mean an equity or debt financing in
which the Company offers and sells equity or debt securities for an
aggregate purchase price of, and obtains gross cash proceeds in an
amount of, not less than $1,000,000. Mr. Leung may, in his sole
discretion, elect to receive any monthly base salary due to him, in
whole or in part, in the form of a restricted stock grant, or a
warrant or an option with no or a an exercise price of $0.00001 per
share, with a future vesting date to be determined by Mr. Leung,
and a term of 10 years. Mr. Leung’s base salary shall increase by
7% on April 1 of each year, based on the salary due to Mr. Leung in
the year prior to each such increase.
In addition to new hire option grants and any other outstanding
options that Mr. Leung may currently hold, Mr. Leung is eligible to
participate in the Company’s 2020 Stock Incentive Program, and any
employee benefit plan of the Company (the “Program”) whereby each
year Mr. Leung may receive an option for up to 5,000,000 shares of
Company Common Stock (the “Option”) per year. The Option, if
granted, will vest and become exercisable over a four (4) year
vesting period such that 1/48 of the total number of Option shares
will vest and become exercisable on each monthly anniversary.
Vesting is contingent upon Mr. Leung’s continued employment with
the Company.
Mr. Leung is eligible for a cash bonus(es) equal to 10% of first
$1,000,000 of earnings before interest, tax, depreciation and
amortization (“EBITDA”) of the Company, 8% of the second $1,000,000
of EBITDA of the Company, 6% of the third $1,000,000 of EBITDA of
the Company, 4% of the fourth $1,000,000 of EBITDA of the Company,
and 2% of all EBITDA of the Company in excess of $4,000,000. All
such bonus payments are due to Mr. Leung when the Company earns its
EBITDA. In lieu of any cash payment due to Mr. Leung as a bonus,
Mr. Leung, may in his sole discretion, elect to receive shares of
common stock of the Company at a rate of $0.27805 per share (the
closing price per share of common stock of the Company on the OTC
Markets on April 15, 2021). In lieu of any issuance of shares
common stock by the Company to Mr. Leung as a bonus, Mr. Leung may,
in his sole discretion, elect to receive any monthly base salary
due to him, in whole or in part, in the form of a restricted stock
grant, or a warrant or an option with no or a an exercise price of
$0.27805 per share, with a future vesting date to be determined by
Mr. Leung, and a term of 10 years.
Mr. Leung is also eligible for a cash bonus in the event of any
sale (whether in one or a series of transactions) of all or a
substantial amount of the assets or the capital stock of the
Company, any sale, merger, consolidation or other event which
results in the transfer of control of or a material interest in the
Company or of all or a substantial amount of the assets thereof, as
well as any recapitalization, restructuring or liquidation of the
Company by the current owners, a third party or any combination
thereof, or any other form of transaction or disposition which
results in the effective sale of the principal business and
operations of the Company by the current owners (a
“Transaction”).
In the event a Transaction is consummated or if the Company enters
into an agreement providing for a Transaction, the Company will pay
Mr. Leung a “Transaction Fee,” payable in cash or other immediately
available funds at the closing of the Transaction. The Transaction
Fee shall be equal to 3% of the aggregate value (as defined below)
of the Transaction; however, in no event shall the Transaction Fee
be less than $750,000.
In the event a licensing transaction is consummated by the Company
for a licensing aggregate value of greater than $5,000,000, the
Company will pay Mr. Leung a cash fee (the “Licensing Transaction
Fee”), payable in cash or other immediately available funds at the
closing of the Licensing Transaction, equal to 6.0% of the
Licensing Aggregate Value; provided, however, that in no event
shall the License Transaction Fee be less than $750,000.
1,000,000 shares of common stock shall be issued to Mr. Leung when
the Company’s securities are listed on an exchange or the OTCQX
tier of the OTC Markets Group, Inc. In lieu of such an issuance of
1,000,000 shares common stock, Mr. Leung may, in his sole
discretion, elect to receive such shares, in the form of a
restricted stock grant, or a warrant or an option with no or a an
exercise price of $0.00001 per share, with a future vesting date to
be determined by Mr. Leung, and a term of 10 years.
The Company will pay for Mr. Leung’s costs related to his (i)
reasonable monthly cell phone and other mobile Internet costs, home
office Internet costs, (iii) car and commuting costs, not to exceed
$1,000 per month, and (iii) club membership costs, payable not
later than 10 days after the end of each month.
Mr. Leung is also entitled a severance payment for his then current
annual base salary rate upon the termination of his employment by
the Company without cause or by him for good reason or in the event
of a change in control.
Indemnification Agreements
We have no indemnification agreements with our officers, directors
or any other person.
Family Relationships
No family relationships exist between our officers and directors or
any person who is an affiliate of the Company.
ITEM 11. EXECUTIVE
COMPENSATION
Summary Compensation Table
The summary compensation table below shows certain compensation
information for services rendered in all capacities to us by our
principal executive officer and principal financial officer and by
each other executive officer whose total annual salary and bonus
exceeded $100,000 during the fiscal periods ended December 31, 2020
and 2019. Other than as set forth below, no executive officer’s
total annual compensation exceeded $100,000 during our last fiscal
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
Name
and
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Deferred
|
|
|
All
Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Awards
($)
|
|
|
Awards
($)
|
|
|
Compensation($)
|
|
|
Compensation($)
|
|
|
Compensation($)
|
|
|
Total
($)
|
|
Law Wai
|
|
2020
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Fan (1)
|
|
2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cheng Kin
|
|
2020
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Ning (2)
|
|
2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marie Huen
|
|
2020
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Lai Chun (3)
|
|
2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leung Tin
|
|
2020
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Lung David (4)
|
|
2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
___________
(1)
|
Appointed President and
Chief Executive Officer an on February 13, 2015; resigned from all
such positions on May 27, 2020.
|
(2)
|
Appointed Chief
Financial Officer, Secretary and Treasurer on February 13, 2015;
resigned from all such positions on May 27, 2020.
|
(3)
|
Appointed Chief
Operating Officer on February 13, 2015; resigned from such position
on May 27, 2020.
|
(4)
|
Appointed President,
Secretary, Treasurer and director on May 27, 2020. Appointed Chief
Executive Officer on April 16, 2021.
|
Employment Contracts, Termination of Employment,
Change-in-Control Arrangements
On April 16, 2021, the Company entered
into an Employment Agreement (the “Employment Agreement”) with
Leung Tin Lung David, our President and Chief Executive Officer and
sole director.
The Employment Agreement provides that Mr. Leung shall act as the
Company’s Chief Executive Officer at an initial annual base salary
of $240,000. Mr. Leung’s monthly base salary shall increase by
$30,000 per month, which is equivalent to $360,000 on an annualized
basis, at the time that the Company closes on a Qualified
Financing. For the purposes of the Employment Agreement, a
“Qualified Financing” shall mean an equity or debt financing in
which the Company offers and sells equity or debt securities for an
aggregate purchase price of, and obtains gross cash proceeds in an
amount of, not less than $1,000,000. Mr. Leung may, in his sole
discretion, elect to receive any monthly base salary due to him, in
whole or in part, in the form of a restricted stock grant, or a
warrant or an option with no or a an exercise price of $0.00001 per
share, with a future vesting date to be determined by Mr. Leung,
and a term of 10 years. Mr. Leung’s base salary shall increase by
7% on April 1 of each year, based on the salary due to Mr. Leung in
the year prior to each such increase.
In addition to new hire option grants and any other outstanding
options that Mr. Leung may currently hold, Mr. Leung is eligible to
participate in the Company’s 2020 Stock Incentive Program, and any
employee benefit plan of the Company (the “Program”) whereby each
year Mr. Leung may receive an option for up to 5,000,000 shares of
Company Common Stock (the “Option”) per year. The Option, if
granted, will vest and become exercisable over a four (4) year
vesting period such that 1/48 of the total number of Option shares
will vest and become exercisable on each monthly anniversary.
Vesting is contingent upon Mr. Leung’s continued employment with
the Company.
Mr. Leung is eligible for a cash bonus(es) equal to 10% of first
$1,000,000 of earnings before interest, tax, depreciation and
amortization (“EBITDA”) of the Company, 8% of the second $1,000,000
of EBITDA of the Company, 6% of the third $1,000,000 of EBITDA of
the Company, 4% of the fourth $1,000,000 of EBITDA of the Company,
and 2% of all EBITDA of the Company in excess of $4,000,000. All
such bonus payments are due to Mr. Leung when the Company earns its
EBITDA. In lieu of any cash payment due to Mr. Leung as a bonus,
Mr. Leung, may in his sole discretion, elect to receive shares of
common stock of the Company at a rate of $0.27805 per share (the
closing price per share of common stock of the Company on the OTC
Markets on April 15, 2021). In lieu of any issuance of shares
common stock by the Company to Mr. Leung as a bonus, Mr. Leung may,
in his sole discretion, elect to receive any monthly base salary
due to him, in whole or in part, in the form of a restricted stock
grant, or a warrant or an option with no or a an exercise price of
$0.27805 per share, with a future vesting date to be determined by
Mr. Leung, and a term of 10 years.
Mr. Leung is also eligible for a cash bonus in the event of any
sale (whether in one or a series of transactions) of all or a
substantial amount of the assets or the capital stock of the
Company, any sale, merger, consolidation or other event which
results in the transfer of control of or a material interest in the
Company or of all or a substantial amount of the assets thereof, as
well as any recapitalization, restructuring or liquidation of the
Company by the current owners, a third party or any combination
thereof, or any other form of transaction or disposition which
results in the effective sale of the principal business and
operations of the Company by the current owners (a
“Transaction”).
In the event a Transaction is consummated or if the Company enters
into an agreement providing for a Transaction, the Company will pay
Mr. Leung a “Transaction Fee,” payable in cash or other immediately
available funds at the closing of the Transaction. The Transaction
Fee shall be equal to 3% of the aggregate value (as defined below)
of the Transaction; however, in no event shall the Transaction Fee
be less than $750,000.
In the event a licensing transaction is consummated by the Company
for a licensing aggregate value of greater than $5,000,000, the
Company will pay Mr. Leung a cash fee (the “Licensing Transaction
Fee”), payable in cash or other immediately available funds at the
closing of the Licensing Transaction, equal to 6.0% of the
Licensing Aggregate Value; provided, however, that in no event
shall the License Transaction Fee be less than $750,000.
1,000,000 shares of common stock shall be issued to Mr. Leung when
the Company’s securities are listed on an exchange or the OTCQX
tier of the OTC Markets Group, Inc. In lieu of such an issuance of
1,000,000 shares common stock, Mr. Leung may, in his sole
discretion, elect to receive such shares, in the form of a
restricted stock grant, or a warrant or an option with no or a an
exercise price of $0.00001 per share, with a future vesting date to
be determined by Mr. Leung, and a term of 10 years.
The Company will pay for Mr. Leung’s costs related to his (i)
reasonable monthly cell phone and other mobile Internet costs, home
office Internet costs, (iii) car and commuting costs, not to exceed
$1,000 per month, and (iii) club membership costs, payable not
later than 10 days after the end of each month.
Mr. Leung is also entitled a severance payment for his then current
annual base salary rate upon the termination of his employment by
the Company without cause or by him for good reason or in the event
of a change in control.
Compensation Committee Interlocks and Insider
Participation
No interlocking relationship exists between our Board of Directors
and the Board of Directors or compensation committee of any other
company, nor has any interlocking relationship existed in the
past.
Option Exercises and Fiscal Year-End Option Value
Table
We have not issued nor have a stock option plan and as such, there
were no stock options exercised by the named executive officers as
of the end of the fiscal period ended December 31, 2020.
Long-Term Incentive Plans and Awards
There were no awards made to a named executive officer, under any
long-term incentive plan, as of the end of the fiscal period ended
December 31, 2020.
We currently do not pay any compensation to our directors serving
on our board of directors.
Stock Option Grants
The following table sets forth stock option grants and compensation
for the fiscal year ended December 31, 2020:
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number of
Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number of
Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
|
Option Exercise
Price ($)
|
|
|
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 ($)
|
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That
Have Not Vested (#)
|
|
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested ($)
|
|
Law Wai Fan (1)
|
|
-0-
|
|
-0-
|
|
-0-
|
|
$
|
-0- |
|
|
|
N/A |
|
|
-0-
|
|
-0-
|
|
-0-
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cheng Kin Ning (2)
|
|
-0-
|
|
-0-
|
|
-0-
|
|
$
|
-0-
|
|
|
|
N/A |
|
|
-0-
|
|
-0-
|
|
-0-
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marie Huen Lai Chun (3)
|
|
-0-
|
|
-0-
|
|
-0-
|
|
$
|
-0-
|
|
|
|
N/A |
|
|
-0-
|
|
-0-
|
|
-0-
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chu Kin Hon (4)
|
|
-0-
|
|
-0-
|
|
-0-
|
|
$
|
-0-
|
|
|
|
N/A |
|
|
-0-
|
|
-0-
|
|
-0-
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leung Tin Lung David (5)
|
|
-0-
|
|
-0-
|
|
-0-
|
|
$
|
-0-
|
|
|
|
N/A |
|
|
-0-
|
|
-0-
|
|
-0-
|
|
-0-
|
|
_____________
(1)
|
Appointed Chief
Executive Officer on February 13, 2015; resigned from such position
on May 27, 2020.
|
(2)
|
Appointed Chief
Financial Officer on February 13, 2015; resigned from such position
on May 27, 2020.
|
(3)
|
Appointed Chief
Operating Officer on February 13, 2015; resigned from such position
on May 27, 2020.
|
(4)
|
Appointed a director on
February 13, 2015; resigned from such position on May 27, 2020.
|
(5)
|
Appointed President, Secretary, Treasurer and
director on May 27, 2020. Appointed Chief Executive Officer on
April 16, 2021.
|
Option Exercises and Fiscal Year-End Option Value
Table.
