UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DCD.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2015May 31, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from______to ______

Commission file number 001-34274number: 000-54013

ADGS ADVISORY,QUALITY ONLINE EDUCATION GROUP INC.

(Exact nameName of Registrant as Specified in itsIts Charter)

Delaware42-1743717

(State or other jurisdictionOther Jurisdiction of

 incorporationIncorporation or Organization)

(I.R.S. Employer

Identification No.)

(I.R.S. Employer

organization)

Units 2611-13A, 26/F

113 Argyle Street, Mongkok

Kowloon, Hong Kong, SAR

N/A
 (Address of principal  executive offices) (Zip Code)

(852) 2374-0002Unit 1, 60 Riviera Dr.Markham, Ontario, CanadaL3R 5M1

Phone: 647776 8618

(Registrant’sAddress of Principal Executive Offices, Zip Code & Telephone Number, Including Area Code)Number)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

None

Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $0.0001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐   No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by a check mark whether the registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act). Yes ☐   No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates: As of most recently completed second fiscal quarter there is no active market for the registrant’s common stock.

The number of shares outstanding of each of the Issuer’s classes of common stock,issuer’s Common Stock as of the latest practicable date: Common, $.0001 par value per share; 1,484,843,869 outstanding as of April 22, 2021.July 17, 2023 was 1,855,065,263.

 

 

ADGS ADVISORY, INC.

TABLE OF CONTENTSCONTENT

PagesPage
PART I
ITEM 1.FINANCIAL STATEMENTS1 - 8
ITEM 2.MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION9 -10
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK10
ITEM 4.CONTROLS AND PROCEDURE10 - 11
PART II
ITEM 1.LEGAL PROCEDURES12
ITEM 1A.RISK FACTORS12
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS12
ITEM 3.DEFAULTS UPON SENIOR SECURITIES12
ITEM 4.MINE SAFETY DISCLOSURES12
ITEM 5.OTHER INFORMATION13
SIGNATURES14
EXHIBIT
PART I - FINANCIAL INFORMATIONExhibit 31.1CHIEF EXECUTIVE OFFICER15
Item 1.Exhibit 31.1Financial Statements.DIRECTOR116
Item 2.Exhibit 32.1Management’s Discussion and Analysis of Financial Condition and Results of Operations.2
Item 3.CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Quantitative and Qualitative Disclosures About Market Risk.10
Item 4.Controls and Procedures.10
PART II - OTHER INFORMATION
Item 1.Legal Proceedings.11
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.11
Item 3.Default upon Senior Securities.11
Item 4.Mine Safety Disclosures.11
Item 5.Other Information.11
Item 6.Exhibits.12
SIGNATURES1317

i

 

PARTPart I - FINANCIAL INFORMATION

ItemITEM 1. Financial Statements

ADGS ADVISORY,QUALITY ONLINE EDUCATION GROUP INC.

CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

FOR

THE QUARTER ENDED May 31, 2023

1

QUALITY ONLINE EDUCATION GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODQUARTER ENDED FEBRUARY 28, 2015 (UNAUDITED)May 31, 2023

Table of Contents

CONTENTSPagesPage
Consolidated Statement of Balance Sheet3
Condensed Consolidated Balance Sheets as of February 28, 2015 (Unaudited) and August 31, 2014F-1
Consolidated Statement of Income and Comprehensive Income4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended February 28, 2015 and 2014 (Unaudited)F-2
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended February 28, 2015 (Unaudited)equityF-35
Condensed Consolidated Statements of Cash Flows for the Six Months Ended February 28, 2015 and 2014 (Unaudited)F-46
Notes to Condensed Consolidated Financial Statements (Unaudited)F-77 - F-318

2

 

QUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENT OF BALANCE SHEET

AS OF MAY 31, 2023

  UNAUDITED  UNAUDITED 
  31-May-23  28-Feb-23 
  US$  US$ 
Current Assets        
Cash  167,037   167,920 
Account receivables  0   0 
Other receivables  30,004   23,600 
Prepayments and other current assets  56,293   12,874 
Total current assets  253,334   204,394 
         
Intangible assets  759,266   759,266 
Property, plant and equipment, net  969,656   819,183 
Total Assets  1,982,256   1,782,842 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities:        
Accounts Payable  588,079   156,893 
Receipt in advance  4,022,872   3,046,450 
Third party loan payable  15,084   18,736 
Assets acquisition payable  110,270   110,221 
Due to related party  427,273   405,408 
Accrued liabilities and other payable  118,319   125,810 
Total current liabilities  5,281,897   3,863,518 
Long-term loan        
Long-term accounts payable  88,216   88,177 
Total liabilities  5,370,113   3,951,695 
         
Total Equity:        
Share capital        
Preferred shares, $0.0001 par value Issued and outstanding shares - 1,000,000  100   100 
Common shares, $0.0001 par value Issued and outstanding shares - 1,783,310,675  181,427   174,310 
Exchangeable shares, $0.0001 par value Issued and outstanding shares - 1,194,308,876  119,431   119,431 
Additional paid in capital  9,433,128   8,016,820 
Retained Earnings  (13,121,979)  (10,508,506)
Accumulated other comprehensive loss  36   28,991 
Total stockholders’ equity  (3,387,857)  (2,168,854)
         
Total liabilities and stockholders’ equity  1,982,256   1,782,842 

The accompany notes are an integral part of these consolidated financial statements

3

 

ADGS ADVISORY INC.

BALANCE SHEETSQUALITY ONLINE EDUCATION GROUP INC.

(Unaudited)UNAUDITED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

  February 28,  August 31, 
  2015  2014 
ASSETS        
Current assets        
Cash $-  $95,811 
Restricted cash  -   258,968 
Accounts receivable  -   1,461,876 
Advance to third parties  -   841,803 
Other receivables and prepaid expenses  -   290,617 
Total current assets  -   2,949,075 
Non-current assets        
Property and equipment, net  -   1,999,545 
Equity-method investment  -   357,870 
Intangible assets  -   1,048,160 
Other investment  -   1,935,459 
Goodwill  -   153,128 
Deposit paid for acquisition of a client list  -   258,061 
Utility and other deposits  -   93,264 
Total non-current assets  -   5,845,487 
Total assets $-  $8,794,562 
         
LIABILITIES & STOCKHOLDERS’ DEFICIT        
Current liabilities        
Bank overdraft $253,738  $253,738 
Assets held under capital lease  10,843   10,843 
Accrued liabilities and other payables  411,044   411,044 
Due to a related party  663,011   663,011 
Deposit received  43,942   43,942 
Deferred revenue  145,159   145,159 
Income tax payable  586,111   586,111 
Bank loans - current portion  569,425   569,425 
Total current liabilities  2,683,273   2,683,273 
         
Non-current liabilities        
Assets held under capital lease, net of current portion  20,987   20,987 
Deferred revenue, net of current portion  290,319   290,319 
Bank loans, net of current portion  3,557,314   3,557,314 
Loan from a related party  645,268   645,268 
Total non-current liabilities  4,513,888   4,513,888 
Total liabilities  7,197,161   7,197,161 
         
Commitments and contingencies  -   - 
Stockholders’ equity        
authorized, none issued and outstanding  Common stock, $0.0001 par value per share, 50,000,000 shares authorized, 35,337,805 shares issued and outstanding as of August 31, 2014 and 25,000,000 shares issued and outstanding as of August 31, 2013  3,534   3,534 
Subscription receivable  -   (3,092,458)
Additional paid in capital  3,454,057   3,454,057 
Retained earnings (deficit)  (10,654,752)  1,399,062 
Accumulated other comprehensive loss  -   (10,126)
Total ADGS Advisory, Inc. stockholders’ equity  (7,197,161)  1,754,069 
Non-controlling interest  -   (156,668)
Total equity  (7,197,161)  1,597,401 
Total liabilities and stockholders’ equity $-  $8,794,562 

