PART
I
Item
1. Business
DBUB
Group, Inc. (the “Company” or “DBUB”) is a Nevada corporation, organized August 20, 1998 under the name
Editworks Ltd. The Company’s name was changed several times since its incorporation. On December 21, 2012, the Company’s
name was changed to Yosen Group, Inc. On September 5, 2018, the Company changed its corporate name to DBUB Group Inc. through
the merger of the Company with its wholly-owned subsidiary, DBUB Group Inc., a Nevada corporation.
The
Company’s former business was conducted through Capital Future Developments Limited (“Capital”). On May 22,
2018, the Company transferred all of its equity in Capital and its affiliates to the former chief executive officer for the transfer
by him to the Company of 1,738,334 shares of common stock, which was the common stock owned by him pursuant to an agreement dated
March 29, 2018. The 1,738,334 shares of common stock were canceled on May 22, 2018. The transfer of the equity in Capital included
Capital’s subsidiaries and Capital’s equity interest in its affiliates. The Company’s former business is treated
as a discontinued operation.
Our
Organization
We are a Nevada corporation, organized August 20, 1998
under the name Editworks, Ltd. Our corporate name was changed to TriLucent Technologies Corp. on April 3, 2001, to Anza Innovations,
Inc. on November 13, 2002, to Gaofeng Gold Corporation on February 12, 2004, to Sun Oil & Gas on December 16, 2004, to China
3C Group on December 19, 2005, to Yosen Group, Inc. on December 21, 2012 and to DBUB Group, Inc on September 5, 2018. Our address
is No. 108 ShangCheng Road, Suite 1-1003, Pudong New District, Shanghai, China 200120, telephone +086-156-18521412. Our website
is www.yosn.com. Information on our website or any other website does not constitute a part of this annual report.
On February 6, 2018,
the Company established a wholly-owned subsidiary in British Virgin Islands, DB-Link Ltd (“DB-Link”). The Company
plans to
operate as a franchisor and operator of restaurants
through DB-Link. On
June 12, 2018, the Company established a wholly-owned subsidiary DBUB PTE. LTD (“DBUB Pte”) in Singapore. On August
30, 2018, the Company established Huantai (Shanghai) Catering Management Co, Ltd. (“Huantai”), a wholly foreign owned
subsidiary in China to execute its restaurant franchising business.
Organizational
Chart
Our
Business Plan
We plan to open and manage
upscale restaurants and catering facilities, initially in the Peoples’ Republic of China (“PRC”), if we are successful,
we may expand our services in the United States, Australia, New Zealand and South East Asia. We may also license our brand names
to other experienced operators and/or chefs of upscale restaurants.
On April 3, 2018, DB-Link
entered into a cooperation agreement with Alvin Leung, as co-founder, regarding brand cooperation and the catering business in
the territory of the Mainland China, Australia, New Zealand and the United States (the “initial territory”). The agreement
provides that Mr. Leung will exclusively work with DB-Link in the initial territory and will provide DB-Link with the brand names
of “Bo” and “Daimon” in the initial territory, and he granted DB-Link the right of first cooperation before
seeking similar cooperation with other parties in Canada, Hong Kong and Europe. DB-Link’s business will be operated by joint
venture entities in which DB-Link will hold a 66% equity interest and Mr. Leung a 34% interest. In addition, DB-Link will pay Mr.
Leung RMB 800,000 (approximately $127,000), half was paid with the balance payable in 2019.
We believe that our cooperation
agreement with Alvin Leung will enable us to develop and operate upscale restaurants based on the methods that Mr. Leung developed
for his well-known restaurants in Hong Kong, which received three Michelin stars, and London, which received one Michelin star.
However, each restaurant is different, and Mr. Leung will not have the personal involvement in our restaurants that he has with
his own. It will be very difficult to duplicate the success that a restaurant has in one market to another market with a different
operation, including a different chef and a different affecting factors. Unlike fast food and popular restaurant chains, each upscale
restaurant has its own personality and its own distinct style and ambiance.
Unlike restaurant chains,
we do not anticipate that our restaurants will be identical in each location, and the chef will be the key to the success of each
restaurant. We also believe that the location of our restaurants will be critical to our long-term success. In selecting a location,
we intend to focus on major metropolitan areas in China with demographic and discretionary spending profiles that favor our high-end
concepts. To the extent that we bring in partners, in addition to Mr. Leung, or work with a licensee, we will look at the potential
partner’s or licensee’s track record and management experience. In choosing a location, we consider factors such as
traffic patterns, proximity to high-end shopping areas and office buildings, hotels and convention centers, area restaurant competition,
accessibility and visibility. Our ability to open new restaurants depends upon, among other things, finding quality locations,
reaching acceptable agreements regarding the lease of locations, raising or having available adequate capital for construction
and opening costs, timely hiring, training and retaining the skilled management, particularly the chef, and other employees necessary
to meet staffing needs, obtaining, for an acceptable cost, required permits and approvals and efficiently managing the amount
of time and expense to build out and open each new restaurant.
Source
of Supply
We
intend to seek consistent quality of the food and beverages served in our properties. Since most of the food ingredients will be
sourced locally, each restaurant, or, if there is more than one in a metropolitan area, we plan to appoint one
purchasing
manager for the area. We will seek to maintain consistent company-wide quality in our restaurants although the menus will vary
from restaurant to restaurant, based on the chefs. We do not presently have any relations with any suppliers, and it will be necessary
for us to develop such relations as we open restaurants. To the extent the restaurant is operated by a licensee, the licensee will
be responsible for developing supply channels, subject to our overall quality control procedures.
Competition
Competition
in the upscale restaurant business is intense, and many restaurants are not successful. The restaurant industry is intensely competitive
with respect to price, quality of service, location, ambiance of facilities and type and quality of food. Because we market to
high-end clientele, low price is not likely to be as crucial a factor as the menu, the quality of the food and service and the
restaurant’s ambience and location. We will compete with a substantial number of national and regional restaurant chains
and independently owned restaurants for customers, restaurant locations and qualified management, including chefs, and other restaurant
staff, including medium and lower price restaurants, since our target customer base does not limit itself to upscale restaurant.
To the extent that our restaurants are located in hotels, casinos, resorts and similar locations, we are subject to competition
in the broader lodging and hospitality markets that could draw potential customers away from our locations.
Since we are a start-up
in the restaurant industry, many, if not most, our competitors have greater financial and other resources, have been in business
longer, have greater name recognition and are better established in the markets where our restaurants are located or where we
may open restaurants. Our inability to compete successfully with other restaurants and food and beverage hospitality services
operations may harm our ability to maintain acceptable levels of revenue growth, limit or otherwise inhibit our ability to grow
one or more of our concepts, or force us to close one or more of our restaurants. We may also need to evolve our concepts to compete
with popular new upscale restaurant or concepts or trends that emerge, and we cannot provide any assurance that we will be successful
in doing so or that any changes we make to any of our concepts in response will be successful or not adversely affect our profitability.
In addition, with improving product offerings at fast casual restaurants and quick-service restaurants combined with the effects
of negative economic conditions and other factors, consumers may choose less expensive alternatives, which could also negatively
affect customer traffic at our restaurants or food and beverage hospitality services operations. Any unanticipated slowdown in
demand at any of our restaurants due to industry competition may adversely affect our business and results of operations.
Seasonality
To
the extent that our restaurants are in locations that have adverse weather in summer or winter, our business may be affected by
weather conditions.
Intellectual
Property
Pursuant
to the cooperation agreement with Alvin Leung, we have the right to use the names “Bo” and “Daimon” in
our restaurants in the initial territory.
