Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-217792
PROSPECTUS
UBI
BLOCKCHAIN INTERNET, LTD.
20,582,000
of our Class A Common Stock, par value $0.001
51,700,000
shares of our Class C Common Stock, par value $0.001
The
selling stockholders of UBI Blockchain Internet, Ltd. (the “Company”) named in this prospectus are offering shares
of Common Stock through this Prospectus. The Company will not receive any of the proceeds from the sale of the shares by the selling
stockholders. We are registering 20,582,000 of our Class A Common Stock held by two selling shareholders and 51,700,000 shares
of our Class C Common Stock being offered by the selling shareholders. The Class A Common stock is at a fixed price of $3.70 and
the Class C Common stock is at a fixed price of $0.20 per share for the entire duration of the offering. Our Class A Common Stock
is presently traded the OTC-QB, under the trading symbol UBIA and our Class C Common Stock is non voting stock that is not traded
on any market or securities exchange. The selling shareholders will receive all of the proceeds from the sale of their stock,
the company will not receive any proceeds of this offering.
Selling
shareholders are underwriters as defined under the Securities Act of 1933. Although our Class A Common Shares are quoted on the
OTC-QB, there can be no assurance that an active trading market for our shares will develop, or, if developed, that it will be
sustained. In the absence of a trading market or an inactive trading market, investors may be unable to liquidate their investment
or make any profit from the investment. We have agreed to bear the expenses relating to the registration of the shares for the
selling stockholders of our Company.
These
securities involve a high degree of risk. See “RISK FACTORS” contained in this prospectus beginning on page 8.
Neither
the U. S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
You
should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized
any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby
that is different from the information included in this Prospectus. If anyone provides you with different information, you should
not rely on it.
The
date of this prospectus is December 22, 2017
Table
of Contents
PROSPECTUS
SUMMARY
UBI
BLOCKCHAIN INTERNET, LTD.
The
following summary highlights selected information contained in this Prospectus. This summary does not contain all the information
that may be important to you. You should read the more detailed information contained in this prospectus, including but not limited
to, the risk factors beginning on page 3. References to “we,” “us,” “our,” “UBI Blockchain
Internet, Ltd.” or the “Company” mean UBI Blockchain Internet, Ltd.
Forward-Looking
Statements
This
Prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe,
plan, expect, future, intend, and similar expressions to identify such forward-looking statements. You should not place too much
reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us described in the “Risk Factors” section and elsewhere
in this Prospectus.
Our
Company
The
Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was
incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated
October 31, 2007, and, at the time of spin off was listed on the Over-the- Counter Bulletin Board. On November 21, 2016, the Company
reincorporated in Delaware under the name UBI Blockchain Internet Ltd. The Company has no revenues and has yet to develop any
products for sale.
UBI
Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet
of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry,
by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs.
With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source
within the context of the Internet of Things to the final consumer.
We
have incurred an unaudited accumulated deficit of $(5,677,344) since our inception on August 26, 2010 through the interim period
of May 31, 2017 and have had to rely on, Tony Liu, our CEO, to loan us monies to fund our operations. We are a development stage
company and management is uncertain that the Company can generate sufficient revenues in the next 12-months to sustain our operations.
We shall need to seek additional funding to continue our operations and implement our plan of operations.
Due
to the uncertainty of our ability to meet our financial obligations and to pay our liabilities as they become due, in their report
on our financial statements for the period for the fiscal year ended August 31, 2017, our registered independent auditors included
additional comments indicating concerns about our ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty. For the fiscal year ended August 31, 2017, we experienced
an audited operating loss of $(1,827,079). As of August 31, 2017, we had audited cash on hand of $15,406 and current portion of
prepaid stock-based salaries and consulting fees of $1,300,000 for total current assets of $1,315,406. Our audited current liabilities
as of August 31, 2017 is $585,506. In order to keep the company operational and fully reporting, management anticipates a burn
rate of approximately $220,000 per month, pre and post-offering.
Without
any additional funding, the Company will be unable to operate. Therefore, if we are unable to generate sufficient revenues, we
must raise additional capital in order to continue operations in order to implement our plan of operations.
Investors
should be aware that we will be subject to the “Penny Stock” rules adopted by the U. S. Securities and Exchange Commission,
which regulate broker-dealer practices in connection with transactions in Penny Stocks. These regulations may have the effect
of reducing the level of trading activity, if any, in the secondary market for our stock, and investors in our common stock may
find it difficult to sell their shares. Please see the disclosures under “Penny Stock Regulations” on Page 23 of this
Prospectus for more information.
Our
principal offices are located at SmartSpace 3F, Level 9, Unit 908, 100 Cyberport Rd., Hong Kong, People’s Republic of China.
Our telephone number is: (212) 372-8836.
The
Offering
Securities
Being Offered:
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20,582,000
shares of Class A Common Stock
51,700,000
shares of Class C Common Stock
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Fixed
Price:
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The
offering by the Class A Common stock is at a fixed price by the selling shareholders of $3.70 per shares and the Class C Common
Stock by the selling shareholders is at a fixed price of $0.20 per share for the entire duration of the offering.
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Terms
of the Offering:
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The
selling shareholders will determine when and how they will sell the common stock offered in this prospectus.
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Securities
Issued and to be Issued
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30,799,046
shares of our Class A Common Stock and 73,400,000 shares of our Class C Common Stock issued and outstanding as of the date
of this Prospectus. All of the common stock to be sold under this Prospectus will be sold by existing shareholders. The Selling
shareholders are underwriters as defined under the Securities Act of 1933.
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Use
of proceeds
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We
will not receive any proceeds from the sale of the common stock by the selling stockholders.
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OTC
Symbol
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UBIA
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Risk
Factors
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You
should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth
in the “Risk Factors” section beginning on page 8 of this prospectus before deciding whether or not to invest
in our common stock.
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We
are registering up to 20,582,000 Class A shares by six existing selling securityholders, 20,000,000 shares to be sold by our controlling
stockholder to the public and 582,000 shares to be sold by five individuals to the public for resale at a price of $3.70 per share
and 51,700,000 Class C common shares for resale by existing selling securityholders at a fixed price of $0.20 per share.
Selected
Financial Data
The
following financial information summarizes the more complete historical financial information at the end of this Prospectus.
The
summary information below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and the fiscal year ended August 31, 2017 and August 31, 2016 and the audited financial statements
and notes thereto included elsewhere in this Prospectus.
Balance
Sheet Data
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August 31, 2017
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August 31, 2016
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(audited)
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(audited)
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Total cash and equivalents
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$
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15,406
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$
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-
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Current portion of prepaid stock-based salaries and consulting fees
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1,300,000
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Total current assets
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$
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1,315,406
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$
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-
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Non-current portion of prepaid stock-based salaries and consulting fees
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493,333
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Office Equipment, net of accumulated depreciation
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17,950
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Website Development Costs
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92,035
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Total Assets
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$
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1,918,724
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$
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-
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Total current liabilities
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$
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585,506
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$
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146,602
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Total liabilities
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$
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585,506
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$
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146,602
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Income
Statement Data
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For the year ended
ended
August 31, 2017,
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For the year ended
August 31, 2016
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(audited)
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(audited)
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Revenues
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$
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-
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$
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-
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Salaries
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463,782
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Consulting Fees
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1,198,334
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Occupancy
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13,953
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Professional Fees
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98,677
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Other
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52,333
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13,079
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Total Operating Expenses
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1,827,079
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13,079
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Operating loss
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$
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(1,827,079
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)
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$
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(13,079
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)
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Other income (expenses)
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37,912
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-
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Net income (loss)
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$
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(1,789,167
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)
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$
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(13,079
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)
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RISK
FACTORS
Please
consider the following risk factors before deciding to invest in our common stock.
This
offering and any investment in our common stock involves a high degree of risk. You should carefully consider the risks described
below and all of the information contained in this Prospectus before deciding whether to purchase our common stock.
If
any of the following risks actually occur, our business, financial condition, and results of operations could be harmed. An investment
in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information
in this Prospectus before investing in our common stock. If any of the following risks occur, our business, operating results,
and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks,
and you may lose all or part of your investment.
RISK
FACTORS RELATING TO OUR FINANCIAL CONDITION
WE
HAVE LIMITED HISTORICAL FINANCIAL INFORMATION UPON WHICH YOU MAY EVALUATE OUR PERFORMANCE.
We
have a limited operating history and we are subject to all risks inherent in a developing business enterprise. The Company has
no revenues and has yet to develop any products for sale.
Our
likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently
encountered in connection with the development of blockchain technology with a focus on the Internet of things covering areas
of food, drugs and healthcare and the competitive environment in which we operate. You should consider, among other factors, our
prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages
of research. We may not be able to successfully address these risks and uncertainties or successfully implement our operating
and acquisition strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations
and could impair the value of our common stock to the point that the investors may lose their entire investment. Even if we accomplish
these objectives, we may not be able to generate positive cash flows or profits that we anticipate in the future.
Our
auditors have made reference to the substantial doubt as to our ability to continue as a going concern,
THERE
IS NO ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our
financial statements included with this Registration Statement for the fiscal years ended August 31, 2017 August 31, 2016, have
been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as
to our ability to continue as a going concern in their audit report on our audited financial statements for the year ended August
31, 2017 and August 31, 2016. Because the Company has been issued an opinion by its auditors that substantial doubt exists as
to whether the Company can continue as a going concern, it may be more difficult for the Company to attract investors. Since our
auditors have raised a substantial doubt about our ability to continue as a going concern, this typically results in greater difficulty
to obtain loans than businesses that do not have a qualified auditors opinion. Additionally, any loans we might obtain may be
on less advantageous terms. Our future is dependent upon our ability to obtain financing and upon future profitable operations
from our business. We plan to seek additional funds from additional loans made to us by Tony Liu, our CEO or through private placements
of our common stock. You may be investing in a company that will not have the funds necessary to continue to deploy its business
strategies. If we are not able to achieve sufficient revenues or find financing to cover our expenses, then we likely will be
forced to cease operations and investors will likely lose their entire investment.
WE
MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE TO US.
We
have prepared audited financial statements for the fiscal years ended August 31, 2017 and August 31, 2016. For the period from
inception (August 26, 2010) through the year end for August 31, 2017, we experienced an accumulated deficit of $6,343,426. Our
ability to continue to operate as a going concern is fully dependent upon the Company obtaining sufficient financing to continue
its development and operational activities. The ability to achieve profitable operations is in direct correlation to our ability
to generate revenues or raise sufficient financing. It is important to note that even if the appropriate financing is received,
there is no guarantee that we will ever be able to operate profitably or derive any significant revenues from its operation. If
we run out of cash reserves, we would be forced to cease operations.
No
assurance can be given that the Company will obtain access to capital markets in the future or that financing, adequate to satisfy
the cash requirements of implementing our business strategies, will be available on acceptable terms. The inability of the Company
to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of its
operations and upon its financial conditions.
BASED
ON OUR BURN RATE, IF we are unable to obtain additional funding our business will fail and our shares may be worthless.
We
have limited financial resources. As of August 31, 2017, we had 15,406 cash available, current portion of prepaid stock-based
salaries and consulting fees of $1,300,000 and office equipment valued at $17,950, non-current portion of prepaid stock-based
salaries and consulting fees of $493,333 and website development of $92,035 for total assets of $1,918,724. Our current burn rate
is approximately $220,000 per month. Based on our current burn rate, we will run out of funds immediately without additional capital.
If we fail to raise sufficient funds to keep our business operational, investors may lose their entire cash investment. There
is no assurance that we can raise funding or that we will have sufficient funds to repay any indebtedness, or that we will not
default on our debt obligations, jeopardizing our business viability. There can be no assurance that financing will be available
in amounts or on terms acceptable to us, if at all. If we are unable to obtain additional financing, we will likely be required
to curtail our business plans and possibly cease our operations.
THE
NATURE OF OUR OPERATIONS ARE HIGHLY SPECULATIVE.
The
success of our plan of operation will depend to a great extent on the operations, financial condition and management. Our business
concept revolves around “developing IoT, e-blockchain, and other technologies.” Our business model is not yet established
in the industry and we will have to convince our customers to use our products and services.
Management
believes that we will be successful in marketing our services, but there can be no assurance that we will be able to attract sufficient
consumers to achieve profitability or even generate anything but minimal revenues. If our intended products and services are not
accepted by consumers, we will fail.
COMPANY
RISK FACTORS
Article
IX of our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum
for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us or our directors, officers or other stockholders.
Article
IX of our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery
does not have jurisdiction, another state or federal court located in the State of Delaware) shall be the exclusive forum for:
(1) any derivative action or proceeding brought on behalf of the corporation, (2) any action asserting a claim of breach of a
fiduciary duty owed by, or other wrongdoing by, any director, officer, employee, agent
or stockholder
of the corporation
to the corporation or the corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision
of the General Corporation Law or the corporation’s Certificate of Incorporation or Bylaws,
(4)
any action to interpret,
apply, enforce or determine the validity of the corporation’s Certificate of Incorporation or Bylaws or (5) any action asserting
a claim governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction
over the indispensable parties named as defendants therein. This exclusive forum provision may limit a stockholder’s ability
to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other stockholders,
which may discourage such lawsuits against us and our directors, officers and other stockholders. Alternatively, if a court were
to find this provision in our Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could adversely affect our business, financial condition and results
of operations.
BECAUSE
OUR OPERATIONS ARE CONCENTRATED IN CHINA OUR STOCKHOLDERS WOULD FACE DIFFICULTY IN ENFORCING THEIR LEGAL RIGHTS UNDER UNITED STATES
SECURITIES LAWS.
Our
operations are concentrated in China and our stockholders would face difficulty in enforcing their legal rights under United States
securities laws in light of our management’s location outside of the United States. Legal protections and remedies available
to the company for certain harmful action taken against it will be pursued within the People’s Republic of China legal system,
which differs from the U.S. legal system in significant ways. Because the company conducts operations outside of the U.S. it is
difficult to pursue legal matters is subject to limitations imposed by other jurisdictions. It is limited ability for U.S. regulators’
to conduct investigations and inspections within China. There may be restrictions on the transfer of cash into and out of China,
as well as on the exchange of currency, which may constrain the company’s liquidity and impede its ability to use cash in
its operations.
U.S.
investors may experience difficulties in attempting to effect a service of process and enforce judgments based upon U.S. Federal
Securities Laws against our company and its non U.S. resident officers and directors.
We
are a Delaware corporation and, as such, we are subject to the jurisdiction of the State of Delaware and the United States courts
for purposes of any lawsuit, action or proceeding by investors herein. An investor would have the ability to effect service of
process in any action on the company within the United States. However, since Mr. Tony Liu, our CEO, Chan Cheung, our CFO and
two of our three directors reside outside the United States substantially all or a portion of the assets are located outside the
United States. As a result, it may not be possible for investors to:
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Effect
service of process within the United States against our non-U.S. resident officers or directors;
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Enforce
U.S. court judgments based upon the civil liability provisions of the U.S. federal securities laws against any of the above
referenced foreign persons in the United States;
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Enforce
in foreign courts U.S. court judgments based on the civil liability provisions of the U.S. federal securities laws against
the above foreign persons; and
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Bring
an original action in foreign courts to enforce liabilities based upon the U.S. federal securities laws against the above
foreign persons.
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WE
MAY NOT BE ABLE TO COMPETE WITH OTHER COMPANIES, SOME OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE.
We
do not have the resources to compete with larger providers of these similar services at this time. With the limited, if not minimal,
resources the Company has available, the Company may experience great difficulties in building a customer base. Competition from
existing and future competitors could result in the Company’s inability to secure any new customers. This competition from
other entities with greater resources and reputations may result in the Company’s failure to maintain or expand its business
as the Company may never be able to successfully execute its business plan. Further, we cannot be assured that it will be able
to compete successfully against present or future competitors or that the competitive pressure it may face will not force the
Company to cease operations.
We
may be unable to gain any significant market acceptance for our products and services or be unable establish a significant market
presence.
Our
growth strategy is substantially dependent upon our ability to market our intended products and services successfully to prospective
clients in the target markets, which shall initially be China, Europe and the United States. This requires that we heavily rely
upon our development and marketing partners in the target markets. Failure to select the right development and marketing partners
in the target markets and other target markets will significantly delay or prohibit our ability to develop our intended products
and services, market the products and gain market acceptance. Our intended products and services may not achieve significant market
acceptance. If acceptance is achieved, it may not be sustained for any significant period of time. Failure of our intended products
and services to achieve or sustain market acceptance could have a material adverse effect on our business, financial conditions
and the results of our operations.
If
potential users within the target markets do not widely adopt online or UBI fails to achieve and sustain sufficient market acceptance,
we will not generate sufficient revenue and our growth prospects, financial condition and results of operations could be harmed.
UBI
may never gain significant acceptance in the marketplace and, therefore, may never generate substantial revenue or allow us to
achieve or maintain profitability. Widespread adoption of virtual and online training portals in the target markets depends on
many factors, including acceptance by users that such systems and methods or other options. Our ability to achieve commercial
market acceptance for UBI or any other future products also depends on the strength of our sales, marketing and distribution organizations.
We
may not be able to attract qualified professionals, academics, university professors and communication professionals from around
the world, which will decrease the value of technological innovation platform and may make it difficult to differentiate UBI from
other online services providers.
Our
strategy includes developing relationships with professionals, academics, university professors and communication professionals
from around the world. If we are unable to establish relationships with these professionals, academics, university professors
and communication professionals that UBI’s technological innovation platform is not effective or that alternative products
are more effective, or if we encounter difficulty promoting adoption or establishing UBI as a standard, our ability to achieve
market acceptance of UBI could be significantly limited.
We
may not be able to develop new products or enhance the capabilities of UBI to keep pace with our industry’s rapidly changing
technology and customer requirements.
The
industry for blockchain technology is characterized by rapid technological changes, new product introductions, enhancements, and
evolving industry standards. Our business prospects depend on our ability to develop new products and applications for our technology
in new markets that develop as a result of technological and scientific advances, while improving the performance and cost-effectiveness.
New technologies, techniques or products could emerge that might offer better combinations of price and performance than UBI systems.
The market for online or virtual healthcare market is characterized by rapid innovation and advancement in technology. It is important
that we anticipate changes in technology and market demand. If we do not successfully innovate and introduce new technology into
our anticipated product lines or effectively manage the transitions of our technology to new product offerings, our business,
financial condition and results of operations could be harmed.
Cyber
security risks could adversely affect our business and disrupt our operations.
The
threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to prevent
breaches, our devices, as well as our servers, computer systems, and those of third parties that we use in our operations are
vulnerable to cyber security risks, including cyber attacks such as viruses and worms, phishing attacks, denial-of-service attacks,
physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our servers
and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss
of critical data, and loss of consumer confidence.
In
addition, we may be the target of email scams that attempt to acquire sensitive information or company assets. Despite our efforts
to create security barriers to such threats, we may not be able to entirely mitigate these risks. Any cyber attack that attempts
to obtain our data and assets, disrupt our service, or otherwise access our systems, or those of third parties we use, if successful,
could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage our reputation.
Our
financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.
Our
primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses
worldwide. Weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign
currency-denominated sales and earnings, and generally leads us to raise international pricing, potentially reducing demand for
our intended products and services. In some circumstances, for competitive or other reasons, we may decide not to raise local
prices to fully offset the strengthening of the U.S. dollar, or at all, which would adversely affect the U.S. dollar value of
our foreign currency denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. dollar,
while generally beneficial to our foreign currency-denominated sales and earnings, could cause us to reduce international pricing,
incur losses on our foreign currency derivative instruments, and incur increased operating expenses thereby limiting any benefit.
Additionally, strengthening of foreign currencies may also increase our cost of product components denominated in those currencies,
thus adversely affecting gross margins.
We
do not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations
in foreign currency exchange rates.
We
may acquire other businesses, form joint ventures or make investments in other companies or technologies that could negatively
affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.
We
may pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage our
proprietary technology and industry experience to expand our offerings or distribution. We have no experience with acquiring other
companies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisition
candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we
may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent
liabilities.
Any
future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets
or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration
of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing
our existing business. We may experience losses related to investments in other companies, which could harm our financial condition
and results of operations. We may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture.
Foreign
acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across
different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific
countries.
To
finance any acquisitions or joint ventures, we may choose to issue shares of common stock as consideration, which could dilute
the ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all. If the
price of our Common Stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using
our stock as consideration
.
THERE
MAY BE A POSSIBLE INABILITY TO FIND SUITABLE EMPLOYEES.
In
order to implement our business plan, management recognizes that additional staff will be required. No assurances can be given
that we will be able to find suitable employees that can support our needs or that these employees can be hired on favorable terms.
We do not plan to hire any additional employees until our cash flows can justify the expense.