FOR QUARTER ENDED MAY 31, 2023

  UNAUDITED  UNAUDITED 
  Three Months Ended 
  31-May-23  31-May-22 
  US$  US$ 
Revenues  1,289,795   509,986 
Total Revenues  1,289,795   509,986 
Cost of Revenue  539,097   220,943 
Total Cost of Revenues  539,097   220,943 
Gross Profit (Loss)  750,698   289,043 
         
Operating expenses:        
Advertising & Marketing  34,921   8,668 
Depreciation  0   2,101 
Financing Costs  63,605   0 
Commission  652,877   152,657 
Rent or lease payments  7,443   0 
Business consulting  2,497,525   527,710 
Legal & Professional fees  11,191   27,038 
Taxes & Licenses  785   0 
General & Administrative expenses  12,172   28,402 
Payroll & Benefits  83,652   36,525 
Total operating expenses  3,364,171   783,101 
Income from Operations  (2,613,473)  (494,057)
         
Income before income taxes  (2,613,473)  (494,057)
         
Provision for income taxes  -   - 
Net Income (loss)  (2,613,473)  (494,057)
Foreign currency translation adjustment  -   - 
Comprehensive income  (2,613,473)  (494,057)
         
Earning/(loss) per share - Basic  0.00   0.00 
Earning/(loss) per share - Diluted  0.00   0.00 

The accompany notes are an integral part of these consolidated financial statements

4

 

QUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR QUARTER ENDED May 31, 2023 

                                         
  Preferred Stock  Exchangeable Shares  Common Stock  Additional     Foreign
currency
    
  Shares
(‘000)
  Amount
$
  Shares
(‘000)
  Amount
$
  Shares
(‘000)
  Amount
$
  Paid in
Capital
  Retained Earnings  translation
gain
  Total 
Balance at Mar 01, 2022  1,000   100   1,207,885   120,789   1,748,903   170,969  $7,622,202  $(8,102,057) $(98,215) $(286,212)
Effect on VIE termination                                      - 
Shares issuance                                      - 
Capital in excess of par value                                      - 
Net loss for the period      -        -        -    -    (494,057)      (494,057)
Foreign currency translation gain                                  (29,362)  (29,362)
Balance at May 31, 2022  1,000   100   1,207,885   120,789   1,748,903   170,969  $7,622,202  $(8,596,114) $(127,577) $(809,631)
                                         
Balance at Mar 01, 2023  1,000   100   1,194,309   119,431   1,783,894   174,310  $8,016,820  $(10,508,506) $28,991  $(2,168,854)
Shares issuance                  71,171   7,117   1,416,308           1,423,425 
Capital in excess of par value                                      - 
Net loss for the period      -        -        -        (2,613,473)  (28,955)  (2,642,428)
Foreign currency translation gain                                      - 
Balance at May 31, 2023  1,000   100   1,194,309   119,431   1,855,065   181,427  $9,433,128  $(13,121,979) $36  $(3,387,857)

The accompanying notes are an integral part of these consolidated financial statements.statements

F-1 5

 

ADGS ADVISORYQUALITY ONLINE EDUCATION GROUP INC.

STATEMENTSUNAUDITED CONSOLIDATED STATEMENT OF OPERATIONSCASH FLOW

(Unaudited)FOR QUARTER ENDED MAY 31, 2023

  Three Months  Three Months  Six Months  Six Months 
  Ended  Ended  Ended  Ended 
  February  February  February  February 
  2015  2014  2015  2014 
             
Revenue $-  $1,441,268  $-  $2,601,278 
                 
Operating Expenses:                
Direct cost of revenue      586,401       1,131,827 
Administrative expenses  -   388,920   -   601,734 
Total operating expenses  -   975,321   -   1,733,561 
Income (loss) from operations  -   465,947   -   867,717 
Other (income) expense                
Other income      (327)      (1,869)
Loss on disposal of assets          12,053,814   - 
Interest expense  -   26,913   -   55,197 
Other (income) expense, net  -   26,586   12,053,814   53,328 
Income (loss) before provision for income taxes  -   439,361   (12,053,814)  814,389 
Tax Provision  -   71,631   -   84,980 
Net Income (Loss) $-   367,730  $(12,053,814) $729,409 
                 
Basic and diluted earnings(loss) per common share $-  $0.01  $(0.48) $0.03 
                 
Weighted average number of shares outstanding  25,000,000   25,000,000   25,000,000   25,000,000 
  UNAUDITED  UNAUDITED 
  Three Months Ended 
  31-May-23  31-May-22 
  US$  US$ 
Cash flows from operating activities:        
Net Loss  (2,613,473)  (494,057)
         
Net income from continuing operations   (28,955)   -  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:     
Depreciation and amortization  -   3,137 
Stock-based compensation  1,273,425   - 
Accounts receivable & other receivable  (6,404)  (38,204)
Prepayments and other assets  (43,420)  - 
Accounts payables  431,225   135,106 
Accrued expenses and other liabilities  (7,491)  16,592 
Advanced from customers  976,422   377,902 
Net cash provided by (used in) operating activities  (18,671)  476 
         
Cash flows from investing activities:        
Additions to property, plant and equipment  (150,473)  - 
Additions to intangible assets  -   - 
Net cash provided (used in) investing activities  (150,473)  - 
         
Cash flows from financing activities:        
Due to related party  21,865   2,857 
Proceeds from third party loan  (3,603)  (611)
Share subscriptions  150,000   - 
Net cash provided (used in) financing activities  168,262   2,246 
         
Effect of exchange rate changes on cash      (29,362)
         
Net increase in cash  (882)  (26,640)
         
Cash, beginning of period  167,920   126,715 
         
Cash, end of period  167,037   100,075 

The accompanyingaccompany notes are an integral part of these consolidated financial statements.statements

F-2 6

 

ADGS ADVISORYQUALITY ONLINE EDUCATION GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR QUARTER ENDED May 31, 2023

NOTE 1 NATURE OF CHANGES IN STOCKHOLDERS’ EQUITYBUSINESS

(unaudited)

Quality Online Education Group Inc. (QOEG) is a leading E-learning company which provides comprehensive online lessons to students in different parts of the world. It locates in Toronto of Canada and has one wholly owned subsidiary company: Golden Bridge Human Resources Consulting Inc., an Ontario, Canada, based company provides tutoring services and courseware development services.

              Subcriptions  Total 
  Common Stock  Paid in  Retained Receivable,  Stockholders’ 
  Shares  Value  Capital  Earnings  net  Equity 
Balance, August 31, 2013  25,000,000  $2,500  $(2,500) $(72,926) $        -  $(72,926)
                         
Net loss              361,679       361,679 
                         
Balance, November 30, 2013  25,000,000  $2,500  $(2,500) $288,753  $-  $288,753 
                         
Net profit              363,078       363,078 
                         
Balance, February 28, 2014  25,000,000  $2,500  $(2,500) $651,831  $-  $651,831 

  Common Stock  Paid in  Retained  Subcriptions
Receivable,
  Total
Stockholders’
 
  Shares  Value  Capital  Earnings  net  Equity 
Balance, August 31, 2014  35,337,805  $3,534  $3,454,057  $1,399,062  $(3,259,252) $1,597,401 
                         
Change in subscription receivable                  3,259,252   3,259,252 
                         
Net loss              (12,053,814)      (12,053,814)
                         
Balance, November 30, 2014  35,337,805  $3,534  $3,454,057  $(10,654,752) $-  $(7,197,161)
                         
Net loss              -         
                         
Balance, February 28, 2015  35,337,805  $3,534  $3,454,057  $(10,654,752) $-  $(7,197,161)

F-3 

ADGS ADVISORY INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

  Six Months  Six Months 
  Ended  Ended 
  February 28  February 28 
  2015  2014 
       
Cash flows from operating activities:        
Net profit/(loss) $         -  $729,409 
   -   729,409 
Adjustments to reconcile net profit/(loss) to net cash provided by operating activities:        
Depreciation of property and equipment  -   53,431 
Equity in loss of equity-method investment  -   5,455 
Amortization of intangible assets  -   98,003 
Changes in assets and liabilities:        
Utility and other deposits  -   (32,315)
Accounts receivable  -   (49,038)
Other receivables  -   93,945 
Prepaid expenses  -   64,051 
Deposit received  -   2,870 
Income tax payable  -   110,440 
Accrued liabilities  -   (20,677)
Deferred revenue  -   (72,534)
Net cash provided by operating activities  -   983,040 
         