There were no stock options exercised by the named executive
officers as of the end of the fiscal period ended December 31,
2020.
Long-Term Incentive Plans and Awards
There were no awards made to a named executive officer, under any
long-term incentive plan, as of the end of the fiscal period ended
December 31, 2020.
Other Compensation
There are no annuity, pension or retirement benefits proposed to be
paid to officers, directors, or employees of our company in the
event of retirement at normal retirement date as there was no
existing plan as of the end of the fiscal year ended December 31,
2020, provided for or contributed to by our company.
DIRECTOR COMPENSATION
The following table sets forth director compensation or the fiscal
year ended December 31, 2020:
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Stock Awards
($)
|
|
|
Option Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation($)
|
|
|
Nonqualified
Deferred Compensation Earnings
($)
|
|
|
All Other
Compensation($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leung Tin Lung David
(1)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
_____________
(1)
|
Appointed President, Secretary, Treasurer and
director on May 27, 2020. Appointed Chief Executive Officer on
April 16, 2021.
|
We currently do not pay any compensation to our directors for
serving on our board of directors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The following table lists, as of the date of this Prospectus, the
number of shares of common stock of our Company that are
beneficially owned by (i) each person or entity known to our
Company to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each officer and director of our
Company; and (iii) all officers and directors as a group.
Information relating to beneficial ownership of common stock by our
principal shareholders and management is based upon information
furnished by each person using “beneficial ownership” concepts
under the rules of the Securities and Exchange Commission. Under
these rules, a person is deemed to be a beneficial owner of a
security if that person has or shares voting power, which includes
the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the
voting of the security. The person is also deemed to be a
beneficial owner of any security of which that person has a right
to acquire beneficial ownership within 60 days. Under the
Securities and Exchange Commission rules, more than one person may
be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to
which he or she may not have any pecuniary beneficial interest.
Except as noted below, each person has sole voting and investment
power.
The percentages below are calculated based on 171,418,500 shares of
our common stock issued and outstanding as of the date of this
Prospectus.
Title of
Class
|
|
Name and Address
of
Beneficial Owner
(2)
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of
Common Stock
(1)
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Leung Tin Lung David
(3)
|
|
|
70,813,213 |
|
|
|
41.3 |
% |
Common Stock
|
|
Chak Wan Ling Margaret
|
|
|
27,763,000 |
|
|
|
16.1 |
% |
Common Stock
|
|
Leung Chue
|
|
|
25,000,000 |
|
|
|
14.5 |
% |
Common Stock
|
|
Leung Suk Mun
|
|
|
25,000,000 |
|
|
|
14.5 |
% |
All directors and executive officers as a
group (1 person)
|
|
|
|
|
70,813,213 |
|
|
|
70.5 |
% |
______________
(1)
|
Calculated based on
171,418,500 shares of common stock issued and outstanding as of the
date of this Prospectus.
|
(2)
|
Unless otherwise
specified, the address of each of the persons set forth below is in
care of the Company, at the address of: Room 1303, 13/F, Technology
Plaza, 651 King’s Road, North Point, Hong Kong.
|
(3)
|
Appointed President,
Secretary, Treasurer and a director on May 27, 2020. Appointed
Chief Executive Officer on April 16, 2021.
|
The following table lists, as of the date of this Prospectus, the
number of shares of Series A Preferred Stock of our Company that
are beneficially owned by (i) each person or entity known to our
Company to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each officer and director of our
Company; and (iii) all officers and directors as a group.
Information relating to beneficial ownership of common stock by our
principal shareholders and management is based upon information
furnished by each person using “beneficial ownership” concepts
under the rules of the Securities and Exchange Commission. Under
these rules, a person is deemed to be a beneficial owner of a
security if that person has or shares voting power, which includes
the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the
voting of the security. The person is also deemed to be a
beneficial owner of any security of which that person has a right
to acquire beneficial ownership within 60 days. Under the
Securities and Exchange Commission rules, more than one person may
be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to
which he or she may not have any pecuniary beneficial interest.
Except as noted below, each person has sole voting and investment
power.
The percentages below are calculated based on 1 share of our Series
A Preferred Stock issued and outstanding as of the date of this
Prospectus.
Title of
Class
|
|
Name and Address of
Beneficial Owner (2)
|
|
Amount and
Nature of Beneficial Ownership
|
|
|
Percent
of
Series A
Stock
(1)
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred
Stock
|
|
Leung Tin Lung David (3)
|
|
|
1 |
|
|
|
100.0 |
% |
All directors and
executive officers as a group (1 person)
|
|
|
|
|
1 |
|
|
|
100.0 |
% |
__________
(1)
|
The percentages below
are based on 1 share of our Series A Preferred Stock issued and
outstanding as of the date of this Prospectus.
|
(2)
|
c/o New Momentum, Room
1303, 13/F, Technology Plaza, 651 King’s Road, North Point, Hong
Kong.
|
(3)
|
Appointed President,
Secretary, Treasurer and a director on May 27, 2020. Appointed
Chief Executive Officer on April 16, 2021.
|
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
Related Party Transactions
On July 6, 2020, the Company entered into a Share Exchange
Agreement (the “Share Exchange Agreement”), by and among the
Company, Nemo Holding Company Limited, a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding. The holders of the common stock of Nemo Holding
consisted of 29 stockholders.
Under the terms and conditions of the Share Exchange Agreement, the
Company offered, sold and issued 10,000,000 shares of common stock
in consideration for all the issued and outstanding shares in Nemo
Holding. Leung Tin Lung David, the Company’s sole officer and
director, became the beneficial holder of 6,000,000 common shares,
or 60%, of the issued and outstanding shares of Nemo Holding. The
effect of the issuance of the 10,000,000 shares issued under the
Share Exchange Agreement represents 10.8% of the issued and
outstanding shares of common stock of the Company.
Immediately prior to the closing of the transactions under the
Share Exchange Agreement, Mr. Leung was the holder of 233,813,213
shares of common stock, or 75.2%, of the issued and outstanding
shares of common stock of the Company. Giving effect to the closing
of the transactions under the Share Exchange Agreement, Mr. Leung
acquired 6,000,000 shares of common stock of the Company, by virtue
of his 60% beneficial ownership of Nemo Holding. The remaining 28
common shareholders of Nemo Holding acquired 4,000,000 shares of
common stock under the Share Exchange Agreement, by virtue of their
aggregate of 40% beneficial ownership of Nemo Holding.
As a result of the share exchange, Nemo Holding became a
wholly-owned subsidiary of the Company.
On April 13, 2021, the Company entered into a Stock Purchase
Agreement with Leung Tin Lung David, the Company’s sole director,
President, and majority stockholder, pursuant to which the Company
sold to Mr. Leung one share of Series A Preferred Stock in exchange
for 169,000,000 shares of common stock of the Company. The Company
subsequently canceled and returned to its authorized capital stock
the 169,000,000 shares of common stock purchased from Mr.
Leung.
On April 16, 2021, the Company entered into an Employment Agreement
(the “Employment Agreement”) with Leung Tin Lung David, our
President and Chief Executive Officer and sole director.
On April 16, 2021, we entered into an Indemnification Agreement,
with Mr. Leung, pursuant to which the Company agreed to indemnify
Mr. Leung for claims against him that may arise in connection with
the performance of his duties as a director and officer for the
Company.
Director Independence
Our board of directors is currently composed of one member, who
does not qualify as an independent director in accordance with the
published listing requirements of the NASDAQ Global Market. The
NASDAQ independence definition includes a series of objective
tests, such as that the director is not, and has not been for at
least three years, one of our employees and that neither the
director, nor any of his family members has engaged in various
types of business dealings with us. In addition, our board of
directors has not made a subjective determination as to each
director that no relationships exist which, in the opinion of our
board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director, though such subjective determination is required by the
NASDAQ rules. Had our board of directors made these determinations,
our board of directors would have reviewed and discussed
information provided by the directors and us with regard to each
director’s business and personal activities and relationships as
they may relate to us and our management.
Our board of directors has not separately designated and standing
committees. Accordingly, the duties customarily performed by an
audit committee, compensation committee, and governance and
nominating committee are performed by our board of directors.
INTEREST OF NAMED EXPERTS AND COUNSEL
Thomas Puzzo, of Law Offices of Thomas E. Puzzo, PLLC, counsel to
the Company, is the holder of 150,000 shares of Common Stock of the
Company. Law Offices of Thomas E. Puzzo, PLLC, is counsel named in
this Prospectus as having prepared part of this Prospectus. Except
with respect to Mr. Puzzo, no expert named in this Prospectus as
having prepared or certified any part of this Prospectus or having
given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the
registration or offering of the Common Stock was employed on a
contingency basis, or had, or is to receive, in connection with the
Offering, a substantial interest, direct or indirect, in the
Company or any of its subsidiaries.
EXPERTS
The financial statements included in this Prospectus for the years
ended December 31, 2020 and 2019 have been audited by Total Asia
Associates PLT, and are included in reliance upon such report given
upon the authority of said firm as experts in auditing and
accounting.
Unless otherwise indicated in the applicable prospectus supplement,
Law Offices of Thomas Puzzo, PLLC, will provide opinions regarding
the validity of the shares of our Common Stock. Law Offices of
Thomas Puzzo, PLLC may also provide opinions regarding certain
other matters. Any underwriters will also be advised about legal
matters by their own counsel, which will be named in the prospectus
supplement.
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Bylaws provide to the fullest extent permitted by law that our
directors or officers, former directors and officers, and persons
who act at our request as a director or officer of a body corporate
of which we are a shareholder or creditor shall be indemnified by
us. We believe that the indemnification provisions in our By-laws
are necessary to attract and retain qualified persons as directors
and officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the Company pursuant to provisions of the State
of Nevada, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
WHERE YOU CAN FIND MORE
INFORMATION
We have filed a registration statement on Form S-1, together with
all amendments and exhibits, with the SEC. This Prospectus, which
forms a part of that registration statement, does not contain all
information included in the registration statement. Certain
information is omitted and you should refer to the registration
statement and its exhibits. With respect to references made in this
Prospectus to any of our contracts or other documents, the
references are not necessarily complete and you should refer to the
exhibits attached to the registration statement for copies of the
actual contracts or documents. You may read and copy any document
that we file at the Commission’s Public Reference Room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the
public reference rooms. Our filings and the registration statement
can also be reviewed by accessing the SEC’s website at
http://www.sec.gov.
CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Total Asia Associates PLT, is our independent registered public
accounting firm. There have not been any changes in or
disagreements with accountants on accounting and financial
disclosure or any other matter.
NEW MOMENTUM
CORPORATION
INDEX TO FINANCIAL STATEMENTS
Fiscal Years ended December 31, 2020 and 2019
(Audited)
Three months ended March 31, 2021 and 2020
(Unaudited)

|
TOTAL ASIA ASSOCIATES
PLT
(AF002128 &
LLP0016837-LCA)
A Firm registered with US PCAOB
and Malaysian MIA
Block
C-3-1, Megan Avenue 1, 189, Off Jalan Tun Razak,
50400, Kuala Lumpur, Malaysia
Tel: (603) 2733 9989
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Director and Shareholders of
NEW MOMENTUM CORPORATION
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of New
Momentum Corporation and its subsidiaries (the ‘Company’) as of
December 31, 2020 and 2019, and the related consolidated statements
of operations and comprehensive loss, changes in shareholders’
deficit and cash flows for the years ended December 31, 2020 and
2019, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2019, and the
results of its operations and its cash flows for the years ended
December 31, 2020 and 2019, in conformity with accounting
principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in note 2 to the consolidated financial
statements, the Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and allow it to
continue as a going concern. These factors create an uncertainty as
to the Company’s ability to continue as a going concern.
Management’s plans in regard to these matters are also described in
note 2. The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ TOTAL ASIA ASSOCIATES PLT
TOTAL ASIA ASSOCIATES PLT
March 26, 2021
We have served as the Company’s auditor since 2020.