Risks
Related to Being a Public Company
IF
WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR
PREVENT FRAUD AND AS A RESULT, INVESTORS MAY BE MISLED AND LOSE CONFIDENCE IN OUR FINANCIAL REPORTING AND DISCLOSURES, AND THE
PRICE OF OUR COMMON STOCK MAY BE NEGATIVELY AFFECTED.
The
Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal control over financial reporting.
A “significant deficiency” means a deficiency or a combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight
of the Company’s financial reporting. A “material weakness” is a deficiency or a combination of deficiencies
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the
annual or interim financial statements will not be prevented or detected on a timely basis.
As
of August 31, 2017, management assessed the effectiveness of our internal control over financial reporting based on the criteria
for effective internal control over financial reporting. The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a
functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on
our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and
procedures; and (2) inadequate segregation of duties consistent with control objectives.
In
addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we
may discover “material weaknesses” in our internal controls as defined in standards established by the Public Company
Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies,
that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will
not be prevented or detected.
Failure
to provide effective internal controls may cause investors to lose confidence in our financial reporting and may negatively affect
the price of our common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports
and to prevent fraud. If we have deficiencies in our internal controls over financial reporting, these deficiencies may negatively
impact our business and operations.
IN
THE FUTURE, WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY.
We
will incur legal, accounting and other expenses as a fully-reporting public company. Moreover, the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley Act”), as well as new rules subsequently implemented by the SEC, have imposed various new requirements
on public companies, including requiring changes in corporate governance practices. Moreover, these rules and regulations will
increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Although we have
not operated the business of UBI Blockchain as a public company, since JA Energy, the company’s predecessor, has been a
public company since 2010 expect to incur approximately $40,000 of incremental operating expenses in 2017. We project that the
total incremental operating expenses of being a public company will be approximately $45,000 for 2018. The incremental costs are
estimates, and actual incremental expenses could be materially different from these estimates. Unless we can generate sufficient
revenues and profits, we may not be able to absorb the costs of being a public company.
As
a result of operating as a public company, our management will be required to devote substantial time to new compliance initiatives.
We
have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that
we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, and rules subsequently implemented
and yet to be implemented by the U. S. Securities and Exchange Commission have imposed and will impose various new requirements
on public companies. Our management and other personnel will need to devote a substantial amount of time to these new compliance
initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities
more time-consuming and costly. For example, we expect these new rules and regulations to make it more difficult and more expensive
for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same
or similar coverage.
In
addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting
and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal
control over financial reporting to allow management, as required by Section 404 of the Sarbanes-Oxley Act. Compliance will require
us to increase our general and administrative expense in order to pay added compliance personnel, outside legal counsel and consultants
to assist us in, among other things, external reporting, instituting and monitoring a more comprehensive compliance function and
board governance function, establishing and maintaining internal controls over financial reporting in accordance with Section
404 of the Sarbanes-Oxley Act, and preparing and distributing periodic public reports in compliance with our obligations under
the U.S. federal securities laws. We currently do not have an internal audit group, and we will evaluate the need to hire additional
accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we
are not able to comply with the requirements of Section 404 in a timely manner, the market price of our stock could decline.
Risks
Related to Administrative, Organizational and Commercial Operations and Growth
The
loss of our Chief Executive Officer or our inability to attract and retain highly skilled developers and other personnel could
negatively impact our business.
Our
success depends on the skills, experience and performance of Tony, Liu, our Chief Executive Officer, and other key employees.
The individual and collective efforts of these employees will be important as we continue to develop and as we expand our commercial
activities. The loss or incapacity of existing members of our executive management team could negatively impact our operations
if we experience difficulties in hiring qualified successors. We do not have any employment agreements in place for our executive
officers; the existence of an employment agreement does not guarantee the retention of the executive officer for any period of
time.
Our
use of “open source” software could negatively affect our ability to sell our INTENDED products and subject us to
possible litigation.
A
portion of the technologies we use incorporates “open source” software. Such open source software is generally licensed
by its authors or other third parties under open source licenses. These licenses may subject us to certain unfavorable conditions,
including requirements that we offer our intended products and services that incorporate the open source software for no cost,
that we make publicly available source code for modifications or derivative works we create based upon, incorporating, or using
the open source software, or that we license such modifications or derivative works under the terms of the particular open source
license. Additionally, if a third-party software provider has incorporated open source software into software that we license
from such provider, we could be required to disclose or provide at no cost any of our source code that incorporates or is a modification
of such licensed software. If an author or other third party that distributes open source software that we use or license were
to allege that we had not complied with the conditions of the applicable license, we could be required to incur significant legal
expenses defending against such allegations and could be subject to significant damages and enjoined from the sale of our intended
products and services that contained the open source software. Any of the foregoing could disrupt the distribution and sale of
our intended products and services and harm our business.
Risks
Related to Intellectual Property
If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.
We
plan to rely upon patents, trademarks, copyright and trade secret protection, as well as non-disclosure agreements and invention
assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information.
Significant elements of our intended products and services are based on unpatented trade secrets and know-how that are not publicly
disclosed. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using
physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret
by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security
measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor,
and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim
that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome
is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse
by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated,
or if any such information was independently developed by a competitor, our competitive position could be harmed.
We
may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us
from commercializing or increase the costs of commercializing our intended products and services.
Our
commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property
rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There
also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications
are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature
frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were
filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that
may later result in issued patents that our products infringe. For example, pending applications may exist that provide support
or can be amended to provide support for a claim that results in an issued patent that our product infringes.
Our
software is built upon open-sourced code and platforms. Nevertheless, there is a risk a third party may assert that we are employing
their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover
our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products
unless we obtained a license under the applicable patents, or until the patents expire. We may not be able to enter into licensing
arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative
technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products
by us.
Risks
Related to Ownership of Our Common Stock
The
price of our Common Stock may be volatile and may be influenced by numerous factors, some of which are beyond our control
.
Factors
that could cause volatility in the market price of our Common Stock include, but are not limited to:
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or anticipated fluctuations in our financial condition and operating results;
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or anticipated changes in our growth rate relative to our competitors;
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commercial
success and market acceptance of UBI;
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success
of our competitors in discovering, developing or commercializing products;
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strategic
transactions undertaken by us;
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additions
or departures of key personnel;
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prevailing
economic conditions;
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disputes
concerning our intellectual property or other proprietary rights;
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sales
of our Common Stock by our officers, directors or significant stockholders;
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future
sales or issuances of equity or debt securities by us;
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business
disruptions caused by earthquakes, tornadoes or other natural disasters; and
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issuance
of new or changed securities analysts’ reports or recommendations regarding us.
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In
addition, the stock markets in general have experienced extreme volatility that has been often unrelated to the operating performance
of the issuer. These broad market fluctuations may negatively impact the price or liquidity of our Common Stock. In the past,
when the price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation
against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending
the lawsuit and the attention of our management would be diverted from the operation of our business.
UBI
Blockchain Internet LTD, a hong Kong Company controls 99.2% OF THE TOTAL VOTING POWER OF OUR CAPITAL that will allow them to control
the Company.
As
of December 21 , 2017, UBI Blockchain Internet LTD., a Hong Kong Company, beneficially owned by Tony Liu, our CEO, controls approximately
99.1% of the total voting power of our outstanding capital stock. As a result, UBI Blockchain Internet LTD. will have the ability
to control substantially all matters submitted to our stockholders for approval including:
a)
election of our board of directors;
b)
removal of any of our directors;
c)
amendment of our Articles of Incorporation or bylaws; and
d)
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination
involving us.
As
a result of its ownership UBI Blockchain Internet LTD, the Hong Kong company has the ability to influence all matters requiring
shareholder 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 UBI Blockchain Internet LTD, the Hong Kong company 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 the Company may decrease. UBI Blockchain Internet LTD, the Hong Kong company’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
Our
Common Stock is or may become subject to the “penny stock” rules of the SEC and the trading market in the securities
is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
Rule
15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer
approve a person’s account for transactions in penny stocks; and (b) 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 a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information
and investment experience objectives of the person and (b) 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 prescribed by the SEC relating
to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability
determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the
transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock”
rules. If our Common Stock is or becomes subject to the “penny stock” rules, it may be more difficult for investors
to dispose of our Common Stock and cause a decline in the market value of our Common 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 or 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.
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. There is no assurance that stockholders will be able to sell shares when desired.
FUTURE
SALES OF SHARES BY EXISTING CONTROLLING STOCKHOLDERS COULD CAUSE OUR STOCK PRICE TO DECLINE, FURTHER, CERTAIN SHARES OF OUR COMMON
STOCK ARE RESTRICTED FROM IMMEDIATE RESALE.
If
our existing controlling stockholder sell, or indicate an intention to sell, substantial amounts of our common stock in the public
market, the trading price of our common stock could decline. As of December 21 , 2017, we have 30,799,046 Class A Common Shares
issued and outstanding. After the effectiveness of our Registration Statement, 20,000,000 shares of the 30,000,000 shares of Class
A Common Stock, owned by our officer will no longer be restricted from immediate resale in the public market. If in the future,
he decides to sell his shares or if it is perceived that they will be sold, to the extent permitted by the Rules 144 and 701 under
the Securities Act, the trading price of our common stock could decline.
We
have authorized and unissued shares OF CLASS A, B and C COMMON stock that may be issued in the future, which would dilute your
ownership in the Company.
Our
authorized capital stock currently consists of 2,000,000,000 shares of common stock, $0.001 par value per share. The Company’s
shares structure currently consists of 1,000,000,000 shares of Class A common stock, 500,000,000 shares of Class B common stock,
and 500,000,000 shares of Class C common stock. As of December 21 , 2017 there are approximately 30,799,046 shares of our Class
A Common Stock issued and outstanding; 6,000,000 shares of our Class B Common Stock issued and outstanding; and 73,400,000 shares
of our Class B Common Stock issued and outstanding. The Board of Directors has a great deal of discretion, in the future, to issue
more shares in each Series, without shareholder approval. The issuance of more shares of any Series would dilute your ownership
in the Company, which would mean your percent of ownership in the Company would decrease.
HOLDERS
OF OUR COMMON STOCK HAVE A RISK OF POTENTIAL DILUTION IF WE ISSUE ADDITIONAL SHARES OF COMMON STOCK IN THE FUTURE.
Although
our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing
stockholders in connection with any future issuance of our common stock, the future issuance of additional shares of our common
stock would cause immediate, and potentially substantial, dilution to the net tangible book value of those shares of common stock
that are issued and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of our
issued and outstanding shares could have a material effect on the market value of the shares.
THE
PRICE OF OUR CLASS C COMMON STOCK OFFERED IN THE OFFERING HAS BEEN ARBITRARILY ESTABLISHED BY OUR MANAGEMENT.
The
offering price has been arbitrarily determined by our management and bears no relationship to assets, earnings, or any other valuation
criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this,
or at any price. This is especially the case if an investment in our company results in a stock price as determined by the market
less than our initial offering. In that case, shares in our company could be purchased in the open market below our initial offering
price. This would result in a loss of money for any investors in this offering.
WE
MAY HAVE DIFFICULTY IN MEETING THE QUALIFICATIONS FOR THE QUOTATION OF OUR CLASS C COMMON STOCK ON THE OTC-BULLETIN BOARD.
After
this Registration Statement becomes effective, we plan to identify a market maker to list our Class C common stock on the OTC-Bulletin
Board. Based on the small size of our Company and our minimal operations, we may have difficulty in meeting the qualifications
for trading our Class C common stock on the OTC-Bulletin Board and in finding a market maker willing to list quotations for our
shares or sponsor our Company for listing. There are no assurances that our Company’s Class C common stock will ever be
quoted on the OTC-Bulletin Board.
LOW-PRICED
STOCKS MAY AFFECT THE RESELL OF OUR SHARES.
Penny
Stock Regulation Broker-dealer practices in connection with transactions in “Penny Stocks” are regulated by certain
penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price
of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the
penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market
value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior
to a transaction in a penny stock; the broker-dealer must make a written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock
rules. When the Registration Statement becomes effective and the Company’s securities become registered, the stock will
likely have a trading price of less than $5.00 per share and will not be traded on any exchanges. Therefore, the Company’s
stock will become subject to the penny stock rules and investors may find it more difficult to sell their securities, should they
desire to do so.
The
offer and sale of Common Shares to the former NOVA shareholders may be deemed to have violated federal securities laws, and, as
a result, those shareholders may have the right to rescind their original purchase of those securities.
The
offer and sale of the 25,000,000 Class C Common Shares for the acquisition of Shenzhen Nova E-commerce, Ltd. may have been in
violation of the rules and regulations under the Securities Act and the interpretations of the SEC. If a violation of the Section
5 of the Securities Act did in fact occur, anyone who acquired Class C Common Shares at a price based on an evaluation of $0.20
per share would have a right to rescind the purchase. The Securities Act generally requires that any claim brought for a violation
of Section 5 of the Securities Act be brought within one year of the violation. If all the shareholders who acquired Class C Common
Shares for their exchange in the ownership of Shenzhen Nova E-commerce, Ltd. demanded rescission within that one-year period,
we would be obligated to repay approximately $5,000,000.
SPECIAL
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We
have made forward-looking statements in this prospectus, including the sections entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and “Business,” that are based on our management’s
beliefs and assumptions and on information currently available to our management. Forward-looking statements include the information
concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry
environment, potential growth opportunities, the effects of future regulation, and the effects of competition. Forward-looking
statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology
such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,”
“estimate” or similar expressions. These statements are only predictions and involve known and unknown risks and uncertainties,
including the risks outlined under “Risk Factors” and elsewhere in this prospectus.
Although
we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results,
events, levels of activity, performance or achievement. We are not under any duty to update any of the forward-looking statements
after the date of this prospectus to conform these statements to actual results, unless required by law.
USE
OF PROCEEDS
The
selling stockholders are selling shares of Common Stock covered by this Prospectus for their own account. We will not receive
any of the proceeds from the sale of these shares. We have agreed to bear the expenses relating to the registration of the shares
for the selling stockholders.
DILUTION
The
Common Stock to be sold by the selling stockholders is Common Stock that is currently issued and outstanding. Accordingly, there
will be no dilution to our existing stockholders.
DETERMINATION
OF OFFERING PRICE
The
offering of the Class A Common stock by the selling shareholders is at a fixed price of $3.70 per share and the Class C Common
Stock by the selling shareholders is at a fixed price of $0.20 per share for the entire duration of the offering. The price of
the Class A Common shares was established on basis of the average of the high and low prices of the Common Stock on the OTC-QB
Bulletin Board on May 9, 2017 within five business days prior to our original Registration Statement filing. The Class C Common
shares are not traded on any market. The offering price bears no relationship whatsoever to our business plan, the price paid
for our shares by our CEO, our assets, earnings, book value or any other criteria of value. The price for the Class C common shares
was arbitrarily determined to establish a price for the stock. The offering price of the Class C Common shares should not be regarded
as an indicator of the market price, if any, of the Class C common stock that may develop in a trading market after this offering,
which is likely to fluctuate.
SELLING
STOCKHOLDERS
The
shares of Common Stock being offered for sale by the selling stockholders hereunder consist of 20,000,000 Class A shares of our
Common Stock held by our controlling stockholder, 582,000 Class A shares held by five individuals, and 51,700,000 Class C Common
Stock held by 178 stockholders.
Each
of the selling shareholders is an “underwriter” within the meaning of the Securities Act in connection with each sale
of shares. The selling shareholders will pay all commissions, transfer taxes and other expenses associated with their sales.
There
are five (5) Class A Common stock selling stockholders. Tony Liu obtained his shares by purchasing his unregistered restricted
shares directly from the Company in October, 2016. This purchase helped fund the Company.
Chaeng
U Wai, obtained his 500,000 Class A common shares based on consulting services to be performed for the Company. The consulting
services consisted of advising management on corporate strategy and helping the company with project design. These shares were
issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, and/or Regulation D and Rule 506 promulgated
thereunder, as this transaction not involve a public offering. The issuance of these shares by us did not involve a public offering.
The
Company did not engage in any form of general solicitation or general advertising in connection with this transaction. The Consultant
was afforded access to our management in connection with this transaction. The Consultant acquired these securities for service
compensation and not with a view toward distribution, acknowledging such intent to us. The Consultant understood the ramifications
of their actions. The shares of Class A common stock issued contained a legend restricting transferability absent registration
or applicable exemption.
Forty-eight
(48) of the Class C selling stockholders, who collectively own 8,400,000 Class C Common shares obtained their shares as engaged
employee and non-employee contractors. These shares were issued in reliance on the exemption under Section 4(2) of the Securities
Act of 1933, and/or Regulation D and Rule 506 promulgated thereunder, as these are transactions not involving a public offering.
The Company had fifteen (15) accredited investors, and thirty-three (33) non accredited investors. No general solicitation has
was made by either the Company or any person acting on its behalf; the shares were issued subject to transfer restrictions; each
equity holder had and will have access to the Company’s public filings, and can ask questions of management; and the shares
contained an appropriate legend stating such securities have not been registered under the Securities Act of 1933 and may not
be offered or sold absent registration or pursuant to an exemption therefrom.
The
Company issued 500,000 unregistered restricted Class A common shares, par value $0.001, of UBI Blockchain Internet, Ltd., to an
independent consultant. This shareholder received Class A common shares based on consulting services to be performed for the Company.
These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Act”)
and/or Regulation D and Rule 506. The issuance of these shares by us did not involve a public offering. The Company did not engage
in any form of general solicitation or general advertising in connection with this transaction. The Consultant was afforded access
to our management in connection with this transaction. The Consultant acquired these securities for service compensation and not
with a view toward distribution, acknowledging such intent to us. The Consultant understood the ramifications of their actions.
The shares of Class A common stock issued contained a legend restricting transferability absent registration or applicable exemption.
One
hundred and thirty (130) of the Class C selling stockholders, who collectively own 25,000,000 Class C Common shares obtained their
unregistered restricted shares in exchange of their pro-rata ownership of Shenzhen Nova E-commerce, Ltd., where such entity was
acquired by the Company as a 100% owned subsidiary.
We
did not engage in any form of general solicitation or general advertising in connection with this transaction. Prior to the transaction,
all of the NOVA shareholders were sent a notice that provided the type of information normally provided in a prospectus. The NOVA
shareholders were afforded access to our management in connection with this transaction. It should be noted that all the NOVA
shareholders, whom are all Chinese citizens have a close knit relationship as by social, cultural and business ties with each
another. All of the NOVA shareholders voted in favor of the UBI acquisition of NOVA, with no dissenting shareholders; and, they
agreed not to resell or distribute the securities. They were able to evaluate the risks and merits of the share exchange they
are able to accept the economic risk in exchanging their shares. The exchanged shares of common stock issued contained a legend
restricting transferability absent registration or applicable exemption.
October
2, 2017, we issued 82,000 shares of our unregistered restricted Class A common stock, with piggyback registration rights in exchange
for legal services from the Law Firm of T. J. Jesky. The shares were issued by as follows: i) 33,000 shares to T. J. Jesky, Esq.;
ii) 39,000 shares to Mark DeStefano, Business Affairs Manager for the law firm; iii) 5,000 shares to John P. O’Shea; a business
consultant for the law firm and iv) 5,000 shares to Jennifer L. O’Shea, a business consultant for the law firm.
Before
these four individual shareholders received their unregistered restricted securities, they were known to us and our management,
through pre-existing business relationships. We did not engage in any form of general solicitation or general advertising in connection
with this transaction. The four individual shareholders were provided access to all material information, which they requested
and all information necessary to verify such information and was afforded access to our management in connection with this transaction.
The shares of common stock issued contained a legend restricting transferability absent registration or applicable exemption.
We relied upon Section 4(2) of the Securities Act and/or Regulation D and Rule 506. We believed that Section 4(2) was available
because the offer and sale did not involve a public offering and there was not general solicitation or general advertising involved
in the offer or sale.
The
Class A Common Stock selling stockholder may from time-to-time offer and sell any or all of their shares during the duration of
this Offering at a fixed price of $3.70 per share.
The
Class C Common Stock selling stockholders may from time-to-time offer and sell any or all of their shares during the duration
of this Offering at the fixed price of $0.20 per share.
Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission.
The
shares to be offered by the selling stockholders are “restricted” securities under applicable federal and state laws
and are being registered under the Securities Act of 1933, as amended (the “Securities Act”) to give the selling stockholders
the opportunity to publicly sell these shares. The registration of these shares does not require that any of the shares be offered
or sold by the selling stockholders.
Each
of the selling stockholders (i) acquired the securities covered by this prospectus in the ordinary course of business, and (ii)
at the time of purchase of such securities, the selling stockholder had no agreement or understanding, directly or indirectly,
with any person to distribute such securities.
Other
than the costs related to preparing this prospectus and a registration fee to the SEC, we are not paying any costs relating to
the sales by the selling stockholders.