Cash flows from investing activities:        
Acquisition of an intangible asset, net of cash acquired  -   (116,104)
Acquisition of subsidiary, net of cash acquired  -   (475,605)
Cash paid for property and equipment  -   (18,066)
Net cash used in investing activities  -   (609,775)
         
Cash flows from financing activities:        
         
Repayment of advances made and expenses paid on behalf of a related party  -   387,159 
Receipt for shares issuable  -   154,988 
Bank fixed deposit  -   (292)
Proceeds from bank loans  -   86,132 
Repayment of bank loans  -   (75,325)
Repayment of capital lease  -   (11,754)
Net increase in bank overdraft  -   34,582 
Repayment of capital lease obligations  -     
Net cash provided by / (used in) financing activities      575,490 
         
Net increase in cash  -   948,755 
Effect on change of exchange rates on cash  -   (407)
Cash as of the beginning of the period  -   164,314 
Cash as of the end of period $-  $1,112,662 
Supplemental disclosures of cash flow information:        
         
Cash paid during the period for:        
Bank loan interest paid $-  $27,840 
Capital lease interest paid $-  $1,915 

The accompanying notesWe are an integralthe pioneer and leader of providing real-time online small group classes. We deliver quality education to students and noticeable results from our passionate teachers and teaching assistants. With our Artificial Intelligent system, we combined Education and Entertainment (Edu-tertainment) in part of these financial statements.the learning. It is our mission to develop confidence in our students so they can reach their goals with happiness and efficiency! The main business scope of the Group includes K12 English Online education services, courseware development and Education-technology platform development.

F-4 

NOTE 2 GOING CONCERN

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Description of business and organization

Nature of operations

ADGS Advisory, Inc. (“the Company” or “ADGS”) was incorporated in the State of Delaware in September 2007 under the name Life Nutrition Products, Inc. PursuantThe Company’s ability to continue operating as a Certificate of Amendment“going concern” is dependent on its ability to its Certificate of Incorporation filed with the State of Delawareincrease revenues and effective as of July 19, 2013, the Company changed its corporate name from “Life Nutrition Products, Inc.” to “ADGS Advisory, Inc.”.

The Company has been dormant since it filed its Form 10-K on February 12, 2015 for period ended August 31, 2014. For financial statement purposes, on subsequent filings, all assets onraise sufficient additional working capital. These matters raise substantial doubt about the Company’s balance sheetability to continue as of August 31, 2014 were considered disposed of or written down; and all liabilities remained on the Company’s balance sheet. Therefore, as result the Company’s auditors have disclaimed the unaudited interim financial statements included in this Report.

With the exception of the Going Concern footnote, the footnotes to the financial statements have not been updated and all assets accounts are considered to have a zero balance, and all liability account balances as of August 31, 2014 remain unchanged as of the date of this Report.

2.Summary of significant accounting policies

Basis of presentation

These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures for a fair presentation of these interim consolidatedgoing concern. The financial statements have been included.prepared on a going concern basis, which contemplates realization of assets and liquidation of liabilities in the ordinary course of business. The results reported inCompany’s grossing billing are continuing increased significantly since last year. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:

The consolidated financial statements for any interim periods are not necessarily indicativeinclude the accounts of the results that may be reported for the entire year. The accompanying consolidated financial statementsQOEG and its subsidiaries and have been prepared in accordance with the rulesgenerally accepted accounting principles (“GAAP”). All material inter-company accounts and regulationstransactions have been eliminated in consolidation.

Use of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentationEstimates:

The preparation of financial statements in conformity with generally accepted accounting principles generally acceptedrequires management to make estimates and assumptions that affect the amounts reported in the United States. These unaudited consolidated financial statements should be readand accompanying notes. Actual results could differ from those estimates.

Financial Statements in conjunction withU.S. dollars:

The reporting currency of the consolidated financial statements.

Company is the U.S. dollar (“dollar”). The unaudited condensed consolidated financial statements include all accountsdollar is the functional currency of the Company and its subsidiaries as disclosed in Note 1. All material inter-company balances and transactions have been eliminated.

As both the Company and its subsidiaries, ADGS and ADGS Tax are under common control, theCompany’s U.S. subsidiary. The financial statements of the Company have been presented as if the receipt of assets and liabilities of the subsidiaries at their net carrying amount been entered into as of March 1, 2011 in accordance with ASC 805-50-15-6. Accordingly, financial information related to periods prior to the assets and liabilities are that of the Company’s operating subsidiaries.

Certain reclassifications have been made to the comparative period amounts to conform with that of the current period.

Going concern

The accompanying consolidated financial statements are presented on a going concern basis. Although the Company has a working capital surplus of $7,197,161 at February 28, 2015, management plans to continue its efforts to raise funds through debt or equity in the near future and increase its profitability to sustain its operations.

F-5 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Foreign currency translation

The Group uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in their respective functional currency, Hong Kong dollars (“HK$”), being the lawful currency in Hong Kong. Assets and liabilities of thenon-US subsidiaries are translated from H.K. Dollars intoto U.S. Dollarsdollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of incomemethods mandated by ASC 830.

Cash and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’ equity section of the balance sheets. The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:Cash Equivalents:

February 28,

2014

 August 31,

2013

(Unaudited)
Balance sheet items, except for equity accountsHK$7.7608=$1HK$7.7525=$1

  February 28, February 28,
  2014 2013
  (Unaudited) (Unaudited)
     
Items in statements of income and cash flows for the three months ended HK$7.7566=$1 HK$7.7993=$1
Items in statements of income and cash flows for the six months ended HK$7.7550=$1 HK$7.7994=$1

Revenue recognition

The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.

(i)  Revenue generates from providing accounting, taxation, company secretarial and consultancy services is recognized when persuasive evidence of an arrangement exists, the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured. The Group generates its revenues from providing professional services under fixed-fee billing arrangements.

In fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee in monthly installments over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

(ii)  Consultancy service for slope inspection represents under fixed price contract is recognized when the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured.

(iii)  Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

F-6 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Revenue recognition (…/Cont’d)

(iv)  The Company recognizes the management fee income when service is provided. Services include providing administration support service or accounting service to companies.

Direct cost of revenue

Direct costs of revenues generated from providing accounting, taxation, company secretarial and consultancy services consists primarily of billable employee compensation and related payroll benefits, the cost of consultants assigned to revenue generating activities and direct expenses billable to clients. Direct cost of revenues does not include an allocation of overhead costs.

Direct costs from providing consultancy service for slope inspections under fixed price contracts are recognized, as the related contact costs are incurred.

Cash

Cash represents cash in banks and cash on hand.

The Group considers all highly liquid investments originally purchased with original maturities of three months or less to be cash equivalents. Substantially allThese financial statements have not been subjected to an audit or review or compilation engagement, and no assurance is provided on them.

Revenue Recognition:

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services rendered, the cash depositssales price of the Group are held with financial institutions located in the Hong Kong, PRC. Management believes these financial institutions are of high credit quality. The group held no cash equivalents at February 28, 2014fee is fixed or determinable, and August 31, 2013.its collectability is reasonably assured.

Restricted cash

Restricted cash represents cash in banks were restricted and deposited in certain banks as security for installment loans payable to the banks.

Accounts receivable

Accounts receivable are recorded at invoiced amounts, net of allowances for doubtful accounts and discounts. The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable. Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions. The Group historically has been able to collect all of its receivable balances.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers.

F-7 7

 

 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Deferred revenue

The Company entered into a contract with a third party to provide corporate advisory and consulting services. The agreement has a fixed term of four years, and is renewable upon maturity. These fees are deferred and are amortized to income as earned over the term of the agreement. Deferred revenue that will be recognized in next fiscal year is classified within current liabilities.