Government
Regulation
We
are subject to China’s National Environmental Protection Law, as well as a number of other national and local laws and regulations
regulating concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling,
release and disposal of, and exposure to, hazardous or toxic substances and health and safety. The environmental laws provide
for significant fines and penalties for noncompliance and liabilities for remediation. We are subject to China’s National
and State Food Hygiene Law, Food Safety Law, Food Safety Law Implementation Regulations and Food Safety Supervision and Administration
Measures for Catering Services. We are also subject to China’s Law on Quality and Safety of Agricultural Products, and Product
Quality Law. Our failure to comply with these regulations could result in monetary penalties and could result in the temporary
or permanent closing of one or more restaurants.
If
we open restaurants in the United States extensive federal, state and local government regulation, including regulations related
to the preparation and sale of food, the sale of alcoholic beverages, the sale and use of tobacco, zoning and building codes,
land use and employee, health, sanitation and safety matters. For example, the preparation, storing and serving of food and the
use of certain ingredients is subject to heavy regulation. Alcoholic beverage control regulations would govern various aspects
of our locations’ daily operations, including the minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing and inventory control, handling and storage. If we operate in different states, we are also required to comply
with a number of different laws covering the same topics. The failure of any of our locations to timely obtain and maintain necessary
governmental approvals, including liquor or other licenses, permits or approvals required to serve alcoholic beverages or food
could delay or prevent the opening of a new location or prevent regular day-to-day operations, including the sale of alcoholic
beverages, at a location that is already operating, any of which would adversely affect our business and results of operations.
In
addition, the costs of operating our locations may increase if there are changes in laws governing minimum hourly wages, working
conditions, overtime and tip credits, health care, workers’ compensation insurance rates, unemployment tax rates, sales
taxes or other laws and regulations such as those governing access for the disabled, including the Americans with Disabilities
Act. For example, the Patient Protection and Affordable Care Act (“PPACA”), among other things, includes guaranteed
coverage requirements and imposes new taxes on health insurers and health care benefits that could increase the costs of providing
health benefits to employees. In addition, if we have a significant number of locations in certain states, regulatory changes
in these states could have a disproportionate impact on our business. If any of the foregoing increased costs were to occur and
we were unable to offset the change by increasing our menu prices or by other means, our business and results of operations could
be adversely affected.
Government
regulation can also affect customer traffic at our locations. A number of states, counties and cities have enacted
menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information. These regulations
would apply if we have 20 or more locations operating under the same trade name and offering substantially the same menus. If
we are subject to these laws, we would be required to post nutritional information on their menus to provide to consumers,
upon request, a written summary of detailed nutritional information. The Food and Drug Administration (“FDA”) is also permitted
to require additional nutrient disclosures, such as trans-fat content. Although we do not presently anticipate that we will
be subject to these requirements, we cannot assure you that we will not become subject to these requirements in the future or
that the laws will not change so that they apply to our restaurants in the United States. Our compliance with the PPACA or
other similar laws to which we may become subject could reduce demand for our menu offerings, reduce customer traffic and/or
reduce average revenue per customer, which would have an adverse effect on our revenue. Also, further government
regulation restricting smoking in restaurants and bars, may reduce customer traffic. Any reduction in customer traffic
related to these or other government regulations could affect revenues and adversely affect our business and results of
operations.
We
are also subject to federal, state and local laws and regulations concerning waste disposal, pollution, protection of the environment,
and the presence, discharge, storage, handling, release and disposal of, and exposure to, hazardous or toxic substances. These
environmental laws provide for significant fines and penalties for noncompliance and liabilities for remediation, sometimes without
regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous
toxic substances. Third parties may also make claims against owners or operators of properties for personal injuries and property
damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our locations.
Environmental conditions relating to releases of hazardous substances at prior, existing or future locations could materially
adversely affect our business, financial condition or results of operations. Further, environmental laws, and the administration,
interpretation and enforcement thereof, are subject to change and may become more stringent in the future, each of which could
materially adversely affect our business, financial condition or results of operations.
To
the extent that governmental regulations impose new or additional obligations on our suppliers, including, without limitation,
regulations relating to the inspection or preparation of meat, food and other products used in our business, product availability
could be limited and the prices that our suppliers charge us could increase. We may not be able to offset these costs through
increased menu prices, which could have a material adverse effect on our business. If any of our restaurants were unable to serve
particular food products, even for a short period of time, or if we are unable to offset increased costs, our business and results
of operations could be adversely affected.
Further,
the U.S. Congress and Department of Homeland Security from time to time consider and may implement changes to federal immigration
laws, regulations or enforcement programs. Some of these changes may increase our obligations for compliance and oversight, which
could subject us to additional costs and make our hiring process more cumbersome, or reduce the availability of potential employees.
Even if we operate our restaurants in strict compliance with U.S. Immigration and Customs Enforcement and state requirements,
some of our employees may not meet federal work eligibility or residency requirements, which could lead to a disruption in our
work force. Although we intend to require all of our new employees in the U.S. to provide us with the government-specified documentation
evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. Unauthorized
workers are subject to seizure and deportation and may subject us to fines, penalties or loss of our business license in certain
jurisdictions. Additionally, a government audit could result in a disruption to our workforce or adverse publicity that could
negatively impact our brand and/or potential for receipt of letters from the Social Security Administration requesting information
(commonly referred to as no-match letters) could make it more difficult to recruit and/or retain qualified employees.
Employees
We
currently have 13 full-time employees including our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer
and 2 part-time employees.
ITEM
1A. RISK FACTORS
Smaller
reporting companies are not required to provide the information required by this Item 1A.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM
2. PROPERTIES
The Company entered
into a lease with Mr. Fuxiang Han on September 30, 2018 for approximately 150 square meters of office space at No. 108 ShangCheng
Road, Suite 2-2204 Pudong New District, Shanghai, China 200120. The lease will expire on September 30, 2020. The monthly rent
expense is RMB 18,000 ($2,480). The lease required a rental deposit of RMB 18,000 ( $2,480).
ITEM
3. LEGAL PROCEEDINGS
There
are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company,
any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a
party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject
of any pending legal proceedings.
ITEM
4. MINE SAFETY DISCLOSURE
Not
Applicable.
Part
II
ITEM
5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The
Company’s common stock is quoted on the OTC Pink market under the symbol “DBUB”. The following table sets forth
the quarterly high and low closing bids of our common stock as reported by the OTC Markets during 2018 and 2017. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
|
|
Low Bid*
|
|
High Bid*
|
2018
|
|
|
|
|
|
|
|
|
Quarter
ended March 31
|
|
$
|
0.1
|
|
|
$
|
0.19
|
|
Quarter
ended June 30
|
|
$
|
0.11
|
|
|
$
|
0.9
|
|
Quarter
ended September 30
|
|
$
|
0.3
|
|
|
$
|
1.11
|
|
Quarter
ended December 31
|
|
$
|
0.08
|
|
|
$
|
0.35
|
|
2017
|
|
|
|
|
|
|
|
|
Quarter
ended March 31
|
|
$
|
0.28
|
|
|
$
|
0.38
|
|
Quarter
ended June 30
|
|
$
|
0.30
|
|
|
$
|
0.45
|
|
Quarter
ended September 30
|
|
$
|
0.16
|
|
|
$
|
0.30
|
|
Quarter
ended December 31
|
|
$
|
0.08
|
|
|
$
|
0.20
|
|
Stockholders
As
of the close of business on April 16, 2019, we had approximately 105 stockholders of record of our common
stock.
Dividends
The
Company did not pay any dividends during 2018 and 2017 and we do not anticipate paying dividends in the foreseeable future.