The
following table sets forth information with respect to the maximum number of shares of Common Stock beneficially owned by the
selling stockholders named below and as adjusted to give effect to the sale of the shares offered hereby. The table lists the
number of shares of Common Stock beneficially owned by each selling stockholder as of the date of this Prospectus, the shares
of Common Stock covered by this Prospectus that may be disposed of by each of the selling stockholders and the number of shares
that will be beneficially owned by the selling stockholders assuming all of the shares covered by this Prospectus are sold.
The
shares beneficially owned have been determined in accordance with rules promulgated by the U. S. Securities and Exchange Commission,
and the information is not necessarily indicative of beneficial ownership for any other purpose. The information in the table
below is current as of the date of this Prospectus. All information contained in the table below is based upon information provided
to us by the selling stockholders and we have not independently verified this information. The selling stockholders may have sold,
transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time or from time to time since the
date on which it provided the information regarding the shares beneficially owned, all or a portion of the shares beneficially
owned in transactions exempt from the registration requirements of the Securities Act of 1933. The selling stockholders may from
time to time offer and sell pursuant to this Prospectus any or all of the Common Stock being registered. The selling stockholders
are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares
immediately upon effectiveness of this Prospectus. All information with respect to share ownership has been furnished by the selling
stockholders.
Except
as may be indicated below, no selling stockholder is the beneficial owner of any additional shares of common stock or other equity
securities issued by us or any securities convertible into, or exercisable or exchangeable for, our equity securities. No selling
stockholder is a registered broker-dealer or an affiliate of a broker-dealer. In addition, the selling stockholders purchased
the stock from us in the ordinary course of business. At the time of the purchase of the stock to be resold, none of the selling
shareholders had any agreements or understandings with us, directly or indirectly, with any person to distribute the stock.
The
following table sets forth, with respect to the selling shareholders (i) the number of shares of common stock beneficially owned
as of December 21 , 2017; (ii) the total percentage of shares beneficially owned prior to the offering; (iii) the maximum number
of shares of common stock which may be sold by the selling shareholders under this prospectus; (iv) the number of shares of common
stock which will be owned after the offering by the selling shareholders; and (v) the total percentage of shares beneficially
owned upon completion of the offering. All shareholders listed below are eligible to sell their shares. The Class A Common Stock
percentage ownerships set forth below are based on 30,799,046 shares outstanding, and the Class C Common Stock percentage ownerships
set forth below are based on 73,400,000 shares outstanding as of the date of this prospectus.
Name of Selling
Stockholder
|
|
Total Number
of
Class A Shares
Beneficially
Owned Prior to
Offering
|
|
|
Total
Percentage
of Class A
Shares
Beneficially
Owned Prior
to
Offering
|
|
|
Maximum
Number of
Class A Shares
to be Sold
|
|
|
Number of
Class
A Shares
Owned
After Offering
|
|
|
Total
Percentage
of Class A
Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UBI Blockchain Internet, LTD., a Hong Kong Company (1)
|
|
|
30,000,000
|
|
|
|
97.4
|
%
|
|
|
20,000,000
|
|
|
|
10,000,000
|
|
|
|
65.1
|
%
|
Cheang U Wai
|
|
|
500,000
|
|
|
|
1.6
|
%
|
|
|
500,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jesky, TJ
|
|
|
33,000
|
|
|
|
0.01
|
%
|
|
|
33,000
|
|
|
|
0
|
|
|
|
-
|
%
|
DeStefano, Mark
|
|
|
39,000
|
|
|
|
0.01
|
%
|
|
|
39,000
|
|
|
|
0
|
|
|
|
-
|
%
|
O’Shea, John P.
|
|
|
5,000
|
|
|
|
0.001
|
%
|
|
|
5,000
|
|
|
|
0
|
|
|
|
-
|
%
|
O’Shea, Jennifer L.
|
|
|
5,000
|
|
|
|
0.001
|
%
|
|
|
5,000
|
|
|
|
0
|
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
30,582,000
|
|
|
|
|
|
|
|
20,582,000
|
|
|
|
20,000,000
|
|
|
|
|
|
1)
Tony Liu, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China. Tony Liu is CEO
of UBI Blockchain Internet, LTD., a Delaware corporation, he is the beneficial owner who exercises the sole voting and dispositive
powers with respect to 30,000,000 Class A common shares owned and has the ultimate voting control over the shares held in the
name of UBI Blockchain Internet, Ltd, a Hong Kong Company.
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior to
Offering
|
|
|
Total
Percentage
of Class C
Shares
Beneficially
Owned Prior
to
Offering
|
|
|
Maximum
Number of
Class C Shares
to be Sold
|
|
|
Number of
Class
C Shares
Owned
After Offering
|
|
|
Total
Percentage
of Class C
Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UBI Blockchain Internet, LTD., a Hong Kong Company (1)
|
|
|
40,000,000
|
|
|
|
54.50
|
%
|
|
|
20,000,000
|
|
|
|
20,000,000
|
|
|
|
27.25
|
%
|
Earn Smart (Hong Kong) Ltd(2)(4)
|
|
|
7,660,100
|
|
|
|
10.44
|
%
|
|
|
7,660,100
|
|
|
|
0
|
|
|
|
-
|
%
|
Yuehui Wang(4)
|
|
|
6,000,000
|
|
|
|
8.17
|
%
|
|
|
6,000,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Star Bright International Investment Enterprise Ltd (3)
|
|
|
5,000,000
|
|
|
|
6.81
|
%
|
|
|
5,000,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhenyuan Yu(4)(5)
|
|
|
1,200,000
|
|
|
|
1.63
|
%
|
|
|
1,200,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhigang Yuan(4)
|
|
|
1,166,014
|
|
|
|
1.59
|
%
|
|
|
1,166,014
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhengping Zhang(4)
|
|
|
588,100
|
|
|
|
0.80
|
%
|
|
|
588,100
|
|
|
|
0
|
|
|
|
-
|
%
|
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Maximum
Number of
Class
C Shares
to be Sold
|
|
|
Number
of
Class C Shares
Owned
After
Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhenyaun Zhang (4)
|
|
|
500,000
|
|
|
|
0.68
|
%
|
|
|
500,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Cosimo J. Patti
|
|
|
500,000
|
|
|
|
0.68
|
%
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
0.34
|
%
|
Hong Zhu
|
|
|
500,000
|
|
|
|
0.68
|
%
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
0.34
|
%
|
Rui Xiong(4)
|
|
|
350,000
|
|
|
|
0.48
|
%
|
|
|
350,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jin Xu(4)
|
|
|
260,000
|
|
|
|
0.48
|
%
|
|
|
260,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jinzhi Wei(4)
|
|
|
254,569
|
|
|
|
0.35
|
%
|
|
|
254,569
|
|
|
|
0
|
|
|
|
-
|
%
|
Rongtao Li(4)
|
|
|
235,105
|
|
|
|
0.32
|
%
|
|
|
235,105
|
|
|
|
0
|
|
|
|
-
|
%
|
Bin Wen (4)
|
|
|
200,000
|
|
|
|
0.27
|
%
|
|
|
200,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Shande Song(4)
|
|
|
185,220
|
|
|
|
0.25
|
%
|
|
|
185,220
|
|
|
|
0
|
|
|
|
-
|
%
|
Jingyu Zhou(4)
|
|
|
182,619
|
|
|
|
0.25
|
%
|
|
|
182,619
|
|
|
|
0
|
|
|
|
-
|
%
|
Rong Liu(4)
|
|
|
177,162
|
|
|
|
0.24
|
%
|
|
|
177,162
|
|
|
|
0
|
|
|
|
-
|
%
|
Jianchun Sun(4)
|
|
|
153,617
|
|
|
|
0.21
|
%
|
|
|
153,617
|
|
|
|
0
|
|
|
|
-
|
%
|
Xinkai Yu(4)
|
|
|
150,000
|
|
|
|
0.20
|
%
|
|
|
150,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Marvyn S. Tse
|
|
|
150,000
|
|
|
|
0.20
|
%
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
0.10
|
%
|
Jinghong Li(4)
|
|
|
144,797
|
|
|
|
0.20
|
%
|
|
|
144,797
|
|
|
|
0
|
|
|
|
-
|
%
|
Yuhu Chen(4)
|
|
|
143,976
|
|
|
|
0.20
|
%
|
|
|
143,976
|
|
|
|
0
|
|
|
|
-
|
%
|
Hai Huang(4)
|
|
|
140,000
|
|
|
|
0.17
|
%
|
|
|
140,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Hongjuan Wang(4)
|
|
|
125,844
|
|
|
|
0.17
|
%
|
|
|
125,844
|
|
|
|
0
|
|
|
|
-
|
%
|
Wanlong Gao(4)
|
|
|
122,947
|
|
|
|
0.17
|
%
|
|
|
122,947
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhixiang Leng(4)
|
|
|
121,586
|
|
|
|
0.17
|
%
|
|
|
121,586
|
|
|
|
0
|
|
|
|
-
|
%
|
Ouyang Ni(4)
|
|
|
115,320
|
|
|
|
0.16
|
%
|
|
|
115,320
|
|
|
|
0
|
|
|
|
-
|
%
|
Xia Cai(4)
|
|
|
110,960
|
|
|
|
0.16
|
%
|
|
|
110,960
|
|
|
|
0
|
|
|
|
-
|
%
|
Kai Su(4)
|
|
|
110,117
|
|
|
|
0.15
|
%
|
|
|
110,117
|
|
|
|
0
|
|
|
|
-
|
%
|
Xuxu Teng(4)
|
|
|
108,897
|
|
|
|
0.15
|
%
|
|
|
108,897
|
|
|
|
0
|
|
|
|
-
|
%
|
Cheung Chan
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Charles Sullivan
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Bifang Ruan
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Jianguo Wei
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Zhenyuan Yu(5)
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Bingxiao Zhang
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Guirong Luo
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Lianjun Huo
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Ziyun Zhou
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Maximum
Number of
Class C Shares
to be Sold
|
|
|
Number of
Class C Shares
Owned After Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhijun Wang
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Kui Cao
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Xuecai Tang
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Jingjia Li
|
|
|
100,000
|
|
|
|
0.14
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0.07
|
%
|
Qinghai Zhao (4)
|
|
|
98,315
|
|
|
|
0.13
|
%
|
|
|
98,315
|
|
|
|
0
|
|
|
|
-
|
%
|
Ruoju Kuang (4)
|
|
|
96,207
|
|
|
|
0.13
|
%
|
|
|
96,207
|
|
|
|
0
|
|
|
|
-
|
%
|
Kun Zeng(4)
|
|
|
94,521
|
|
|
|
0.13
|
%
|
|
|
94,521
|
|
|
|
0
|
|
|
|
-
|
%
|
Yunjiang Yue(4)
|
|
|
91,663
|
|
|
|
0.12
|
%
|
|
|
91,663
|
|
|
|
0
|
|
|
|
-
|
%
|
Yingmei Zhang(4)
|
|
|
90,659
|
|
|
|
0.12
|
%
|
|
|
90,659
|
|
|
|
0
|
|
|
|
-
|
%
|
Guanrong Chen(4)
|
|
|
90,562
|
|
|
|
0.12
|
%
|
|
|
90,562
|
|
|
|
0
|
|
|
|
-
|
%
|
Guang Zhu(4)
|
|
|
83,210
|
|
|
|
0.11
|
%
|
|
|
83,210
|
|
|
|
0
|
|
|
|
-
|
%
|
%Xia Zhao (4)
|
|
|
81,939
|
|
|
|
0.11
|
%
|
|
|
81,939
|
|
|
|
0
|
|
|
|
-
|
%
|
Jingxiu Wang(4)
|
|
|
77,200
|
|
|
|
0.11
|
%
|
|
|
77,200
|
|
|
|
0
|
|
|
|
-
|
%
|
%Zaihua Chen(4)
|
|
|
75,934
|
|
|
|
0.10
|
%
|
|
|
75,934
|
|
|
|
0
|
|
|
|
-
|
%
|
Juanli Zhang(4)%
|
|
|
75,918
|
|
|
|
0.10
|
%
|
|
|
75,918
|
|
|
|
0
|
|
|
|
-
|
%
|
Depu Zhao(4)
|
|
|
75,785
|
|
|
|
0.10
|
%
|
|
|
75,785
|
|
|
|
0
|
|
|
|
-
|
%
|
Shilian Xu(4)
|
|
|
72,039
|
|
|
|
0.10
|
%
|
|
|
72,039
|
|
|
|
0
|
|
|
|
-
|
%
|
Jing Zhang(4)
|
|
|
69,090
|
|
|
|
0.09
|
%
|
|
|
69,090
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhaoxia Xing(4)
|
|
|
68,332
|
|
|
|
0.09
|
%
|
|
|
68,332
|
|
|
|
0
|
|
|
|
-
|
%
|
Xuemei Yuan(4)
|
|
|
67,837
|
|
|
|
0.09
|
%
|
|
|
67,837
|
|
|
|
0
|
|
|
|
-
|
%
|
Shuqin Ma(4)
|
|
|
67,047
|
|
|
|
0.09
|
%
|
|
|
67,047
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiaobiao Xin(4)
|
|
|
66,248
|
|
|
|
0.09
|
%
|
|
|
66,248
|
|
|
|
0
|
|
|
|
-
|
%
|
Hua Huang(4)
|
|
|
65,728
|
|
|
|
0.09
|
%
|
|
|
65,728
|
|
|
|
0
|
|
|
|
-
|
%
|
Qingshan Liu(4)
|
|
|
64,430
|
|
|
|
0.09
|
%
|
|
|
64,430
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiliang Zhang(4)
|
|
|
63,101
|
|
|
|
0.09
|
%
|
|
|
63,101
|
|
|
|
0
|
|
|
|
-
|
%
|
Yunying Huang(4)
|
|
|
61,690
|
|
|
|
0.08
|
%
|
|
|
61,690
|
|
|
|
0
|
|
|
|
-
|
%
|
Yuwen Yan(4)
|
|
|
60,857
|
|
|
|
0.08
|
%
|
|
|
60,857
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiaofang Cui(4)
|
|
|
60,588
|
|
|
|
0.08
|
%
|
|
|
60,588
|
|
|
|
0
|
|
|
|
-
|
%
|
Jiayan Sun(4)
|
|
|
60,000
|
|
|
|
0.08
|
%
|
|
|
60,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Feng Peng(4)
|
|
|
56,065
|
|
|
|
0.08
|
%
|
|
|
56,065
|
|
|
|
0
|
|
|
|
-
|
%
|
Longbin Song(4)
|
|
|
55,855
|
|
|
|
0.07
|
%
|
|
|
55,855
|
|
|
|
0
|
|
|
|
-
|
%
|
Huiqin Wang(4)
|
|
|
54,794
|
|
|
|
0.07
|
%
|
|
|
54,794
|
|
|
|
0
|
|
|
|
-
|
%
|
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Maximum
Number of
Class C Shares
to be Sold
|
|
|
Number of
Class C Shares
Owned After
Offering
|
|
|
Total
Percentage of Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qiuju Yao(4)
|
|
|
54,200
|
|
|
|
0.07
|
%
|
|
|
54,200
|
|
|
|
0
|
|
|
|
-
|
%
|
Sumei Mu(4)
|
|
|
54,049
|
|
|
|
0.07
|
%
|
|
|
54,049
|
|
|
|
0
|
|
|
|
-
|
%
|
Liping Zhang(4)
|
|
|
53,526
|
|
|
|
0.07
|
%
|
|
|
53,526
|
|
|
|
0
|
|
|
|
-
|
%
|
Wei Feng(4)
|
|
|
53,151
|
|
|
|
0.07
|
%
|
|
|
53,151
|
|
|
|
0
|
|
|
|
-
|
%
|
Xinhua Gu(4)
|
|
|
52,974
|
|
|
|
0.07
|
%
|
|
|
52,974
|
|
|
|
0
|
|
|
|
-
|
%
|
Xuefeng Huang(4)
|
|
|
52,679
|
|
|
|
0.07
|
%
|
|
|
52,679
|
|
|
|
0
|
|
|
|
-
|
%
|
Yueshan Shi(4)
|
|
|
51,367
|
|
|
|
0.07
|
%
|
|
|
51,367
|
|
|
|
0
|
|
|
|
-
|
%
|
Renwen Zhang(4)
|
|
|
50,868
|
|
|
|
0.07
|
%
|
|
|
50,868
|
|
|
|
0
|
|
|
|
-
|
%
|
Aiwen Zhang(4)
|
|
|
50,664
|
|
|
|
0.07
|
%
|
|
|
50,664
|
|
|
|
0
|
|
|
|
-
|
%
|
Huixian Ma(4)
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
50,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Ling Liu(4)
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
50,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiaochun Song
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Yujie Liu
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Sijun Nie
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Qinghua He
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Guiying Wang
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Wei Hu
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Shuqiu Yu
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Xiaofeng Zhang
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Wenxiang Lu
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Mengmeng Wu
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Tai Wai David Sun
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Chi Sam LAO
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Wu Wai HUI
|
|
|
50,000
|
|
|
|
0.07
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
0.03
|
%
|
Jinhua Tang(4)
|
|
|
49,382
|
|
|
|
0.07
|
%
|
|
|
49,382
|
|
|
|
0
|
|
|
|
-
|
%
|
Haixin Min(4)
|
|
|
49,257
|
|
|
|
0.07
|
%
|
|
|
49,257
|
|
|
|
0
|
|
|
|
-
|
%
|
Huifen Shen(4)
|
|
|
48,195
|
|
|
|
0.07
|
%
|
|
|
48,195
|
|
|
|
0
|
|
|
|
-
|
%
|
Guofang Guan(4)
|
|
|
45,256
|
|
|
|
0.06
|
%
|
|
|
45,256
|
|
|
|
0
|
|
|
|
-
|
%
|
Menglin Bai(4)
|
|
|
44,500
|
|
|
|
0.06
|
%
|
|
|
44,500
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiangsong Chen(4)
|
|
|
44,076
|
|
|
|
0.06
|
%
|
|
|
44,076
|
|
|
|
0
|
|
|
|
-
|
%
|
Huiying Guo(4)
|
|
|
43,561
|
|
|
|
0.06
|
%
|
|
|
43,561
|
|
|
|
0
|
|
|
|
-
|
%
|
Hongmei Li(4)
|
|
|
42,759
|
|
|
|
0.06
|
%
|
|
|
42,759
|
|
|
|
0
|
|
|
|
-
|
%
|
Yongju Zhu(4)
|
|
|
42,596
|
|
|
|
0.06
|
%
|
|
|
42,596
|
|
|
|
0
|
|
|
|
-
|
%
|
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Maximum Number of
Class C Shares
to be Sold
|
|
|
Number of
Class C Shares
Owned After
Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junwei Tu(4)
|
|
|
42,568
|
|
|
|
0.06
|
%
|
|
|
42,568
|
|
|
|
0
|
|
|
|
-
|
%
|
Junping Guo(4)
|
|
|
42,430
|
|
|
|
0.06
|
%
|
|
|
42,430
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiaobo Liu(4)
|
|
|
41,792
|
|
|
|
0.06
|
%
|
|
|
41,792
|
|
|
|
0
|
|
|
|
-
|
%
|
Weiying Pu(4)
|
|
|
41,475
|
|
|
|
0.06
|
%
|
|
|
41,475
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiuhua Zhao(4)
|
|
|
41,374
|
|
|
|
0.06
|
%
|
|
|
41,374
|
|
|
|
0
|
|
|
|
-
|
%
|
Li Wang(4)
|
|
|
40,449
|
|
|
|
0.06
|
%
|
|
|
40,449
|
|
|
|
0
|
|
|
|
-
|
%
|
Fei Niu(4)
|
|
|
38,822
|
|
|
|
0.05
|
%
|
|
|
38,822
|
|
|
|
0
|
|
|
|
-
|
%
|
Jianliang Liu(4)
|
|
|
38,748
|
|
|
|
0.05
|
%
|
|
|
38,748
|
|
|
|
0
|
|
|
|
-
|
%
|
Linghong Yu(4)
|
|
|
38,668
|
|
|
|
0.05
|
%
|
|
|
38,668
|
|
|
|
0
|
|
|
|
-
|
%
|
Lie Zhao(4)
|
|
|
37,939
|
|
|
|
0.05
|
%
|
|
|
37,939
|
|
|
|
0
|
|
|
|
-
|
%
|
Shaohua Liang (4)
|
|
|
37,938
|
|
|
|
0.05
|
%
|
|
|
37,938
|
|
|
|
0
|
|
|
|
-
|
%
|
Xuegang Ren(4)
|
|
|
37,836
|
|
|
|
0.05
|
%
|
|
|
37,836
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhongfei Yang(4)
|
|
|
36,754
|
|
|
|
0.06
|
%
|
|
|
36,754
|
|
|
|
0
|
|
|
|
-
|
%
|
Xiefeng Li(4)
|
|
|
36,745
|
|
|
|
0.05
|
%
|
|
|
36,745
|
|
|
|
0
|
|
|
|
-
|
%
|
Ming Zhang(4)
|
|
|
36,604
|
|
|
|
0.05
|
%
|
|
|
36,604
|
|
|
|
0
|
|
|
|
-
|
%
|
Peixian Wang(4)
|
|
|
35,348
|
|
|
|
0.05
|
%
|
|
|
35,348
|
|
|
|
0
|
|
|
|
-
|
%
|
Xin Fu(4)
|
|
|
34,889
|
|
|
|
0.05
|
%
|
|
|
34,889
|
|
|
|
0
|
|
|
|
-
|
%
|
Chuanliang Li(4)
|
|
|
33,508
|
|
|
|
0.05
|
%
|
|
|
33,508
|
|
|
|
0
|
|
|
|
-
|
%
|
Cihai Guo(4)
|
|
|
33,419
|
|
|
|
0.05
|
%
|
|
|
33,419
|
|
|
|
0
|
|
|
|
-
|
%
|
Hong Liu(4)
|
|
|
32,850
|
|
|
|
0.04
|
%
|
|
|
32,850
|
|
|
|
0
|
|
|
|
-
|
%
|
Jiaxin Dong(4)
|
|
|
32,678
|
|
|
|
0.04
|
%
|
|
|
32,678
|
|
|
|
0
|
|
|
|
-
|
%
|
Guoping Liu(4)
|
|
|
32,656
|
|
|
|
0.04
|
%
|
|
|
32,656
|
|
|
|
0
|
|
|
|
-
|
%
|
Caixia Wang(4)
|
|
|
32,594
|
|
|
|
0.04
|
%
|
|
|
32,594
|
|
|
|
0
|
|
|
|
-
|
%
|
Yulan Wang(4)
|
|
|
32,541
|
|
|
|
0.04
|
%
|
|
|
32,541
|
|
|
|
0
|
|
|
|
-
|
%
|
Fang Yu(4)
|
|
|
32,319
|
|
|
|
0.04
|
%
|
|
|
32,319
|
|
|
|
0
|
|
|
|
-
|
%
|
Lixin Ma(4)
|
|
|
32,240
|
|
|
|
0.04
|
%
|
|
|
32,240
|
|
|
|
0
|
|
|
|
-
|
%
|
Peisha Jiang(4)
|
|
|
31,965
|
|
|
|
0.04
|
%
|
|
|
31,965
|
|
|
|
0
|
|
|
|
-
|
%
|
Yingyu Jin(4)
|
|
|
31,639
|
|
|
|
0.04
|
%
|
|
|
31,639
|
|
|
|
0
|
|
|
|
-
|
%
|
Yuyou Gao(4)
|
|
|
30,956
|
|
|
|
0.04
|
%
|
|
|
30,956
|
|
|
|
0
|
|
|
|
-
|
%
|
Xuebing Shao(4)
|
|
|
30,300
|
|
|
|
0.04
|
%
|
|
|
30,300
|
|
|
|
0
|
|
|
|
-
|
%
|
Dongfeng Chang(4)
|
|
|
30,217
|
|
|
|
0.04
|
%
|
|
|
30,217
|
|
|
|
0
|
|
|
|
-
|
%
|
Xueqin Li(4)
|
|
|
30,020
|
|
|
|
0.04
|
%
|
|
|
30,020
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhongtao Zhao(4)
|
|
|
29,871
|
|
|
|
0.04
|
%
|
|
|
29,871
|
|
|
|
0
|
|
|
|
-
|
%
|
Name of Selling
Stockholder
|
|
Total Number
of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Prior
to Offering
|
|
|
Maximum
Number of
Class C Shares
to be Sold
|
|
|
Number of
Class C Shares
Owned After
Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jinhua Song(4)
|
|
|
29,783
|
|
|
|
0.04
|
%
|
|
|
29,783
|
|
|
|
0
|
|
|
|
-
|
%
|
Li Xu(4)
|
|
|
29,573
|
|
|
|
0.04
|
%
|
|
|
29,573
|
|
|
|
0
|
|
|
|
-
|
%
|
Hairong Chen(4)
|
|
|
29,039
|
|
|
|
0.03
|
%
|
|
|
29,039
|
|
|
|
0
|
|
|
|
-
|
%
|
Wenbin Liu(4)
|
|
|
28,829
|
|
|
|
0.03
|
%
|
|
|
28,829
|
|
|
|
0
|
|
|
|
-
|
%
|
Hui Ma(4)
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
20,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Demin Hu(4)
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
20,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Chunmei Wang(4)
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
20,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jingchi Zhang(4)
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
20,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Renlin Li
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Jishan Liu
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Haixia Li
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Mengjie Wu
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Yi Zhang
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Wei Wang
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Zhengjun Sun
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Yingying Zhao
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Yanhua Wang
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Jiufeng Yuan
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Pin Li
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Xia Liang
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Bianmei Wu
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Jimei Pang
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Yanmin Li
|
|
|
20,000
|
|
|
|
0.03
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0.01
|
%
|
Yali Chen(4)
|
|
|
10,000
|
|
|
|
0.01
|
%
|
|
|
10,000
|
|
|
|
|
|
|
|
-
|
%
|
Shanghong Long(4)
|
|
|
10,000
|
|
|
|
0.01
|
%
|
|
|
10,000
|
|
|
|
|
|
|
|
-
|
%
|