Stock based compensation:

Property and equipment

Property and equipment are recorded at cost less accumulated depreciation. Maintenance, repairs and minor renewals are expensed as incurred; major renewals and improvements that extendThe Company records stock-based compensation in accordance with the lives or increaseASC 718 “Shares-Based Compensation” FASB Accounting Standards Classification using the capacity of plant assets are capitalized.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the reporting period of disposition.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets after taking into account their respective estimated residual value.

The estimated useful lives of the assets are as follows:

Estimated Life
Investment propertyOver the unexpired term of the lease
Leasehold improvement5 years
Furniture and fixtures5 years
Office equipment5 years
Motor vehicles5 years

Equity-method investment

Affiliated companies,fair value method. All transactions in which goods or services are the Company has significant influence, but not control,consideration received for the issuance of equity instruments are accounted for equity-method investment. Equity-method investment adjustments include the Company’s proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, adjustments to recognize certain differences between the Company’s carrying value and the Company’s equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Gain or losses are realized when such investments are sold.

Non-controlling interest

Non-controlling interests represents the 20% interest in ADGS Tax not owned by Almonds Kisses.

F-8 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Purchased intangible assets

The Group assesses the useful lives and possible impairment of existing recognized intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

significant underperformance relative to historical or projected future operating results;
significant changes in the manner of use of the acquired assets or the strategy for our overall business;
identification of other impaired assets within a reporting unit;
disposition of a significant portion of an operating segment;
significant negative industry or economic trends;

The intangible assets are amortized using the straight line method over a period of 10 years.

Purchased goodwill

All business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the acquisition andbased on the fair value of the net identifiable assets acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

Positive goodwill arising on acquisitions is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortized but is tested annually for impairment.

Decreases in goodwill resulting from the non-payment of contingent consideration are recognized in the period when non-payment occurs.

Negative goodwill arising on an acquisition is recognized directly in profit or loss.

The Group assesses the useful lives and possible impairment of existing goodwill when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

significant underperformance relative to historical or projected future operating results;
significant changes in the manner of use of the acquired assets or the strategy for our overall business;
identification of other impaired assets within a reporting unit;
disposition of a significant portion of business;
significant negative industry or economic trends;

Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an accrual basis or when indications of impairment exist.

Assets under capital lease

Assets held under capital leases are recorded at the lower of the net present value of the minimum lease paymentsreceived or the fair value of the leased asset atequity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the inceptioncost of the lease. The interest elementservices received as consideration are measured and recognized based on the fair value of the finance cost is chargedequity instruments issued.

Foreign Currency:

The Company translates the financial statements of our foreign subsidiaries from the local (functional) currencies to U.S. dollars. The rates of exchange at each fiscal year end are used for translating the statementassets and liabilities and the average monthly rates of exchange for each year are used for the consolidated statements of operations and comprehensive income overloss. Gains or losses resulting from the lease period so as to produce a constant periodic rate of interest on the remaining balancetranslation of the liability for each period. Depreciation expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.

F-9 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Comprehensive income

Comprehensive income includes net income and also considers the effect of other changes to stockholders’ equity thatforeign subsidiaries’ financial statements are not included in the determination of net income, but rather are reportedaccompany consolidated balance sheets as a separate component of stockholders’stockholder’s equity. The Group reports foreign currency translation adjustments

NOTE 4: STOCKHOLDERS’ EQUITY COMMON STOCK

After the acquisition and unrealized gains and lossesmerger on investments (those which are considered temporary) as components of comprehensive income.

Earnings per share

Basic earnings per share is computed onAug 31,2020, the basismanagement had canceled the original common stock of the weighted-averageCompany and authorized new share capital. It consists of 50,000,000 shares of common stock of which 39,129,789 shares were outstanding as of Aug 31, 2020 and 3,581,517 were free trading. On October 7, 2020, the Company announced to increase the number of authorized common shares to 5,000,000,000, up to 3 billion of which will be reserved in order to enact the Merger Agreement. The remainder of the increase will be reserved to fund potential new product line development, market expansion, and any further mergers and acquisitions as such opportunities arise. At the same time, an exchangeable shares structure will be used to finalize the current acquisition of QOEG.

Pursuant to the Share Exchange Agreement dated Aug 31, 2020, ADGS Advisory, Inc. (previous name before name change in May 2021) and QOEG started to exchange shares. As of May 31, 2023, there were 1,194,308,876 QOEG exchangeable shares that have not been exchanged to QOEG common shares. QOEG has 5,000,000,000 common shares and 20,000,000 preferred shares authorized. Among those shares, 1,783,310,675 QOEG common shares and 1,000,000 QOEG preferred shares were issued and outstanding.

NOTE 5: INCOME TAXES

The net operating loss carryovers may be subject to limitation under Internal Revenue Code due to significant changes in the Company’s common stock outstanding duringownership. The Company has provided a full valuation allowance against the fiscal years. Diluted earnings per share is computed on the basisfull amount of the weighted-average numbernet operating loss benefit, since, in the opinion of sharesmanagement, based upon the earnings history of the common stock plus any effect of dilutive potential common shares outstanding during the period using the if-converted method.

Income taxes

The Group accounts for income taxes under FASB ASC Topic 740 “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

The Group records uncertain tax positions whenCompany it is more likely than not that the tax positionsbenefit will not be sustained upon examinationrealized.

NOTE 6: LOAN FROM SHAREHOLDERS

In support of the Company’s efforts and cash requirements, it may rely on advances from shareholders until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note. The loans are payable on demand, unsecured and bears no interest.

NOTE 7: COMMITMENTS AND CONTINGENCIES

The Company has entered into a service contract with Tianjin Zhipin Education Technology Co., Ltd as one of the respective tax authority.outsourcing vendors on global online market research, education consulting and information technology consulting service in September 2021 for three years. The Company is not aware of any litigation incidental to the conduct of our business as of May 31, 2023.

The Group recognizes interest and penalty related to income tax matters as income tax expense. For the six months ended February 28, 2014 and 2013, there was no penalty or interest recognized as income tax expenses.

F-10 8

 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.Summary of significant accounting policies (…/Cont’d)

Employee benefits

i)  Salaries, wages, annual bonuses, paid annual leave and staff welfare are accrued in the year in which the associated services are rendered by employees of the Group. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

ii) Contributions to appropriate local contribution retirement schemes pursuant to the relevant labor rules and regulations in Hong Kong which are charged to the cost of sales and general and administrative expenses in the statement of operation as and when the related employee service is provided. The Group incurred $31,859 and $19,659 for the three months period ended February 28, 2014 and 2013; $50,551 and $37,218 for the six months period ended February 28, 2014 and 2013 respectively.

Fair value measurements

FASB ASC Topic 820, “Fair Value Measurement and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liab i lity in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Group. Unobservable inputs reflect the Group’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 -Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 -Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.

Level 3 -Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Group’s financial instruments consist principally of cash, accounts receivable, accounts payable, bank loans, and accrued liabilities. Pursuant to ASC 820, the fair value of the Group’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Group believes that the carrying amounts of all of the Group’s other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

F-11 

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

3. BUSINESS SEGMENTS

A)  Business segment reporting - by product

The Company has three (3) reportable business segments: providing accounting, taxation, company secretarial, consultancy services, and consultancy service for slope inspection . The Company evaluates performance based on net operating profit. Administrative functions are centralized however, where applicable, portions of the administrative function expenses are allocated between the operating segments. In the event any services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The administrative expenses are captured discretely within each segment. The Company’s property and equipment, and accounts receivable are captured and reported discretely within each operating segment.