Kuala Lumpur, Malaysia
NEW MOMENTUM CORPORATION
CONSOLIDATED
BALANCE SHEETS
AS OF DECEMBER 31, 2020 AND 2019
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
|
|
As of December 31,
|
|
|
|
2020
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
64,496 |
|
|
$ |
9,343 |
|
Accounts receivable
|
|
|
374 |
|
|
|
503 |
|
Deposits, prepayments and other
receivables
|
|
|
19,953 |
|
|
|
11,471 |
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
84,823 |
|
|
|
21,317 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
84,823 |
|
|
$ |
21,317 |
|
|
|
|
|
|
|
|
|
|
LIABILTIES AND
SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued liabilities and other
payables
|
|
$ |
12,290 |
|
|
$ |
682 |
|
Amount due to a related
company
|
|
|
- |
|
|
|
22,840 |
|
Amounts due to directors
|
|
|
199,949 |
|
|
|
83,377 |
|
Convertible promissory note
|
|
|
33,444 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
245,683 |
|
|
|
106,899 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
245,683 |
|
|
|
106,899 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock, Class A, $0.001
par value; 175,000,000 shares authorized; no share issued and
outstanding as at December 31, 2020 and 2019
|
|
|
- |
|
|
|
- |
|
Common stock, $0.001 par value;
500,000,000 shares authorized; 340,268,500 and 10,000,000 shares
issued and outstanding as at December 31, 2020 and 2019,
respectively
|
|
|
340,269 |
|
|
|
10,000 |
|
Additional paid in capital
|
|
|
4,054,600 |
|
|
|
- |
|
Accumulated other comprehensive
losses
|
|
|
(884 |
) |
|
|
(553 |
) |
Accumulated losses
|
|
|
(4,554,845 |
) |
|
|
(95,029 |
) |
|
|
|
|
|
|
|
|
|
Shareholders’ deficit
|
|
|
(160,860 |
) |
|
|
(85,582 |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ DEFICIT
|
|
$ |
84,823 |
|
|
$ |
21,317 |
|
See accompanying notes to consolidated financial statements.
NEW MOMENTUM CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(Currency expressed in United States Dollars
(“US$”))
|
|
Years ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
237,980
|
|
|
$
|
183
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(233,757
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,223
|
|
|
|
183
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
(4,111,983
|
)
|
|
|
(23,066
|
)
|
Legal and professional
fee
|
|
|
(64,013
|
)
|
|
|
-
|
|
Total operating expenses
|
|
|
(4,175,996
|
)
|
|
|
(23,066
|
)
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(4,171,773
|
)
|
|
|
(22,883
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Government subsidy
|
|
|
23,853
|
|
|
|
3,367
|
|
Interest income
|
|
|
1
|
|
|
|
5
|
|
Interest expense
|
|
|
(1,028
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
22,826
|
|
|
|
3,372
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
|
|
(4,148,947
|
)
|
|
|
(19,511
|
)
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
(4,148,947
|
)
|
|
|
(19,511
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss :
|
|
|
|
|
|
|
|
|
Foreign currency translation
loss
|
|
|
(331
|
)
|
|
|
(182
|
)
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(4,149,278
|
)
|
|
$
|
(19,693
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
165,747,163
|
|
|
|
10,000,000
|
|
See accompanying notes to consolidated financial statements.
NEW MOMENTUM CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(Currency expressed in United States Dollars
(“US$”))
|
|
Years ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Cash flow from operating
activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,148,947
|
)
|
|
$
|
(19,511
|
)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation for
services
|
|
|
4,074,000
|
|
|
|
-
|
|
Amortization of convertible note
discount
|
|
|
444
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
129
|
|
|
|
7,672
|
|
Deposits, prepayments and
other receivables
|
|
|
(8,482
|
)
|
|
|
7,357
|
|
Accrued liabilities and other
payables
|
|
|
11,608
|
|
|
|
(7,975
|
)
|
Net cash used in operating
activities
|
|
|
(71,248
|
)
|
|
|
(12,457
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing
activities:
|
|
|
|
|
|
|
|
|
Advance from a director
|
|
|
116,572
|
|
|
|
54,263
|
|
Proceed from issuance of
convertible bonds
|
|
|
33,000
|
|
|
|
-
|
|
Repayment to related
companies
|
|
|
(22,840
|
)
|
|
|
(37,392
|
)
|
|
|
|
|
|
|
|
|
|
Net cash generated from financing
activities
|
|
|
126,732
|
|
|
|
16,871
|
|
|
|
|
|
|
|
|
|
|
Effect on exchange rate change on
cash and cash equivalents
|
|
|
(331
|
)
|
|
|
(182
|
)
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash
equivalents
|
|
|
55,153
|
|
|
|
4,232
|
|
|
|
|
|
|
|
|
|
|
BEGINNING OF
YEAR
|
|
|
9,343
|
|
|
|
5,111
|
|
|
|
|
|
|
|
|
|
|
END OF YEAR
|
|
$
|
64,496
|
|
|
$
|
9,343
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
|
|
|
Cash paid for tax
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to consolidated financial statements.
NEW MOMENTUM CORPORATION
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
|
|
Common stock
|
|
|
Additional paid in
|
|
|
Accumulated other comprehensive
|
|
|
Accumulated
|
|
|
Total shareholders’
|
|
|
|
No. of Shares
|
|
|
Amount
|
|
|
capital
|
|
|
losses
|
|
|
losses
|
|
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at January 1, 2019
(restated)
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
$ |
- |
|
|
$ |
(371 |
) |
|
$ |
(75,518 |
) |
|
$ |
(65,889 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(182 |
) |
|
|
- |
|
|
|
(182 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19,511 |
) |
|
|
(19,511 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31,
2019
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
$ |
- |
|
|
$ |
(553 |
) |
|
$ |
(95,029 |
) |
|
$ |
(85,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for acquisition of
legal acquirer
|
|
|
310,868,500 |
|
|
|
310,869 |
|
|
|
- |
|
|
|
- |
|
|
|
(310,869 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for service
rendered
|
|
|
19,400,000 |
|
|
|
19,400 |
|
|
|
4,054,600 |
|
|
|
- |
|
|
|
- |
|
|
|
4,074,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(331 |
) |
|
|
- |
|
|
|
(331 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,148,947 |
) |
|
|
(4,148,947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31,
2020
|
|
|
340,268,500 |
|
|
$ |
340,269 |
|
|
$ |
4,054,600 |
|
|
$ |
(884 |
) |
|
$ |
(4,554,845 |
) |
|
$ |
(160,860 |
) |
See accompanying notes to consolidated financial statements.
NEW
MOMENTUM CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
New Momentum Corporation (formerly known as Eason Education Kingdom
Holdings, Inc.) (the “Company”) was incorporated under the law of
the State of Nevada on July 1, 1999. The Company through its
subsidiaries, mainly operates a smartphone application to provide
the online platform with “Book Now, Pay Later” flight booking
service for travelers among over 500 airlines worldwide to search
and secured their tickets. With a simple, user-friendly interface,
the Company enables customers to arrange and book the multiple-stop
itineraries, and to check their bookings through official airline
websites using the Gagfare booking reference number.
On July 6, 2020, the Company entered into a Share Exchange
Agreement (the “Share Exchange Agreement”), by and among the
Company, Nemo Holding Company Limited, a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding. The holders of the common stock of Nemo Holding
consisted of 29 stockholders.
Under the terms and conditions of the Share Exchange Agreement, the
Company issued 10,000,000 shares of common stock in consideration
for all the issued and outstanding shares in Nemo Holding. Leung
Tin Lung David, the Company’s sole officer and director, is the
beneficial holder of 6,000,000 common shares, or 60%, of the issued
and outstanding shares of Nemo Holding. The effect of the issuance
of the 10,000,000 shares issued under the Share Exchange Agreement
represents 10.8% of the issued and outstanding shares of common
stock of the Company. Both the Company and Nemo Holding are
controlled by the same management team. Upon completion of the
Share Exchange Transaction, Nemo Holding became a 100% owned
subsidiary of the Company.
Because the Company is a shell company, Nemo Holding will comprise
the ongoing operations of the combined entity and its senior
management will serve as the senior management of the combined
entity, Nemo Holding is deemed to be the accounting acquirer for
accounting purposes. The transaction will be treated as a
recapitalization of the Company. Accordingly, the consolidated
assets, liabilities and results of operations of the Company will
become the historical financial statements of Nemo Holding, and the
Company’s assets, liabilities and results of operations will be
consolidated with Nemo Holding beginning on the acquisition date.
Nemo Holding was the legal acquiree but deemed to be the accounting
acquirer. The Company was the legal acquirer but deemed to be the
accounting acquiree in the reverse merger. The historical financial
statements prior to the acquisition are those of the accounting
acquirer (Nemo Holding). After completion of the Share Exchange
Transaction, the Company’s consolidated financial statements
include the assets and liabilities, the operations and cash flow of
the accounting acquirer.
During the year ended December 31, 2020, the Company established
two subsidiaries namely New Momentum Asia Pte. Ltd, a Singapore
corporation and JPOPCOIN Limited, a Hong Kong corporation,
respectively, for business expansion.
Description of subsidiaries
Name
|
|
Place of
incorporation
and kind of
legal entity
|
|
Principal
activities
|
|
Particulars of
registered/ paid up share
capital
|
|
Effective
interest
held
|
|
|
|
|
|
|
|
|
|
NEMO Holding Company Limited
|
|
British Virgin Islands
|
|
Investment holding
|
|
10,000 ordinary shares at par
value of US$1
|
|
100%
|
|
|
|
|
|
|
|
|
|
Gagfare Limited
|
|
Hong Kong
|
|
Travel agency
|
|
500,000 ordinary shares for
HK$500,000
|
|
100%
|
|
|
|
|
|
|
|
|
|
Beyond Blue Limited
|
|
Hong Kong
|
|
Event organizer
|
|
1 ordinary share for HK$1
|
|
100%
|
|
|
|
|
|
|
|
|
|
New Momentum Asia Pte. Ltd.
|
|
Singapore
|
|
Investment holding
|
|
1 ordinary share for SGD 1
|
|
100%
|
|
|
|
|
|
|
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JPOPCOIN Limited
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Hong Kong
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Administrative service
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5 ordinary shares for HK$5
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100%
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The Company and its subsidiaries are hereinafter referred to as
(the “Company”).
2. GOING CONCERN UNCERTAINTIES
The accompanying consolidated financial statements have been
prepared using the going concern basis of accounting, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
The Company has suffered from continuous loss from its inception
and shareholders’ deficit of $160,860 and net current liabilities
of $160,860 at December 31, 2020. In addition, with respect to the
ongoing and evolving coronavirus (COVID-19) outbreak, which was
designated as a pandemic by the World Health Organization on March
11, 2020, the outbreak has caused substantial disruption in
international economies and global trades and if repercussions of
the outbreak are prolonged, could have a significant adverse impact
on the Company’s business.
The continuation of the Company as a going concern through December
31, 2021 is dependent upon the continued financial support from its
shareholders. Management believes the Company is currently pursuing
additional financing for its operations. However, there is no
assurance that the Company will be successful in securing
sufficient funds to sustain the operations.
These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. These consolidated
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets and liabilities that may result in the Company not being
able to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the
application of certain significant accounting policies as described
in this note and elsewhere in the accompanying consolidated
financial statements and notes.
These accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America (“US GAAP”).
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Use of estimates and
assumptions
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In preparing these consolidated financial statements, management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities in the balance sheet and revenues and
expenses during the years reported. Actual results may differ from
these estimates.
The consolidated financial statements include the financial
statements of the Company and its subsidiaries. All significant
inter-company balances and transactions within the Company have
been eliminated upon consolidation.
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Cash and cash equivalents
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Cash and cash equivalents are carried at cost and represent cash on
hand, demand deposits placed with banks or other financial
institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date of such
investments.
Accounts receivable are recorded at the invoiced amount and do not
bear interest, which are due within contractual payment terms,
generally 30 to 90 days from completion of service. Credit is
extended based on evaluation of a customer's financial condition,
the customer credit-worthiness and their payment history. Accounts
receivable outstanding longer than the contractual payment terms
are considered past due. Past due balances over 90 days and over a
specified amount are reviewed individually for collectibility. At
the end of fiscal year, the Company specifically evaluates
individual customer’s financial condition, credit history, and the
current economic conditions to monitor the progress of the
collection of accounts receivables. The Company will consider the
allowance for doubtful accounts for any estimated losses resulting
from the inability of its customers to make required payments. For
the receivables that are past due or not being paid according to
payment terms, the appropriate actions are taken to exhaust all
means of collection, including seeking legal resolution in a court
of law. Account balances are charged off against the allowance
after all means of collection have been exhausted and the potential
for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers. As of
December 31, 2020 and 2019, there was no allowance for doubtful
accounts.
The Company adopted Accounting Standards Codification (“ASC”)
606 – Revenue from Contracts with Customers” (“ASC 606”) as of
January 1, 2019 using the modified retrospective method. This
method allows the Company to apply ASC 606 to new contracts entered
into after January 1, 2019, and to its existing contracts for which
revenue earned through December 31, 2018 has been recognized under
the guidance in effect prior to the effective date of ASC 606. The
revenue recognition processes the Company applied prior to adoption
of ASC 606 align with the recognition and measurement guidance of
the new standard, therefore adoption of ASC 606 did not require a
cumulative adjustment to opening equity.
Under ASC 606, a performance obligation is a promise within a
contract to transfer a distinct good or service, or a series of
distinct goods and services, to a customer. Revenue is recognized
when performance obligations are satisfied and the customer obtains
control of promised goods or services. The amount of revenue
recognized reflects the consideration to which the Company expects
to be entitled to receive in exchange for goods or services. Under
the standard, a contract’s transaction price is allocated to each
distinct performance obligation. To determine revenue recognition
for arrangements that the Company determines are within the scope
of ASC 606, the Company performs the following five steps:
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identify
the contract with a customer;
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identify
the performance obligations in the contract;
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determine
the transaction price;
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allocate
the transaction price to performance obligations in the contract;
and
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recognize
revenue as the performance obligation is satisfied.