Huaibin Wang(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Rui Xu(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Lanzhen Wang(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Wei Wang(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Zhenggeng Huang(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Lixin Ye(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Name of Selling Stockholder
|
|
Total Number
of
Class C Shares Beneficially
Owned Prior
to Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially Owned Prior
to Offering
|
|
|
Maximum
Number of
Class C Shares
to be Sold
|
|
|
Number of
Class C Shares
Owned After Offering
|
|
|
Total
Percentage of
Class C Shares
Beneficially
Owned Upon
Completion of
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wei Jiang(4)
|
|
|
7,000
|
|
|
|
0.01
|
%
|
|
|
7,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Haixia Li(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Liling Hu(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Yajun Chen(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Qian Cheng(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Yanling Pei(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Mingquan Zeng(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jianyu Li(4)
|
|
|
4,000
|
|
|
|
0.01
|
%
|
|
|
4,000
|
|
|
|
0
|
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals:
|
|
|
73,400,000
|
|
|
|
-
|
|
|
|
51,700,000
|
|
|
|
-
|
|
|
|
-
|
|
1)
Tony Liu, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China. Tony Liu, CEO
of UBI Blockchain Internet, Ltd, a Delaware corporation is the beneficial owner who exercises the sole voting and dispositive
powers with respect to 40,000,000 Class C common shares owned and has the ultimate voting control over the shares held in the
name of UBI Blockchain Internet, Ltd, a Hong Kong Company.
2)
Earn Smart (Hong Kong) Ltd., Rm 2409-10, 24/F, Shui On Centre, 6-8 Harbour Rd, Wanchai, Hong Kong. Chaeng U Wai, Lao is the beneficial
owner who exercises the sole voting and dispositive powers with respect to 7,660,100 Class C common shares owned and has the ultimate
voting control over the shares held in the name of Earn Smart (Hong Kong) Ltd.
3)
Star Bright International Investment Enterprise Ltd., Unit A 26/F, 338 Hennessy Rd, Wanchai, Hong Kong, People’s Republic
of China. Chi Sam Lao is the beneficial owner who exercises the sole voting and dispositive powers with respect to 5,000,000 Class
C common shares owned and has the ultimate voting control over the shares held in the name of Star Bright International Investment
Enterprise Ltd.
4)
The shareholders indicated represent the former shareholders of Shenzhen Nova E-commerce, Ltd. an entity that was 100% acquired
as a subsidiary of the Company. In exchange for their ownership in Shenzhen Nova E-commerce, each shareholder received their pro-rata
ownership the Company on or about May 22, 2017.
5)
Zhenyuan Yu is listed twice on the selling shareholder table. He received 1,200,000 Class C shares as part of the Nova acquisition,
where he is registering all of these shares and separately he received 100,000 Class C shares for business consulting where he
is only registering half of these shares.
6)
The following shareholders have had a material relationship with the Company, its predecessors or affiliates within the past three
years: Tony Liu, Chairman and CEO, Chan Cheung, CFO, Corporate Secretary, Cosimo J. Patti, Director, and Hong Zhu, the above Directors
and Officers were appointed to their positions on January 3, 2017.
This
table assumes that the selling shareholders will sell all of their shares available for sale following the effectiveness of the
registration statement that are included this prospectus. The selling shareholders are not required to sell their shares. The
numbers in this table assume that the selling shareholders do not purchase additional shares of common stock, and assumes that
all shares offered will be sold following the effectiveness of this registration statement.
The
selling securityholders are not broker-dealers nor affiliates of a broker-dealer.
PLAN
OF DISTRIBUTION
The
selling shareholders are underwriters as defined under the Securities Act of 1933. The offering by the Class A Common stock is
at a fixed price of $3.70 per share and the Class C Common Shares selling shareholders is at a fixed price of $0.20 per share
for the entire duration of the offering.
Although
our Class A Common Stock is listed on the OTC-QB, there has been very little trading activity. Our Class C Common Stock is not
listed on any exchange. If and when a market develops for our Common Stock, the shares may be sold or distributed from time-to-time
by the selling stockholders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market
prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices,
which may be changed. At such time, the distribution of the shares may be effected in one or more of the following methods:
|
●
|
ordinary
brokers transactions, which may include long or short sales,
|
|
|
|
|
●
|
transactions
involving cross or block trades on any securities or market where our common stock is trading,
|
|
|
|
|
●
|
through
direct sales to purchasers or sales effected through agents,
|
|
|
|
|
●
|
through
transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or
|
|
|
|
|
●
|
any
combination of the foregoing.
|
Brokers,
dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions
or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or
to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary
commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing
arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution
of the shares. We will not receive any proceeds from the sale of the shares of the selling stockholders pursuant to this Prospectus.
We have agreed to bear the expenses of the registration of the Common Stock.
PENNY
STOCK RULES
The
Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions
in “penny stocks” as such term is defined by Rule 15g-9. Penny stocks are generally equity securities with a price
of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system provided
that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
The
Common Stock offered by this Prospectus constitutes penny stock under the Securities and Exchange Act. The Common Stock will remain
penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell
the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer
engaged by the purchaser for the purpose of selling his or her shares of Common Stock in our Company will be subject to the penny
stock rules.
The
penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver
a standardized risk disclosure document prepared by the Commission, which: (i) contains a description of the nature and level
of risk in the market for penny stocks in both public offerings and secondary trading; (ii) contains a description of the broker’s
or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation
to such duties or other requirements of Securities’ laws; (iii) contains a brief, clear, narrative description of a dealer
market, including bid and ask prices for penny stocks and significance of the spread between the bid and ask price; (iv) contains
a toll-free telephone number for inquiries on disciplinary actions; (v) defines significant terms in the disclosure document or
in the conduct of trading in penny stocks; and (vi) contains such other information and is in such form as the Commission shall
require by rule or regulation. The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny
stock, (i) bid and offer quotations for the penny stock; (ii) the compensation of the broker-dealer and its salesperson in the
transaction; (iii) the number of shares to which such bid and ask prices apply, or other comparable information relating to the
depth and liquidity of the market for such stock; and (iv) monthly account statements showing the market value of each penny stock
held in the customer’s account.
In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions
involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have
the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock
rules. Therefore, stockholders may have difficulty selling those securities.
BLUE
SKY RESTRICTIONS ON RESALE
When
a selling stockholder wants to sell shares of our Common Stock under the Prospectus which is a part of this registration statement,
the selling stockholder will also need to comply with state securities laws, also known as “blue sky laws,” with regard
to secondary sales. All States offer a variety of exemptions from registration of secondary sales. The broker for a selling stockholder
will be able to advise the stockholder as to which states have an exemption for secondary sales of our Common Stock.
Any
person who purchases shares of our Common Stock from a selling stockholder pursuant to this Prospectus and who subsequently wishes
to resell such shares will also have to comply with blue sky laws regarding secondary sales.
When
this Prospectus becomes effective, a selling stockholder will indicate in which state(s) he or she wishes to sell the shares,
and such seller’s broker will be able to identify whether the stockholder will need to register in that state or may rely
on an exemption from registration.
EXPENSES
OF ISSUANCE AND DISTRIBUTION
We
have agreed to pay all expenses incident to the offering and sale to the public of the shares being registered other than any
commissions and discounts of underwriters, dealers or agents and any transfer taxes, which shall be borne by the selling security
holder. The expenses which we are paying are set forth in the following table.
Nature
of Expenses:
|
|
Amount
|
|
U.S. Securities and Exchange Commission registration fee
|
|
$
|
10,024.59
|
|
Legal fees and miscellaneous expenses*
|
|
|
1,000.00
|
|
Audit fees
|
|
|
1,000.00
|
|
Transfer agent fees*
|
|
|
1,500.00
|
|
Printing*
|
|
|
500.00
|
|
Total
|
|
$
|
14,024.59
|
|
*Estimated
Expenses
Under
the securities laws of certain states, the shares of common stock may be sold in such states only through registered or licensed
brokers or dealers. The selling stockholder is advised to ensure that any underwriters, brokers, dealers or agents effecting transactions
on behalf of the selling stockholder are registered to sell securities in all fifty states. In addition, in certain states the
shares of common stock may not be sold unless the shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and we have complied with them. The selling stockholder and any brokers, dealers
or agents that participate in the distribution of common stock are underwriters, and any profit on the sale of common stock by
them and any discounts, concessions or commissions received by those underwriters, brokers, dealers or agents may be considered
underwriting discounts and commissions under the Securities Act of 1933.
In
accordance with Regulation M under the Securities Exchange Act of 1934, neither we nor the selling stockholder may bid for, purchase
or attempt to induce any person to bid for or purchase, any of our common stock while we or they are selling stock in this offering.
Neither we nor any of the selling stockholder intends to engage in any passive market making or undertake any stabilizing activity
for our common stock. The selling stockholder will not engage in any short selling of our securities. Further, under the rules
and regulations of FINRA any broker-dealer may not receive discounts, concessions, or commissions in excess of 8% in connection
with the sale of any securities registered hereunder.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock currently consists of 2,000,000,000 shares of common stock, $0.001 par value per share. The Company’s
shares structure currently consists of 1,000,000,000 authorized shares of Class A Common Stock, 500,000,000 authorized shares
of Class B Common Stock and 500,000,000 authorized shares of Class C Common Stock. As of December 21 , 2017 there are approximately
30,799,046 shares of our Class A Common Stock issued and outstanding; 6,000,000 shares of our Class B Common Stock issued and
outstanding; and 73,400,000 shares of our Class C Common Stock issued and outstanding.
COMMON
STOCK
The
holders of our Class A Common Stock are entitled to one vote per share, the holders of our B Common Stock are entitled to ten
votes per share, and holders of our Class C Common Stock are not entitled to vote. Each share of Class B Common Stock shall be
convertible into one (1) fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any
time upon written notice to the Company.
Our
Common Stock does not provide the right to preemptive, subscription or conversion rights, and there are no redemption or sinking
fund provisions or rights. Our Class A common stockholders are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote. Our Class B common stockholders are entitled to ten non-cumulative votes per share on all matters
on which stockholders may vote. The Class A and Class B shareholders vote together as a single class on all matters submitted
to a vote or for the consent of the stockholders of the Company. Please refer to the Company’s Articles of Incorporation
and the applicable statutes of the State of Delaware for a more complete description of the rights of holders of the Company’s
Common Stock.
DIVIDEND
POLICY
We
have not paid any cash dividends to stockholders. The declaration of any future cash dividends is at the discretion of our board
of directors and depends upon our earnings, if any, our capital requirements and financial position, general economic conditions
and other pertinent factors. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.
WARRANTS
There
are no outstanding warrants to purchase our securities.
OPTIONS
There
are no outstanding options to purchase our securities.
INTEREST
OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this Prospectus as having prepared or certified any part thereof 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 our
Common Stock was employed on a contingency basis . Additionally, no such expert or counsel was connected with us as a promoter,
managing or principal underwriter, voting trustee, director, officer or employee.
In
October 2017, the Company issued 82,000 shares of Class A Common Stock to the Law Offices of T. J. Jesky, our counsel, in lieu
of cash payment for legal services. Pursuant to Item 509 of Regulation S-K the interest of counsel is deemed substantial and needs
to be disclosed since the fair market value of all securities of the registrant owned and received by counsel exceeds $50,000.
Counsel and his affiliates are registering the following Class A shares as part of this Registration Statement: T. J. Jesky, Esq.
33,000 shares; affiliates, Mark DeStefano 39,000 shares; John P. O’Shea, 5,000 shares and Jennifer L. O’Shea 5,000
shares. Based on the number of shares being registered and the fixed offering price for the Class A shares of $3.70 per share,
the interests of counsel and his affiliates is deemed substantial.
AUDITING
MATTER
Our
financial statements for the fiscal years ended August 31, 2017 and August 31, 2016 have been audited by Michael T. Studer CPA
P.C., an independent registered public accounting firm located at 111 West Sunrise Highway, Second Floor East, Freeport, NY 11520
and have been included in reliance upon such report given upon the authority of said firm as experts in accounting and auditing.
LEGAL
MATTERS
Certain
legal matters in connection with this Registration Statement will be passed upon the validity of the Common Stock offered under
this Prospectus by The Law Offices of T. J. Jesky, 200 West Madison Suite 2100, Chicago, IL 60606. TJ Jesky is a small shareholder
of the Registrant. This plan registers shares, which were issued for legal services rendered to the Company.
ORGANIZATION
WITHIN THE LAST FIVE YEARS
The
Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was
incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation and became a fully reporting Company on January
5, 2011. Reshoot Production Company was incorporated October 31, 2007, and, at the time of spin off Reshoot Production Company
was listed on the Over-the- Counter Bulletin Board. On November 21, 2016, the Company reincorporated in Delaware under the name
UBI Blockchain Internet LTD.
SHARES
ELIGIBLE FOR FUTURE SALE
Future
sales of a substantial number of shares of our common stock in the public market could adversely affect market prices prevailing
from time to time. The shares of our common stock offered may be resold without restriction or further registration under the
Securities Act, except that any shares purchased by our “affiliates,” as that term is defined under the Securities
Act, may generally only be sold in compliance with Rule 144 under the Securities Act.
Rule
144
When
the Company became fully reporting, it originally registered 65,846,667 shares (SEC File number: 333-169485) as a dividend spin-out
to all of the forty-five (45) shareholders of Reshoot Production Company and the Company subsequently registered 6,000,000 shares
(SEC File number; 333-179516) to four (4) foreign investors. The Company also issued unregistered 5,145,682 shares since its inception
and returned to Treasury for cancellation 33,583,149 shares. This equates to 43,409,200 shares. On February 9, 2016, the Company
decreased its issued and outstanding shares 1 for 200. After the reverse split there were 217,046 shares issued and outstanding.
On or about October 3, 2106, the Company issued issue 30,000,000 unregistered restricted Class A Common Stock, 6,000,000 unregistered
restricted Class B Voting Common Stock, and 40,000,000 unregistered restricted Class C Common Stock in exchange for $200,000.
On April 3, 2005 the Company issued 8,400,000 unregistered restricted Class C non voting common shares, to 44 new shareholders
for consulting services. On May 1, 2017, the Company issued 500,000 unregistered restricted Class A common shares to a independent
consultant. As of May 16, 2017, the Company agreed to issue 25,000,000 unregistered restricted Class C common stock for 100% acquisition
of Shenzhen Nova E-commerce, Ltd. And, on October 2, 2017, the Company issued 82,000 unregistered restricted Class A stock in
exchange for legal services.
With
the exception of 217,046 Class A Common Stock, all of our shares are “restricted securities” as defined under Rule
144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption
from registration, if available. During the time that we were a “shell company,” holders of our restricted securities
were not be able to rely on Rule 144 in connection with the sale of those restricted securities. Since only our Class A Common
stock is quoted on the OTC-QB, the holders of Class A Common stock have the ability to liquidate their stock, in the open market,
once the restricted legend is removed. There are no assurances than an active market will develop for our shares, which would
make the Class A Common shares difficult to sell. Since our Class B and Class C Common stock are not quoted any exchange, holders
of Class B and C Common stock may find their stock to be very illiquid. Any investment in our Class B and C Common stock may be
highly illiquid and without a market value.
In
general, Rule 144 promulgated by the Securities and Exchange Commission pursuant to the Securities Act, provides:
If
the issuer of the securities is, and has been for a period of at least 90 days immediately before the sale, subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, a minimum of six months must elapse between the later of the date of
the acquisition of the securities from the issuer, or from an affiliate of the issuer, and any resale of such securities in reliance
on this section for the account of either the acquirer or any subsequent holder of those securities.
If
the issuer of the securities is not, or has not been for a period of at least 90 days immediately before the sale, subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, a minimum of one year must elapse between the later of
the date of the acquisition of the securities from the issuer, or from an affiliate of the issuer, and any resale of such securities
in reliance on this section for the account of either the acquirer or any subsequent holder of those securities.