The following tables set forth the Company’s four main segments:

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
Three months ended February 28, 2014                    
Segment revenue                    
Revenue from external  customer $417,329  $26,166  $997,773  $         -  $1,441,268 
Direct cost of revenue  (159,613)  (34,526)  (392,262)  -   (586,401)
Administrative expense  (112,614)  (7,061)  (269,245)  -   (388,920)
Gross profit/(loss)  145,102   (15,421)  336,266   -   465,947 
                     
Other income  95   6   226   -   327 
Finance cost  (7,793)  (489)  (18,631)  -   (26,913)
                     
Income/(loss) before income taxes  137,404   (15,904)  317,861   -   439,361 
Income tax  (20,742)  (1,300)  (49,589)  -   (71,631)
Net income/(loss) $116,662  $(17,204) $268,272  $-  $367,730 

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
                
Total assets $1,716,361  $47,056  $3,278,687  $696,486  $5,738,590 
                     
Total liabilities $955,529  $60,465  $2,711,268  $1,359,497  $5,086,759 

F-12 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3. BUSINESS SEGMENTS (…../Cont’d)

A)  Business segment reporting - by product (…../Cont’d)

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
Three months ended February 28, 2013                    
Segment revenue                    
Revenue from external  customer $251,079  $832,770  $212,186  $        -  $1,296,035 
Direct cost of revenue  (125,032)  (438,706)  (39,870)  -   (603,608)
Administrative expense  (53,459)  (177,309)  (45,178)  -   (275,946)
Gross profit  72,588   216,755   127,138   -   416,481 
                     
Other income  -   -   -   -   - 
Finance cost  (6,460)  (21,428)  (5,460)  -   (33,348)
                     
Income before income taxes  66,128   195,327   121,678   -   383,133 
Income tax  (8,328)  (27,622)  (7,038)  -   (42,988)
Net income $57,800  $167,705  $114,640  $-  $340,145 

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
                
Total assets $856,599  $3,036,888  $168,687  $          -  $4,062,174 
                     
Total liabilities $805,813  $2,856,836  $746,428  $-  $4,409,077 

F-13 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.BUSINESS SEGMENTS (…../Cont’d)

B)  Business segment reporting - by product (…../Cont’d)

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
Six months ended February 28, 2014                    
Segment revenue                    
Revenue from external  customer $696,971  $50,690  $1,853,617  $        -  $2,601,278 
Direct cost of revenue  (327,310)  (62,331)  (742,186)  -   (1,131,827)
Administrative expense  (165,795)  (11,725)  (424,214)  -   (601,734)
Gross profit/(loss)  203,866   (23,366)  687,217   -   867,717 
                     
Other income  8,729   763   (7,623)  -   1,869 
Finance cost  (14,813)  (1,104)  (39,280)  -   (55,197)
                     
Income/(loss) before income taxes  197,782   (23,707)  640,314   -   814,389 
Income tax  (24,054)  (1,591)  (59,335)  -   (84,980)
Net income/(loss) $173,728  $(25,298) $580,979  $-  $729,409 

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
                
Total assets $1,716,361  $47,056  $3,278,687  $696,486  $5,738,590 
                     
Total liabilities $955,529  $60,465  $2,711,268  $1,359,497  $5,086,759 

F-14 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.BUSINESS SEGMENTS (…../Cont’d)

C)  Business segment reporting - by product (…../Cont’d)

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
Six months ended February 28, 2013                    
Segment revenue                    
Revenue from external  customer $537,628  $1,081,057  $286,949  $        -  $1,905,634 
Direct cost of revenue  (278,048)  (598,639)  (90,352)  -   (967,039)
Administrative expense  (152,364)  (263,008)  (70,983)  -   (486,355)
Gross profit  107,216   219,410   125,614   -   452,240 
                     
Other income  -   -   -   -   - 
Finance cost  (20,293)  (33,413)  (9,069)  -   (62,775)
                     
Income before income taxes  86,923   185,997   116,545   -   389,465 
Income tax  (8,328)  (27,622)  (7,038)  -   (42,988)
Net income $78,595  $158,375  $109,507  $-  $346,477 

  Accounting & Corporate Services  Corporate Restructuring & Insolvency  Multi-
Disciplinary Advisory
  Corporate & Other Income  Total 
                
Total assets $856,599  $3,036,888  $168,687  $         -  $4,062,174 
                     
Total liabilities $805,813  $2,856,836  $746,428  $-  $4,409,077 

F-15 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

4. ACQUISITION OF SUBSIDIARY

Almonds Kisses Limited (“Almonds Kisses”), a wholly owned subsidiary of ADGS Advisory Inc. (the “Company”) entered into a purchase and sale agreement (the “Purchase Agreement”) dated October 20, 2013 which was previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2013. Pursuant to the Purchase Agreement, the Company agreed to purchase all shares of T H Strategic Management Limited (“T H Strategic”), a Hong Kong, People’s Republic of China incorporated company (the “Acquisition”) for purchase consideration of approximately $516,000 (HK$4 million). T H Strategic Management Limited is engaged in providing accounting, taxation, company secretarial and consultancy services. 

In consideration for acquisition of the issued and outstanding shares of TH Strategic, Almonds Kisses has agreed to pay the seller the sum of about $516,000 (HK$4 million), payable in four equal monthly installments of about $129,000 (HK$1 million) each. Almonds Kisses has fully paid the consideration of acquisition before the end of February 2014.

The following table summarizes the estimated fair values of tangible assets acquired and liabilities assumed as of the date of the Merger:

  

Assets

/(liabilities)

 
Cash $16,189 
Account receivables  89,685 
Accrual and other payables  (17,544)
Tax payables  (25,469)
Due to a related party  (22,504)
Total identifiable net assets $40,357 
Goodwill  475,605 
Consideration $515,962 

As the purchase price exceeds the fair value of assets and liabilities acquired or assumed, goodwill will be recognized. Goodwill is calculated as the difference between the Acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill is not expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist. No acquisition related costs incurred in this acquisition.

F-16 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

5.CASH

Cash represents cash in bank and cash on hand. Cash as of February 28, 2014 and August 31, 2013 consists of the following:

  February 28,  August 31, 
  2014  2013 
  (Unaudited)     
Bank balances and cash $1,112,662  $164,314 

All cash was maintained in Hong Kong, PRC. In Hong Kong, there are no rules or regulations mandating an obligatory insurance of bank accounts. Management believes these financial institutions are of high credit quality.

6.RESTRICTED CASH

At February 28, 2014 and August 31, 2013, $129,465 of cash was restricted and deposited in a bank as security for installment loans payable to the bank.

F-17 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

7.DUE FROM A RELATED PARTY

The amounts due from the Group CFO are interest free, unsecured and repayable on demand. The Advances to the CFO were funded by Group bank loans. These bank loans were secured by real property owned by the CFO. The activity for such amounts due to shareholders for the period/year ended February 28, 2014 and August 31, 2013 is as follows:

  

Period Ended

February 28,
2014

 
  (Unaudited) 
Balance due at September 1, 2013 $418,658 
Amount repaid during the period  (387,159)
Exchange alignment  (449)
Balance due at February 28, 2014 $31,050 

  

Year Ended

August 31,
2013

 
    
Balance due at September 1, 2012 $241,036 
Amount advanced during the year  4,831,702 
Amount repaid during the year  (4,655,559)
Exchange alignment  1,479 
Balance due at August 31, 2013 $418,658 

8.LOAN FROM A RELATED PARTY

The loan from a related party is interest free, unsecured and is due and payable on August 30, 2017.

F-18 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

9.PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

  February 28,  August 31, 
  2014  2013 
  (Unaudited)    
       
Investment property $1,909,062  $1,909,062 
Leasehold improvement  103,414   85,345 
Furniture and fixtures  5,632   5,632 
Office equipment  6,730   6,730 
Motor vehicle  145,407   145,407 
   2,170,245   2,152,176 
Less: Accumulated depreciation  (116,916)  (63,486)
  $2,053,329  $2,088,690 

Depreciation expense for the three months ended February 28, 2014 and 2013 amounted to $27,613 and $8,958; for the six months ended February 28, 2014 and 2013 amounted to $53,431 and $15,243 respectively.