Securities
Authorized For Issuance under Equity Compensation Plans
Equity
Compensation Plan Information
The
following is a summary of all of our equity compensation plans as of December 31, 2018:
Plan Category
|
|
Number of securities
issued upon
exercise of
outstanding options,
warrants and rights
|
|
Number of restricted
shares issued
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available
for future issuance
under
equity compensation
plan (excluding
securities reflected
in column (a)
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
Equity Compensation Plans Approved by Shareholders
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
Equity Compensation Plans Not Approved by Shareholders
|
|
|
—
|
|
|
|
3,943,333
|
|
|
$
|
—
|
|
|
|
210,000
|
|
On
December 23, 2016, our board of directors (“BOD”) adopted the Yosen Group 2016 Restricted Stock Plan (the “2016
Plan”). The 2016 Plan provides for the granting of restricted stock awards to employees, directors and consultants
of the Company and the employees, directors and consultants of the Company’s affiliates. Under the 2016 Plan, 1,360,000
shares of the Company’s common stock were initially available for issuance for awards. As of December 31, 2017
,
1,150,000 of the shares available for issuance under the 2016 Plan were issued and 210,000 shares were available for issuance.
In addition, 2,553,333 shares were issued pursuant to prior plans and warrants.
Repurchase
of Securities
We
did not repurchase any of shares of our common stock during 2018 and 2017.
Recent
Sales of Unregistered Securities
Pursuant
to a subscription agreement dated September 20, 2018, with Alvin Leung, Mr. Leung purchased 1,000,000 shares of common stock at
$0.26 per share, or a total of $260,000. On September 22, 2018, we sold 150,000 shares of common stock to an unrelated party at
$0.26 per share. The proceeds from the sale of the shares were used for working capital purposes.
The
issuance of the shares was exempt from registration pursuant to Regulation S of the SEC under the Securities Act of 1933. No commission
or other remuneration was paid in connection with the sale of the shares.
ITEM
6. SELECTED FINANCIAL DATA
Not
applicable.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements
that involve risks, uncertainties and assumptions. See “Note Regarding Forward-Looking Statements.” Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed in “Risk
Factors” and elsewhere in this report.
Overview
From
2007 until the first quarter of 2017, we were engaged in the resale and distribution of third party products such as mobile phones,
facsimile machines, DVD players, stereos, speakers, MP3 and MP4 players, iPods, electronic dictionaries, CD players and audio
systems. Due to declining sales and continuing losses, we discontinued this business. We had previously imported into China digital
products, baby products, health nutrition and frozen food products, but this business was discontinued prior to December 31, 2017.
On
February 15, 2018, our directors and officers resigned and we brought in new management and changed our business. Our business
plan will be opening, managing and operating upscale restaurants and license our restaurants to restaurant operators. We may also
enter into agreements with licensees pursuant to which our wholly-owned subsidiary, DB-Link Ltd, and the licensee would invest
in the restaurant. Our business plan contemplates that DB-Link will have a majority interest in the joint venture entity that
operates the restaurants, DB-Link will manage the restaurants for which it will receive a management fee, DB-Link will establish
a restaurant business related training school to train chefs and wait staff, and DB-Link will operate its own online restaurant
supplies store to service the restaurants we own or license. However, we cannot assure you that we will be able to open and operate
restaurants or enter into license agreements with qualified licensees or the terms of any license or management agreement.
In
furtherance of our plan to engage in the upscale restaurant business, on April 3, 2018, DB-Link entered into an agreement dated
March 16, 2018, with Alvin Leung, regarding brand cooperation and the catering business in the initial territory of mainland China.
The agreement provides that Mr. Leung will exclusively work with DB-Link in the initial territory and will provide DB-Link with
the brand names of “Bo” and “Daimon” in the initial territory, and he granted DB-Link a first right of
cooperation before seeking similar cooperation with other third parties in Canada, Hong Kong and Europe. DB-Link’s business
will be operated by joint venture entities in which DB-Link will hold a 66% equity interest and Mr. Leung a 34% interest. In addition,
DB-Link will pay Mr. Leung RMB 800,000 (approximately $127,000), half was paid with the balance payable in 2019.
In view of our desire
to disengage from our former business, on March 29, 2018, we entered into an agreement with Zhenggang Wang, who was a director,
chief executive officer and chairman of the board of the Company until his resignation February 1, 2018, pursuant to which we
sold to Mr. Wang all of the stock in our wholly-owned subsidiary, Capital Future Development Limited (“Capital”),
a British Virgin Islands company, for the transfer by Mr. Wang to us of 1,738,334 shares of our common stock, all of the common
stock owned by Mr. Wang. All of our consolidated liabilities at December 31, 2017 were liabilities of Capital and its subsidiaries,
with the result that subsequent to the transfer of the equity in Capital, the liabilities of Capital ceased to be our liabilities.
The shares acquired by us were cancelled. All of our former business was conducted through Capital and its subsidiaries. The transfer
of the stock of Capital was consummated in May 2018.
Following the transfer of the stock of Capital,
we have three subsidiaries, DB-Link, Huantai and DBUB Pte. Our business will be conducted through Huantai and DBUB Pte. We anticipate
we will have separate subsidiaries for the restaurants we own or operate although we may have one subsidiary owning more than
one restaurant in a city.
On September 5, 2018, we changed our corporate name
to DBUB Group Inc. through a merger of our Company with our wholly-owned subsidiary, DBUB Group Inc., a Nevada corporation.
Results of Operations
We incurred general and
administrative expenses of $647,035 and $276,524, respectively for 2018 and 2017. These expenses related primary to expenses incurred
as a public reporting company such as audit fees, legal fees, filing, transfer agent fees and, to a lesser extent, in 2018, to
expenses relating to preliminary efforts to begin to develop our proposed restaurant business. Our net loss from continuing operations
was $1,062,171 and $153,807 respectively, for 2018 and 2017.
In
2018, we had total other expense of $427,793, including $414,435 of interest owed to the chairman of the board and an officer.
In 2018, we had total
other income of $11,862. In 2017, we had total other income of $126,006. It's primarily forgiveness of accounts payable from suppliers.
We had a net gain of
$3,855,189 in 2018 primarily due to disposal of our Company’s business, which was sold to former CEO of $4,077,266. In 2017,
we had a loss from discontinued operations of $1,237,285.
For 2018, we have a net
gain of $2,793,018, or $0.16 per share (basic and diluted). The net loss from continuing operations was $0.06 per share (basic
and diluted) and the net gain from discontinued operations was a $0.22 per share (basic and diluted).
For 2017, we have a
net loss of $1,136,820, or $0.12 per share (basic and diluted), respectively. The net loss from continuing operations was $(0.01)
per share (basic and diluted) and the net loss from discontinued operations was ($0.11) per share (basic and diluted).
Foreign Currency Translation Adjustments
The impact of foreign translation from our accounts
in RMB to US dollar on our operating results was not material. During the translation process, the assets and liabilities of all
PRC subsidiaries and Singapore are translated into US dollars at year end exchange rates. The revenues and expenses are translated
into US dollars at average exchange rates of the years. Resulting translation adjustments are recorded as a component of accumulated
other comprehensive income within stockholders’ equity.
|
|
2018
|
|
2017
|
RMB/$ exchange rate at year end
|
|
|
0.1454
|
|
|
|
0.1480
|
|
Average RMB/$ exchange rate for the years
|
|
|
0.1512
|
|
|
|
0.1537
|
|
$ Singapore/$ exchange rate at year end
|
|
|
1.3494
|
|
|
|
|
|
Average $ Singapore /$ exchange rate for the years
|
|
|
1.3623
|
|
|
|
|
|
Transaction gains or losses arising from exchange
rate fluctuation on transactions denominated in a currency other than the functional currency were included in the consolidated
results of operations. As a result of the translation, DBUB recorded a foreign currency loss of $22,939 in 2018 and gain of $256,056
in 2017, which is a separate line item on the Statements of Operations and Comprehensive Loss.
Liquidity and Capital Resources
Operations and liquidity needs are funded primarily through
cash flows from advances from related parties including our Chairman and equity financing.
Cash and equivalents
were $1,544,049 as of December 31, 2018 and the Company’s current assets totaled $2,840,690 as of December 31, 2018. The
Company’s current liabilities were $3,652,036 as of December 31, 2018. The Company’s working capital deficiency at
December 31, 2018 was $811,346. During 2018, the Company’s net cash used in operating activities was $878,125.