Except
as provided in Rule 144, the amount of securities sold for the account of an affiliate of the issuer in reliance upon this section
shall be determined as follows: If any securities are sold for the account of an affiliate of the issuer, regardless of whether
those securities are restricted, the amount of securities sold, together with all sales of securities of the same class sold for
the account of such person within the preceding three months, shall not exceed the greatest of: (A) one percent of the shares
or other units of the class outstanding as shown by the most recent report or statement published by the issuer, or (B) the average
weekly reported volume of trading in such securities on all national securities exchanges and/or reported through the automated
quotation system of a registered securities association during the four calendar weeks preceding the filing of notice required
by paragraph (h) of Rule 144, or if no such notice is required the date of receipt of the order to execute the transaction by
the broker or the date of execution of the transaction directly with a market maker, or (C) the average weekly volume of trading
in such securities reported pursuant to an effective transaction reporting plan or an effective national market system plan during
the four-week period specified in paragraph (e)(1)(ii) of Rule 144.
Special
provisions for “Shell Companies”
The
provisions of Rule 144 are not available for the resale of securities initially issued by a “shell company” which
is defined as an issuer, other than a business combination related shell company, as defined in Rule 405, or an asset-backed issuer,
as defined in Item 1101(b) of Regulation AB, that has no or nominal operations; and either no or nominal assets; assets consisting
solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets;
or an issuer that has been at any time previously an issuer described in paragraph (i)(1)(i) of Rule 144.
Another
important factor to be considered while being deemed a “shell company” is that we could not file registration statements
under Section 5 of the Securities Act using a Form S-8, a short form of registration to register securities issued to employees
and consultants under an employee benefit plan.
There
can be no assurance that we will be able to obtain any financing if or when it is needed on terms we deem acceptable due to being
deemed a “shell company.” Any additional financing may not be available to us, or if available, may not be on terms
favorable to us due to being deemed a “shell company.”
Notwithstanding
paragraph (i)(1) of Rule 144, if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but
has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act; has filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as
applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials),
other than Form 8-K reports, and has filed current “Form 10 information” with the SEC reflecting its status as an
entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements
of Rule 144 after one year has elapsed from the date that the issuer filed “Form 10 information” with the SEC.
The
term “Form 10 information” means the information that is required by SEC Form 10, to register under the Exchange Act
each class of securities being sold under Rule 144. The Form 10 information is deemed filed when the initial filing is made with
the SEC.
In
order for Rule 144 to be available, UBI Blockchain Internet must have certain information publicly available. We plan to publish
information necessary to permit transfer of shares of our common stock in accordance with Rule 144 of the Securities Act, in as
much as we have filed the registration statement with respect to this prospectus.
DESCRIPTION
OF BUSINESS
Company
History
The
Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was
incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated
October 31, 2007, and, at the time of spin off was listed on the Over-the-Counter Bulletin Board.
From
August 2010 to May 2014 the Company was in the business of designing a suite of modular, self-contained, fully automated, climate
controlled units for distributed production of energy. While some of these products were proven to be technologically viable,
none were ever developed to the point where they were ready for introduction to the marketplace.
On
or about September 30, 2014, the Board of Directors approved the formation of a new company called Peak Energy Holdings, a Nevada
corporation, where each shareholder in the Company received one share of common of Peak Energy Holdings for each share of common
stock owned in the Company and one share of preferred stock of Peak Energy for each share of preferred share owned in the Company.
As part of the transaction, the Company spun-off all of its assets and liabilities into Peak Energy. Further, the spin-off subsidiary
operated as an independent entity separate entity from the Company with new management operating the current core business of
Peak Energy for the benefit of the original stockholders. The effect of this action allowed the Company to explore new business
opportunities without the burden of the assets and liabilities on the corporate books.
On
November 21, 2016, the Company changed its corporate name to UBI Blockchain Internet, LTD, and changed the state of incorporation
from the State of Nevada to the State of Delaware pursuant to a plan of conversion in connection with which the Company adopted
a new certificate of incorporation under the laws of the State of Delaware.
On
May 16, 2017, the Company acquired 100% ownership of Shenzhen Nova E-commerce, Ltd., a private Shenzhen Chinese corporation in
exchange for 25,000,000 unregistered restricted Class C common shares. In April, 2017 Shenzhen Nova E-commerce began its operations
of an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household
goods, digital and luxury products.
UBI
Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet
of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry,
by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs.
With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source
within the context of the internet of things to the final consumer.
Overview
UBI’s
business encompasses the research and application of blockchain technology with a focus on the Internet of Things (“IoT”)
covering areas of food and drugs, healthcare, just to name a few. The Company will leverage the stock market to build a new business
technology platform, specialized in the safety and freshness keeping of food and drugs within the context of micro and macro environment
of the human life. The Company has no revenues, has yet to develop any products for sale and has no customers at this time.
UBI
plans to set up teams, that are dedicated to blockchain application and research, application of the internet of things, IT and
data analytics in order to achieve its business goals.
An
Internet of Things is defined as: the internetworking of physical devices, vehicles (also referred to as “connected devices”
and “smart devices”), buildings, and other items embedded with electronics, software, sensors, actuators, and network
connectivity that enable these objects to collect and exchange data. The IoT allows objects to be sensed and/or controlled remotely
across existing network infrastructure, creating opportunities for more direct integration of the physical world into computer-based
systems, and resulting in improved efficiency, accuracy and economic benefit. Blockchain, originally block chain, is defined as
:
a distributed database that maintains a continuously-growing list of ordered records called
blocks
. Each block contains
a timestamp and a link to a previous block. By design, blockchains are resistant to modification of the data - once recorded,
the data in a block cannot be altered retroactively. The Company plans to develop and specialize in the design, development, promotion
and sales of blockchain technology and internet of things.
Our
Chinese language website is: www.globalubi.com
.
The website is referenced herewith for informational purposes only, it
is not part of this Registration Statement.
Industry
Trends
Recent
advances in streamlining video, monitoring sensors, high-speed broadband internet, introducing wireless standards (such as Bluetooth
low-power) and other technologies have brought about the emergence of virtual transactions and investment plans that individuals
and businesses can base on their spending habits to measure data that monitoring equipment and applications to receive real-time
feedback and to fit a wide range of personal and corporate preferences for reliability at home.
Blockchain
techniques have shown considerable adaptability in recent years, as various market sectors have sought to find ways of incorporating
capabilities into their operations. While most of the focus has so far been on financial services industry, this has begun to
change. For example, the use of blockchain technology to support digital electronic payments to counter counterfeit drugs in the
pharmaceutical industry. The adaptability of blockchain to a large number of applications has been one of the driving forces of
the technology’s growing interest in past few years. As solution for organization and ledger needs, the most recent market
for blockchain technology is pharmaceutical industry.
The
use blockchain technology and internet of things is being employed to address universal healthcare industry regarding food and
drug safety and labor relations management. At present, management believes that there exists confusion of Chinese medicine industry
including fake drugs, bad medicine serious phenomenon, no regulated production, no guaranteed efficacy of traditional Chinese
medicine. The excessive use of antibiotics, poison capsules incidents, vaccine cases ginkgo leaf, licorice tablets and other major
drug cases, have seriously affected people’s physical and mental health. Therefore, food and drug safety relates to vital
interests of millions of people’s social problems. From current safety issues of food and drug, we see scientific and exact
drug management issues.
Management
believes that the blockchain technology and internet of things promote industrial information and emergence of possible technological
solutions. Through integration of blockchain technology for the core of internet of things to establish a seamless industrial
chain so as to achieve food and drug safety control and enterprise relations management. Internet of Things is the extension and
continuation of internet. IoT can increase the ubiquity of the internet by integrating every object for interaction via radio
frequency identification (RFID) devices, infrared sensors, global positioning systems, laser scanners and other information sensing
equipment, which leads to a highly distributed network of devices communicating with human beings as well as other devices. IoT
is opening opportunities for a large number of novel applications that promise to improve quality of lives. In recent years, IoT
has connected with blockchain, exchange and communication for intelligent identification, location, tracking, monitoring and management
of a network. This technology is still in its infancy.
A
universal healthcare system covers all citizens seeking to achieve efficiencies by integrating the basic functions of healthcare
delivery, health insurance, distribution of healthy food and drug safety and labor relations management. Based on the full integration
of internet of things with blockchain technology, this technology can change old systems. Blockchain technology is a distributed
database that maintains a continuously-growing list of records called blocks. Each block contains a timestamp and a link to a
previous block. The data in a block cannot be altered retrospectively. Blockchain has characteristics such as decentrality, openness
and transparency, autonomy, security of information that cannot be tampered with, and anonymity, these features can strengthen
solution to drug and food safety issues, as well as getting more meaningful solution to enterprise labor relations management.
Blockchain
technology-based applications
Management
plans to focus its business in the integrated wellness industry, which providing procedures for safety and effectiveness in food
and drugs, but also preventing counterfeit or fake food and drugs. With the advancement of the blockchain technology, we can trace
a food or drug product all the way up to its original source within the context of the internet of things.
We
are in the early stages of blockchain technology, which can store decentralized and distributed software ledger with complete
transaction history. Blockchain technology has a wide range of potential applications, in addition to financial, real estate,
back office systems and stock trading applications. Blockchain is a distributed ledger agreement that allows projects or transactions
to be transparently registered and is first developed for use in a variety of industries to offer a wide range of services including
banking, stock trading, real estate and even global diamond sales. More and more financial giants join blockchain technology applications
and research and development, including IBM, Microsoft, Intel, Blockstream and Thompson Reuters, to further accelerate blockchain
technology as a maturity and development system. Management believes the investments in the field of blockchain are growing. Due
to maturity and safety of blockchain technology, it can play a role in many fields, and management believes its application field
and development potential offer a growth opportunity for the Company.
The
five features of blockchain include: de-centralization, openness, autonomy, non-tampering and anonymity. These features make blockchain
an advantage in science and finance. Blockchain technology is a decentralized, distributed ledger that allows each transaction
to be recorded and verified by network, which means that they do not need a central regulator such as a bank or financial institution.
Transactions are also anonymous and theoretically real-time, although recent network over-saturation has led to this problem.
The block-based distributed accounting technology, combined with its artificial intelligence and internet of things technologies,
makes it possible for billions of smart technologies to connect to internet for greater security, allowing virtual time travel
and allowing regulators to return to the point at which the problem occurred.
One
of potential application of this technology is the creation of registers based on blockchain of IoT devices, and the use of artificial
intelligence programs to perform automated intelligent diagnostics and more advanced functions, which can ultimately lead engineers
and regulators to virtualize clock backwards. At the same time, blockchain technology can reduce audit costs; reduce distrust
of central node, so that flow of financial assets is more transparent and convenient. In fact, current blockchain technology is
indeed application of digital electronic payments to “blockchain +” transition extension from financial sector gradually
to IoT and other non-financial areas which will trigger more and greater industrial restructuring and revolution. It is our time
to enter real power blockchain technology.
The
central concept and future development of blockchain are trends of things fit, leading gradual self-government of things. Blockchain
technology is a good solution: infrastructure investment, high maintenance costs and data security issues. Blockchain technology
support IoT which is an extension and more advanced stage of internet. Blockchain technology research and application will make
IoT networking shine. Blockchain’s point-to-point communication platform gives a subtle solution. Blockchain technology
creates a shared, distributed, digital book between network nodes to record transactions, rather than storing them on a central
server. Thus eliminating the need for central verification. It provides a way to create a consensus network without having trust
a single node, and data store does not need to be stored in a central server, but by sharing it to all nodes in the network.
Internet
of Things (IoT) is about creating digital representations of real-world objects. It is a phenomenon that draws on rapid developments
within IT, ICT and telecommunications to spark insights and to help companies create entirely new types of services and business
areas. Management believes that the Internet of Things will be the next technology to promote the rapid development of the world’s
important productive forces.
Health
Care Business Focus
Management
believes that the global IoT in healthcare market is growing at a significant growth rate, due to increasing demand for advanced
healthcare information system, and growing prevalence of chronic and lifestyle associated diseases.
The
IoT applications in healthcare, such as telemedicine, medication management, clinical operations and workflow management, inpatient
monitoring, helps in compiling services related to diagnosis, treatment, care, and rehabilitation. They improve communication
between patients and healthcare providers, in order to reduce medication errors, and provide better coordinated care.
Blockchain
technology supports IoT which is an extension and more advanced stage of internet. Blockchain’s point-to-point communication
platform problem, gives a subtle solution. Blockchain technology creates a shared, distributed, digital book between network nodes
to record transactions, rather than storing them on a central server. Thus eliminating need for central verification. It provides
a way to create a consensus network without having to trust a single node, and data store does not need to be stored in a central
server, but by sharing it to all nodes in network. Blockchain technology can also help solve medical field of data privacy and
other issues, such as custody of electronic medical records, safe storage of genetic data, drug security and so on.
The
Market Opportunity
The
Company is in the early stages of blockchain technology, which can store decentralized and distributed software ledger with complete
transaction history. Blockchain technology has a wide range of potential applications, in addition to financial, real estate,
and back office systems. Blockchain can be utlized as a distributed ledger agreement that allows projects or transactions to be
transparently registered and can be used in a variety of industries to offer a wide range of services including banking, stock
trading, real estate and even global diamond sales.
Blockchain
technology can play a role in many fields. Blockcchain transactions are theoretically real-time. The block-based distributed accounting
technology, combined with its artificial intelligence and internet of things technologies, makes it possible for countless of
smart technologies to connect to internet for greater security, allowing technicians to return to the point at which the problem
occurred. One of potential applications of this technology is the creation of registers based on blockchain of IoT devices, and
the use of artificial intelligence programs to perform automated intelligent diagnostics and more advanced functions, which can
ultimately lead engineers and technicians to virtualize clock backwards. At the same time, blockchain technology can reduce audit
costs; reduce distrust of central node, so that flow of financial assets is more transparent and convenient. In fact, current
blockchain technology is indeed application of digital electronic payments to “block chain +” transition extension
from financial sector gradually to IoT and other non-financial areas which will trigger more and greater industrial restructuring
and revolution.
The
internet of things is based on computer science, including network, electronics, radio frequency, induction, wireless, artificial
intelligence, bar code, cloud computing, automation, embedded technology as an integrated technology. Internet of things is called
the third wave of the world information industry revolution, after computer revolution, and the second internet revolution. Management
believes that within 10 years, internet of things will be widely used in intelligent medicine, intelligent transportation, environmental
protection, government work, public safety, safety home, intelligent home appliance, industrial monitoring, elderly care, personal
health, intelligent building, green agriculture and breeding, surveillance, imaging, computers, mobile phones and other fields.
Blockchain
technology is a good solution for: infrastructure investment, high maintenance costs and data security issues. Blockchain technology
supports IoT which is an extension and more advanced stage of internet. Blockchain technology research and application will make
IoT networking more efficient. Blockchain technology creates a shared, distributed, digital book between network nodes to record
transactions, rather than storing them on a central server. This eliminates the need for central verification. It provides a way
to create a consensus network without having to trust a single node, and data store does not need to be stored in a central server,
but by sharing it to all nodes in network. Blockchain technology can also solve medical field of data privacy and other issues,
such as custody of electronic medical records, safe storage of genetic data, and drug security.
Our
Strategy
Our
growth strategy is substantially dependent upon our ability to market our product successfully to prospective clients in the target
markets, which shall initially be China, Europe and the United States. This requires that we heavily rely upon our development
and marketing partners in the target markets. Failure to select the right development and marketing partners in the target markets
and other target markets will significantly delay or prohibit our ability to develop the products and services, market the products
and gain market acceptance. Our products and services may not achieve significant acceptance. Such acceptance, if achieved, may
not be sustained for any significant period of time. Failure of our services to achieve or sustain market acceptance could have
a material adverse effect on our business, financial conditions and the results of our operations.
It
is our management’s strategy is to make UBI the premier online investment and communication platform in key markets in China,
and later on we may expand into Europe and North America. There are no assurances that management will be able to successfully
execute this strategy. In an effort to achieve this goal, we intend to do the following:
●
Introducing innovative products
We
plan to develop commercially applicable blockchain based payment and other functions, such as product tracking. We aim at satisfaction
of user experience, covering the consumption after sales.
●
Create brand awareness and drive sales of our products and services in key markets
We
intend to target our marketing efforts to create global awareness of our brand and drive sales of our products and services in
the key markets of China.
●
Employ professional investment professionals, academics, university professors and communication professionals
We
plan to employ investment professionals, academics, university professors and communication professionals from around the world
to develop technologies applications to human beings.
●
Coordinate with strategic partners in each of the target markets for marketing and distribution
We
believe that international markets represent a significant growth opportunity for us and we intend to expand sales of our intended
products and services globally through selected retailers and strategic partnerships. We plan to work with key partners in the
target markets to provide marketing and distribution expertise and assistance. Although it may be challenging to gain market acceptance
in these markets, we believe the assistance of such experts will expedite the process.
Competitive
Strengths
We
believe that the following strengths position us to build our business model:
A.
Building a Creative Commercial Platform through Independent Design and Development
We
plan to make an integrated platform that incorporates the blockchain technology, internet of things, and a stock market. This
platform when built, will support blockchain based payment, the convenience of internet of things, with the speed, safety, and
convenience not yet experienced. We plan to establish a brand name of “Global UBI” for our intended products and services.
B.
Management Believes We Have Good Relations in China’s Healthcare Industry
In
China, we believe that our management has good relations in the field of integrated health industry for scientific research and
development, raw material production base and other industrial chains. Our management is also familiar with the international
pharmaceutical market and the food market. We believe that technology is the top productive force. The effective combination of
blockchain technology and Internet of Things technology which exclude all possible human factors, its centralization, transparency
and chain cannot be tampered with, traceability, etc. can solve the drug and food safety issues.
Target
Market
At
present, fake drugs are common in China, as there exists little regulation of production, and no guaranteed efficacy of traditional
Chinese medicine. There has been an excessive use of antibiotics, poison capsules incidents, vaccine cases ginkgo leaf, licorice
tablets and other major drug cases, seriously affecting people’s physical and mental health. Therefore, food and drug safety
is related to the vital interests of millions of people in China.
Sources
of Income and Pricing
We
plan to use application of information technology (IT), blockchain technology and IoT technology that permeate virtually all aspects
of corporate and social activity, effective combination of food and drugs safety and management of labor relations. The products
and services enabled by it have had a major impact to the healthcare industry. As we look to the future, emerging technologies
raise new trend in security, law enforcement, privacy, safety in food and drug of healthcare industry.
Sales
and Marketing
The
Company plans to place an emphasis on social media for the marketing and advancement of blockchian, internet of things, and technological
innovation platform as well as the traditional health application, food and drug production process chain for more transparent
transactions. The Company plans to implement original sources of procurement advantages, and preferred overseas products. For
the domestic high-end consumers, we provide more efficient, convenient and affordable imports of quality goods.
Management
believes Chinese consumers are more likely to consider buying a product if they see it mentioned on a social-media site and more
likely to purchase a product or service if a friend or acquaintance recommends it on a social-media site.
Chinese
consumers rely heavily upon peer-to-peer recommendations over general mass advertising. In general, the Chinese populace is skeptical
of information from news sources and advertising and rely more on word-of-mouth from friends, family, and key opinion leaders,
many of whom share information on social media.
While
messaging and sharing photos is as popular in China as in other regions, one aspect of usage in the country stands out: social
media has a greater influence on purchasing decisions for consumers in China than for those anywhere else in the world. Due to
the widespread use of social media in China, the Company will focus its marketing efforts on this medium. The Company will be
present with its own social media site on the largest Chinese social media platforms. Sale of our intended products and services
will take place on the portal. With regards to North America and European Market, we anticipate employing a similar strategy.
Our most important profit and revenue will come from our development of drugs, food safety software, and system platform technology
to promote sales and transfer technology. These software technologies and platform technologies will be widely used in health
industry businesses and regulatory agencies.
Manufacturing
The
Company does not at this time engage in any manufacturing but may engage in manufacturing of products to be sold on the Company’s
website in the future.
Government
Regulation
We
are or may become subject to a variety of laws and regulations in the State of Delaware, where we are incorporated, the United
States and the People’s Republic of China (“PRC”) that involve matters central to our business, including laws
and regulations regarding privacy, data protection, data security, data retention, consumer protection, advertising, electronic
commerce, intellectual property, manufacturing, anti-bribery and anti-corruption, and economic or other trade prohibitions or
sanctions. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that
are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.
In
particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding
privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data,
the scope of which is changing, subject to differing interpretations, and may be inconsistent among different jurisdictions. We
strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data
security, and data protection. However, given that the scope, interpretation, and application of these laws and regulations are
often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that
is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived
failure to comply with our privacy or security policies or privacy-related legal obligations by us or third-party service-providers
or the failure or perceived failure by third-party apps, with which our users choose to share their data, to comply with their
privacy policies or privacy-related legal obligations as they relate to the data shared with them, or any compromise of security
that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in
governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand and operating
results.