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The Company records its revenue from booking income upon the ticket
booking service is rendered to travelers. The Company also
records its revenue from the sale of air tickets upon the
confirmation and issuance of tickets to the travelers.
The Company adopted the ASC 740 Income tax provisions of paragraph
740-10-25-13, which addresses the determination of whether tax
benefits claimed or expected to be claimed on a tax return should
be recorded in the consolidated financial statements. Under
paragraph 740-10-25-13, the Company may recognize the tax benefit
from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the consolidated financial
statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement. Paragraph
740-10-25-13 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting
in interim periods and requires increased disclosures. The Company
had no material adjustments to its liabilities for unrecognized
income tax benefits according to the provisions of paragraph
740-10-25-13.
The estimated future tax effects of temporary differences between
the tax basis of assets and liabilities are reported in the
accompanying balance sheets, as well as tax credit carry-backs and
carry-forwards. The Company periodically reviews the recoverability
of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
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Uncertain tax positions
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The Company did not take any uncertain tax positions and had no
adjustments to its income tax liabilities or benefits pursuant to
the ASC 740 provisions of Section 740-10-25 for the years ended
December 31, 2020 and 2019.
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Foreign currencies
translation
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Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the
exchange rates prevailing at the dates of the transaction. Monetary
assets and liabilities denominated in currencies other than the
functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The
resulting exchange differences are recorded in the consolidated
statement of operations.
The reporting currency of the Company is United States Dollar
("US$") and the accompanying consolidated financial statements have
been expressed in US$. In addition, the Company is operating in
Hong Kong and Singapore and maintain its books and record in its
local currency, Hong Kong Dollars (“HKD”) and Singapore Dollars
(“SGD”), which are a functional currency as being the primary
currency of the economic environment in which their operations are
conducted. In general, for consolidation purposes, assets and
liabilities of its subsidiary whose functional currency is not US$
are translated into US$, in accordance with ASC Topic 830-30, “
Translation of Financial Statement”, using the exchange
rate on the balance sheet date. Revenues and expenses are
translated at average rates prevailing during the period. The gains
and losses resulting from translation of financial statements of
foreign subsidiary are recorded as a separate component of
accumulated other comprehensive income within the statements of
changes in shareholders’ equity.
Translation of amounts from HKD and SGD into US$ have been made at
the following exchange rates for the years ended December 31, 2020
and 2019:
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December 31,
2020
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December 31,
2019
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Year-end HKD:US$ exchange
rate
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0.12899
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0.12842
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Average HKD:US$ exchange rate
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0.12894
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0.12764
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Year-end SGD:US$ exchange
rate
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0.75645
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-
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Average SGD:US$ exchange rate
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0.74365
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-
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The Company calculates net loss per share in accordance with ASC
Topic 260, “Earnings per Share.” Basic loss per share is computed
by dividing the net loss by the weighted-average number of common
shares outstanding during the period. Diluted loss per share is
computed similar to basic income per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common
stock equivalents had been issued and if the additional common
shares were dilutive.
ASC Topic 220, “Comprehensive Income”, establishes
standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income as
defined includes all changes in equity during a period from
non-owner sources. Accumulated other comprehensive income, as
presented in the accompanying consolidated statements of changes in
shareholders’ equity, consists of changes in unrealized gains and
losses on foreign currency translation. This comprehensive income
is not included in the computation of income tax expense or
benefit.
The Company adopted Topic 842, Leases (“ASC 842”), using
the modified retrospective approach through a cumulative-effect
adjustment and utilizing the effective date of January 1, 2019 as
its date of initial application, with prior periods unchanged and
presented in accordance with the previous guidance in Topic
840, Leases (“ASC 840”).
At the inception of an arrangement, the Company determines whether
the arrangement is or contains a lease based on the unique facts
and circumstances present. Leases with a term greater than one year
are recognized on the balance sheet as right-of-use (“ROU”) assets,
lease liabilities and long-term lease liabilities. The Company has
elected not to recognize on the balance sheet leases with terms of
one year or less. Operating lease liabilities and their
corresponding right-of-use assets are recorded based on the present
value of lease payments over the expected remaining lease term.
However, certain adjustments to the right-of-use asset may be
required for items such as prepaid or accrued lease payments. The
interest rate implicit in lease contracts is typically not readily
determinable. As a result, the Company utilizes its incremental
borrowing rates, which are the rates incurred to borrow on a
collateralized basis over a similar term an amount equal to the
lease payments in a similar economic environment.
In accordance with the guidance in ASC 842, components of a lease
should be split into three categories: lease components (e.g. land,
building, etc.), non-lease components (e.g. common area
maintenance, consumables, etc.), and non-components (e.g. property
taxes, insurance, etc.). Subsequently, the fixed and in-substance
fixed contract consideration (including any related to
non-components) must be allocated based on the respective relative
fair values to the lease components and non-lease components.
Lease expense is recognized on a straight-line basis over the lease
terms. Lease expense includes amortization of the ROU assets and
accretion of the lease liabilities. Amortization of ROU assets is
calculated as the periodic lease cost less accretion of the lease
liability. The amortized period for ROU assets is limited to the
expected lease term.
The Company has elected a practical expedient to combine the lease
and non-lease components into a single lease component. The Company
also elected the short-term lease measurement and recognition
exemption and does not establish ROU assets or lease liabilities
for operating leases with terms of 12 months or less.
Contributions to retirement plans (which are defined contribution
plans) are charged to general and administrative expenses in the
accompanying statements of operation as the related employee
service is provided.
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Share-based compensation
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The Company follows ASC 718, Compensation—Stock
Compensation (“ASC 718”), which requires the measurement and
recognition of compensation expense for all share-based payment
awards, including restricted stock units, based on estimated grant
date fair values. Restricted stock units are valued using the
market price of the Company’s common shares on the date of grant.
The Company records compensation expense, net of estimated
forfeitures, over the requisite service period.
The Company follows the ASC 850-10, Related Party for the
identification of related parties and disclosure of related party
transactions.
Pursuant to section 850-10-20 the related parties include
a) affiliates of the Company; b) entities for which
investments in their equity securities would be required, absent
the election of the fair value option under the Fair Value Option
Subsection of section 825–10–15, to be accounted for by the equity
method by the investing entity; c) trusts for the benefit of
employees, such as pension and Income-sharing trusts that are
managed by or under the trusteeship of management; d) principal
owners of the Company; e) management of the Company; f) other
parties with which the Company may deal if one party controls or
can significantly influence the management or operating policies of
the other to an extent that one of the transacting parties might be
prevented from fully pursuing its own separate interests; and
g) other parties that can significantly influence the
management or operating policies of the transacting parties or that
have an ownership interest in one of the transacting parties and
can significantly influence the other to an extent that one or more
of the transacting parties might be prevented from fully pursuing
its own separate interests.
The consolidated financial statements shall include disclosures of
material related party transactions, other than compensation
arrangements, expense allowances, and other similar items in the
ordinary course of business. However, disclosure of transactions
that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The
disclosures shall include: a) the nature of the
relationship(s) involved; b) a description of the transactions,
including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are
presented, and such other information deemed necessary to an
understanding of the effects of the transactions on the financial
statements; c) the dollar amounts of transactions for each of
the periods for which income statements are presented and the
effects of any change in the method of establishing the terms from
that used in the preceding period; and d) amount due from or
to related parties as of the date of each balance sheet presented
and, if not otherwise apparent, the terms and manner of
settlement.
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Commitments and contingencies
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The Company follows the ASC 450-20, Commitments to report
accounting for contingencies. Certain conditions may exist as of
the date the financial statements are issued, which may result in a
loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company assesses
such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies
related to legal proceedings that are pending against the Company
or un-asserted claims that may result in such proceedings, the
Company evaluates the perceived merits of any legal proceedings or
un-asserted claims as well as the perceived merits of the amount of
relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be
accrued in the Company’s consolidated financial statements. If the
assessment indicates that a potentially material loss contingency
is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability,
and an estimate of the range of possible losses, if determinable
and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed
unless they involve guarantees, in which case the guarantees would
be disclosed. Management does not believe, based upon information
available at this time that these matters will have a material
adverse effect on the Company’s financial position, results of
operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash
flows.
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Fair value of financial
instruments
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The Company follows paragraph 825-10-50-10 of the FASB Accounting
Standards Codification for disclosures about fair value of its
financial instruments and has adopted paragraph 820-10-35-37 of the
FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)
to measure the fair value of its financial instruments. Paragraph
820-10-35-37 of the FASB Accounting Standards Codification
establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures,
paragraph 820-10-35-37 of the FASB Accounting Standards
Codification establishes a fair value hierarchy which prioritizes
the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy
defined by paragraph 820-10-35-37 of the FASB Accounting Standards
Codification are described below:
Level 1
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Quoted market prices available in
active markets for identical assets or liabilities as of the
reporting date.
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Level 2
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Pricing inputs other than quoted
prices in active markets included in Level 1, which are either
directly or indirectly observable as of the reporting date.
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Level 3
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Pricing inputs that are generally
observable inputs and not corroborated by market data.
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Financial assets are considered Level 3 when their fair values are
determined using pricing models, discounted cash flow methodologies
or similar techniques and at least one significant model assumption
or input is unobservable.
The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or
liabilities and the lowest priority to unobservable inputs. If the
inputs used to measure the financial assets and liabilities fall
within more than one level described above, the categorization is
based on the lowest level input that is significant to the fair
value measurement of the instrument.
The carrying amounts of the Company’s financial assets and
liabilities, such as cash and cash equivalents, accounts
receivable, deposits, prepayment and other receivables, amount due
from a director and operating lease right-of-use assets,
approximate their fair values because of the short maturity of
these instruments.
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Recent accounting
pronouncements
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From time to time, new accounting pronouncements are issued by the
Financial Accounting Standard Board (“FASB”) or other standard
setting bodies and adopted by the Company as of the specified
effective date. Unless otherwise discussed, the Company believes
that the impact of recently issued standards that are not yet
effective will not have a material impact on its financial position
or results of operations upon adoption.
Recently Adopted Accounting Standards
In June 2016, the FASB issued guidance that affects loans, trade
receivables and any other financial assets that have the
contractual right to receive cash. Under the new guidance, an
entity is required to recognize expected credit losses rather than
incurred losses for financial assets. The new guidance is effective
for fiscal years beginning after December 15, 2019 and interim
periods within those fiscal years. The Company adopted the new
guidance effective January 1, 2020, with no material impact to the
Company’s consolidated financial position, results of operations or
cash flows.
In August 2018, the FASB issued guidance which modifies certain
disclosure requirements over fair value measurements. The guidance
is effective for fiscal years beginning after December 15, 2019,
including all interim periods within that fiscal year. The Company
adopted the new guidance effective January 1, 2020. The Company
does not currently classify any of its derivative contracts or
restoration plan assets as Level 3 assets or liabilities, nor did
the Company have any transfers amongst fair value levels during the
year ended December 31, 2020. As a result, the guidance did not
have an impact on Company’s the fair value measurement disclosures
upon adoption.
In January 2017, the FASB issued guidance which eliminates the
second step from the traditional two-step goodwill impairment test.
Under current guidance, an entity performed the first step of the
goodwill impairment test by comparing the fair value of a reporting
unit with its carrying amount; if an impairment loss was indicated,
the entity computed the implied fair value of goodwill to determine
whether an impairment loss existed, and if so, the amount to
recognize. Under the new guidance, an impairment loss is recognized
for the amount by which the carrying amount exceeds the reporting
unit’s fair value (the Step 1 test), with no further testing
required. Any impairment loss recognized is limited to the amount
of goodwill allocated to the reporting unit. The new guidance is
effective for public companies that are Securities and Exchange
Commission (“SEC”) registrants for fiscal years beginning after
December 15, 2019. The Company adopted the new guidance on
January 1, 2020, and applied the guidance prospectively to its
goodwill impairment tests.
Accounting Standards Not Yet Adopted as of December 31,
2020
In December 2019, the FASB issued new guidance to simplify the
accounting for income taxes by removing certain exceptions to the
general principles and also simplification of areas such as
franchise taxes, step-up in tax basis goodwill, separate entity
financial statements and interim recognition of enactment of tax
laws or rate changes. The new guidance is effective for fiscal
years beginning after December 15, 2020 and interim periods within
those fiscal years, with early adoption permitted. The Company is
currently evaluating the impact of this new guidance on its
consolidated financial statements.
In March 2020, the FASB issued guidance to address certain
accounting consequences from the anticipated transition from the
use of the London Interbank Offered Rate (“LIBOR”) and other
interbank offered rates to alternative reference rates. The new
guidance contains practical expedients for reference rate reform
related activities that impact debt, leases, derivatives and other
contracts. The guidance is optional and may be elected over time as
reference rate reform activities occur. During the year ended
December 31, 2020, the Company elected to apply the hedge
accounting expedients related to probability and the assessments of
effectiveness for future LIBOR-indexed cash flows to assume that
the index upon which future hedged transactions will be based on
matches the index of the corresponding derivatives. Application of
these expedients preserves the presentation of derivatives
consistent with past presentation. The Company continues to
evaluate the impact of the guidance and may apply other elections
as applicable as additional changes in the market occur.
4. AMOUNTS DUE TO A RELATED COMPANY AND
DIRECTORS
As of December 31, 2020 and 2019, the Company owed to its directors
in the amount of $199,949 and $83,377, respectively. The amounts
are unsecured, non-interest bearing and have no fixed terms of
repayment. Imputed interest from related party loans is not
significant.