Cash and equivalents
were $23,048 at December 31, 2017 and current assets totaled $1,074,764. The Company’s current liabilities were $5,736,041
at December 31, 2017. Working capital deficiency at December 31, 2017 was $4,661,277. During 2017, net cash used in operating
activities was $386,239.
Our cash used and provided in 2018 and 2017 was as follows:
|
|
2018
|
|
2017
|
Net cash used in operating activities
|
|
$
|
(878,125
|
)
|
|
$
|
(386,239
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(137,764
|
)
|
|
|
2,542
|
|
Net cash provided by financing activities
|
|
|
2,627,147
|
|
|
|
304,311
|
|
Effect of exchange rate change on cash and equivalents
|
|
|
(80,258
|
)
|
|
|
(33,413
|
)
|
Net decrease in cash and equivalents
|
|
|
1,531,001
|
|
|
|
(112,799
|
)
|
Cash and equivalents at beginning of year
|
|
|
23,048
|
|
|
|
135,847
|
|
Cash and equivalents at end of year
|
|
$
|
1,554,049
|
|
|
$
|
23,048
|
|
Net cash used in operating
activities was $878,125 in 2018 compared to $386,239 in 2017. This decrease was mainly attributable to (i) increase
in net income of $4,184,111, (ii) decrease in other receivable of $303,294 (iii) decrease in prepaid expenses of $600,564 (iv)
decrease in advance to suppliers of $110,033 offset by the increase in accounts payable of $12,308 in 2018, adding back the change
in assets and liabilities of discontinued operations $1,057,092.
|
|
2018
|
|
2017
|
Net cash provided by (used in) investing activities
|
|
$
|
(137,764
|
)
|
|
$
|
2,542
|
|
Net cash used in investing activities in 2018 was
$137,764 in 2018, which consists primarily of equipment purchase.
We had an advance from related party of $3,199,207
compared to that of $0 in 2017. Proceeds from equity financing of continuing operations was $299,000 in 2018 compared to $0 in
2017.
|
|
2018
|
|
2017
|
Net cash provided by financing activities
|
|
$
|
2,627,147
|
|
|
$
|
304,311
|
|
|
|
2018
|
|
2017
|
Net decrease in cash and equivalents
|
|
$
|
1,531,001
|
|
|
$
|
(112,799
|
)
|
|
|
2018
|
|
2017
|
Cash and equivalents
|
|
$
|
1,544,049
|
|
|
$
|
23,048
|
|
Cash and equivalents as of December 31, 2018 were solely
bank accounts in the US, Singapore and China.
Working Capital Requirements
With the change in our
business, our working capital requirements relate to our proposed restaurant business. Before we can open any restaurant, we will
need sufficient upfront capital to cover our cash outlays before we generate revenue. These expenditures include finding an acceptable
location, negotiating a lease and making the initial payments under the lease, making the leasehold improvements, including the
purchase or lease of restaurant equipment, obtaining necessary permits, developing relationships with food suppliers and the media,
and recruiting and training staff and payroll during the preopening period. Until we have demonstrated that we are able to operate
an upscale restaurant profitable, we may have difficulty in obtaining the financing. It may be necessary for us to provide the
financing source with an equity position in a restaurant, which would reduce our percentage interest in the restaurant. Our principal
source of funds for the year ended December 31, 2018 was loans from related parties, including our chief executive officer. The
loans were due on demand with interest of 2%. To the extent we have to raise funds through the sale of our equity securities,
it would be necessary for us to issue equity at a discount from the market price, which could result in significant dilution to
our stockholders. We do not have any agreement or understanding with any financing source and we cannot assure you we will be
able to obtain the funding required for any restaurant. To the extent we are not able to obtain the necessary financing, we may
not be able to open restaurants, which would severely impair our ability to operate profitably. There is no assurance we will
be able to raise any funds on terms favorable to us, or at all or that related parties will provide us with short-term financing
to meet our immediate cash needs. In the event we issue shares of equity or convertible securities, the shares held by our existing
stockholders would be diluted. Future expansion will be limited by the availability of financing products and raising capital.
Going Concern
As discussed in Note
2 to the financial statements, we had net income of $2,793,018 and net loss of $1,391,093 for 2018 and 2017, respectively. Our
accumulated deficit was $29,872,106 as of December 31, 2018. In addition, our cash position substantially deteriorated from 2010,
and we have significant cash requirements for our restaurant business. These issues raise substantial doubt regarding 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.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Our discussion and analysis
of our financial condition and results of operations is based upon our consolidated financial statements (“CFS”), which
were prepared in accordance with US GAAP. The preparation of these requires us to make estimates, judgments and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and
liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.
An accounting policy
is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly
uncertain at the time the estimates are made, and if different estimates that reasonably could have been used, or changes in the
accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe
the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the
CFS.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not
applicable.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The
CFS of the Company are included in this Annual Report on Form 10-K beginning on page F-1, which
are incorporated herein by reference.
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, we conducted an evaluation of our disclosure controls and procedures as of December 31, 2018, as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal
financial officer have concluded that as of December 31, 2018, the Company’s disclosure controls and procedures were not
effective due to the material weakness in our internal controls identified below.
Disclosure
controls and procedures are designed to provide that information required to be disclosed by us in reports that we file or submit
under the Exchange Act is accumulated, recorded, processed, summarized, communicated to our management, including our principal
executive officer and principal financial officer and reported within the time periods specified in Securities and Exchange Commission
rules and forms.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”),
as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). ICFR refers to the process designed by, or under the supervision
of, our principal executive and principal financial officers, and effected by the BOD, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with US GAAP and includes those policies and procedures that:
1.
|
|
Pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our
assets;
|
2.
|
|
Provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
US GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors;
and
|
3.
|
|
Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that
could have a material effect on the financial statements.
|
Under
the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our ICFR based on the framework in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, and due to the material
weakness described below, management concluded that our internal controls were not effective as of December 31, 2018.
Our
management identified the following material weakness: our inability to record transactions and provide disclosures in accordance
with US GAAP. The current staff in our accounting department is inexperienced in US GAAP. They need substantial training to meet
the demands of a US public company. The accounting skills and understanding necessary to fulfill the requirements of US GAAP-based
reporting, including the preparation of financial statements and consolidation, are inadequate.
All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of
its inherent limitations, ICFR may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
Attestation
Report of the Independent Registered Public Accounting Firm
This
Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm. Our management’s
report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange
Commission that permit us to provide only our management’s report in this Annual Report.
Changes
in Internal Control over Financial Reporting
There
were no changes in our ICFR that occurred during our fourth fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our ICFR.
ITEM 9B.
OTHER INFORMATION
Unregistered
Sales of Equity Securities and Use of Proceeds.
On
September 20, 2018, we sold 1,000,000 shares of common stock at $0.26 per share to an investor with whom we have an agreement
relating to the development of our restaurant business.
On
September 22, 2018, we sold 150,000 shares of common stock to an unrelated party $0.26 per share.
The
shares were issued pursuant to Regulation S of the SEC pursuant to the Securities Act of 1933, as amended. The proceeds from the
sale of the shares was used for working capital purposes.
Other
Information
In July
2018, we entered into an oral agreement with an unrelated party, pursuant to which we advanced the third party SGD 817,860 (approximately
$598,350) to prepare a business plan for the development of restaurants in Singapore, searching for restaurant locations, and
negotiating leases for the restaurants. In the event that the third party does not negotiate leases on terms and at locations
acceptable to us, the third party will refund the advance.
PART
III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth the name, age and position of each of our current executive officers and directors.