We
plan to develop solutions to ensure that data transfers from the E.U. provide adequate protections to comply with the E.U. Data
Protection Directive. If we fail to develop such alternative data transfer solutions, one or more national data protection authorities
in the European Union could bring enforcement actions seeking to prohibit or suspend our data transfers to the U.S. and we could
also face additional legal liability, fines, negative publicity, and resulting loss of business.
Governments
are continuing to focus on privacy and data security and it is possible that new privacy or data security laws will be passed
or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations,
or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material
manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our
policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes
to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly
increase our operating costs.
The
labeling, distribution, importation, marketing, and sale of our intended products are subject to extensive regulation by various
U.S. state and federal and foreign agencies, including the CPSC, Federal Trade Commission, Food and Drug Administration, or FDA,
Federal Communications Commission, and state attorneys general, as well as by various other federal, state, provincial, local,
and international regulatory authorities in the countries in which our intended products and services are distributed or sold.
If we fail to comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant
monetary fines, other penalties, or claims, which could harm our operating results or our ability to conduct our business.
The
global nature of our business operations also create various domestic and foreign regulatory challenges and subject us to laws
and regulations such as the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, and similar anti-bribery and anti-corruption
laws in other jurisdictions, and our intended products are also subject to U.S. export controls, including the U.S. Department
of Commerce’s Export Administration Regulations and various economic and trade sanctions regulations established by the
Treasury Department’s Office of Foreign Assets Controls. If we become liable under these laws or regulations, we may be
forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources
or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating
results. In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and
legislative proposals could harm our brand or otherwise impact the growth of our business. Any costs incurred as a result of compliance
or other liabilities under these laws or regulations could harm our business and operating results.
PRC
Government Regulations
Because
our business and employees are located in the PRC, our business is also regulated by the national and local laws of the PRC. We
believe our conduct of business complies with existing PRC laws, rules and regulations.
General
Regulation of Businesses
We
believe we are in material compliance with all applicable labor and safety laws and regulations in the PRC, including the PRC
Labor Contract Law, the PRC Production Safety Law, the PRC Regulation for Insurance for Labor Injury, the PRC Unemployment Insurance
Law, the PRC Provisional Insurance Measures for Maternity of Employees, PRC Interim Provisions on Registration of Social Insurance,
PRC Interim Regulation on the Collection and Payment of Social Insurance Premiums and other related regulations, rules and provisions
issued by the relevant governmental authorities from time to time.
According
to the PRC Labor Contract Law, we are required to enter into labor contracts with our employees. We are required to pay no less
than local minimum wages to our employees. We are also required to provide employees with labor safety and sanitation conditions
meeting PRC government laws and regulations and carry out regular health examinations of our employees engaged in hazardous occupations.
Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative
and criminal liability in the case of serious violations. In addition, according to the PRC Social Insurance Law, employers like
our PRC subsidiaries in China must provide employees with welfare schemes covering pension insurance, unemployment insurance,
maternity insurance, work-related injury insurance, medical insurance, and housing funds.
Foreign
Currency Exchange
The
principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended
(2008). Under these Rules, RMB is freely convertible for current account items, such as trade and service-related foreign exchange
transactions, but not for capital account items, such as direct investment, loan or investment in securities outside China unless
the prior approval of, and/or registration with, the State Administration of Foreign Exchange of the People’s Republic of
China, or SAFE, or its local counterparts (as the case may be) is obtained.
Pursuant
to the Foreign Currency Administration Rules, foreign invested enterprises, or FIEs, in China may purchase foreign currency without
the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing
these transactions. They may also retain foreign exchange (subject to a cap approved by SAFE) to satisfy foreign exchange liabilities
or to pay dividends. In addition, if a foreign company acquires a subsidiary in China, the acquired company will also become an
FIE. However, the relevant PRC government authorities may limit or eliminate the ability of FIEs to purchase and retain foreign
currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities
outside China are still subject to limitations and require approvals from, and/or registration with, SAFE.
Employees
We
have 18 full-time employees and we engage the services 44 non-employee contractors. Within our workforce, 8 employees are engaged
in product development and 10 employees are engaged in business development, finance, human resources, facilities, information
technology and general management and administration. We expect the number of full time employees to rise to more than 25 by the
end of December, 2017. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages.
We consider our relationship with our employees to be good.
Recent
Event
On
May 16, 2017, the Board of Directors of the Company ratified and approved an Acquisition Agreement with Shenzhen Nova E-commerce,
Ltd., (“NOVA”), a private Shenzhen Chinese corporation. Nova’s headquarters are located at: Tower A, 1 Qianwan
One Rd, Qianhai Shengang Cooperative Zone, Shenzhen, China. Under the terms of the Agreement UBI acquired 100% ownership of Nova
in exchange for 25,000,000 unregistered restricted Class C common shares by UBI. The Board of Directors of both entities approved
the Acquisition Agreement, as well as the majority of shareholders. The Chinese government approved the acquisition as of August
28, 2017. The Business License Chinese Uniform Social Credit Code is: 91440300MA5DDCB527. Now that the transfer of ownership has
been completed, the 130 owners of NOVA received their Class C common shares, based on their pro-rata ownership of NOVA.
About
Shenzhen Nova E-commerce, Ltd
Shenzhen
Nova E-commerce Ltd. (“NOVA”) was incorporated on May 26, 2016 and currently operates an online store in China selling
a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products.
Nova’s website became operational in April, 2017.
Nova’s
operations prior to the date of acquisition, included, but was not limited to:
|
●
|
Researching
and developing business opportunities unique to a Chinese customer base
|
|
●
|
Building
corporate infrastructure and administration
|
|
●
|
Integration
of multiple technologies and programs
|
|
●
|
Building
Business Relationships
|
|
●
|
Human
resource staffing
|
|
●
|
Training
personnel
|
|
●
|
Equipment
procurement
|
|
●
|
Building
the corporate website
|
|
●
|
Developing
marketing strategies in order to capitalize on commercialization activities
|
|
●
|
Establish
and maintain strategic collaborations with product suppliers
|
|
●
|
Obtain
financing to implement the business activities
|
NOVA
is registered in Qianhai Free Trade Zone, China. Its business operation is an e-commerce platform offering online retail service,
via OYA Mall. From its inception on May 26, 2016 through April, 2017, NOVA has been building its website and infrastructure. Nova
has commenced its pilot operation in April 2017.
NOVA’s
Chinese language website is: www.oyamall.com. The website is operational, where customers can buy products, including food, non-prescription
medicine, skin care products etc. offered on the website. For the purpose of this Registration Statement, the website is not part
of this Registration Statement, but referenced for informational purposes.
DESCRIPTION
OF PROPERTY
The
Company owns no real property. Our administrative offices are located at: SmartSpace 3F, Level 9, Unit 908, 100 Cyberport Rd.,
Hong Kong, People’s Republic of China., telephone: (212) 372-8836. The Company has been using this Hong Kong office space
provided by UBI Blockchain Internet, LTD. (a Hong Kong Company) at no cost to the Company. UBI Hong Kong owns 30,000,000 shares
of the Company’s Class A common stock, 6,000,000 shares of the Company’s Class B common stock; and 40,000,000 shares
of the Company’s C common stock. UBI Hong Kong will not seek reimbursement for providing this administrative space.
LEGAL
PROCEEDINGS
We
are not a party to or otherwise involved in any legal proceedings.
In
the ordinary course of our business, we expect that from time-to-time we will be involved in various pending or threatened legal
actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material
adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than
as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on
our financial position or results of operations.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Disclaimer
Regarding Forward Looking Statements
You
should read the following discussion in conjunction with our financial statements and the related notes and other financial information
included in this Form S-1. In addition to historical financial information, the following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results could differ materially. Factors that could cause
or contribute to these differences include those discussed below and elsewhere in this Form S-1, particularly in the Section titled
Risk Factors.
Although
the forward-looking statements in this Registration Statement reflect the good faith judgment of our management, such statements
can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently
subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed
in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report
and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial
condition, and results of operations and prospects.
Plan
of Operation
As
of the date of this Registration Statement, we have serious concerns as to whether we have, and will have, sufficient cash flow
to continue to operate for the next twelve months if we are not successful in developing blockchain technology with a focus on
the Internet of things covering areas of food, drugs and healthcare. We will apply any proceeds from future revenues to help cover
our expenditures. Unless sufficient revenues are recognized, we anticipate that our projected expenditures will most likely exceed
any proceeds from those revenues over the next twelve months, which will require that we obtain new financing in order for us
to pursue our current plan of operations. We plan to look for both public and private sources of financing. There can be no assurance,
however, that we can obtain sufficient capital on acceptable terms, if at all. If we do not achieve the necessary financing, then
we will not be able to proceed with our planned activities, which would materially adversely affect our financial condition, business
prospects and results of operations.
We
anticipate generating losses and therefore we may be unable to continue operations in the future. We plan to rely on equity sales
of our common shares in order to continue to fund our business operations. We would have to issue equity or enter into a strategic
arrangement with a third party. Issuances of additional shares will result in dilution to our existing shareholders. There is
no assurance that we will achieve any of additional sales of our equity securities or other financing to fund our business operations.
We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit
or any other sources.
Explanatory
Paragraph in Our Independent Registered Public Accounting Firm Report
Our
independent accountants have included a paragraph in their most recent report, in our audited financial statements for the year
ended August 31, 2017, regarding concerns about our ability to continue as going concern. We have further disclosed in our notes
to the financial statements that we are dependent upon our ability to obtain financing and upon future profitable operations from
the development of our business opportunities, and that there are no assurances that we will be able to meet our financial obligations
in the future.
Company
Background
UBI
Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet
of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry,
by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs.
With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source
within the context of the Internet of Things to the final consumer.
Results
of Operations
Year
Ended August 31, 2017 Compared to Year Ended August 31, 2016
For
the fiscal year ended August 31, 2017 and 2016, we had no revenues.
Expenses
Total
operating expenses increased $1,814,000 from $13,079 in 2016 to $1,827,079 in 2017. Total stock-based compensation increased $1,366,667
in 2017 from $0 in 2016. Total cash based employee compensation increased $270,449 in 2017 from $0 in 2016. Total cash based professional
and consulting fees increased $123,677 in 2017 from $0 in 2016. Other general and administrative expenses increased $53,207 from
$13,079 in 2016 to $66,286 in 2017.
The
increase in operating expenses resulted from the Company’s engagement in the blockchain internet business which commenced
September of 2016 and the acquisition of Nova which was completed in August 2017. To execute its development strategy, the Company
hired professional staff and consultants commenced during the fiscal year ended August 31, 2017. Consequently, stock-based compensation,
wages, professional fees, consulting fees and other general and administrative expenses increased compared to the fiscal year
ended August 31, 2016.
The
Company had other income - net of $37,912 in the fiscal year ended August 31, 2017, which resulted from the gain on settlement
of liabilities of $47,575 offset by the accrued interest-related party expense of $9,663.
Net
loss increased $1,776,088 from a net loss of $13,079 in 2016 to a net loss of $1,789,167 in 2017. The increase resulted from the
Company’s engagement in the blockchain internet business which commenced September of 2016 and the acquisition of Nova which
was completed in August 2017 as explained above.
Liquidity
and Capital Resources
As
of August 31, 2017, the Company had total assets of $1,918,724 consisting of office equipment of $17,950, website development
costs of $92,035, prepaid stock-based salaries and consulting fees of $1,793,333, and cash of $15,406 and total liabilities of
$585,506. Our financial statements indicated that there was substantial doubt about the Company continuing as a going concern.
Based on our current burn rate, we will run out of funds immediately without additional capital.
The
Company has not generated any income as of August 31, 2017. The working capital was provided by a major shareholder of the Company.
The Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities
and operations. These limitations have adversely affected the Company’s ability to obtain certain projects and pursue additional
business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order
for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through
additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders),
or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary
financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and
market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained
on terms favorable to the Company, or at all.
Recent
Accounting Pronouncements
Changes
to accounting principles generally accepted in the United States of America (“U.S. GAAP”) are established by the FASB
in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.
Management
considers the applicability and impact of all ASUs. ASUs not listed were assessed and were either determined to be not applicable
or are expected to have minimal impact on our consolidated financial position and results of operations.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS AND CORPORATE GOVERNANCE
The
following table sets forth the names and ages of the current directors and executive officers of the Company, the principal offices
and positions with the Company held by each person and the date such person became a director or executive officer of the Company.
The executive officers of the Company are elected annually by the Board of Directors. The directors serve one-year terms until
their successors are elected. The executive officers serve terms of one year or until their resignation or removal by the Board
of Directors. There are no family relationships among any of the directors and officers.
Name
|
|
Age
|
|
Position
& Offices Held
|
|
|
|
|
|
Tony
Liu
|
|
63
|
|
Chairman
of the Board and CEO
|
Chan
Cheung
|
|
60
|
|
CFO,
Corporate Secretary
|
Jun
Min
|
|
57
|
|
Director
|
Cosimo
J. Patti
|
|
66
|
|
Director
|
All
of the above Directors and Officers were appointed to their positions on January 3, 2017.
Set
forth below is a brief description of the background and business experience of our officers and directors.
Tony
Liu, Chairman of the Board and CEO.
Mr.
Tony Liu brings almost 50 years of management, extensive leadership, strategy, risk management and marketing experience to to
UBI. Mr. Liu served as a representative to the National People’s Congress in China, with his practical work experience in
the Chinese community for many years. He has been Chairman of Hong Kong Silver Union Group Co., Ltd., since May, 2009. From 2001
- 2014 he was Chairman and Chief Executive Officer of American Oriental Bioengineering, Inc., a pharmaceutical company that produced
and marketed prescription pharmaceutical products, over-the-counter pharmaceutical products and nutraceutical products
,
He
is also a limited partner of Shenzhen Zhu Mao Investment Enterprise since July, 2015. Mr. Liu graduated with a major in Communications
& Commands from Wuhan Communication College in 1986 and studied Integrated Marketing and Media at the University of Hong Kong
in 2004. Mr. Liu studied in the Program of Sustainable Growth of Large Corporations sponsored by the School of Engineering and
the School of Business at Stanford University. Mr. Liu passed the dissertation for his Doctor of Business Administration degree
in September 2010 at Tarlac State University through a program jointly run by Beijing Normal University and Tarlac State University.
This program is accredited by The Philippines Department of Education and China Department of Education.
Chan
Cheung, Chief Financial Officer and Corporate Secretary
Mr.
Chan Cheung is Certified Public Accountant, joined the Company in September, 2016. He brings to the management team over 30 years
of financial and accounting experience in banking, finance, and management, before joining the Company. From April 2009 to August
2016, he worked as the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary at Neo-Neon Holdings Ltd, a Hong
Kong Stock Exchange listed company with the ticker symbol of HK.1868., where he was responsible for financial reporting, mergers
& acquisitions, and strategic planning. He obtained a BS degree from Chinese University of Hong Kong in 1983, he is member
of the Hong Kong Institute of Certified Public Accountants and Association of Chartered Certified Accountants.
Jun
Min, Director
Jun
Min brings to the Company over 30 years of business experience in operations management, along with a vast amount of leadership,
consumer industry, marketing experience and knowledge of the consumer and pharmaceutical products industries in China. Mr. Min
worked at the Price Checking Department Bureau of Heilongjiang Province from 1987 to 1992. Subsequently, he worked for Three-
Happiness Bioengineering, Co. Ltd. from 1994. In November 2008, Mr. Min joined the board of directors of China Aoxing Pharmaceuticals
Co., Inc. (OTCBB:CAXG), a specialty pharmaceutical company specializing in research, development, manufacturing and distribution
of a variety of pain killers and pain-management products. Mr. Jun Min has worked in the position of manager of corporate communications
at Sanleyuan Group, in Hong Kong from 1993 to Present. From 2002 to 2014, he was Director and Vice President of American Oriental
Bioengineering, Inc., a pharmaceutical company that produced and marketed prescription pharmaceutical products. Mr. Min received
a BA in Business Management from Zhongyang Broadcast TV University in 1986.
Cosimo
J. Patti, Director
Mr.
Patti has over 50 years of business experience in managing corporate teams for both domestic and international operations, as
well as compliance and sales organizations. Mr. Patti brings risk management, and financial experience in delivering products
and services to consumers and businesses, he brings consumer and business insights, as well as a global perspective, to the Board.
From 2004 to 2014, Mr. Patti was an independent director of American Oriental Bioengineering, Inc., a pharmaceutical company that
produced and marketed prescription pharmaceutical products. Mr. Patti was the President and Chairman of Technology Integration
Group, Inc. D/B/A FSI Advisors Group, a global Financial Services (Bulletin Board listed TING) consulting organization from 1999
to 2005. In May 2009, Mr. Patti was appointed to the Board of Directors of China XD Plastics Company Limited (NASDAQ:CXDC), a
company engaged in the development, manufacturing, and distribution of modified plastics primarily for use in automotive applications.
In June 2007, Mr. Patti joined the Board of Directors of Advanced Battery Technologies, Inc. (NASDAQ:ABAT). He was the Director
of Strategic Cross-border Business with Cedel Bank from 1996 to 1999. Since 1986, Mr. Patti has served as an appointed arbitrator
to the New York Stock Exchange and the National Association of Securities Dealers adjudicating cases involving client disputes
and improprieties. Mr. Patti attended Brooklyn College from 1968 to 1970.
Board
of Directors
Our
board of directors consists of three members without any compensation.
Audit
Committee
The
company does not presently have an Audit Committee. No qualified financial expert has been hired because the company is too small
to afford such expense.
Committees
and Procedures
|
(1)
|
The
registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing
similar functions. The Board acts itself in lieu of committees due to its small size.
|
|
|
|
|
(2)
|
The
view of the board of directors is that it is appropriate for the registrant not to have such a committee because its director
participate in the consideration of director nominees and the board and the company are so small.
|
|
(3)
|
The
members of the Board who acts as nominating committee is not independent, pursuant to the definition of independence of a
national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).
|
|
|
|
|
(4)
|
The
nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders,
but the committee will consider director candidates recommended by security holders.
|
|
|
|
|
(5)
|
The
basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there
is no need to adopt a policy for a small company.
|
|
|
|
|
(6)
|
The
nominating committee will consider candidates recommended by security holders, and by security holders in submitting such
recommendations.
|
|
|
|
|
(7)
|
There
are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security
holders except to find anyone willing to serve with a clean background.
|
|
|
|
|
(8)
|
The
nominating committee’s process for identifying and evaluation of nominees for director, including nominees recommended
by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the
manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a
security holder, or found by the board.
|
Code
of Ethics
We
have not adopted a Code of Ethics for the Board and any salaried employees.
EXECUTIVE
COMPENSATION
The
following table sets forth certain compensation information for: (i) each person who served as the chief executive officer of
our company at any time during the years ended August 31, 2016 and 2015, regardless of compensation level, and (ii) each of our
other executive officers, other than the chief executive officer, serving as an executive officer at any time during 2016-2015.
Compensation information is shown for fiscal years 2016 and 2015.
UBI
Blockchain Internet, Ltd., Summary Compensation Table
|
|
|
|
|
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
Ending
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
P
ositio
n
|
|
|
Aug 31,
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony Liu
Appointed: January 3, 2017
|
|
|
CEODirector
|
|
|
|
2017
|
|
|
|
25,721
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chan Cheung
Appointed: January 3, 2017
|
|
|
CFO
|
|
|
|
2017
|
|
|
|
108,030
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry Hall
|
|
|
CEO/CFO/Director
|
|
|
|
2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Appointed: Aug 30, 2013
Resigned: Jan. 3, 2017
|
|
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Arnone
|
|
|
Secretary/Director
|
|
|
|
2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Appointed: Apr 10, 2014
Resigned: Jan. 3, 2017
|
|
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Note:
During 2016 Mr. Hall received $10,000 and Mr. Arnone received $5,000 as reimbursement for fees to cover past incidental expenses.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until
removed by the board.
Family
Relationships
There
are no arrangements or understandings pursuant to which a director or executive officer was selected to be a director or executive
officer. There are no family relationships among our directors/officers.
Significant
Employees
We
have no significant employees other than Officers/Directors.
Involvement
in Certain Legal Proceedings
Our
directors, executive officers and control persons have not been involved in any of the following events during the past ten years
and which is material to an evaluation of the ability or the integrity of our director or executive officer:
|
1.
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
2.
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
|
|
|
|
|
3.
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities; and
|
|
|
|
|
4.
|
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.
|
|
|
|
|
5.
|
was
found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities
law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or
vacated;
|
|
|
|
|
6.
|
was
found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
|
|
|
|
|
7.
|
was
the 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:
|
|
|
a.
|
Any
Federal or State securities or commodities law or regulation; or
|
|
|
b.
|
Any
law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or
|
|
|
c.
|
Any
law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
8.
|
was
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined
in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons associated with a member.
|
Audit
Committee Financial Expert
We
do not have an audit committee nor do we have an audit committee established at this time.