As of December 31, 2020 and 2019, the Company owed to the related
company which is controlled by the Company’s directors in the
amount of $0 and $22,840, respectively. The amounts are unsecured,
non-interest bearing and have no fixed terms of repayment. Imputed
interest from related party loans is not significant.
5. CONVERTIBLE PROMISSORY NOTE
On October 27, 2020, the Company and EMA Financial, LLC, (“EMA”)
entered into a Securities Purchase Agreement, whereby the Company
issued a note to EMA (the “EMA Note”) in the original principal
amount of $35,000. The EMA Note contains an original issue discount
of $2,000 which will be reflected as a debt discount and amortized
over the nine months Note term. The EMA Note is convertible into
shares of the common stock of the Company at a price equal to 55%
of the lowest trading price of the Company’s common stock for the
twenty (20) consecutive trading days immediately preceding to the
conversion date. The EMA Note bears interest at 10% per annum and
is due on July 27, 2021.
As of December 31, 2020 and 2019, accrued interest amounted to $584
and $0, respectively.
For the year ended December 31, 2020 and 2019, the amortization of
discount was $444 and $0, respectively.
6. SHAREHOLDERS’ DEFICIT
Preferred Stock
Authorized shares
The Company was authorized to issue 175,000,000 shares of Class A
preferred stock at par value of $0.001. Any class of preferred
stock may have preferential voting rights, liquidation rights or
other rights with respect to the class of common stock. These
preferential rights may have anti-takeover effects and may also
result in the dilution of the common stockholders; equity interest
and earnings per share.
Issued and outstanding shares
As of December 31, 2020 and 2019, no Class A preferred stock was
issued and outstanding.
Common Stock
Authorized shares
The Company was authorized to issue 500,000,000 shares of common
stock at par value of $0.001.
Issued and outstanding shares
On October 23, 2020, the Company issued 19,400,000 shares of common
stock at $0.21 per share under the Plan to compensate certain
consultants and service providers in rendering the services to the
Company in the amount of $4,074,000 and charged to the
operations.
As of December 31, 2020, 340,268,500 common shares issued and
outstanding.
Stock Option Plan
On October 19, 2020, the Company approved the 2020 Stock Incentive
Plan (the “Plan”) and authorized the director to issue the maximum
shares of common stock of 20,000,000 shares at a price of $0.21 per
share under the Plan.
On October 23, 2020, the Company issued 19,400,000 shares of common
stock at $0.21 per share under the Plan to compensate certain
consultants and service providers in rendering the services to the
Company.
As of December 31, 2020, 600,000 shares are not issued under the
Plan.
7. INCOME TAX
Income (loss) before income taxes within or outside the United
States are shown below:
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Years ended December 31,
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2020
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2019
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Domestic
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$
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(4,139,578
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)
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$
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-
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Foreign
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(9,369
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)
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(19,511
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)
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Total
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$
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(4,148,947
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)
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$
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(19,511
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)
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The provision (benefit) for income taxes as shown in the
accompanying consolidated statements of income consists of the
following:
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Years ended December 31,
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2020
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2019
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Current:
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$
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-
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$
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-
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Domestic
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|
-
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|
|
-
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|
Foreign
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|
-
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-
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Deferred:
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Domestic
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-
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|
-
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Foreign
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|
-
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-
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Provision for income taxes
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$
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-
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$
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-
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The effective tax rate in the years presented is the result of the
mix of income earned in various tax jurisdictions that apply a
broad range of income tax rate. The Company operates in various
countries: United States of America and Hong Kong that are subject
to taxes in the jurisdictions in which they operate, as
follows:
United States of America
NNAX is registered in the State of Nevada and is subject to US
federal corporate income tax. The U.S. Tax Cuts and Jobs Act (the
“Tax Reform Act”) was signed into law. The Tax Reform Act
significantly revised the U.S. corporate income tax regime by,
among other things, lowering the U.S. corporate tax rate from 35%
to 21% effective January 1, 2018. The Company’s policy is to
recognize accrued interest and penalties related to unrecognized
tax benefits in its income tax provision. The Company has not
accrued or paid interest or penalties which were not material to
its results of operations for the periods presented. Deferred tax
asset is not provided for as the tax losses may not be able to
carry forward after a change in substantial ownership of the
Company in July 2020.
As of December 31, 2020, the operations in the United States of
America incurred $4,924,704 of cumulative net operating losses
which can be carried forward to offset future taxable income. The
net operating loss carryforwards begin to expire in 2040, if
unutilized. The Company has provided for a full valuation allowance
against the deferred tax assets of $1,034,188 on the expected
future tax benefits from the net operating loss carryforwards as
the management believes it is more likely than not that these
assets will not be realized in the future.
ASC 740, Accounting for Income Taxes, which requires an
assessment of both positive and negative evidence when determining
whether it is more likely than not that deferred tax assets are
recoverable. Such assessment is required on a jurisdiction by
jurisdiction basis. The Company’s history of cumulative losses,
along with expected future U.S. losses required that a full
valuation allowance be recorded against all net deferred tax
assets. The Company intends to maintain a full valuation allowance
on net deferred tax assets until sufficient positive evidence
exists to support reversal of the valuation allowance.
BVI
Under the current BVI law, the Company is not subject to tax on
income.
Singapore
The Company’s operating subsidiary is registered in Republic of
Singapore and is subject to the Singapore corporate income tax at a
standard income tax rate of 17% on the assessable income arising in
Singapore during its tax year. No assessable income was generated
in Singapore during the year ended December 31, 2020 and there was
no provision for income tax.
Hong Kong
The Company’s subsidiaries operating in Hong Kong is subject to the
Hong Kong Profits Tax at the two-tiered profits tax rates from
8.25% to 16.5% on the estimated assessable profits arising in Hong
Kong during the current year, after deducting a tax concession for
the tax year. The reconciliation of income tax rate to the
effective income tax rate for the years ended December 31, 2020 and
2019 is as follows:
|
|
Years ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Loss before
income taxes
|
|
$
|
(5,687
|
)
|
|
$
|
(19,511
|
)
|
Statutory
income tax rate
|
|
|
16.5
|
%
|
|
|
16.5
|
%
|
Income tax expense at statutory
rate
|
|
|
(938
|
)
|
|
|
(3,219
|
)
|
Tax effect of non-taxable
items
|
|
|
(3,936
|
)
|
|
|
(555
|
)
|
Net operating loss
|
|
|
4,874
|
|
|
|
3,774
|
|
Income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
The following table sets forth the significant components of the
deferred tax assets of the Company as of December 31, 2020 and
2019:
|
|
As
of December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
Net operating loss
carryforwards
|
|
|
|
|
|
|
- United States
|
|
$
|
1,034,188
|
|
|
$
|
-
|
|
- Hong Kong
|
|
|
21,108
|
|
|
|
16,234
|
|
- Singapore
|
|
|
82
|
|
|
|
-
|
|
|
|
|
1,055,378
|
|
|
|
16,234
|
|
Less: valuation allowance
|
|
|
(1,055,378
|
)
|
|
|
(16,234
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
8. NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average
number of common shares outstanding during the year. The dilutive
effect of potential common shares outstanding is included in
diluted net loss per share. The following table sets forth the
computation of basic and diluted net loss per share for the years
ended December 31, 2020 and 2019:
|
|
Years ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Net loss attributable to common
shareholders
|
|
$
|
(4,148,947
|
)
|
|
$
|
(19,511
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – Basic and diluted
|
|
|
165,747,163
|
|
|
|
10,000,000
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – Basic and
diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.00
|
)
|
9. PENSION COSTS
The Company is required to make contribution to their employees
under a government-mandated defined contribution pension scheme for
its eligible full-times employees in Hong Kong. The Company is
required to contribute a specified percentage of the participants’
relevant income based on their ages and wages level. During the
years ended December 31, 2020 and 2019, $280 and $0 contributions
were made accordingly.
10. RELATED PARTY TRANSACTIONS
From time to time, the directors of the Company advanced funds to
the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and had no fixed terms of
repayment.
During the years ended December 31, 2020 and 2019, the Company has
been provided free office space by its shareholder. The management
determined that such cost is nominal and did not recognize the rent
expense in its consolidated financial statements.
Since February 1, 2016, the Company was granted with the right of
use to the website and mobile application platforms by JJ Explorer
Tours Limited (“JJ Explorer”), which was also controlled by the
directors of the Company. Also, the Company formed a cooperation
partnership with JJ Explorer whereas JJ Explorer invested to
develop and maintained the operations of the Gagfare web and mobile
application platforms in a term of 5 years, to be expired on
January 31, 2021. On January 31, 2021, JJ Explorer agreed to extend
the term of additional 5 years, up January 31, 2026. In return, JJ
Explorer would share 50% of the net earnings generated by the
Company in the use of its web and mobile application platforms
during the cooperation period. For the years ended December 31,
2020 and 2019, the Company did not record the service charges and
paid to JJ Explorer.
Apart from the transactions and balances detailed elsewhere in
these accompanying consolidated financial statements, the Company
has no other significant or material related party transactions
during the years presented.
11. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the years ended December 31, 2020 and 2019, there was no single
customer exceeding 10% of the Company’s revenue.
(b) Economic and political risk
The Company’s major operations are conducted in Hong Kong.
Accordingly, the political, economic, and legal environments in
Hong Kong, as well as the general state of Hong Kong’s economy may
influence the Company’s business, financial condition, and results
of operations.
(c) Exchange rate risk
The Company cannot guarantee that the current exchange rate will
remain steady; therefore there is a possibility that the Company
could post the same amount of profit for two comparable periods and
because of the fluctuating exchange rate actually post higher or
lower profit depending on exchange rate of HKD and SGD converted to
US$ on that date. The exchange rate could fluctuate depending on
changes in political and economic environments without notice.
12. COMMITMENTS AND CONTINGENCIES
As of December 31, 2020 and 2019, the Company has no material
commitments or contingencies.
13. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which
establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before
consolidated financial statements are issued, the Company has
evaluated all events or transactions that occurred after December
31, 2020, up through March 26, 2021, the Company issued the audited
consolidated financial statements. The Company determined that
there are no further events to disclose.
On March 11, 2021, the Company filed the Certificate of Designation
to create and authorize Series A Preferred Stock.
NEW MOMENTUM CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
Non-current asset:
|
|
|
|
|
|
|
Right-of-use asset
|
|
$ |
45,241 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
42,512 |
|
|
$ |
64,496 |
|
Accounts receivable
|
|
|
487 |
|
|
|
374 |
|
Deposits, prepayments and other
receivables
|
|
|
19,897 |
|
|
|
19,953 |
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
62,896 |
|
|
|
84,823 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
108,137 |
|
|
$ |
84,823 |
|
|
|
|
|
|
|
|
|
|
LIABILTIES AND SHAREHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued liabilities and other payables
|
|
$ |
11,008 |
|
|
$ |
12,290 |
|
Amount due to directors
|
|
|
218,840 |
|
|
|
199,949 |
|
Convertible promissory note
|
|
|
34,111 |
|
|
|
33,444 |
|
Lease liabilities
|
|
|
24,827 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
288,786 |
|
|
|
245,683 |
|
|
|
|
|
|
|
|
|
|
Non-current liability
|
|
|
|
|
|
|
|
|
Lease liabilities
|
|
$ |
19,310 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
308,096 |
|
|
|
245,683 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock, Class A, $0.001 par value;
175,000,000 shares authorized; no share issued and outstanding as
at March 31, 2021 and December 31, 2020
|
|
|
- |
|
|
|
- |
|
Common stock, $0.0001 par value; 500,000,000
shares authorized; 340,268,500 shares issued and outstanding as at
March 31, 2021 and December 31, 2020
|
|
|
340,269 |
|
|
|
340,269 |
|
Additional paid in capital
|
|
|
4,054,600 |
|
|
|
4,054,600 |
|
Accumulated other comprehensive losses
|
|
|
(575 |
) |
|
|
(884 |
) |
Accumulated losses
|
|
|
(4,594,253 |
) |
|
|
(4,554,845 |
) |
|
|
|
|
|
|
|
|
|
Shareholders’ deficit
|
|
|
(199,959 |
) |
|
|
(160,860 |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’
DEFICIT
|
|
$ |
108,137 |
|
|
$ |
84,823 |
|
See accompanying notes to condensed consolidated financial
statements.
NEW MOMENTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(Currency expressed in United States Dollars
(“US$”))
(Unaudited)
|
|
Three Months ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$ |
338,949 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(337,826 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,123 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
(18,475 |
) |
|
|
(3,538 |
) |
Legal and professional fee
|
|
|
(19,884 |
) |
|
|
- |
|
Total operating expenses
|
|
|
(38,359 |
) |
|
|
(3,538 |
) |
|
|
|
|
|
|
|
|
|
Other (expense) income
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,172 |
) |
|
|
- |
|
Government subsidy
|
|
|
- |
|
|
|
10,295 |
|
Total other (expense)
income
|
|
|
(2,172 |
) |
|
|
10,295 |
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME BEFORE INCOME
TAXES
|
|
|
(39,408 |
) |
|
|
6,777 |
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
|
(39,408 |
) |
|
|
6,777 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
|
309 |
|
|
|
(123 |
) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
$ |
(39,099 |
) |
|
$ |
6,654 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares
outstanding
|
|
|
340,268,500 |
|
|
|
10,000,000 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$ |
(0.00 |
) |
|
$ |
0.00 |
|
See accompanying notes to condensed consolidated financial
statements.