Included in motor vehicle of the Group, the net carrying amount of $105,646 as of February 28, 2014 and $120,183 as of August 31, 2013 is under capital lease with the related depreciation charge for of $7,267 and $4,075 for the three months ended February 28, 2014 and 2013; $14,537 and $5,477 for the six months ended February 28, 2014 and 2013 respectively.

The residential property held by Motion Tech is collateral for a banking facility with a maximum amount of $2,063,850 (HK$16 million).

10.ASSETS HELD UNDER CAPITAL LEASES

The Group leases a motor vehicle that is classified as capital lease. The cost of the motor vehicle under capital leases is included in the Balance Sheets as property and equipment and was $105,646 (net of accumulated depreciation) at February 28, 2014. Amortization of assets under capital leases is included in depreciation expense. The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of February 28, 2014, are as follows:

  Amount 
    
Year ending August 31,    
2014 (Six months) $13,658 
2015  27,316 
2016  27,316 
2017  27,316 
2018  10,745 
Thereafter  - 
Total minimum lease payment  106,351 
Less: Imputed interest  (6,136)
Present value of net minimum lease payments  100,215 
Less: Current maturities of capital leases obligations  (12,004)
Long-term capital leases obligations $88,211 

F-19 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

11.INTANGIBLE ASSETS

Intangible assets consist of customer lists purchased from three unrelated parties pursuant to the agreements dated June 21, 2005, April 28, 2011 and September 30, 2013.

The intangible assets are amortized using the straight line method over a period of 10 years. Amortization expenses for the three months ended February 28, 2014 and 2013 are $48,990 and $44,875; for the six months ended February 28, 2014 and 2013 are $98,003 and $89,750 respectively. The future amortization as of February 28, 2014 will be as follows:

  Amount 
    
Year ending August 31,    
2014 (Six months) $97,928 
2015  194,191 
2016  92,774 
2017  92,774 
2018  92,774 
Thereafter  280,186 
  $850,627 

12.INCOME TAXES

The entities that comprise the Group file separate tax returns in the respective tax jurisdictions that they operate. The Company files income tax returns in the U.S. federal and state, and foreign jurisdictions such as Hong Kong, People’s Republic of China. The Inland Revenue Department of Hong Kong, People’s Republic of China would have a 7 year period that it could make changes on tax returns filed.

The Company is domiciled in the State of Delaware, U.S.A.. No provision for U.S.A. profits tax has been made as the Company has sustained losses.

The Company’s subsidiary, Almonds Kisses is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, ADGS Advisory Limited, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $81,195 and $42,823 has been made for the six months ended February 28, 2014 and 2013, respectively.

The Company’s subsidiary, ADGS Tax Advisory Limited, is domiciled in Hong Kong. No provision for Hong Kong profits tax has been made as the subsidiary sustained tax losses for the six months ended February 28, 2014 and 2013.

The Company’s subsidiary, Vantage Advisory Limited, is domiciled in Hong Kong. No provision for Hong Kong profits tax has been made as the subsidiary sustained tax losses for the six months ended February 28, 2014.

F-20 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

12.INCOME TAXES (…/Cont’d )

The Company’s subsidiary, Motion Tech is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, T H Strategic Management Limited acquired on October 20, 2013, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $3,785 has been made for the six months ended February 28, 2014.

The Company’s income tax for the six months ended February 28, 2014 and 2013 can be reconciled to the income before income tax expenses in the statement of operations as follows:

  

For the Three months ended February 28,

  

For the Six months ended

February 28,

 
  2014  2013  2014  2013 
             
Income before tax $439,361  $383,133  $814,389  $389,465 
                 
Expected Hong Kong income tax expense at statutory tax rate of 16.5% $72,495  $63,217  $134,375  $64,262 
Temporary difference  (35,086)  (3,528)  (73,679)  (3,240)
Utilization of tax losses  -   (21,382)  193   (27,394)
Unrealised tax loss  34,222   4,681   24,091   9,360 
Actual income tax expense $71,631  $42,988  $84,980  $42,988 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

  February 28, 2014  August 31, 2013 
  (Unaudited)    
Deferred tax asset:        
Unrecognized tax losses $-  $- 
         
Deferred tax liability:        
Difference between book and tax depreciation $1,242  $2,340 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Other major temporary differences that give rise to the deferred tax assets and liabilities are net operating losses carry forwards. As the amounts are immaterial as of February 28, 2014 and August 31, 2013, no deferred taxes have been provided for in the accounts.

F-21 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

13.BANK LOANS

The details of the bank loans outstanding as of February 28, 2014 (unaudited) are as follows:

  Outstanding loan  Current annualized       
Name of bank amount  interest rate Nature of loans Term of loans  Collateral
             
Shanghai Commercial Bank (“SCB”) 

US$930,270

(HK$7,219,643)

  SCB annual rate of 3% Term loan  January 30, 2012 to December 31, 2035  Property and personal guarantee from related party and third party
               
Hang Seng Bank (“HSB”) 

US$117,276

(HK$910,153)

  HSB monthly rate of 0.38% Term loan  June 27, 2012 to June 26, 2017  Property and personal guarantee from related party and third party
               
Hitachi Capital (HK) Ltd (“HC”) 

US$29,737

(HK$230,779)

  HC annual rate of 2.14% flat Term loan  January 27, 2014 to January 26, 2016  Personal guarantee from related party and third party
               
DBS 

US$1,181,342

(HK$9,168,157)

  DBS annual rate of 2.75% Term loan  November 12, 2012 to 12 October, 2037  Property and personal guarantee from related party
               
Bank of East Asia (“BEA”) 

US$36,508

(HK$283,333)

  BEA monthly rate of 0.6% Term loan  February 20, 2014 to February 20, 2015  Personal guarantee from related party
               
  $2,295,133           

The details of the bank loans outstanding as of August 31, 2013 are as follows:

  Outstanding loan  Current annualized       
Name of bank amount  interest rate Nature of loans Term of loans  Collateral
             
Shanghai Commercial Bank (“SCB”) 

US$943,651

(HK$7,315,652)

  SCB annual rate of 3% Term loan  January 30, 2012 to December 31, 2035  Property and personal guarantee from related party and third party
               
Hang Seng Bank (“HSB”) 

US$136,863

(HK$1,061,028)

  HSB monthly rate of 0.38% Term loan  June 27, 2012 to June 26, 2017  Property and personal guarantee from related party and third party
               
Hitachi Capital (HK) Ltd (“HC”) 

US$5,573

(HK$43,204)

  HC annual rate of 6.98% Term loan  June 29, 2012 to November 25, 2013  Personal guarantee from related party
               
DBS 

US$1,200,698

(HK$9,308,419)

  DBS annual rate of 2.75% Term loan  November 12, 2012 to 12 October, 2037  Property and personal guarantee from related party
               
  $2,286,785           

F-22 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

13.BANK LOANS (…../Cont’d)

Interest expenses for the three months ended February 28, 2014 and 2013 are $13,177 and $26,684; six months ended February 28, 2014 and 2013 are $27,840 and $55,944 respectively.

Bank loans repayment schedule is as follows:

  February 28, 2014  August 31,
2013
 
  (Unaudited)     
Year ending August 31,        
2014 (Six months) $76,531  $107,548 
2015  149,718   114,303 
2016  119,244   118,253 
2017  85,557   90,382 
2018  74,406   79,363 
Thereafter  1,789,677   1,776,936 
  $2,295,133  $2,286,785 

The bank loans as outlined in the aforementioned tables are secured by the directors’ and third parties’ properties and personal guarantees.

14.DEFERRED REVENUE

  February 28,
2014
  August 31,
2013
 
  (Unaudited)    
Deferred revenue – current portion $144,959  $145,114 
Deferred revenue – net of current portion  362,398   435,343 
  $507,357  $580,457 

The Company has an agreement with a third party for consultancy services with a fixed fee and term of four years, renewable upon expiration. Deferred revenue to be recognized in next fiscal year (2014) is classified as current liabilities with the remaining balance classified as a non-current liabilities.