Auditors;
Code of Ethics; Financial Expert
Our
principal independent accountant is the firm of Michael T. Studer CPA P.C., Freeport, NY. We do not currently have a Code of Ethics
applicable to our principal executive, financial and accounting officer. We do not have an audit committee or nominating committee.
Potential
Conflicts of Interest
We
are not aware of any current or potential conflicts of interest with any of our officers/directors.
Compensation
of Directors
We
did not pay our directors any compensation during fiscal years ended August 31, 2017 and August 31, 2016.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information concerning the ownership of the Company’s Common Stock as of December 21
, 2017, with respect to: (i) each person known to the Company to be the beneficial owner of more than five percent of the Company’s
Common Stock; (ii) all directors; and (iii) directors and executive officers of the Company as a group. To the knowledge of the
Company, each shareholder listed below possesses sole voting and investment power with respect to the shares indicated.
We
believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted
in the table. Under the rules of the U. S. Securities and Exchange Commission, a person (or group of persons) is deemed to be
a “beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct
the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than
one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any
security, which that person has the right to acquire within 60-days, such as options or warrants to purchase our common stock.
Security
Ownership Table
Name of Beneficial Owner
|
|
Class A
Common
|
|
|
Percent
|
|
|
Class B
Common
|
|
|
Percent
|
|
|
Class C
Common
|
|
|
Percent
|
|
|
Percent of Total
Voting Power (1)
|
|
Named Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony Liu, CEO & Chairman (2)
|
|
|
30,000,000
|
|
|
|
97.4
|
%
|
|
|
6,000,000
|
|
|
|
100
|
%
|
|
|
40,000,000
|
|
|
|
54.5
|
%
|
|
|
99.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chan Cheung, CFO & Secretary (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun Min, Director (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cosimo J. Patti Director (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (4 persons)
|
|
|
30,000,000
|
|
|
|
97.4
|
%
|
|
|
6,000,000
|
|
|
|
100
|
%
|
|
|
40,600,000
|
|
|
|
53.2
|
%
|
|
|
99.1
|
%
|
(1)
Percentage of total voting power represents voting power with respect to all shares of our Class A Common Stock (30,799,046 issued
and outstanding) and Class B Voting stock (6,000,000 shares issued and outstanding), as a single class. The holder of our Class
B Voting Stock are entitled to ten votes per share, and holders of our Class A Common Stock are entitled to one vote per share.
The 6,000,000 Class B shares have voting rights equal to 60,000,000 common shares. Percentage of Total Voting Power is calculated
based on an aggregate of 90,799,046 (30,799,046 Class A Common + 60,000,000 Class B Voting Common) shares issued and outstanding.
There are 73,400,000 non-voting Class C shares issued and outstanding.
2)
Tony Liu, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China. Tony Liu is the
beneficial owner who exercises the sole voting and dispositive powers with respect to 30,000,000 Class A common shares, 6,000,000
Class B common shares, and 40,000,000 Class C common shares owned and has the ultimate voting control over the shares held in
the name of UBI Blockchain Internet, LTD., a Hong Kong Company.
3)
Chan Cheung, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China.
4)
Jun Min, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China.
5)
Cosimo J. Patti, Smart-Space 3F, Level 9, Cyberport 3, 100 Cyberport Road, Hong Kong, People’s Republic of China.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our
Chairman and CEO, Tony Liu is also our primary shareholder. He controls 30,000,000 shares of our Class A Common Stock, representing
99.4% ownership of the Class; 6,000,000 shares of our Class B Common Stock, representing 100% ownership of the Class; and 40,000,000
Class C Common Stock, representing 54.5% of the Class.
The
Company has been using this Hong Kong office space provided by UBI Blockchain Internet, LTD. (a Hong Kong Company) at no cost
to the Company. UBI Hong Kong is benefically owned by Tony Liu, the Chairman and CEO of the Company.
In
the year ended August 31, 2017, Tony Liu, chief executive officer of the Company, paid a total of $514,081 of expenditures on
behalf of the Company. The amount due to Tony Liu for these expenditures is interest bearing at a rate of 7% per annum. As of
August 31, 2017, accrued interest amounted to $10,350. The advances and related accrued interest are due on demand.
Global
Alliance Securities, LLC, 100 Wall Street, New York, NY 10005 has a long standing relationship with Mark DeStefano, the former
debt holder of the Company. Mr. DeStefano asked Global Alliance Securities, LLC if they could help him find someone to pay off
the debt the Company owed him in exchange for taking control of the Company. Global Alliance Securities found a buyer in China.
As a finder’s fee for finding a buyer, Mr. DeStefano paid Global Alliance a fee of $20,000. The fee was paid based on a
long standing relationship, there was no written agreement between the parties.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our
By-laws 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 (the “Act”
or “Securities Act”) may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
LEGAL
MATTERS
The
Law Offices of T. J. Jesky has opined on the validity of the shares of common stock being offered hereby.
EXPERTS
The
financial statements included in this prospectus and in this registration statement have been audited by Michael T., Studer CPA
P.C., an independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere
herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed a registration statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common
stock being offered by this prospectus, and reference is made to such registration statement. This prospectus constitutes the
prospectus of UBI Blockchain Internet, Ltd. filed as part of the registration statement, and it does not contain all information
in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities
and Exchange Commission.
We
are subject to the informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy
statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information
may be inspected at public reference facilities of the SEC at 100 F Street N.E., Washington D.C. 20549. Copies of such material
can be obtained from the Public Reference Section of the SEC at 100 F Street N.E., Washington, D.C. 20549 at prescribed rates.
Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet
website at http://www.sec.gov.
The
public may read and copy any materials with the Commission at the SEC’s Public Reference Room at 100 F Street, NE., Washington,
DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. The public may obtain information on the operation of
the Public Reference Room by calling the Commission at 1-800-SEC-0330.
We
intend to furnish our stockholders with annual reports containing audited financial statements.
FINANCIAL
STATEMENTS
UBI
BLOCKCHAIN INTERNET, LTD.
August
31, 2017
August
31, 2016
(audited)
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
of UBI Blockchain Internet, Ltd. (formerly JA Energy)
I have audited the accompanying consolidated
balance sheets of UBI Blockchain Internet, Ltd. (formerly JA Energy) (the “Company”) as of August 31, 2017 and 2016
and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of UBI Blockchain Internet, Ltd.
(formerly JA Energy) as of August 31, 2017 and 2016 and the results of its operations and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.
The accompanying financial statements
referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as
a going concern. Management’s plans in regard to this matter are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
|
/s/ Michael T. Studer CPA P.C.
|
|
Michael T. Studer CPA P.C.
|
Freeport, New York
December 6, 2017
UBI Blockchain Internet,
Ltd.
(Formerly JA Energy)
Consolidated Balance Sheets
|
|
August 31, 2017
|
|
|
August 31, 2016
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
15,406
|
|
|
$
|
-
|
|
Current portion of prepaid stock-based salaries and consulting fees
|
|
|
1,300,000
|
|
|
|
-
|
|
Total Current Assets
|
|
|
1,315,406
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Office equipment, net of accumulated depreciation of $7,845 at August 31, 2017
|
|
|
17,950
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
Non-current portion of prepaid stock-based salaries and consulting fees
|
|
|
493,333
|
|
|
|
-
|
|
Website development costs
|
|
|
92,035
|
|
|
|
-
|
|
Total Other Assets
|
|
|
585,368
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
1,918,724
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
71,425
|
|
|
$
|
68,419
|
|
Advances from former related party
|
|
|
-
|
|
|
|
26,981
|
|
Due to related party
|
|
|
514,081
|
|
|
|
-
|
|
Bank overdraft
|
|
|
-
|
|
|
|
1,202
|
|
Notes payable - former related party
|
|
|
-
|
|
|
|
50,000
|
|
Total current liabilities
|
|
|
585,506
|
|
|
|
146,602
|
|
Total liabilities
|
|
|
585,506
|
|
|
|
146,602
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit):
|
|
|
|
|
|
|
|
|
Preferred Stock: $0.001 par value, 5,000,000 shares authorized, 0 and 1,000,000 shares issued and outstanding as of August 31, 2017 and 2016, respectively
|
|
|
-
|
|
|
|
1,000
|
|
Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 30,717,046 and 217,046 shares issued and outstanding as of August 31, 2017 and 2016, respectively
|
|
|
30,717
|
|
|
|
217
|
|
Class B common stock, $0.001 par value, 500,000,000 shares authorized, 6,000,000 and 0 shares issued and outstanding as of August 31, 2017 and 2016, respectively
|
|
|
6,000
|
|
|
|
-
|
|
Class C common stock, $0.001 par value, 500,000,000 shares authorized, 73,400,000 and 0 shares issued and outstanding as of August 31, 2017 and 2016, respectively
|
|
|
73,400
|
|
|
|
-
|
|
Additional paid in capital
|
|
|
7,475,931
|
|
|
|
4,315,919
|
|
Stock subscription payable
|
|
|
90,521
|
|
|
|
90,521
|
|
Accumulated other comprehensive income
|
|
|
75
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(6,343,426
|
)
|
|
|
(4,554,259
|
)
|
Total stockholders’ equity (deficit)
|
|
|
1,333,218
|
|
|
|
(146,602
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and Stockholders’ Equity (Deficit)
|
|
$
|
1,918,724
|
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
UBI Blockchain Internet, Ltd.
(Formerly JA Energy)
Consolidated Statements of Operations
For the Years Ended
|
|
August 31, 2017
|
|
|
August 31, 2016
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
Employee compensation (including stock-based compensation of $193,333 and $0, respectively)
|
|
|
463,782
|
|
|
|
-
|
|
Consulting fees (including stock-based compensation of $1,173,334 and $0, respectively
|
|
|
1,198,334
|
|
|
|
-
|
|
Professional fees
|
|
|
98,677
|
|
|
|
-
|
|
Occupancy
|
|
|
13,953
|
|
|
|
-
|
|
Other
|
|
|
52,333
|
|
|
|
13,079
|
|
Total Operating Expenses
|
|
|
1,827,079
|
|
|
|
13,079
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(1,827,079
|
)
|
|
|
(13,079
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
Interest expense - related party
|
|
|
(9,663
|
)
|
|
|
-
|
|
Gain on settlement of accounts payable and accrued liabilities
|
|
|
47,003
|
|
|
|
-
|
|
Gain on settlement of bank overdraft
|
|
|
572
|
|
|
|
-
|
|
Total Other Income (Expenses) - net
|
|
|
37,912
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,789,167
|
)
|
|
$
|
(13,079
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss per share of Class A, Class B, and Class C Common Stock
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Class A, Class B, and Class C Common Shares
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
76,849,922
|
|
|
|
217,046
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
UBI Blockchain Internet, Ltd.
(Formerly JA Energy)
Consolidated Statements of Stockholders’
Equity
For the Years Ended August 31, 2017 and 2016
|
|
Preferred Stock
|
|
|
Class A Common Stock
|
|
|
Class B Common Stock
|
|
|
Class C Common Stock
|
|
|
Additional
Paid in
|
|
|
Stock Subscription
|
|
|
Accumulated
|
|
|
Accumulated Other Comprehensive
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Income
|
|
|
Equity
|
|
Balance - August 31, 2015
|
|
|
100,000
|
|
|
$
|
1,000
|
|
|
|
217,046
|
|
|
$
|
217
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
4,315,919
|
|
|
$
|
90,521
|
|
|
$
|
(4,541,180
|
)
|
|
$
|
-
|
|
|
$
|
(133,523
|
)
|
Net loss for the year ended August 31, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(13,079
|
)
|
|
|
-
|
|
|
|
(13,079
|
)
|
Balance - August 31, 2016
|
|
|
100,000
|
|
|
|
1,000
|
|
|
|
217,046
|
|
|
|
217
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,315,919
|
|
|
|
90,521
|
|
|
|
(4,554,259
|
)
|
|
|
-
|
|
|
|
(146,602
|
)
|
Class A, Class B, and Class C common stock agreed to be issued on September 15, 2016 for $200,000 cash (collected September 14, 2016 and October 11, 2016)
|
|
|
-
|
|
|
|
-
|
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
6,000,000
|
|
|
|
6,000
|
|
|
|
40,000,000
|
|
|
|
40,000
|
|
|
|
124,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
Finder’s fee paid reqarding September 15, 2016 change in control agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,000
|
)
|
Contributed capital collected October 11, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
17,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,500
|
|
Retirement of preferred stock - November 30, 2016
|
|
|
(100,000
|
)
|
|
|
(1,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(32,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,735
|
)
|
Class C common stock issued for stock based compensation - April 3, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,400,000
|
|
|
|
8,400
|
|
|
|
1,671,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,680,000
|
|
Class A common stock issued to a consultant - May 1, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,479,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,480,000
|
|
Class C common stock issued to stockholders of Shenzhen Nova E-commerce Ltd. - August 29, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
(79,853
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(54,853
|
)
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75
|
|
|
|
75
|
|
Net loss for the year ended August 31, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(1,789,167
|
)
|
|
|
-
|
|
|
|
(1,789,167
|
)
|
Balance - August 31, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
30,717,046
|
|
|
$
|
30,717
|
|
|
|
6,000,000
|
|
|
$
|
6,000
|
|
|
|
73,400,000
|
|
|
$
|
73,400
|
|
|
$
|
7,475,931
|
|
|
$
|
90,521
|
|
|
$
|
(6,343,426
|
)
|
|
$
|
75
|
|
|
$
|
1,333,218
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
UBI Blockchain Internet,
Ltd.
(Formerly JA Energy)
Consolidated Statements
of Cash Flows
For the Years Ended
|
|
August 31, 2017
|
|
|
August 31, 2016
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,789,167
|
)
|
|
$
|
(13,079
|
)
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
1,610
|
|
|
|
-
|
|
Stock-based compensation - consulting fees
|
|
|
1,173,334
|
|
|
|
-
|
|
Stock-based compensation - employees
|
|
|
193,333
|
|
|
|
-
|
|
Gain on settlement of accounts payable and accrued liabilities
|
|
|
(47,003
|
)
|
|
|
-
|
|
Gain on settlement of bank overdraft
|
|
|
(572
|
)
|
|
|
-
|
|
Increase (decrease) in accounts payable and accrued liabilities
|
|
|
25,358
|
|
|
|
144
|
|
Increase (decrease) in bank overdraft
|
|
|
(630
|
)
|
|
|
-
|
|
Net cash used by operating activities
|
|
|
(443,737
|
)
|
|
|
(12,935
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of office equipment
|
|
|
(5,932
|
)
|
|
|
-
|
|
Net cash used by investing activities
|
|
|
(5,932
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from financing activities
|
|
|
|
|
|
|
|
|
Due to related party
|
|
|
378,216
|
|
|
|
-
|
|
Advances from (repayments to) former related party
|
|
|
(26,981
|
)
|
|
|
12,935
|
|
Repayment of note payable to former related party
|
|
|
(50,000
|
)
|
|
|
|
|
Buyback of preferred stock
|
|
|
(33,735
|
)
|
|
|
|
|
Proceeds from sale of common stock - net
|
|
|
180,000
|
|
|
|
|
|
Contributed capital
|
|
|
17,500
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
465,000
|
|
|
|
12,935
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
75
|
|
|
|
-
|
|
Net Increase (Decrease) in Cash
|
|
|
15,406
|
|
|
|
-
|
|
Cash and cash equivalents at beginning of period
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents at end of period
|
|
$
|
15,406
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Issuance of 8,400,000 shares of Class C common stock to 7 employees and 38 consultants on April 3, 2017 changed to prepaid stock-based salaries and consulting fees
|
|
$
|
1,680,000
|
|
|
$
|
-
|
|
Issuance of 500,000 shares of Class A common stock to consultant on May 1, 2017 changed to prepaid stock-based salaries and consulting fees
|
|
$
|
1,480,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Issuance of 25,000,000 shares of Class C common stock to stockholders of Shenzhen Nova E-commerce, Ltd. (“Nova”) on August 29, 2017 in exchange for Nova Capital Stock:
|
|
|
|
|
|
|
|
|
Carrying Value of Nova assets and liabilities at August 29, 2017:
|
|
|
|
|
|
|
|
|
Office equipment - net
|
|
$
|
13,628
|
|
|
$
|
-
|
|
Website development costs
|
|
|
92,035
|
|
|
|
-
|
|
Total Assets
|
|
|
105,663
|
|
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
24,651
|
|
|
|
-
|
|
Due to related party
|
|
|
135,865
|
|
|
|
-
|
|
Total Liabilities
|
|
|
160,516
|
|
|
|
-
|
|
Excess of liabilities over assets
|
|
$
|
54,853
|
|
|
$
|
-
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
UBI Blockchain Internet Ltd.
(Formerly JA Energy)
Notes to Consolidated Financial Statements
For The Years Ended August 31, 2017 and 2016
NOTE 1 – ABOUT THE COMPANY
The Company was organized August 26, 2010 (Date
of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production
Company, a Nevada corporation. Reshoot Production Company was incorporated October 31, 2007, and, at the time of spin off was listed
on the Over-the- Counter Bulletin Board. On November 21, 2016 the Company reincorporated in Delaware under the name UBI Blockchain
Internet Ltd.
On September 30, 2014, the Board of Directors
passed a resolution to form a new company called Peak Energy Holdings (Peak) with each shareholder in the Company receiving one
share of common of Peak for each share of common stock in the Company and one share of preferred stock of Peak for each share of
preferred stock of the Company.
On November 9, 2014, JA Energy (the “Company”)
entered into an Irrevocable Asset and Liability Exchange Agreement (the “Agreement”). The Agreement dealt with the
dividend spin-off of JA Energy’s wholly owned subsidiary, Peak Energy Holdings. At the JA Energy annual shareholder meeting,
held on September 30, 2014, the shareholders of the Company approved the transfer of all of the assets and liabilities of the Parent
into a wholly owned subsidiary. The subsidiary had the same characteristics and number of authorized and issued shares as the Parent,
whereby all Preferred and Common shareholders in the Parent received a pro-rata stock dividend in the subsidiary that is equal
to the number of shares they owned in the Parent on a one-for-one (1:1) basis. The major shareholders of the Company entered into
a separate agreement with regards to the dividend spin-off. They agreed to and put into effect the following points upon the dividend
spin-off of the Peak Energy Holdings from JA Energy:
|
●
|
Mr. James Lusk (the largest debtor of JA Energy) transferred all assets and liabilities, as of March 31, 2014, from JA Energy to the Subsidiary to the extent legally assignable.
|
|
●
|
Two of the major shareholders in JA Energy transferred all ownership of their Preferred and Common stock held in the subsidiary to Mr. James Lusk.
|
|
|
|
|
●
|
Mr. James Lusk transferred all of the common stock ownership he owned and controlled in JA Energy to the major shareholders.
|
|
|
|
|
●
|
Mr. James Lusk provided a notarized signed letter addressed to the Company and auditor that he agreed to transfer all assets and liabilities, as of March 31, 2014, from the Parent to the Subsidiary to the extent legally assignable.
|
|
|
|
|
●
|
JA Energy warranted that any new liabilities incurred on the books of JA Energy after April 1, 2014 would not be transferred to the subsidiary.
|
|
●
|
JA Energy represented and warranted that there were no liabilities, actual or contingent, created in the subsidiary. Prior to the effective time of the transfer, the subsidiary would have no assets nor liabilities.
|
|
|
|
|
●
|
JA Energy warranted that since April 1, 2014, with the exception of the preferred voting shares, no other shares were issued, awarded or pledged to be issued. The number of common shares issued and outstanding in JA Energy at March 31, 2014 were the same number of the shares issued at the date of transfer.
|
|
|
|
|
●
|
Upon the completion of the transfer of assets and liabilities, shares were exchanged and the subsidiary was divested from JA Energy and now operates independent as a separate entity of JA Energy with its own management;
|
|
|
|
|
●
|
Mr. James Lusk took control of Peak Energy Holdings, independent of JA Energy.
|
|
|
|
|
●
|
All Parties indemnified and held harmless the other Parties from and against any and all losses, damages, liabilities, resulting or arising from these transactions.
|
The Agreement did not affect any other shareholders
in the Company who maintained their share ownership of JA Energy, and have pro-rata ownership in Peak Energy Holdings following
the dividend spin-off.