NEW MOMENTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Currency expressed in United States Dollars
(“US$”))
(Unaudited)
|
|
Three months ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Cash flow from operating
activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
$ |
(39,408 |
) |
|
$ |
6,777 |
|
Adjustment to reconcile net (loss) income to
net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Amortization of convertible note discount
|
|
|
667 |
|
|
|
- |
|
Depreciation of right-of-use asset
|
|
|
5,038 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(113 |
) |
|
|
(21 |
) |
Accrued liabilities and other
payables
|
|
|
(1,282 |
) |
|
|
285 |
|
Lease liabilities
|
|
|
632 |
|
|
|
- |
|
Net cash used in operating
activities
|
|
|
(34,466 |
) |
|
|
7,041 |
|
|
|
|
|
|
|
|
|
|
Cash flow from financing
activities:
|
|
|
|
|
|
|
|
|
Advances from (repayment to) a director
|
|
|
18,891 |
|
|
|
(2,564 |
) |
Advance from related companies
|
|
|
- |
|
|
|
2,784 |
|
Payment of lease liabilities
|
|
|
(6,774 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net cash generated from financing
activities
|
|
|
12,117 |
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
Effect on exchange rate change on cash and
cash equivalents
|
|
|
365 |
|
|
|
(175 |
) |
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(21,984 |
) |
|
|
7,086 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD
|
|
|
64,496 |
|
|
|
9,343 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF
PERIOD
|
|
$ |
42,512 |
|
|
$ |
16,429 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid for tax
|
|
$ |
- |
|
|
$ |
- |
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
See accompanying notes to condensed consolidated financial
statements.
NEW MOMENTUM
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ DEFICIT
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
|
|
For the three months
ended March 31, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
other
|
|
|
|
|
|
Total
|
|
|
|
Common stock
|
|
|
|
paid-in
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
shareholders’
|
|
|
|
No. of shares
|
|
|
Amount
|
|
|
|
capital
|
|
|
losses
|
|
|
losses
|
|
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at January 1, 2020
(restated)
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
(553 |
) |
|
$ |
(95,029 |
) |
|
$ |
(85,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
(123 |
) |
|
|
- |
|
|
|
(123 |
) |
Net loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
6,777 |
|
|
|
6,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2020
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
(676 |
) |
|
$ |
(88,252 |
) |
|
$ |
(78,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at January 1, 2021
(audited)
|
|
|
340,268,500 |
|
|
$ |
340,269 |
|
|
$ |
4,054,600 |
|
|
$ |
(884 |
) |
|
$ |
(4,554,845 |
) |
|
$ |
(160,860 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
309 |
|
|
|
- |
|
|
|
309 |
|
Net loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(39,408 |
) |
|
|
(39,408 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31,
2021
|
|
|
320,868,500 |
|
|
$ |
320,869 |
|
|
$ |
4,054,600 |
|
|
$ |
(575 |
) |
|
$ |
(4,594,253 |
) |
|
$ |
(199,959 |
) |
See accompanying notes to condensed consolidated financial
statements.
NEW
MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
New Momentum Corporation (the “Company”) was incorporated under the
law of the State of Nevada on July 1, 1999. The Company through its
subsidiaries, mainly operates a smartphone application to provide
the online platform with “Book Now, Pay Later” flight
booking service for travelers among over 500 airlines worldwide to
search and secured their tickets. With a simple, user-friendly
interface, the Company enables customers to arrange and book the
multiple-stop itineraries, and to check their bookings through
official airline websites using the Gagfare booking reference
number on http://presscentre.asia/gagfare.html.
Description of subsidiaries
Name
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Place of incorporation
and kind of
legal entity
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Principal activities
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Particulars of
registered/
paid up share
capital
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Effective interest
held
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|
|
|
|
|
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NEMO Holding Company Limited
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British Virgin Islands
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Investment holding
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10,000 ordinary shares at par value of
US$1
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100%
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|
|
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Gagfare Limited
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Hong Kong
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Travel agency
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500,000 ordinary share of HK$500,000
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100%
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|
|
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Beyond Blue Limited
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Hong Kong
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Event organizer
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1 ordinary share of HK$1
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100%
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New Momentum Asia Pte. Ltd.
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Singapore
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Investment holding
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1 ordinary share of SGD 1
|
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100%
|
|
|
|
|
|
|
|
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|
JPOPCOIN Limited
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Hong Kong
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Administrative service
|
|
5 ordinary share of HK$5
|
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100%
|
The Company and its subsidiaries are hereinafter referred to as
(the “Company”).
2. GOING CONCERN UNCERTAINTIES
The accompanying condensed consolidated financial statements have
been prepared using the going concern basis of accounting, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
The Company has suffered from shareholders’ deficit of $199,959 and
net current liabilities of $180,649 at March 31, 2021. In addition,
with respect to the ongoing and evolving coronavirus (COVID-19)
outbreak, which was designated as a pandemic by the World Health
Organization on March 11, 2020, the outbreak has caused substantial
disruption in international economies and global trades and if
repercussions of the outbreak are prolonged, could have a
significant adverse impact on the Company’s business.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
The continuation of the Company as a going concern through March
31, 2021 is dependent upon the continued financial support from its
stockholders. Management believes the Company is currently pursuing
additional financing for its operations. However, there is no
assurance that the Company will be successful in securing
sufficient funds to sustain the operations.
These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. These condensed
consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets and liabilities that may result in the
Company not being able to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements
reflect the application of certain significant accounting policies
as described in this note and elsewhere in the accompanying
condensed consolidated financial statements and notes.
These accompanying condensed consolidated financial statements have
been prepared in U.S. Dollars in conformity with generally accepted
accounting principles in the United States of America (“U.S. GAAP”)
for interim financial information pursuant to the rules and
regulations of the Securities and Exchange Commission (the “SEC”).
Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary to make the financial
statements not misleading have been included. Operating results for
the interim period ended March 31, 2021 are not necessarily
indicative of the results that may be expected for the fiscal year
ending December 31, 2021. The information included in this Form
10-Q should be read in conjunction with Management’s Discussion and
Analysis, and the financial statements and notes thereto included
in the Company’s Form 10-K, as filed with the SEC on March 25,
2021.
·
|
Use of estimates and
assumptions |
In preparing these condensed consolidated financial statements,
management makes estimates and assumptions that affect the reported
amounts of assets and liabilities in the balance sheet and revenues
and expenses during the years reported. Actual results may differ
from these estimates.
The condensed consolidated financial statements include the
financial statements of the Company and its subsidiary. All
significant inter-company balances and transactions within the
Company have been eliminated upon consolidation.
·
|
Cash and cash equivalents |
Cash and cash equivalents are carried at cost and represent cash on
hand, demand deposits placed with banks or other financial
institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date of such
investments.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
Accounts receivable are recorded at the invoiced amount and do not
bear interest, which are due within contractual payment terms,
generally 30 to 90 days from completion of service. Credit is
extended based on evaluation of a customer’s financial condition,
the customer credit-worthiness and their payment history. Accounts
receivable outstanding longer than the contractual payment terms
are considered past due. Past due balances over 90 days and over a
specified amount are reviewed individually for collectibility. At
the end of fiscal year, the Company specifically evaluates
individual customer’s financial condition, credit history, and the
current economic conditions to monitor the progress of the
collection of accounts receivables. The Company will consider the
allowance for doubtful accounts for any estimated losses resulting
from the inability of its customers to make required payments. For
the receivables that are past due or not being paid according to
payment terms, the appropriate actions are taken to exhaust all
means of collection, including seeking legal resolution in a court
of law. Account balances are charged off against the allowance
after all means of collection have been exhausted and the potential
for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers. As of
March 31, 2020 and December 31, 2020, there was no allowance for
doubtful accounts.
The Company adopted Accounting Standards Codification (“ASC”)
606 – Revenue from Contracts with Customers” (“ASC 606”) as of
January 1, 2019 using the modified retrospective method. This
method allows the Company to apply ASC 606 to new contracts entered
into after January 1, 2019, and to its existing contracts for which
revenue earned through December 31, 2018 has been recognized under
the guidance in effect prior to the effective date of ASC 606. The
revenue recognition processes the Company applied prior to adoption
of ASC 606 align with the recognition and measurement guidance of
the new standard, therefore adoption of ASC 606 did not require a
cumulative adjustment to opening equity.
Under ASC 606, a performance obligation is a promise within a
contract to transfer a distinct good or service, or a series of
distinct goods and services, to a customer. Revenue is recognized
when performance obligations are satisfied and the customer obtains
control of promised goods or services. The amount of revenue
recognized reflects the consideration to which the Company expects
to be entitled to receive in exchange for goods or services. Under
the standard, a contract’s transaction price is allocated to each
distinct performance obligation. To determine revenue recognition
for arrangements that the Company determines are within the scope
of ASC 606, the Company performs the following five steps:
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•
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identify the contract
with a customer;
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•
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identify the
performance obligations in the contract;
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•
|
determine the
transaction price;
|
|
•
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allocate the
transaction price to performance obligations in the contract;
and
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|
•
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recognize revenue as
the performance obligation is satisfied.
|
The Company records its revenue from booking income upon the ticket
booking service is rendered to travelers. The Company also records
its revene from the sale of air tickets upon the confirmation and
issuance of tickets to the travelers.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
The Company adopted the ASC 740 Income tax provisions of
paragraph 740-10-25-13, which addresses the determination of
whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the condensed consolidated financial
statements. Under paragraph 740-10-25-13, the Company may recognize
the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the
condensed consolidated financial statements from such a position
should be measured based on the largest benefit that has a greater
than fifty percent (50%) likelihood of being realized upon ultimate
settlement. Paragraph 740-10-25-13 also provides guidance on
de-recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the
provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between
the tax basis of assets and liabilities are reported in the
accompanying balance sheets, as well as tax credit carry-backs and
carry-forwards. The Company periodically reviews the recoverability
of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
·
|
Uncertain tax positions |
The Company did not take any uncertain tax positions and had no
adjustments to its income tax liabilities or benefits pursuant to
the ASC 740 provisions of Section 740-10-25 for the three months
ended March 31, 2021 and 2020.
·
|
Foreign currencies translation |
Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the
exchange rates prevailing at the dates of the transaction. Monetary
assets and liabilities denominated in currencies other than the
functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The
resulting exchange differences are recorded in the condensed
consolidated statement of operations.
The reporting currency of the Company is United States Dollar
(“US$”) and the accompanying condensed consolidated financial
statements have been expressed in US$. In addition, the Company is
operating in Hong Kong and maintain its books and record in its
local currency, Hong Kong Dollars (“HKD”), which is a functional
currency as being the primary currency of the economic environment
in which their operations are conducted. In general, for
consolidation purposes, assets and liabilities of its subsidiary
whose functional currency is not US$ are translated into US$, in
accordance with ASC Topic 830-30, “ Translation of Financial
Statement”, using the exchange rate on the balance sheet date.
Revenues and expenses are translated at average rates prevailing
during the period. The gains and losses resulting from translation
of financial statements of foreign subsidiary are recorded as a
separate component of accumulated other comprehensive income within
the statements of changes in stockholder’s equity.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
Translation of amounts from HKD into US$ has been made at the
following exchange rates for the nine months ended March 31, 2021
and 2020:
|
|
March
31,
2021
|
|
|
March
31,
2020
|
|
Period-end HKD:US$ exchange rate
|
|
|
0.12863 |
|
|
|
0.12899 |
|
Period average HKD:US$ exchange rate
|
|
|
0.12892 |
|
|
|
0.12869 |
|
Period-end SGD:US$ exchange rate
|
|
|
0.74331 |
|
|
|
- |
|
Period average SGD:US$ exchange rate
|
|
|
0.75071 |
|
|
|
- |
|
ASC Topic 220, “Comprehensive Income”, establishes
standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income as
defined includes all changes in equity during a period from
non-owner sources. Accumulated other comprehensive income, as
presented in the accompanying condensed consolidated statements of
changes in stockholders’ equity, consists of changes in unrealized
gains and losses on foreign currency translation. This
comprehensive income is not included in the computation of income
tax expense or benefit.
The Company adopted Topic 842, Leases (“ASC 842”), using
the modified retrospective approach through a cumulative-effect
adjustment and utilizing the effective date of January 1, 2019 as
its date of initial application, with prior periods unchanged and
presented in accordance with the previous guidance in Topic 840,
Leases (“ASC 840”).
At the inception of an arrangement, the Company determines whether
the arrangement is or contains a lease based on the unique facts
and circumstances present. Leases with a term greater than one year
are recognized on the balance sheet as right-of-use (“ROU”) assets,
lease liabilities and long-term lease liabilities. The Company has
elected not to recognize on the balance sheet leases with terms of
one year or less. Operating lease liabilities and their
corresponding right-of-use assets are recorded based on the present
value of lease payments over the expected remaining lease term.
However, certain adjustments to the right-of-use asset may be
required for items such as prepaid or accrued lease payments. The
interest rate implicit in lease contracts is typically not readily
determinable. As a result, the Company utilizes its incremental
borrowing rates, which are the rates incurred to borrow on a
collateralized basis over a similar term an amount equal to the
lease payments in a similar economic environment.