15.CONCENTRATIONS OF RISK

The Group’s credit risk is somewhat limited due to a relatively large customer base. During the three- and six- months ended February 28, 2014 and 2013, the Group had no customer which accounted for 10% or more of total revenue or 10% or more of total accounts receivable at February 28, 2014 or August 31, 2013.

F-23 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

16.RELATED PARTY TRANSACTIONS

Significant operating expenses arising from transaction with a related company was as follows.

  

For the three months ended February 28,
2014

  

For the three months ended February 28,

2013

  

For the six months ended February 28,

2014

  

For the six months ended February 28,

2013

 
Revenue:-                           
Accounting & corporate services $102,121  $-  $176,699  $- 
Multi-disciplinary Advisory  515,542       973,002   - 
  $617,663  $-  $1,149,701  $- 
Direct cost of revenue:-                
Multi-Disciplinary Advisory $28,821  $-  $63,426  $- 

These balances primarily represent revenue and direct cost of revenue, which transactions related to the Company’s Chief Operating Officer and related parties for the three and six months ended February 2014 and 2013.

See Notes 7 and 8 for discussion of advances to and from related parties.

F-24 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

17.COMMITMENTS AND CONTINGENCIES

Commitments and contingencies

(a)  In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising within the normal course of businesses that relate to a wide range of matters. The Group records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, evidence and the specifics of each matter. The Group has not recognized a provision for claims or contingencies as of February 28, 2014 and August 31, 2013.

(b)  Rental expense amounted to $40,772 and $39,483 for the three months ended February 28, 2014 and 2013; $83,315 and $80,463 for the six months ended February 28, 2014 and 2013 respectively. The total future minimum lease payments under non-cancellable operating leases with respect to premises as of February 28, 2014 are payable as follows

Year Ending August 31, Rental 
    
2014 (Six months) $66,191 
2015  94,156 
2016  - 
2017  - 
2018  - 
Over five years  - 
  $160,347 

(c)  Deferred revenue amounted to $72,479 and nil for the six months ended February 28, 2014 and 2013 respectively. The total future revenue under non-cancellable agreement with respect to consultancy service income as of February 28, 2014 are receivable as follows:

Year Ending August 31, Revenue 
    
2014 (Six months) $72,480 
2015  144,959 
2016  144,959 
2017  144,959 
2018  - 
Over five years  - 
  $507,357 

Economic and political risks

(d)  The major operations of the Group are conducted in Hong Kong, the PRC. Accordingly, the political, economic, and legal environments in Hong Kong, the PRC, as well as the general state of Hong Kong’s economy may influence the business, financial condition, and results of operations of the Company.

Among other risks, the Group’s operations are subject to the risks of restrictions on: changing taxation policies; and political conditions and governmental regulations.

F-25 

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

18.SUBSEQUENT EVENT

On March 19, 2014, the Company issued 1,400,000 shares of common stock to 12 investors for the purchase price of $0.30 per share or $420,000 in the aggregate which shares were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the U.S. Securities Act of 1933, as amended, and Regulation S thereunder. All investors represented and warranted that they were non-U.S. persons with the meaning of Regulation S.

On April 15, 2014, the Company issued 1,290,000 shares of common stock to a director for the purchase price of $0.30 per share or $387,000 in the aggregate which shares were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the U.S. Securities Act of 1933, as amended, and Regulation S thereunder. Such investor represented and warranted that he was a non-U.S. person with the meaning of Regulation S.

F-26 

 

ItemITEM 2. Management’s DiscussionMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and Analysis of Financial Condition and Results of Operations.

The followinganalysis (“MD&A”) should be read in conjunction with the consolidated financial statements of Quality Online Education Group Inc. (ticker symbol: QOEG) for the Company included elsewhere herein. All amounts are in U.S. Dollars unless other noted.quarters ended May 31, 2023 and 2022.

Safe Harbor for Forward-Looking Statements

This report containsCertain statements included in this MD&A constitute forward-looking statements. These statements, involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or impliedincluding those identified by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would”expressions anticipate, believe, plan, estimate, expect, intend, and similar expressions intended to identifythe extent they relate to Quality Online Education Group Inc. (ticker symbol: QOEG) or its management. These forward-looking statements. Forward-looking statements are not facts, promises, or guarantees; rather, they reflect our current views with respect toexpectations regarding future events and are based on assumptions andresults or events. These forward-looking statements are subject to risks and uncertainties. Given these uncertainties youthat could cause actual results, activities, performance, or events to differ materially from current expectations. These include risks related to revenue growth, operating results, industry, products, and litigation, as well as the matters discussed in QOEG’s MD&A under Risk Factors. Readers should not place undue reliance on any such forward-looking statements. Also, forward-lookingQOEG disclaims any obligation to publicly update or to revise any such statements represent our estimates and assumptions only as ofto reflect any change in the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future resultsCompany’s expectations or in events, conditions, or circumstances on which any such statements may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly,based, or to updatethat may affect the reasonslikelihood that actual results couldwill differ materially from those anticipated in any forward-looking statements, even if new information becomes availableset forth in the future.forward-looking statements.

Company Overview

Unless the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to the combined business of ADGS Advisory, Inc., formerly known as Life Nutrition Products, Inc., a Delaware corporation, and its direct and indirect wholly-owned subsidiaries, Almonds Kisses Limited (BVI), a British Virgin Islands company, ADGS Advisory Limited, a Hong Kong corporation, Vantage Advisory Limited, a Hong Kong corporation, Motion Tech Development Limited, a British Virgin Islands company, and TH Strategic Management Limited, a Hong Kong corporation, as well as ADGS Tax Advisory Limited, a Hong Kong corporation which is an 80% owned subsidiary, and Dynamic Golden Limited, a Hong Kong corporation which until November 19, 2013 was 30% owned by ADGS Tax Advisory Limited and has since been 30% owned by Almonds Kisses Limited (BVI). Pursuant to a Certificate of Amendment to the its Certificate of Incorporation filed with the State of Delaware and effective as of July 19, 2013, the Company changed its corporate name from “Life Nutrition Products, Inc.” to “ADGS Advisory, Inc.”.

We are primarily engaged in providing accounting, taxation, company secretarial, general corporate and consultancy services in Hong Kong.

On April 12, 2013, we acquired 100% of the issued and outstanding capital stock of Almonds Kisses Limited (BVI) (“Almonds Kisses BVI”) in exchange for 20,155,000 sharesThe following discussion of our common stock, representing in the aggregate approximately 80.1%financial condition and results of our issued and outstanding shares of common stock.

Almonds Kisses BVI was incorporated on March 1, 2011 as a limited liability company in the British Virgin Islands. ADGS Advisory Limited (“ADGS Hong Kong”) is a Hong Kong corporation which was incorporated on April 28, 2011 and had been wholly owned by the same group of shareholders until being acquired by Almonds Kisses BVI pursuant to a reorganization completed in 2012 to prepare for the Transaction. Vantage Advisory Limited is a Hong Kong corporation which was incorporated on March 6, 2008 which has been wholly owned by Almonds Kisses BVI since January 2013. Motion Tech is a British Virgin Islands company which was incorporated on October 7, 2007 and has been wholly owned by Almonds Kisses BVI since August 2013. Motion Tech is a property holding company which owns a residential property. TH Strategic Management Limited is a Hong Kong corporation which was incorporated on March 16, 2010 which has also been wholly owned by Almonds Kisses BVI since October 2013. ADGS Hong Kong owns 80% of ADGS Tax Advisory Limited (“ADGS Tax”) which is a Hong Kong incorporated holding company. Dynamic Golden Limited which is also a Hong Kong incorporated company, which was 30% owned by ADGS Tax until November 19, 2013 and has since been 30% owned by Almonds Kisses BVI, owns an investment in residential real property located in Tuen Mun, New Territories, Hong Kong.

The chart below presents our corporate structure as of the date of this report:

ADGS Advisory, Inc.