On September 15, 2016, the Company, with the
approval of the Board of Directors agreed to issue 30,000,000 shares of unregistered restricted Class A Common Stock, 6,000,000
shares of unregistered restricted Class B Voting Common Stock, which carries a voting weight equal to ten (10) Common Shares, and
40,000,000 shares of unregistered restricted Class C Common Stock to UBI Blockchain Internet, LTD (“UBI Hong Kong”),
a Hong Kong company, or assigns in exchange for $200,000. On September 26, 2016, pursuant to NRS 78.1955, the Board of Directors
approved the filing of a Certificate of Designation with the Nevada Secretary of State to designate Class A, B and C common shares,
par value $0.001. Concurrently with the filing of this Certificate of Designation, all Common Stock issued and outstanding became
Class A Common Stock. Class B Common Stock carries a voting weight equal to ten (10) Common Shares. The Class B shares can be converted
into fully paid and non-assessable Common Shares, on a one-to-one basis, at the option of the holder at any time upon written notice
to the Company and its authorized transfer agent. Class C Common Stock has no voting rights. Upon the conversion or other exchange
of all outstanding shares of Class B Common Stock into or for shares of Class A Common Stock, all shares of Class C Common Stock
shall be automatically, without further action by any holder thereof, converted into an identical number of fully paid and non-assessable
shares of Class A Common Stock on the date fixed therefore by the Board of Directors that is no less than sixty-one days and no
more than one hundred and eighty days following such conversion or exchange.
On October 7, 2016, the 30,000,000 Class A
shares and 6,000,000 Class B shares were issued. On November 21, 2016, the Company reincorporated in Delaware under the name UBI
Blockchain Internet Ltd. and increased the number of authorized shares from 75,000,000 to 200,000,000 shares consisting of 130,000,000
authorized shares of Class A Common Stock, 6,000,000 authorized shares of Class B Common Stock and 64,000,000 authorized shares
of Class C Common Stock. On March 1, 2017, the 40,000,000 shares of Class C common stock were issued. All of the preceding shares
were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and
were issued under Regulation S to one (1) foreign entity who attested it is an accredited investor who is not a citizen or a resident
of the USA.
On January 3, 2017, the Company appointed four
new directors, accepted the resignations of its two former directors and appointed Tony Liu (who controls UBI Hong Kong) as Chief
Executive Officer of the Company.
Commencing in the three months ended February
28, 2017, the Company started research activities in Hong Kong relating to “blockchain” technology planned to be provided
for future customers.
On March 1, 2017, the Company issued 40,000,000
shares of Class C common stock to our chief executive officer Tony Liu pursuant to the September 15, 2016 agreement (see above).
On April 3, 2017, the Company issued a total
of 8.400,000 shares of Class C common stock to a total of 45 contractor employees and nonemployees (see Note 6).
On May 1, 2017, the Company issued 500,000
restricted shares of Class A common stock to an independent consultant for consulting services to be performed for the Company
(see Note 6).
On May 24, 2017, the Company increased the
number of authorized common shares from 200,000,000 shares to 2,000,000,000 shares (1,000,000,000 shares of Class A common stock,
500,000,000 shares of Class B common stock, and 500,000,000 shares of Class C common stock).
On August 29, 2017, upon the approval of the
acquisition by the related PRC authorities, the Company issued a total of 25.000,000 shares of Class C common stock to shareholders
of Shenzhen Nova E-commerce, Ltd. (“Nova”) in exchange for control of the business of Nova (see Notes 4 and 6).
NOTE 2 - GOING CONCERN
These financial statements have been prepared
in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has an accumulated deficit
since inception of $6,343,426. The Company has not generated any meaningful revenues to date, and its ability to continue as a
going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and
maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the
Company. As described above, there was a change in control of the Company in October 2016.
These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result
from the outcome of this uncertainty.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The relevant accounting policies are listed
below.
Basis of Accounting
The basis is United States generally accepted
accounting principles.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of UBI Blockchain Internet Ltd. and its wholly owned subsidiary Shenzhen Nova E-commerce, Ltd. (“Nova”)
from the date of acquisition of Nova on August 29, 2017 (see Note 4). All intercompany accounts and transactions have been eliminated
in consolidation.
Earnings per Share
The basic earnings (loss) per share of Class
A, Class B and Class C common stock is calculated by dividing the Company’s net income (loss) available to Class A, Class
B and Class C common shareholders by the weighted average number of Class A, Class B and Class C common shares issued and outstanding
during the year. The diluted earnings (loss) per share of Class A, Class B and Class C common stock is calculated by dividing the
Company’s net income (loss) available to Class A, Class B and Class C common shareholders by the diluted weighted average
number of Class A, Class B and Class C shares outstanding during the year. The diluted weighted average number of Class A, Class
B and Class C shares outstanding is the basic weighted number of Class A, Class B, and Class C shares adjusted as of the first
of the year for any potentially dilutive debt or equity (none at August 31, 2017).
Cash and Cash Equivalents
The Company considers all short-term investments
with a maturity of three months or less at the date of purchase to be cash and cash equivalents.
Use of Estimates
In preparing financial statements in conformity
with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reported period. Actual results could differ from those estimates.
Property and Equipment
Property and equipment is stated at cost less
accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful lives of the respective
assets. Expenditures for repairs and maintenance are expensed as incurred.
Website development costs
Website development costs are carried at cost
less accumulated amortization. Commencing in year ending August 31, 2018, website development costs will be amortized over an estimated
economic life of 5 years.
As of August 31, 2107, the expected future
amortization expense of website development costs is:
Year ended August 31,
|
|
|
Amount
|
|
|
2018
|
|
|
$
|
18,407
|
|
|
2019
|
|
|
|
18,407
|
|
|
2020
|
|
|
|
18,407
|
|
|
2021
|
|
|
|
18,407
|
|
|
2022
|
|
|
|
18,407
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
92,035
|
|
Foreign Currency Translation
The reporting currency and functional currency
of the Company is the United States Dollar. The functional currency of Nova is the Chinese Renminbi (“RMB”).
Nova assets and liabilities are translated
into United States dollars at period-end exchange rates ($0.1518 at August 31, 2017). Nova revenues and expenses are translated
into United States dollars at weighted average exchange rates ($0.1517 for the period August 29, 2017 to August 31, 2017). Resulting
translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’
equity.
Transactions denominated in currencies other
than the functional currency (principally the Hong Kong Dollar) are translated at the exchange rates prevailing at the dates of
the transactions. Exchange gains and losses, which were not significant in the years ended August 31, 2017 and August 31, 2016,
are reflected in income.
Income Taxes
The provision for income taxes is the total
of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income
taxes where differences exist between the period in which transactions affect current taxable income and the period in which they
enter into the determination of net income in the financial statements.
Revenue recognition
The Company recognizes revenue from services
and product sales once all the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists;
the services or products have been delivered; the fee is fixed and determinable and not subject to refund or adjustment; and collection
of the amount due is reasonably assured. For the periods presented, the Company had no revenues.
Stock-Based Compensation
The Company accounts for employee stock-based
compensation in accordance with the guidance of FASB ASC Topic 718, “Compensation - Stock Compensation,” which requires
all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements
based on their fair values. The Company does not have an employee stock option plan.
The Company follows ASC topic 505-50, formerly
EITF 96-18, “
Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction
with Selling Goods and Services
,” for stock issued to consultants and other non-employees. In accordance with ACS Topic
505-50, the stock issued as compensation for services provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the stock, whichever can be more clearly determined. The fair value of
the equity instrument is charged directly to consulting expense over the period during which services are rendered.
Year end
The Company’s fiscal year-end is August
31.
Reverse Stock Split
All references to
numbers of shares of our common stock and per-share information in the accompanying financial statements have been adjusted retroactively
to reflect the Company’s 1-for- 200 reverse stock split effected on January 20, 2016. The par value was not adjusted as a
result of the reverse stock split.
Recent Accounting Pronouncements
The Company’s management has evaluated
recently issued accounting pronouncements through August 31, 2017 and concluded that they will not have a material effect on future
financial statements.
NOTE 4 – ACQUISITION OF NOVA E-COMMERCE,
LTD.
On August 29, 2017, pursuant to an Acquisition
Agreements dated May 16, 2017, the Company acquired 100% ownership of Shenzhen Nova E-commerce, Ltd. (“Nova”) in exchange
for 25,000,000 shares of Company Class C common stock. Nova is a Shenzhen Chinese corporation which was incorporated on May 26,
2016. Nova plans on operating an online store in China selling a wide range of products.
The acquisition has been accounted for as a
recapitalization transaction in the accompanying consolidated financial statements. Accordingly, the financial position and results
of operations of Nova prior to the August 29, 2017 date of acquisition have been excluded from the accompanying consolidated financial
statements.
The carrying values of the assets and liabilities
of Nova at the August 29, 2017 date of acquisition consisted of:
Cash
|
|
$
|
-
|
|
Office equipment, net
|
|
|
13,628
|
|
Website development costs
|
|
|
92,035
|
|
Total assets
|
|
|
105,663
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
24,651
|
|
Due to related party
|
|
|
135,865
|
|
Total liabilities
|
|
|
160,516
|
|
|
|
|
|
|
Excess of liabilities over assets
|
|
$
|
54,853
|
|
The following proforma information (unaudited)
summaries the results of operations for the years ended August 31, 2017 and 2016 as if Nova was acquired on May 26, 2016 (Nova’s
date of inception). The pro forma information is not necessarily indicative of the results that would have been reported had the
transaction actually occurred on May 26, 2016, not is it intended to project results of operations for any future period.
|
|
Year Ended August 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Employee Compensation (including stock-based compensation of $193,333 and $0, respectively)
|
|
|
563,725
|
|
|
|
65,551
|
|
Consulting fees (including stock based compensation of $1,173,334 and $0, respectively)
|
|
|
1,198,334
|
|
|
|
-
|
|
Professional fees
|
|
|
98,677
|
|
|
|
-
|
|
Occupancy
|
|
|
85,188
|
|
|
|
57,508
|
|
Other
|
|
|
254,255
|
|
|
|
193,608
|
|
Total operating expenses
|
|
|
2,200,179
|
|
|
|
316,667
|
|
Loss from Operations
|
|
|
(2,200,179
|
)
|
|
|
(316,667
|
)
|
Other Income (expenses):
|
|
|
|
|
|
|
|
|
Gain on settlement of liabilities
|
|
|
47,575
|
|
|
|
-
|
|
Interest expense - related party
|
|
|
(10,409
|
)
|
|
|
-
|
|
Other income (expenses) - net
|
|
|
37,166
|
|
|
|
-
|
|
Net Loss
|
|
$
|
(2,163,013
|
)
|
|
$
|
(316,667
|
)
|
Net Loss per share of Class A, Class B, and Class C common stock - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
Weighted average number of Class A, Class B, and Class C Common Shares outstanding - basic and diluted
|
|
|
101,712,936
|
|
|
|
6,860,882
|
|
NOTE 5 – PREPAID STOCK BASED SALARIES
AND CONSULTING FEES
Prepaid stock-based salaries and consulting
fees at August 31, 2017 consist of:
|
|
Fair value of stock
issuance (Note 6)
|
|
|
Prepaid balance
at August 31, 2017
|
|
|
|
|
|
|
|
|
1,450,000 shares of Class C common stock issued to 7 employees on April 3, 2017 pursuant to service agreements with a service term of one year expiring December 31, 2017
|
|
$
|
290,000
|
|
|
$
|
96,667
|
|
6,950,000 shares of Class C common stock issued to 38 consultants on April 3, 2017 pursuant to service agreements with a service term of one year expiring December 31, 2017
|
|
|
1,390,000
|
|
|
|
463,333
|
|
500,000 shares of Class A common stock issued to a consultant on May 1, 2017 pursuant to Consulting Agreement dated April 28, 2017 with a service term of two years expiring April 30, 2019
|
|
|
1,480,000
|
|
|
|
1,233,333
|
|
Total
|
|
$
|
3,160,000
|
|
|
|
1,793,333
|
|
Current portion
|
|
|
|
|
|
|
(1,300,000
|
)
|
Non-current portion
|
|
|
|
|
|
$
|
493,333
|
|
At August 31, 2017, there was $1,793,333 of
unrecognized compensation costs related to shares of Class A and Class C common stock issued to employees and non-employee pursuant
to service agreements. These costs are expected to be recognized as expense in the years ended August 31, 2018 ($1,300,000) and
August 31, 2019 ($493,333).
NOTE 6 - STOCKHOLDERS’ EQUITY
Pursuant to the September 15, 2016 change in
control agreement (see Note 1), a representative of UBI paid into an attorney trust account $150,000 on September 14, 2016 and
$67,500 on October 11, 2016, for a total of $217,500. The $217,500 consisted of $200,000 for the newly issued shares of Class A,
Class B Voting, and Class C Common Stock and $17,500 for the payment of specific expenses.
Starting in December 2016, the Company engaged
the services of a total of 45 employees and non-employees to perform certain marketing, research and development and investor relations
services. The related agreements, which were executed in March 2017, provide for the contractors to work for the Company for terms
ranging from September 2016 to January 1, 2017 to December 31, 2017 for compensation including the issuance of a total of 8,400,000
shares of Class C common stock (which occurred April 3, 2017). Of the 8,400,000 shares, 5,000,000 shares were issued to Star Bright
International Investment Enterprises, 100,000 shares were issued to the Company’s chief financial officer and 500,000 shares
were issued to an independent Director of the Company.
The $1,680,000 estimated fair value of the
8,400,000 shares of Class C common stock (using a price of $0.20 per share) was recorded as prepaid expenses and is being expensed
evenly over the year ended December 31, 2017 (see Note 4). For the three and the year ended August 31, 2017, we recognized stock-based
salaries expense of $212,619 and $582,889, respectively, and recognized stock-based consulting fees expe3nse of $494,787 and $1,160,621,
respectively, from these agreements.
On May 1, 2017, the Company issued 500,000
restricted shares of Class A common stock to a consultant pursuant to a Consulting Agreement dated April 28, 2017 with a service
term of two years expiring April 30, 2019. The $1,480,000 estimated fair value of the 500,000 shares of Class A common stock (using
a price of $2.96 per share based on a $3.95 closing trading price on April 28, 2017 less a 25% restricted stock discount) was recorded
as a prepaid expense and is being expensed evenly over the 2-year service period expiring April 30, 2019. For the three and the
year ended August 31, 2017, we recognized stock-based consulting fees expense of $61,667 and $123,334 respectively, from this agreement.
On August 29, 2017, upon the regulatory approval
of the transfer of Nova’s Hong Kong business license to the Company, the Company acquired 100% ownership of Nova in exchange
for the Company’s issuance of a total of 25,000,000 shares of Class C common stock to the 130 owners of Nova.
NOTE 7 - RELATED PARTY TRANSACTIONS
As described in Note 9, the Company was obligated
to Mr. Mark DeStefano (“DeStefano”) for a $50,000 note payable and $26,981 for payments made on behalf of the Company.
Subsequently, Mr. DeStefano advanced $1,285 to the Company. During the three months ended November 30, 2016 the Company satisfied
these obligations. DeStefano had voting control of the Company from June 2014 (see Note 9) to October 24, 2016 (when the Company
purchased from DeStefano the 1,000,000 shares of Preferred Stock for $33,735) through his ownership of the 1,000,000 shares of
Voting Preferred Stock issued and outstanding (equivalent to 50,000,000 votes).
For the three months ended November 30, 2016,
consulting fees paid to former related parties consists of a total of $15,000 paid to the two then directors of the Company and
$10,000 paid to an entity controlled by DeStefano.
Commencing March, 2017, the Company has been
using office space provided by an affiliate of UBI Blockchain Internet, LTD. (Hong Kong) (“UBI Hong Kong”) at a monthly
rent of 22,100 Hong Kong Dollars (approximately $2,833 at the August 31, 2017 exchange rate) per month. UBI Hong Kong owns 30,000,000
shares of the Company’s Class A common stock.
In the year ended August 31, 2017, Tony Liu,
chief executive officer of the Company, paid a total of $514,081 of expenditures on behalf of the Company. The amount due to Tony
Liu for these expenditures is interest bearing at a rate of 7% per annum. As of August 31, 2017, accrued interest amounted to $10,350.
The advances and related accrued interest are due on demand.
NOTE 8 - PROVISION FOR INCOME TAXES
The Company accounts for income taxes under
FASB Accounting Standard Codification ASC 740 “Income Taxes”. ASC 740 requires use of the liability method. ASC 740
provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities
at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or realized.
As of August 31, 2017, the Company had net
operating loss carry forwards of approximately $1,444,245 that may be available to reduce future years’ taxable income through
2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements as
their realization has not been determined likely to occur. Also, due to the change in control, there are annual limitations on
future net operating loss carry forward deductions.
All tax years remain subject to examination
by the respective tax authorities.
At August 31, 2017 and 2016, deferred tax assets
consisted of:
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Net operating loss caryforwards
|
|
$
|
505,486
|
|
|
$
|
357,611
|
|
Value allowance
|
|
|
(505,486
|
)
|
|
|
(357,611
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets – net
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE 9 - NOTES PAYABLE – Former Related
Party
On April 4, 2014, the Company issued a One-year
Promissory Note (“the Note”) in the amount of $50,000 to Mark DeStefano (“DeStefano) (see Note 7). The Note bore
interest at 12% percent per annum with interest due each month. In the event that interest was not paid within three days from
the time it was due the Note was to be considered in default and was to be fully due and payable. Additional consideration for
the Note included the Chief Executive Officer of the Company giving the note holder his voting proxy for all of the shares he held
with the exception of voting on a tender offer or a sale of the Company’s assets. As of May 8, 2014, the Note was in default.
On May 5, 2014, the Company issued a second
One-Year Promissory Note (“the Second Note”) in the amount of $20,000 to the same stockholder noted above. The Second
Note was issued with the restriction that the funds be used specifically to pay the Company’s Patent Counsel for fees to
finalize certain patent filings and was secured by all patents and patent applications held by the Company. The Second Note was
to bear interest at 12% percent per annum with interest due each month. In the event that interest was not paid within three days
from the time it was due, the Second Note would be considered in default and would be fully due and payable.
On June 6, 2014, the Company received notices
that it was in default of the two Promissory Notes described above. Rather than default on the Notes, the Company issued 1,000,000
shares of $0.001 par value Voting Preferred Stock in exchange for Notes Payable totaling $20,000 plus forgiveness of interest totaling
$1,900. Additionally, the Company agreed to designate with the State of Nevada Secretary of State that each share of preferred
carries the voting power of 50 common shares. Finally, the shareholder agreed to cancel the shares upon full payment of the $50,000
Note, without accrued interest and the sale of five units of the MDU.
In October 2016, the $50,000 note payable was
satisfied.
NOTE 10 – OTHER INCOME AND EXPENSE
During the three months ended November 30,
2016, the Company settled a bank overdraft of $942 for $370. This settlement resulted in income of $572.
On January 27, 2017, the Company entered into
a Settlement Agreement with a former landlord satisfying a $35,868 accrued liability for $4,100. This settlement, along with an
arrangement with another vendor, resulted in other income of $47,003.
NOTE 11 – REVERSE STOCK SPLIT
On January 20, 2016, the Company effected a
1-for-200 reverse stock split of its outstanding common stock, par value $0.001 per share (the “Reverse Stock Split”).
As a result of the Reverse Stock Split, each two hundred shares of the Company’s Common Stock issued and outstanding immediately
prior to the Reverse Stock Split were automatically combined into and became one share of common stock. No fractional shares were
issued as a result of the Reverse Stock Split and any stockholder who otherwise would have been entitled to receive fractional
shares received an additional share. Also, as a result of the Reverse Stock Split, the per share exercise price of, and the number
of shares of common stock underlying our warrants outstanding immediately prior to the Reverse Stock Split were automatically proportionally
adjusted based on the 1-for-200 split ratio in accordance with the terms of such warrants. Share and per-share amounts of the Company’s
common stock and warrants included herein have been adjusted to retroactively give effect to the Reverse Stock Split. The Reverse
Stock Split did not alter the par value of the Common Stock, $0.001 per share, or modify any voting rights or other terms of the
common stock.
NOTE 12 – SUBSEQUENT EVENTS
On October 2,
2017, the Company issued a total of 82,000 shares of Class A common stock to 4 individuals associated with the Company’s
law firm for legal services rendered.
In September 2017, Nova entered into two lease
agreements for office space in Shenzhen China. The first lease provides for monthly rent of RMB 12,353 or approximately $1,875
per month, and expires September 2020. The second lease provides for monthly rent of RMB 8,964 or approximately $1,320 per month
and expires September 2019.
[BACK COVER PAGE OF PROSPECTUS]
PROSPECTUS
December 22, 2017
UBI BLOCKCHAIN INTERNET, LTD.
20,582,000
Shares of CLASS A Common Stock held by a stockholder
51,700,000
shares of Class B common stock held by stockholders
Dealer
prospectus delivery obligation
Until
MARCH 26, 2018, all dealers effecting transactions in the registered securities, whether or not participating in this distribution,
may be required to deliver a Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
Grafico Azioni UBI BlockChain Internet (CE) (USOTC:UBIA)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni UBI BlockChain Internet (CE) (USOTC:UBIA)
Storico
Da Giu 2023 a Giu 2024