Name
|
|
Age
|
|
Position
|
Hong Yang
|
|
|
56
|
|
|
Chairman of the board and director
|
Zinan Zhou
|
|
|
48
|
|
|
Chairman of the board, Chief executive officer, director
|
Dongming Xing
|
|
|
47
|
|
|
Chief financial officer
|
Lihui Wang
|
|
|
38
|
|
|
Chief operating office, director
|
Shu Yu Poon
|
|
|
42
|
|
|
Head of marketing
|
Hong
Yang has been executive director and general manager of Tianxinyang Industry LLC, a conglomerate enterprise engaged in gold jewelry
sales, investment, wealth management and precious metal processing since December 2013 and vice chairman of Chengdu Tianxingyang
Gold Industry LLC, since February 2000. Ms. Yang received her Ethical Management EMBA from Peking University and her MBA from
Capital University of Economics and Business. She is currently pursuing her EMBA at National University in Singapore. Ms. Yang
holds the NGTC Diamond Grading Certificate from the National Jewelry Jade Quality Supervision and Inspection Center, the Shanghai
Gold Exchange Traders Certificate from the Shanghai Gold Exchange and, in August 2011, she received the National Gold Industry
science and Technology Management Advanced Workers Honorary Certificate from the China Gold Association. Ms. Yang was a director
to DBUB until January 30, 2019. Ms. Yang did not resign because of a disagreement on any matter relating to the Company’s
operations, policies or practices.
Zinan
Zhou has been chairman of Asia Capital Wealth Management (China) Co., Ltd., a wealth management company since 2012. Ms. Zhou got
her EMBA degree at National University in Singapore in 2018
Dongming
Xing was chief financial officer of Asia Capital Wealth Management (China) Co., Ltd. from 2013 to January 2018. He was chief financial
officer of Zhuhai Modern Classic Photography Design Ltd from 2009 to 2013. Mr. Xing received his degree in accounting from University
of Science and Technology in Beijing.
Shu
Yu Poon has been a partner and general manager of two restaurants in Shanghai, Bo Shanghai, a Michelin rated restaurant, and Daimon
since 2015. He was a partner and managing director of Hot Plate restaurant since 2012. He was marketing manager from September
2013 until July 2014 and operations manager from July 2014 to January 2015 of Eu Yan Sang International Ltd., a health and wellness
company that focuses on traditional Chinese medicine and wellness products. Mr. Poon received his B.A. in philosophy with a minor
in advertising from Fu Jen Catholic University.
Lihui
Wang has 12 years of experience in business development, solution architecting and project management in the domain of information
technology and information systems. He had led and managed eight Singapore government IT projects. From 2013, when Mr. Wang founded
Weebo Pte Ltd., a distributor of cloud based POS system products in high-end retails, service and food and beverage sectors, until
February 1, 2019, Mr. Wang was a managing director at Weebo. Mr. Wang remains a director or Weebo. Mr. Wang received his Master
of Science in Information System from the WKW School of Nanyang Technological University in May 2009. He received his Professional
Diploma in J2EE and Web Service/ISS from National University of Singapore in May 2006. Mr. Wang received a Bachelor of Science
in Information System from University of London in March 2005 . He received a Diploma in Electrical & Electronic from Ngee
Ann Polytechnic in November 2001.
The
Company does not have any compensation agreements or understandings with any of its officers and directors.
Each
director serves for a one-year term after which each director may stand for re-election at the Company’s annual meeting
of stockholders. Each of our directors serves until his resignation or removal. Our officers serve at the pleasure of our BOD.
Significant
Employees
We
do not have significant employees who are not our executive officers or directors.
Family
Relationships
There
are no family relationships between our officers and directors.
Involvement
in Certain Legal Proceedings
During
the past 10 years, to our knowledge, except as described below, none of our present or former directors, executive officers or
persons nominated to become directors or executive officers has been the subject of any of the following:
(1)
A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent
or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such filing, or any corporation or business association of which
he was an executive officer at or within two years before the time of such filing;
(2)
Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(3)
Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
(i)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission (“CFTC”), or an
associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company,
or engaging in or continuing any conduct or practice in connection with such activity;
(ii)
Engaging in any type of business practice; or
(iii)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation
of Federal or State securities laws or Federal commodities laws;
(4)
Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal
or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage
in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity;
(5)
Such person was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state
securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or
vacated;
(6)
Such person was found by a court of competent jurisdiction in a civil action or by the CFTC to
have violated any Federal commodities law, and the judgment in such civil action or finding by the CFTC
has not been subsequently reversed, suspended or vacated;
(7)
Such person 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:
(i)
Any federal or state securities or commodities law or regulation; or
(ii)
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
(iii)
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8)
Such person 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.
Except
as disclosed herein, we are not a party to any pending legal proceeding. To the knowledge of our management, except as disclosed
herein, no federal, state or local governmental agency is presently contemplating any proceeding against us.
Board’s
Role in Risk Oversight
The
BOD has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant committees.
These committees then provide reports to the full board. The oversight responsibility of the board and its committees is enabled
by management reporting processes that are designed to provide visibility to the board about the identification, assessment, and
management of critical risks. These areas of focus include strategic, operational, financial and reporting, succession and compensation,
compliance, and other risks. The board and its committees oversee risks associated with their respective areas of responsibility,
as summarized below.
Board
Committees
The
board does not have any committees.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the executive officers and
directors of the Company and every person who is directly or indirectly the beneficial owner of more than 10% of any class of
security of the Company to file reports of ownership and changes in ownership with the SEC. Such persons also are required to
furnish our company with copies of all Section 16(a) forms they file. Based solely on our review of copies of such forms received
by us, we believe that as of December 31, 2018, the executive officers and directors of the Company and every person who is directly
or indirectly the beneficial owner of more than 10% of any class of security of the Company complied with the filing requirements
of Section 16(a) of the Exchange Act.
Code
of Ethics
We
adopted a corporate code of ethics that establishes the standards of ethical conduct applicable to our officers, directors and
employees, including our principal executive officer and our principal financial and accounting officer and persons performing
similar functions. The Code of Business Conduct and Ethics was disclosed as an Exhibit 14.1 of the Registrant’s 10-K Annual
Report filed with the SEC on March 27, 2008. A written copy of the Code of Business Conduct and Ethics will be provided upon request
at no charge by writing to our Chief Financial Officer, DBUB Group, Inc., No. 108 Shang Cheng Road, Suite 1-1003, Pudong New District,
Shanghai, China 200120.
ITEM 11.
EXECUTIVE COMPENSATION
The
following is a summary of the compensation we paid to our executive officers, for the fiscal years ended December 31, 2018
and 2017.
Summary
Compensation Table
Name and Position
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($)
|
|
Option Awards
|
|
Total
|
Zinan Zhou
(1)
|
|
|
2018
|
|
|
|
19,527
|
|
|
|
|
|
|
|
|
|
|
$
|
19,527
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Dongming Xing
(2)
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
(1)
Ms.Zinan Zhou serves as the President, CEO of DBUB GROUP INC since February 15, 2018.
(2)
Mr.Dongming Xing serves as the chief Financial Officer of DBUB GROUP INC since February 15, 2018.
Director
Compensation
The
following table sets forth the compensation paid to our directors during the years ended December 31, 2018 and 2017.
Name and Position
|
|
Year
|
|
Fees Earned or Paid in Cash
($)
|
|
Stock
Awards
($)
|
|
Option Awards
|
|
All Other Compensation
|
|
Total
|
Hong Yang
(1)
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Zinan Zhou
(2)
|
|
|
2018
|
|
|
|
19,527
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,527
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Shu Yu Poon
(3)
|
|
|
2018
|
|
|
|
52,120
|
|
|
|
—
|
|
|
|
|
|
|
|
9,233
|
|
|
|
61,353
|
|
(1)
Ms.Hong Yang serves as the chairman of DBUB GROUP INC since Feb 2018.
(2)
Ms.Zinan Zhou serves as the President, CEO of DBUB GROUP INC since February 2018.