In accordance with the guidance in ASC 842, components of a lease
should be split into three categories: lease components (e.g. land,
building, etc.), non-lease components (e.g. common area
maintenance, consumables, etc.), and non-components (e.g. property
taxes, insurance, etc.). Subsequently, the fixed and in-substance
fixed contract consideration (including any related to
non-components) must be allocated based on the respective relative
fair values to the lease components and non-lease components.
Lease expense is recognized on a straight-line basis over the lease
terms. Lease expense includes amortization of the ROU assets and
accretion of the lease liabilities. Amortization of ROU assets is
calculated as the periodic lease cost less accretion of the lease
liability. The amortized period for ROU assets is limited to the
expected lease term.
The Company has elected a practical expedient to combine the lease
and non-lease components into a single lease component. The Company
also elected the short-term lease measurement and recognition
exemption and does not establish ROU assets or lease liabilities
for operating leases with terms of 12 months or less.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
The Company follows the ASC 850-10, Related Party for the
identification of related parties and disclosure of related party
transactions.
Pursuant to section 850-10-20 the related parties include a)
affiliates of the Company; b) entities for which investments in
their equity securities would be required, absent the election of
the fair value option under the Fair Value Option Subsection of
section 825–10–15, to be accounted for by the equity method by the
investing entity; c) trusts for the benefit of employees, such as
pension and Income-sharing trusts that are managed by or under the
trusteeship of management; d) principal owners of the Company; e)
management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the
management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing
its own separate interests; and g) other parties that can
significantly influence the management or operating policies of the
transacting parties or that have an ownership interest in one of
the transacting parties and can significantly influence the other
to an extent that one or more of the transacting parties might be
prevented from fully pursuing its own separate interests.
The condensed consolidated financial statements shall include
disclosures of material related party transactions, other than
compensation arrangements, expense allowances, and other similar
items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of condensed
consolidated or combined financial statements is not required in
those statements. The disclosures shall include: a) the nature of
the relationship(s) involved; b) a description of the transactions,
including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are
presented, and such other information deemed necessary to an
understanding of the effects of the transactions on the financial
statements; c) the dollar amounts of transactions for each of the
periods for which income statements are presented and the effects
of any change in the method of establishing the terms from that
used in the preceding period; and d) amount due from or to related
parties as of the date of each balance sheet presented and, if not
otherwise apparent, the terms and manner of settlement.
·
|
Commitments and contingencies |
The Company follows the ASC 450-20, Commitments to report
accounting for contingencies. Certain conditions may exist as of
the date the financial statements are issued, which may result in a
loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company assesses
such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies
related to legal proceedings that are pending against the Company
or un-asserted claims that may result in such proceedings, the
Company evaluates the perceived merits of any legal proceedings or
un-asserted claims as well as the perceived merits of the amount of
relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be
accrued in the Company’s condensed consolidated financial
statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is
probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if
determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed
unless they involve guarantees, in which case the guarantees would
be disclosed. Management does not believe, based upon information
available at this time that these matters will have a material
adverse effect on the Company’s financial position, results of
operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash
flows.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
·
|
Fair value of financial
instruments |
The Company follows paragraph 825-10-50-10 of the FASB Accounting
Standards Codification for disclosures about fair value of its
financial instruments and has adopted paragraph 820-10-35-37 of the
FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)
to measure the fair value of its financial instruments. Paragraph
820-10-35-37 of the FASB Accounting Standards Codification
establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures,
paragraph 820-10-35-37 of the FASB Accounting Standards
Codification establishes a fair value hierarchy which prioritizes
the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy
defined by paragraph 820-10-35-37 of the FASB Accounting Standards
Codification are described below:
Level 1
|
|
Quoted market prices available in active
markets for identical assets or liabilities as of the reporting
date.
|
|
|
|
Level 2
|
|
Pricing inputs other than quoted prices in
active markets included in Level 1, which are either directly or
indirectly observable as of the reporting date.
|
|
|
|
Level 3
|
|
Pricing inputs that are generally observable
inputs and not corroborated by market data.
|
Financial assets are considered Level 3 when their fair values are
determined using pricing models, discounted cash flow methodologies
or similar techniques and at least one significant model assumption
or input is unobservable.
The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or
liabilities and the lowest priority to unobservable inputs. If the
inputs used to measure the financial assets and liabilities fall
within more than one level described above, the categorization is
based on the lowest level input that is significant to the fair
value measurement of the instrument.
The carrying amounts of the Company’s financial assets and
liabilities, such as cash and cash equivalents, accounts
receivable, deposits, prepayment and other receivables, amount due
from a director and operating lease right-of-use assets,
approximate their fair values because of the short maturity of
these instruments.
·
|
Recent accounting
pronouncements |
From time to time, new accounting pronouncements are issued by the
Financial Accounting Standard Board (“FASB”) or other standard
setting bodies and adopted by the Company as of the specified
effective date. Unless otherwise discussed, the Company believes
that the impact of recently issued standards that are not yet
effective will not have a material impact on its financial position
or results of operations upon adoption.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
Simplifying the Accounting for Debt with Conversion and Other
Options.
In June 2020, the FASB issued ASU 2020-06 to simplify the
accounting in ASC 470, “Debt with Conversion and Other
Options” and ASC 815, “Contracts in Equity’s Own
Entity”. The guidance simplifies the current guidance for
convertible instruments and the derivatives scope exception for
contracts in an entity’s own equity. Additionally, the amendments
affect the diluted EPS calculation for instruments that may be
settled in cash or shares and for convertible instruments. This ASU
will be effective beginning in the first quarter of the Company’s
fiscal year 2022. Early adoption is permitted. The amendments in
this update must be applied on either full retrospective basis or
modified retrospective basis through a cumulative-effect adjustment
to retained earnings/(deficit) in the period of adoption. The
Company is currently evaluating the impact of ASU 2020-06 on its
consolidated financial statements and related disclosures, as well
as the timing of adoption.
Financial Instruments
In June 2016, the FASB issued ASU 2016-13, “Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments” (“ASU 2016-13”), which
modifies the measurement of expected credit losses of certain
financial instruments. In February 2020, the FASB issued ASU
2020-02 and delayed the effective date of ASU 2016-13 until fiscal
year beginning after December 15, 2022. The Company is currently
evaluating the impact of adopting ASU 2016-13 on its consolidated
financial statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12 to simplify the
accounting in ASC 740, “Income Taxes.” This guidance
removes certain exceptions related to the approach for intra-period
tax allocation, the methodology for calculating income taxes in an
interim period, and the recognition of deferred tax liabilities for
outside basis differences. This guidance also clarifies and
simplifies other areas of ASC 740. This ASU will be effective
beginning in the first quarter of the Company’s fiscal year 2021.
Early adoption is permitted. Certain amendments in this update must
be applied on a prospective basis, certain amendments must be
applied on a retrospective basis, and certain amendments must be
applied on a modified retrospective basis through a
cumulative-effect adjustment to retained earnings/(deficit) in the
period of adoption. The adoption of ASU 2019-12 does not have a
significant impact on the Company’s consolidated financial
statements as of and for the three-month period ended March 31,
2021.
Earnings Per Share
In April 2021, the FASB issued ASU 2021-04, which included Topic
260 “Earnings Per Share”. This guidance clarifies and
reduces diversity in an issuer’s accounting for modifications or
exchanges of freestanding equity-classified written call options
due to a lack of explicit guidance in the FASB Codification. The
ASU 2021-04 is effective for all entities for fiscal years
beginning after December 15, 2021. Early adoption is permitted. The
Company is currently evaluating the impact of adopting ASU 2021-04
on its consolidated financial statements.
The Company has reviewed all recently issued, but not yet
effective, accounting pronouncements and do not believe the future
adoption of any such pronouncements may be expected to cause a
material impact on its financial condition or the results of its
operations.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
4. LEASE
The Company leased office under various non-cancelable operating
leases expiring at the term of 2 years, through December 31,
2022.
Right of use assets and lease liability – right of use are as
follows:
|
|
March 31
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
(Audited)
|
|
|
|
|
|
|
|
|
Right-of-use assets
|
|
$ |
45,241 |
|
|
$ |
- |
|
The lease liability – right of use is as follows:
|
|
March 31
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
(Audited)
|
|
|
|
|
|
|
|
|
Current portion
|
|
$ |
24,827 |
|
|
$ |
- |
|
Non-current portion
|
|
|
19,310 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total lease
liabilities
|
|
|
44,137 |
|
|
|
- |
|
As of March 31, 2021, the operating lease payment of $27,034 will
become matured in the next 12 months.
5. AMOUNT DUE TO DIRECTORS
The amount represented temporary advances to the Company by its
directors, which was unsecured, interest-free and had no fixed
terms of repayments.
6. CONVERTIBLE PROMISSORY NOTE
On October 27, 2020, the Company and EMA Financial, LLC, (“EMA”)
entered into a Securities Purchase Agreement, whereby the Company
issued a note to EMA (the “EMA Note”) in the original principal
amount of $35,000. The EMA Note contains an original issue discount
of $2,000 which will be reflected as a debt discount and amortized
over the nine months Note term. The EMA Note is convertible into
shares of the common stock of the Company at a price equal to 55%
of the lowest trading price of the Company’s common stock for the
twenty (20) consecutive trading days immediately preceding to the
conversion date. The EMA Note bears interest at 10% per annum and
is due on July 27, 2021.
As of March 31, 2021 and December 31, 2020, accrued interest
amounted to $1,458 and $584, respectively.
For the three months ended March 31, 2021 and 2020, the
amortization of discount was $874 and $0, respectively.
7. SHAREHOLDERS’ DEFICIT
Authorized shares
As of March 31, 2021 and December 31, 2020, the Company
authorized two classes of stock; 500,000,000 shares of common stock
at par value of $0.001 and 175,000,000 shares of Class A preferred
stock at par value of $0.001.
Issued and outstanding shares
There are 340,268,500 common shares issued and outstanding as of
March 31, 2021 and December 2020.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
8. INCOME TAX
The Company mainly operates in Hong Kong that is subject to taxes
in the governing jurisdictions in which it operates. The effective
tax rate in the period presented is the result of the mix of income
earned in various tax jurisdictions that apply a broad range of
income tax rate, as follows:
United States of America
NNAX is registered in the State of Nevada and is subject to US
federal corporate income tax. The U.S. Tax Cuts and Jobs Act (the
“Tax Reform Act”) was signed into law. The Tax Reform Act
significantly revised the U.S. corporate income tax regime by,
among other things, lowering the U.S. corporate tax rate from 35%
to 21% effective January 1, 2018. The Company’s policy is to
recognize accrued interest and penalties related to unrecognized
tax benefits in its income tax provision. The Company has not
accrued or paid interest or penalties which were not material to
its results of operations for the periods presented. Deferred tax
asset is not provided for as the tax losses may not be able to
carry forward after a change in substantial ownership of the
Company in July 2020.
BVI
Under the current BVI law, the Company is not subject to tax on
income.
Singapore
The Company’s operating subsidiary is registered in Republic of
Singapore and is subject to the Singapore corporate income tax at a
standard income tax rate of 17% on the assessable income arising in
Singapore during its tax year. No assessable income was generated
in Singapore during the three months ended March 31, 2021 and there
was no provision for income tax.
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the
Hong Kong Profits Tax at the two-tiered profits tax rates from
8.25% to 16.5% on the estimated assessable profits arising in Hong
Kong during the current year, after deducting a tax concession for
the tax year. The reconciliation of income tax rate to the
effective income tax rate for the three months ended March 31, 2021
and 2020 is as follows:
|
|
Three months ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
|
$ |
(17,805 |
) |
|
$ |
6,777 |
|
Statutory income tax
rate
|
|
|
16.5 |
% |
|
|
16.5 |
% |
Income tax expense at statutory rate
|
|
|
(2,938 |
) |
|
|
1,118 |
|
Tax loss ultilized
|
|
|
- |
|
|
|
(1,118 |
) |
Net operating loss
|
|
|
2,938 |
|
|
|
- |
|
Income tax expense
|
|
$ |
- |
|
|
$ |
- |
|
As of March 31, 2021 and December 31, 2020, the operation in Hong
Kong incurred $145,733 and $127,927 of cumulative net operating
losses which can be carried forward to offset future taxable income
at no expiry. The Company has provided for a full valuation
allowance against the deferred tax assets of $24,046 and $21,108 on
the expected future tax benefits from the net operating loss
carryforwards as the management believes it is more likely than not
that these assets will not be realized in the future.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
9. RELATED PARTY TRANSACTIONS
From time to time, the directors of the Company advanced funds to
the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and had no fixed terms of
repayment.
During the three months ended March 31, 2021 and 2020, the Company
has been provided free office space by its shareholder. The
management determined that such cost is nominal and did not
recognize the rent expense in its condensed consolidated financial
statements.
Since February 1, 2016, the Company was granted with the right of
use to the website and mobile application platforms by JJ Explorer
Tours Limited (“JJ Explorer”), which was also controlled by the
directors of the Company. Also, the Company formed a cooperation
partnership with JJ Explorer whereas JJ Explorer invested to
develop and maintained the operations of the Gagfare web and mobile
application platforms in a term of 5 years, to be expired on
January 31, 2021. In return, JJ Explorer would share 50% of the net
earnings generated by the Company in the use of its web and mobile
application platforms during the cooperation period. For the three
months ended March 31, 2021 and 2020, the Company did not record
the service charges and paid to JJ Explorer.
As of March 31, 2021 and December 31, 2020, the Company owed
to directors $218,840 and $199,949, respectively. The amounts due
to the related parties are unsecured, non-interest bearing and have
no fixed terms of repayment.
Apart from the transactions and balances detailed elsewhere in
these accompanying condensed consolidated financial statements, the
Company has no other significant or material related party
transactions during the periods presented.
10. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the three and nine months ended March 31, 2021 and 2020, there
was no single customer exceeding 10% of the Company’s revenue.
(b) Economic and political risk
The Company’s major operations are conducted in Hong Kong.
Accordingly, the political, economic, and legal environments in
Hong Kong, as well as the general state of Hong Kong’s economy may
influence the Company’s business, financial condition, and results
of operations.
NEW MOMENTUM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Currency expressed in United States Dollars (“US$”),
except for number of shares)
(Unaudited)
(c) Exchange rate risk
The Company cannot guarantee that the current exchange rate will
remain steady; therefore there is a possibility that the Company
could post the same amount of profit for two comparable periods and
because of the fluctuating exchange rate actually post higher or
lower profit depending on exchange rate of HKD converted to US$ on
that date. The exchange rate could fluctuate depending on changes
in political and economic environments without notice.
11. COMMITMENTS AND CONTINGENCIES
As of March 31, 2021, the Company has no material commitments or
contingencies.
12. SUBSEQUENT EVENTS
On April 13, 2021, the Company entered into a Stock Purchase
Agreement with Leung Tin Lung David, the Company’s sole director,
President and Chief Executive Officer, and majority stockholder,
pursuant to which the Company sold to Mr. Leung one share of Series
A Preferred Stock in exchange for 169,000,000 shares of common
stock of the Company. The Company subsequently canceled and
returned to its authorized capital stock the 169,000,000 shares of
common stock purchased from Mr. Leung.
In accordance with ASC Topic 855, “Subsequent Events”,
which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but
before condensed consolidated financial statements are issued, the
Company has evaluated all events or transactions that occurred
after March 31, 2021, up through the date the Company presented the
unaudited condensed consolidated financial statements. The Company
determined that there are no further events to disclose.
[OUTSIDE BACK COVER PAGE]
PROSPECTUS
NEW MOMENTUM CORPORATION
5,182,617 SHARES OF
COMMON STOCK
We have not authorized any dealer, salesperson or other person to
give you written information other than this prospectus or to make
representations as to matters not stated in this prospectus. You
must not rely on unauthorized information. This prospectus is not
an offer to sell these securities or a solicitation of your offer
to buy the securities in any jurisdiction where that would not be
permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create
an implication that the information contained herein nor the
affairs of the Issuer have not changed since the date hereof.
Until ___________, 2021 (90 days after the date of this
prospectus), all dealers that effect transactions in these shares
of common stock may be required to deliver a prospectus. This is in
addition to the dealer’s obligation to deliver a prospectus when
acting as an underwriter and with respect to their unsold
allotments or subscriptions.
THE DATE OF THIS PROSPECTUS IS ____________, 2021
PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being
registered hereby. All such expenses will be borne by the Company;
none shall be borne by any Selling Security Holders.
Item
|
|
Amount
($)
|
|
SEC Registration
Fee
|
|
$ |
565.42 |
|
Accounting Fees
|
|
|
3,500.00 |
|
Printing Costs
|
|
|
1,500.00 |
|
Legal fees and
expenses
|
|
|
20,000.00 |
|
TOTAL
|
|
$ |
25,565.42 |
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company’s Bylaws and Articles of Incorporation provide that we
shall, to the full extent permitted by the Nevada Revised Statutes,
as amended from time to time (the “Nevada Corporate Law”),
indemnify all of our directors and officers. Section 78.7502 of the
Nevada Corporate Law provides in part that a corporation shall have
the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in
the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Similar indemnity is authorized for such persons against expenses
(including attorneys’ fees) actually and reasonably incurred in
defense or settlement of any threatened, pending or completed
action or suit by or in the right of the corporation, if such
person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation,
and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable
to the corporation. Any such indemnification may be made only as
authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is
proper because the indemnitee has met the applicable standard of
conduct. Under our Bylaws and Articles of Incorporation, the
indemnitee is presumed to be entitled to indemnification and we
have the burden of proof to overcome that presumption. Where an
officer or a director is successful on the merits or otherwise in
the defense of any action referred to above, we must indemnify him
against the expenses which such offer or director actually or
reasonably incurred. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
RECENT SALES OF UNREGISTERED SECURITIES
Share Exchange Agreement
On July 6, 2020, the Company entered into a Share Exchange
Agreement (the “Share Exchange Agreement”), by and among the
Company, Nemo Holding Company Limited, a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding. The holders of the common stock of Nemo Holding
consisted of 29 stockholders.
Under the terms and conditions of the Share Exchange Agreement, the
Company offered, sold and issued 10,000,000 shares of common stock
in consideration for all the issued and outstanding shares in Nemo
Holding. Leung Tin Lung David, the Company’s sole officer and
director, became the beneficial holder of 6,000,000 common shares,
or 60%, of the issued and outstanding shares of Nemo Holding. The
effect of the issuance of the 10,000,000 shares issued under the
Share Exchange Agreement represents 10.8% of the issued and
outstanding shares of common stock of the Company.
Immediately prior to the closing of the transactions under the
Share Exchange Agreement, Mr. Leung was the holder of 233,813,213
shares of common stock, or 75.2%, of the issued and outstanding
shares of common stock of the Company. Giving effect to the closing
of the transactions under the Share Exchange Agreement, Mr. Leung
acquired 6,000,000 shares of common stock of the Company, by virtue
of his 60% beneficial ownership of Nemo Holding. The remaining 28
common shareholders of Nemo Holding acquired 4,000,000 shares of
common stock under the Share Exchange Agreement, by virtue of their
aggregate of 40% beneficial ownership of Nemo Holding.
As a result of the share exchange, Nemo Holding became a
wholly-owned subsidiary of the Company.
10% Convertible Note
On October 27, 2020, the Registrant offered and sold the Note,
dated October 27, 2020, to EMA Financial for aggregate proceeds of
$33,000. As of June 9, 2021, there was $35,000 in principal and
$2,042 in interest due and owing under the Note. The Note is due
July 27, 2021, and carries interest at a rate of 10% per annum. The
conversion price of the Note Shares is equal to the lower of: (i)
the lowest closing price of the Common Stock during the preceding
twenty (20) trading day period ending on the latest complete
trading day prior to the Issue Date of this Note or (ii) 55% of the
lowest trading price for the Common Stock on the Principal Market
during the twenty (20) consecutive trading days including and
immediately preceding the Conversion Date. We will not receive any
proceeds from the sale of the shares of common stock offered by the
Selling Security Holders. The terms and conditions of the Note
provide registration rights for the Note Shares.
Stock Purchase Agreement
On
April 13, 2021, the Company entered into a Stock Purchase Agreement
with Leung Tin Lung David, the Company’s sole director, President,
and majority stockholder, pursuant to which the Company sold to Mr.
Leung one share of Series A Preferred Stock in exchange for
169,000,000 shares of common stock of the Company. The Company
subsequently canceled and returned to its authorized capital stock
the 169,000,000 shares of common stock purchased from Mr.
Leung.
Investment Agreement with Strattner Alternative Credit Fund
LP
On April 16, 2021, the Company entered
into an Investment Agreement dated as of April 16, 2021 (the
“Investment Agreement”) with Strattner. The Investment Agreement
provides that, upon the terms and subject to the conditions set
forth therein, Strattner is committed to purchase up to
$5,000,000 (the “Total Commitment”) worth of the Company’s common
stock, $0.001 par value, over the 36-month term of the Investment
Agreement. Additionally, under the Investment Agreement, the
Company paid to Strattner a commitment fee equal in the form
of 250,000 restricted shares of the Company’s common stock.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this registration
statement:
Number
|
|
Description
|
|
|
|
2.1
|
|
Share Exchange Agreement, dated July 6, 2020, by and among the New
Momentum Corporation, Nemo Holding Corp., a British Virgin Islands
corporation (“Nemo Holding”), and the holders of common shares of
Nemo Holding (5)
|
3.1.1
|
|
Articles of Incorporation, dated July 1, 1999 (1)
|
3.1.2
|
|
Amended and Restated Articles of Incorporation, dated December 9,
2010 (2)
|
3.1.3
|
|
Certificate of Correction, dated April 1, 2011(7)
|
3.1.4
|
|
Certificate of Amendment to Articles of Incorporation, dated August
6, 2015 (8)
|
3.1.5
|
|
Certificate of Amendment to Articles of Incorporation, dated June
18, 2020 (5)
|
3.1.6
|
|
Certificate of Designation for Series A Preferred Stock, dated
March 11, 2021(7)
|
3.2
|
|
Bylaws (3)
|
4.1
|
|
10% Convertible Note, dated October 27, 2020 (6)
|
5.1
|
|
Opinion of Law Offices of Thomas E. Puzzo, PLLC, regarding the
legality of the securities being registered. (9)
|
10.1
|
|
Investment Agreement, dated April 16, 2021, by and between New
Momentum Corporation, a Nevada corporation, and Strattner
Alternative Credit Fund LP, a Delaware limited partnership.
(9)
|
10.2
|
|
Registration Rights Agreement, dated April 16, 2021, by and between
New Momentum Corporation, a Nevada corporation, and Strattner
Alternative Credit Fund LP, a Delaware limited partnership.
(9)
|
10.3
|
|
Employment Agreement, dated April 16, 2021, by and between New
Momentum Corporation, a Nevada corporation, and Leung Tin Lung
David. (9)
|
10.4
|
|
Indemnification Agreement, dated April 16, 2021, by and between New
Momentum Corporation, a Nevada corporation, and Leung Tin Lung
David. (9)
|
14.1
|
|
Code of Ethics (4)
|
21.1
|
|
Subsidiaries of the Registrant
|
23.1
|
|
Consent of Total Asia Associates PLT
|
23.2
|
|
Consent of Law Offices
of Thomas E. Puzzo, PLLC (contained in Exhibit 5.1).
|
_______________
(1)
|
Incorporated by
reference to the Registrant’s Registration Statement on Form SB-2
(File No. 333-54002), filed with the Securities and Exchange
Commission on January 19, 2001.
|
(2)
|
Incorporated by
reference to the Registrant’s Definitive Information Statement on
Schedule 14C (File No. 000-52273), filed with the Securities and
Exchange Commission on November 17, 2010.
|
(3)
|
Incorporated by
reference to the Registrant’s Annual Report on Form 10-K (File No.
000-52273), filed with the Securities and Exchange Commission on
April 17, 2015.
|
(4)
|
Incorporated by
reference to the Registrant’s Annual Report on Form 10-KSB (File
No. 000-52273), filed with the Securities and Exchange Commission
on April 14, 2006.
|
(5)
|
Incorporated by
reference to the Registrant’s Current Report on Form 8-K (File No.
000-52273) dated filed with the Securities and Exchange Commission
on July 8, 2020.
|
(6)
|
Incorporated by
reference to the Registrant’s Current Report on Form 8-K (File No.
000-52273) dated filed with the Securities and Exchange Commission
on November 20, 2020.
|
(7)
|
Incorporated by
reference to the Registrant’s Annual Report on Form 10-K (File No.
000-52273), filed with the Securities and Exchange Commission on
April 26, 2021.
|
(8)
|
Incorporated by
reference to the Registrant’s Current Report on Form 8-K (File No.
000-52273) dated filed with the Securities and Exchange Commission
on August 14, 2015.
|
(9)
|
Incorporated by
reference to the Registrant’s Registration Statement on Form S-1
(File No. 333-257302), filed with the Securities and Exchange
Commission on June 23, 2021.
|
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1)
|
To file, during any
period in which offers or sales of securities are being made, a
post-effective amendment to this registration statement to:
|
|
(i)
|
Include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933;
|
|
(ii)
|
To reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(§230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration
statement.
|
|
(iii)
|
To include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to
such information in the registration statement;
|
(2)
|
That, for the purpose
of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
|
(3)
|
To remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
|
|
|
(4)
|
That, for the purpose
of determining liability under the Securities Act of 1933 to any
purchaser:
|
|
(i)
|
If the registrant is
subject to Rule 430C, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other
than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such date of first use.
|
(5)
|
That, for the purpose
of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to
this registration statement, regardless of the underwriting method
used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities
to such purchaser:
|
|
(i)
|
Any preliminary
prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
|
|
|
|
|
(ii)
|
Any free writing
prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
|
|
|
|
|
(iii)
|
The portion of any
other free writing prospectus relating to the offering containing
material information about the undersigned registrant or our
securities provided by or on behalf of the undersigned registrant;
and
|
|
|
|
|
(iv)
|
Any other communication
that is an offer in the offering made by the undersigned registrant
to the purchaser.
|
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the “Act”) may be permitted to our
directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act, and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities, other than the payment by us of expenses incurred or
paid by one of our directors, officers, or controlling persons in
the successful defense of any action, suit or proceeding, is
asserted by one of our directors, officers, or controlling persons
in connection with the securities being registered, we will, unless
in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.