(3)
Mr.Dongming Xing serves as the Chief Financial Officer of DBUB GROUP INC since February 2018.
Aggregated
Option Exercises and Fiscal Year-End Option Value Table
There
were no stock options exercised since the date of inception of the Company through the date of this Report by the executive officers
named in the Summary Compensation of REBL.
Long-Term
Incentive Plan (“LTIP”) Awards Table
There
were no awards made to any named executive officers in the last completed fiscal year under any LTIP.
Employment
Agreements
We
currently do not have any employment agreements with our directors or executive officers.
Option
Plan
We
currently do not have any stock option plan. However, we may issue stock options pursuant to a stock option plan in the future.
Such stock options may be awarded to management, employees, members of the Company’s BOD and consultants
of the Company.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table provides information as to shares of common stock beneficially owned as of April 16, 2019, by:
•
|
|
Each current
officer named in the summary compensation table;
|
•
|
|
Each person
owning of record or known by us, based on information provided to us by the persons named below, at least 5% of our common stock;
and
|
•
|
|
All directors
and officers as a group.
|
For
purposes of the following table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting
of, a security, or sole or shared investment power with respect to a security, or any combination thereof, and the right to acquire
such power (for example, through the exercise of warrants granted by us) within 60 days of April 16, 2019.
Name of Beneficial Owner
|
|
Amount Beneficial Ownership
|
|
Percentage of Beneficial Ownership
|
Zinan Zhou
|
|
|
2,554,996
|
|
|
|
12.2
|
%
|
Dongming Xing
|
|
|
7,000
|
|
|
|
—
|
|
Shu Yu Poon
|
|
|
—
|
|
|
|
—
|
|
Hong Yang
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
All directors and executive officers as a group (4 persons)
|
|
|
2,561,996
|
|
|
|
12.2
|
%
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions
with Related Parties
On
May 22, 2018, pursuant to an agreement dated March 29, 2018, the Company sold to its former chief executive officer, who is also
a former director and chairman of the board, all of the stock in Capital for the transfer by the former chief executive officer
to the Company of 1,738,334 shares of the Company’s common stock, all of the Company’s common stock owned by him.
As of May 22, 2018, the 1,738,334 shares were cancelled. As a result of the sale of this subsidiary to the former chief executive
officer, the Company effectively sold all of its PRC subsidiaries for the surrender of 1,738,334 shares of common stock valued
at $312,900 at $0.18 per share, which was the market price of Company’s common stock share on May 22, 2018. The Company
recorded a gain of $4,077,266. See Note 5.
Promoters and Certain Control Persons
See
the heading “Transactions with Related Persons” above.
Director
Independence
As
of December 31, 2018, Hong Yang was determined by the Company’s board of directors as an “independent director”,
defined in the Marketplace Rules of the Nasdaq Stock Market.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
MJF
& Associates served as the Company's registered independent public accountants for the fiscal years ended December 31, 2018
and 2017.
The
following table shows the fees that were billed for the audit and other services for 2018 and 2017.
|
|
2018
|
|
2017
|
Audit Fees
|
|
$
|
50,000
|
|
|
$
|
50,405
|
|
Audit-Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
50,000
|
|
|
$
|
50,405
|
|
Audit
Fees
The
aggregate fees billed by our current auditors, MJF, for professional services for the audit of our annual financial statements
for 2018 and 2017 were $50,000 and $50,405 respectively.
Audit
Related Fees
We
incurred no audit related fees to MJF during 2018 and 2017.
Tax
Fees
MJF
did not render any services for tax compliance, tax advice and tax planning during the years ended December 31, 2018 and 2017.
All
Other Fees
MJF
did not bill us any additional fees that are not disclosed under audit fees, audit related fees or tax fees during 2018 and 2017.
Pre-Approval
Process, Policies and Procedures
The BOD has adopted
pre-approval policies for all services, including both audit and non-audit services, provided by our independent auditors. For
audit services, each year the independent auditor provides the BOD with an engagement letter outlining the scope of the audit
services proposed to be performed during the year, which must be formally accepted by the BOD before the audit process commences. The
independent auditor also submits an audit services fee proposal, which also must be approved by the board of BOD before the audit
process commences. The audit, tax, and all other fees and services described above were pre-approved for 2018 and 2017.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2018 AND 2017
Note
1 -
ORGANIZATION
DBUB
Group Inc is a Nevada corporation, organized on August 20, 1998 under the name Editworks, Ltd. Our corporate name was changed
to TriLucent Technologies Corp. on April 3, 2001, to Anza Innovations, Inc. on November 13, 2002, to Gaofeng Gold Corporation
on February 12, 2004, to Sun Oil & Gas on December 16, 2004, to China 3C Group on December 19, 2005, to Yosen Group, Inc.
on December 21, 2012 and to DBUB Group, Inc on September 5, 2018. Our address is No. 108 ShangCheng Road, Suite 1-1003, Pudong
New District, Shanghai, China 200120, telephone +086-156-18521412. Our website is www.yosn.com. Information on our website or
any other website does not constitute a part of this annual report.
On
February 6, 2018, the Company established a wholly-owned subsidiary in British Virgin Islands, DB-Link Ltd (“DB-Link”).
The Company plans to operate franchising or operations of restaurants through DB-Link. On June 12, 2018, the Company established
a wholly-owned subsidiary DBUB PTE. LTD (“DBUB Pte”) in Singapore. On August 30, 2018, the Company established Huantai
(Shanghai) Catering Management Co, Ltd. (“Huantai”), a wholly foreign owned subsidiary in China to execute its plan
to execute its restaurant franchise business.
ORGANIZATIONAL
CHART
Our
corporate structure as of December 31, 2018 is as follows:
Note
2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The accompanying consolidated
financial statements (“CFS”) were prepared in accordance with accounting principles generally accepted in the United
States (GAAP) with the instructions to Form 10-K and Article 10 of Regulation S-X. All adjustments (consisting of normal recurring
items) necessary to present fairly the Company’s consolidated financial position have been included. Reclassifications have
been made to conform historical financial statements with the current period’s presentation.
The
parent company does not have operations. Its main activities were incurring expenses relating to its status as a public company
in the United States.
Going
Concern
The accompanying CFS were
prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. For 2018, the Company realized a net loss from continuing operations of $1,062,171. The Company does not generate
substantial revenue from continuing operations and requires significant funding for its operations with no assurance as to its
ability to obtain the funding on reasonable, if any, terms. The Company has an accumulated deficit of $29,872,106 as of December
31, 2018. There can be no assurance that the Company will become profitable or obtain necessary financing for its business or
that it will be able to continue in business. As of December 31, 2018, related parties, including the Company’s chief executive
officer, made advances to the Company of $3,231,871. These issues raise substantial doubt regarding the Company’s ability
to continue as a going concern.
Principles
of Consolidation
The
CFS include the accounts of the Company and its subsidiaries. The consolidated results of operations and consolidated financial
condition of Capital is reflected as net gain from discontinued operations, and the assets and liabilities of the discontinued
operations at December 31, 2017 are reflected as current and non-current assets and liabilities of the Company’s discontinued
operations. All material intercompany accounts, transactions and profits were eliminated in consolidation.
Currency
Translation
The
reporting currency of the Company is the United States dollar. The accounts of Huantai were maintained, and its financial statements
were expressed RMB and the accounts of DBUB Pte Singapore dollars (SGD), which are the respective functional currency of the subsidiaries.
Our financial statements were translated into United States dollars in accordance with FASB ASC Topic 830-10,
”Foreign
Currency Translation,”
with the RMB and SGD as the functional currency. According to FASB ASC Topic 830-10, assets
and liabilities were translated at the ending exchange rate, stockholders’ equity is translated at the historical rates
and income statement items are translated at the average exchange rate for the year. The resulting translation adjustments are
reported as other comprehensive income in accordance with FASB ASC Topic 220,
”Reporting Comprehensive Income,”
as
a component of shareholders’ equity. Transaction gains and losses are reflected in the consolidated statements of operations
and comprehensive loss.
The
impact of foreign translation from our accounts in RMB and SGD to U.S. dollars on the Company’s operating results was not
material in the years ended December 31, 2018 and 2017. During the translation process, the assets and liabilities of all subsidiaries
are translated into US dollars at period-end exchange rates. The revenues and expenses are translated into U.S. dollars at average
exchange rates of the periods. Resulting translation adjustments are recorded as a component of accumulated other comprehensive
income within stockholders’ equity.
|
|
December 31,
|
|
|
2018
|
|
2017
|
RMB/$ exchange rate at period end
|
|
|
0.1512
|
|
|
|
0.1408
|
|
Average RMB/$ exchange rate for the periods
|
|
|
0.1454
|
|
|
|
0.1537
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
SGD/$ exchange rate at period end
|
|
|
0.7340
|
|
|
|
—
|
|
Average SGD/$ exchange rate for the periods
|
|
|
0.7411
|
|
|
|
—
|
|
Transaction gains or
losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency were
included in the consolidated Statements of Operations and Comprehensive Loss. As a result of the translation, the Company recorded
a foreign currency gain of $22,939 and a gain of $256,056 for the years ended December 31, 2018 and 2017.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Risks
and Uncertainties
The
Company is subject to risks from, among other things, intense competition associated with the industry in general, other risks
associated with financing, liquidity requirements, rapidly changing customer tastes and requirements, limited operating history,
foreign currency exchange rates and the volatility of public markets as well as other risks associated with the restaurant and
related industries.
Contingencies
Certain
conditions may exist as of the date the financial statements are issued, which could result in a loss to the Company but which
will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s
management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material
would be disclosed.
Loss
contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.
Property
and Equipment, net
Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals
and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property
and equipment is provided using the straight-line method for substantially all assets with estimated lives of:
Automotive
|
|
|
5 years
|
|
Office Equipment
|
|
|
5 years
|
|
As
of December 31, 2018, and 2017, property and equipment consisted of the following:
|
|
2018
|
|
2017
|
Automotive
|
|
$
|
116,284
|
|
|
$
|
44,015
|
|
Office equipment
|
|
|
|
|
|
|
163,100
|
|
Plant and equipment
|
|
|
|
|
|
|
217,702
|
|
Construction in progress
|
|
|
|
|
|
|
—
|
|
Subtotal
|
|
|
|
|
|
|
424,817
|
|
Less: accumulated depreciation
|
|
|
(8,278
|
)
|
|
|
(267,844
|
)
|
Total
|
|
$
|
108,006
|
|
|
$
|
156,973
|
|
Long-Lived Assets
The
Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC 360, “
Property,
Plant and Equipment,”
which requires impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the
assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Losses on long-lived assets to be disposed of are determined in a similar manner,
except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December
31, 2018 and 2017, there were no significant impairments of its long-lived assets not related to the discontinued operations.
Fair
Value of Financial Instruments
FASB
ASC Topic 825, “
Financial Instruments
,” requires the Company disclose estimated fair values (“fair
values”) of financial instruments. The carrying amounts reported in the statements of financial position for current assets
and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.
General
and Administrative Expenses
General
and administrative expenses are comprised principally of payroll and benefits costs for corporate employees, occupancy costs of
corporate facilities, lease expenses, management fees, traveling expenses and other operating and administrative expenses, including
freight charges, purchase and delivery costs, internal transfer freight charges and other distribution costs.
Share
Based Payment
The
Company follows FASB ASC 718-10,
“Stock Compensation”
, which addresses the accounting for transactions
in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity
obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services
received in exchange for an award of equity instruments based on the grant-date FV of the award (with limited exceptions). Incremental
compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
Other Income
Other income was $11,862
and $126,006 for the years ended December 31, 2018 and 2017 respectively. Other income in 2017 was primarily attributable to the
accounts payable forgiven.
Other Expense
Other expense was $427,793
and $443,674 for the years ended December 31, 2018 and 2017, respectively. Other expense consists of the following:
|
|
2018
|
|
2017
|
Interest expense
|
|
$
|
414,435
|
|
|
$
|
237,206
|
|
Bank fees
|
|
|
1,252
|
|
|
|
9,493
|
|
Miscellaneous
|
|
|
12,106
|
|
|
|
196,975
|
|
Total other expense
|
|
$
|
427,793
|
|
|
$
|
443,674
|
|
Interest expense
for 2018 was interest owed to the chairman of the board and an officer.
Income
Taxes
The
Company utilizes FASB ASC Topic 740,
“Income Taxes”
. Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts
at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
Basic
and Diluted Earnings (Loss) per Share
Earnings
(loss) per share are calculated in accordance with FASB ASC Topic 260,
“Earnings per Share,”
Basic
earnings (loss) per share is based upon the weighted average number of common shares outstanding. Diluted earnings (losses) per
share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution
is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the
beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. If convertible shares and stock options are anti-dilutive, the impact of
conversion is not included in the diluted net income per share. Excluded from the calculation of diluted earnings per share for
2018 and 2017 were warrants to purchase 257,507 shares of common stock because the inclusion of such warrants would have been
anti-dilutive.
Statement
of Cash Flows
In
accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations
are calculated based upon the functional currency, in our case the RMB and SGD. As a result, amounts related to changes in assets
and liabilities reported on the statement of cash flows will not necessarily agree with the changes in the corresponding balances
on the balance sheet. Following the disposal of the discontinued operations, cash from operations, investing and financing activities
for the year ended December 31, 2018 is net of the effect of such disposal.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable, advances to suppliers
and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy
financial institutions. Since the Company has not generated any revenues or commenced operations in its continuing business, the
Company cannot evaluate the risk of a concentration of credit risk.
Segment
Reporting
FASB
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.
The management approach model is based on the way a company’s management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a company. Following the Company’s disposal
of its existing business, the Company has one operating segment, the restaurant business, which has not generated any revenues
through December 31, 2018.
Recent
Accounting Pronouncements
In
June 2018, the FASB issued ASU 2018-07,
“Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting.”
These amendments expand the scope of Topic 718, Compensation—Stock Compensation
(which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods
or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.
The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. ASU 2018-07 is effective for public companies
for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company does not currently
expect the adoption to have any significant impact on the Company’s financial statements.
The
Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future
adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial statements.
Note
3 -
ADVANCES TO SUPPLIERS
Advances
to suppliers represent advance payments to suppliers for the purchase of inventory.
Note
4 -
PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid
expenses and other current assets in 2018 and 2017 was $235,265 and $317,334. Prepaid expense consists primarily the deferred
stock compensation recorded at the end of 2018 and 2017 for restricted stocks issued on December 23, 2016. The deferred stock
compensation is expensed over three years.
Note
5 -
COMMON STOCK
Stock
options - Options issued have a 10-year life and were vested upon issuance. The option holder has no voting or dividend rights.
The grant price was the market price at the date of grant. The Company records the expense of the stock options over the related
vesting period. The options were valued using the Black-Scholes option-pricing model at the date of grant stock option pricing
and are classified as equity. The outstanding stock warrants were issued in 2015 and 2016. No options or warrants were issued
during 2017 and 2018.
Outstanding
options and warrants by exercise price consisted of the following as of December 31, 2018:
Exercise Price
|
|
Number of
Shares
|
|
Weighted
Average
Remaining
Life (Years)
|
|
Weighted
Average
Exercise Price
|
|
Number
of Shares
|
|
Weighted
Average
Exercise
Price
|
Warrants:
|
|
|
|
|
|
|
|
|
|
|
$
|
0.75
|
|
|
|
66,975
|
|
|
|
0.15
|
|
|
$
|
0.75
|
|
|
|
66,975
|
|
|
|
0.75
|
|
$
|
0.75
|
|
|
|
190,532
|
|
|
|
0.45
|
|
|
$
|
0.75
|
|
|
|
190,532
|
|
|
|
0.75
|
|
(1)
On November 16, 2015, the Company issued stock warrants to purchase 66,975 shares of common stock at $0.75 per share. The warrants
expired on November 15, 2018. The Company determined the fair value of these warrants was $81,375 based on the following assumptions:
Term
|
|
3 years
|
Expected volatility
|
|
|
203
|
%
|
Risk – free interest rate
|
|
|
1.2
|
%
|
Dividend yield
|
|
|
0
|
%
|
Weighted-average grant date fair value
|
|
$
|
1.215
|
|
(2)
On March 18, 2016, the Company issued warrants to purchase 190,532 shares of common stock at $0.75 per share as part of a private
placement of 190,532 units with each unit consisting of one share of common stock and a three-year warrant to purchase one share
of common stock. The Company determined that the fair value of these warrants was $206,917 based on the following assumptions:
Term
|
|
3 years
|
Expected volatility
|
|
|
178
|
%
|
Risk – free interest rate
|
|
|
1.0
|
%
|
Dividend yield
|
|
|
0
|
%
|
Weighted-average grant date fair value
|
|
$
|
1.086
|
|
Note
6 -
COMPENSATED ABSENCES
Regulation
45 of the labor laws in the PRC entitles employees to annual vacation leave after one year of service. In general all leaves must
be utilized annually, with proper notification, any unutilized leave is cancelled.
Note
7 -
INCOME TAXES
The
parent company is subject to the U.S. federal income tax at 21% in 2018 and 34% in 2017. The parent company does not conduct any
operations and only incurs expenses, such as legal fees, accounting fees, investor relations expenses and filing fees, relating
to the Company’s status as a reporting company under the U.S. securities laws. DB-Link Ltd is not subject to U.S. or PRC income tax and is not subject to income tax in the British Virgin Islands.
In
2018 and 2017, the U.S. operating subsidiaries incurred a net operating loss of $300,796 and $153,807. As a result, $63,167 and
$32,299 of deferred tax assets and the same amount of valuation allowance were recorded to offset deferred tax assets for 2018
and 2017.
Our
PRC subsidiary Huantai was subject to the PRC income tax at a rate of 25%. Singapore subsidiary DBUB Pte was subject to an income
tax rate of 17%.
Discontinued
operations sold on May 22, 2018 were subject to the PRC income tax at a rate of 25% before May 22, 2018.
The
components of deferred income tax assets and liabilities as of December 31, 2018 and 2017 are as follows:
|
|
2018
|
|
2017
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
U.S. net operating losses
|
|
$
|
63,167
|
|
|
$
|
32,299
|
|
PRC operation
|
|
|
69,593
|
|
|
|
—
|
|
Singapore operation
|
|
|
89,133
|
|
|
|
—
|
|
Discontinued operation
|
|
|
37,753
|
|
|
|
309,322
|
|
Total deferred tax assets
|
|
|
259,646
|
|
|
|
341,621
|
|
Less valuation allowance
|
|
|
(259,646
|
)
|
|
|
(341,621
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation
of the differences between the statutory U.S. Federal income tax rate and the effective rate is as follows for 2018 and 2017.
|
|
2018
|
|
2017
|
Tax benefit at US Statutory Rate
|
|
|
(21.0
|
)%
|
|
|
(21.0
|
)%
|
Tax rate difference
|
|
|
0.8
|
%
|
|
|
(3.6
|
)%
|
Valuation allowance
|
|
|
20.2
|
%
|
|
|
24.6
|
%
|
Effective rate
|
|
|
—
|
%
|
|
|
—
|
%
|
Note 8 –
DISCONTINUED
OPERATIONS
The
Company’s former business was the distribution of imported products, including digital products, baby products, health nutrition
and frozen food through its online store, applications on mobile devices and also in physical stores. The Company had sustained
continuing losses in this business and did not believe it will be able to operate that business profitably. As a result, the Company
transferred the equity in Capital to its former chief executive officer in May 2018. The Company’s former business is treated
as a discontinued operation.
As
of December 31, 2018, the Company had no assets and liabilities associated with the discontinued operations. The following table
summarizes the assets and liabilities of the discontinued operations as of December 31, 2017 included in the Consolidated
Balance Sheets:
|
|
December 31,
2017
|
Cash
|
|
$
|
15,167
|
|
Accounts receivable
|
|
|
94,465
|
|
Inventories
|
|
|
388,609
|
|
Advance to suppliers
|
|
|
149,530
|
|
Prepaid expenses and other receivables
|
|
|
101,778
|
|
Intangible asset
|
|
|
23,694
|
|
Other non-current asset
|
|
|
319,694
|
|
Property, plant and equipment
|
|
|
156,973
|
|
Total assets
|
|
|
1,249,910
|
|
|
|
|
|
|
Short-term loans
|
|
|
(2,795,441
|
)
|
Accounts payable
|
|
|
(323,975
|
)
|
Advance from customers
|
|
|
(106,292
|
)
|
Accrued expenses and other payable
|
|
|
(710,997
|
)
|
Income tax payable
|
|
|
(832,306
|
)
|
Advance from related party
|
|
|
(823,739
|
)
|
Total liabilities
|
|
|
(5,592,750
|
)
|
Net liabilities
|
|
$
|
(4,342,840
|
)
|
As a result of the sale
of Capital to former chief executive officer, the Company recognized a gain of $4,077,267 from the disposition of Capital and its
affiliates stock in the year ended December 31, 2018. This amount consists of a $2,456,389 gain from sale of the Company’s
equity in Capital and its affiliates and $1,620,878 reflecting the principal of loans by Capital on the date of the transfer, which,
as a result of the transfer of the equity in Capital, are no longer obligations of the Company. The obligations were liabilities
of Capital with no recourse to the Company.
The following table
summarizes the operating results of the discontinued operations included in the Consolidated Statements of Operations and Comprehensive
Loss for the years ended December 31, 2018 and 2017:
|
|
2018
|
|
2017
|
Sales, net
|
|
$
|
272,204
|
|
|
$
|
2,386,858
|
|
Cost of sales
|
|
|
(246,888
|
)
|
|
|
(2,273,246
|
)
|
Gross profit
|
|
|
25,316
|
|
|
|
113,612
|
|
General and administrative expenses
|
|
|
(188,110
|
)
|
|
|
(686,305
|
)
|
Loss from discontinued operations
|
|
|
(162,794
|
)
|
|
|
(572,693
|
)
|
Other expenses
|
|
|
(59,283
|
)
|
|
|
(244,826
|
)
|
Gain on disposal of discontinued operations
|
|
|
4,077,266
|
|
|
|
—
|
|
Income (loss) before income taxes
|
|
|
3,855,189
|
|
|
|
(817,519
|
)
|
Provision for income taxes
|
|
|
—
|
|
|
|
(2,123
|
)
|
Net income (loss) from discontinued operations, net of income tax
|
|
$
|
3,855,189
|
|
|
$
|
(819,642
|
)
|
Note
9 -
OTHER COMPREHENSIVE INCOME
Other
comprehensive income, included in stockholders’ deficit at December 31, 2018 and 2017, is foreign currency translation adjustment.
Following the disposal of Capital, Other comprehensive Income was reclassified in the equity section and included in gain on disposal
in accordance with ASC 830-30-40-1.
Note
10 -
CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS
The
Company’s proposed operations are in the PRC and Singapore. Accordingly, the Company’s business, financial condition
and results of operations may be influenced by the political, economic and legal environments in the PRC and Singapore and by
the general state of the PRC’s and Singapore’s economy. The Company’s business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things.
Note
11 -
SEGMENT INFORMATION
Following
the Company’s decision to discontinue its existing business, the Company only has one operating segment the restaurant business,
which has not generated revenue as of December 31, 2018.