(formerly Life Nutrition Products, Inc.),

a Delaware corporation

ê 100%

Almonds Kisses Limited (BVI),

a British Virgin Islands company

ê 100%ê 100%ê 100%ê 100%ê 30%
ADGS Advisory LimitedVantage Advisory Limited,TH Strategic Management Limited,Motion Tech DevelopmentDynamic Golden Limited,
a Hong Kong corporationa Hong Kong corporationa Hong Kong corporationLimited, a British Virgin Islandsa Hong Kong
 corporation company
ê 80%
ADGS Tax Advisory Limited
a Hong Kong corporation

Critical Accounting Policies

While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

Basis of presentation

The accompanying interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures for a fair presentation of these interim consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States. These unaudited consolidated financial statementsoperations should be read in conjunction with the consolidatedour financial statements and accompanying footnotesthe related notes included in this report.

Liquidity, Capital Resources and Plan of the Company for the year ended August 31, 2013, as filed in Form 10-K with the Securities and Exchange Commission on December 24, 2013.Operations

The unaudited condensed consolidatedGoing Concern

Our financial statements include all accounts of the Company and its subsidiaries as disclosedappearing elsewhere in note 1.  All material inter-company balances and transactionsthis offering circular have been eliminated.

As both the Company and its subsidiaries, ADGS and ADGS Tax are under common control, the financial statements of the Company have been presented as if the receipt of assets and liabilities of the subsidiaries at their net carrying amount been entered into as of March 1, 2011 in accordance with ASC 805-50-15-6. Accordingly, financial information related to periods prior to the assets and liabilities are that of the Company’s operating subsidiaries.

Certain reclassifications have been made to the comparative period amounts to conform with that of the current period.

Going concern

The accompanying consolidated financial statements are presentedprepared on a going concern basis.   Althoughbasis, which contemplates the Company has a working capital surplus of $255,542 at February 28, 2014, management plans to continue its efforts to raise funds through debt or equity in the near future and increase its profitability to sustain its operations.

Revenue recognition

The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.

(i) Revenue generates from providing accounting, taxation, company secretarial and consultancy services is recognized when persuasive evidence of an arrangement exists, the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured. The Group generates its revenues from providing professional services under fixed-fee billing arrangements.

In fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee in monthly installments over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

(ii) Consultancy service for slope inspection represents under fixed price contract is recognized when the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured.

(iii) Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

(iv) The Company recognizes the management fee income when service is provided. Services include providing administration support service or accounting service to companies.

Purchased intangible assets and goodwill

The Company assesses the useful lives and possible impairment of existing recognized intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

- significant underperformance relative to historical or projected future operating results;

- significant changes in the manner of use of the acquired assets or the strategy for our overall business;

- identification of other impaired assets within a reporting unit;

- disposition of a significant portion of an operating segment;

- significant negative industry or economic trends;

The intangible assets are amortized using the straight line method over a period of 10 years.

Income taxes

The Company accounts for income taxes under FASB ASC Topic 740 “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basesrealization of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the deferred tax assets will not be realized. Deferred tax assets andsatisfaction of liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.normal course of business. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

The Company records uncertain tax positions when it is more likely than not that the tax positions will not be sustained upon examination by the respective tax authority.

The Company recognizes interest and penalty related to income tax matters as income tax expense. For the six months ended February 28, 2014 and 2013, there was no penalty or interest recognized as income tax expenses.

Economic and political risks

The major operations of the Company are conducted in Hong Kong, the PRC. Accordingly, the political, economic, and legal environments in Hong Kong, the PRC, as well as the general state of Hong Kong’s economy may influence the business, financial condition, and results of operations of the Company.

Among other risks, the Company’s operations are subject to the risks of restrictions on: changing taxation policies; and political conditions and governmental regulations.

Recently issued accounting standards not yet adopted

The Company has reviewed all recently issued, but not effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will cause a material impact on its financial condition or the result of its operation.

Trends and Uncertainties

Insofar that our revenues are mainly derived from providing professional services to our clients under fixed-fee billing arrangements, the number of clients we have at any given time and the fees billed are the Company’s key uncertainties. The recent growth in revenues was primarily due to the acquisition of customer lists and client bases in 2011 and, therefore, we cannot be certain that this growth represents a trend which will continue although we have recently made acquisitions and we plan to make additional acquisitions in the upcoming years and we are regularly exploring such opportunities which may benefit our business and increase our revenues. In the future, we expect that we will seek to purchase other customer lists and client bases as part of our overall growth strategy, although there can be no assurance that we will be able to do any of the foregoing on terms which will be acceptable to us.

Other key uncertainties include our high leverage and highly variable interest expense. To date, we have significantly relied upon debt financings to fund our operations. At February 28, 2014 (unaudited) and August 31, 2013 (audited), we had outstanding bank loans (excluding bank overdrafts) in the principal amount of $2,295,133 and $2,286,785, respectively. We also had bank overdrafts of $777,837 as of February 28, 2014 compared with $744,077 as of August 31, 2013. Interest expense from bank loans and overdrafts (excluding capital lease interest) for the six months ended February 28, 2014 was $52,895 and for the six months ended February 28, 2013 was $61,879. Such loans are primarily term loans with maturity dates ranging from February 2014 to October 2037. Approximately $0.5 million of the bank loans are to be repaid over the next five years. While we have begun to achieve profitable operations during fiscal 2013, there can be no assurance that such profitability will continue or that revenues from our operations will be able to service these debt obligations. See “Risk Factors” elsewhere in this report for further discussion of these uncertainties and others.

In addition to the foregoing, as of February 28, 2014, advances to a related party total $31,050. The advances to the related party represent unsecured, non-interesting bearing loans without fixed repayment terms. Although most of such advances have been repaid to the Company, such advances may have detrimentally affected our ability to do business insofar that such advances represented a major portion of the Company’s available cash. These advances were provided as a special accommodation to such related party whose personal properties were provided as collateral for bank loans obtained by the Company. Although there is no binding obligation on the part of the shareholder to repay such loans, such shareholder previously informally agreed to repay such amounts on or before November 1, 2013 but has since revised such date to May 31, 2014. The foregoing represents another key uncertainty since no assurance can be made that such advances will be repaid on or before May 31, 2014 or at all. In addition, although such advances are no longer being made to such shareholder, such advances have not generated income to the Company and may have detrimentally affected our ability to grow the business for the benefit of all of the shareholders.

Principal Components of Our Income Statement

Revenue

Our revenue is derived from providing professional services to our clients under fixed-fee billing arrangements. The most significant factors that affect our revenue are number of clients and our fees billed. In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a pre-determined set of professional services. Generally, our client agrees to pay a fixed-fee every month over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

Operating expenses

Our operating expenses consist of direct cost of revenue, general and administrative expenses.

Direct cost of revenue

Our direct cost of revenue primarily consists of commission paid, consultant fees, legal and professional fees, management fees, salaries, secretarial fees and sub-contractor fees.

General and administrative expenses

Our general and administrative expenses include advertising and exhibitions, computer fee, depreciation of property and equipment, motor vehicles, rent, rates and building management fee and other miscellaneous expenses related to our administrative activities.

Our operating expenses are positively correlated to our revenue, with the anticipated expansion of our Company, we anticipate the absolute dollars of the operating expenses will increase accordingly.

Other comprehensive income

Other comprehensive income reflects foreign currency translation adjustment according to our accounting policies.

For the Three Months Ended February 28, 2014 and February 28, 2013 and For the Six Months Ended February 28, 2014 and February 28, 2013 (unaudited)

The following table presents the consolidated statements of operations of the Company for the three months ended February 28, 2014 as compared to the results of operations for the three months ended February 28, 2013 and for the six months ended February 28, 2014 as compared to the results of operations for the six months ended February 28, 2013.

  

For the Three Months Ended
February 28,

  

For the Six Months Ended

 February 28,

 
  

2014

(unaudited)

  

2013

(unaudited)

  

2014

(unaudited)

  

2013

(unaudited)

 
     (A)     (A) 
             
Revenue $1,441,268  $1,296,035  $2,601,278  $1,905,634 
Less: Operating expenses                
Direct cost of revenue  (586,401)  (603,608)  (1,131,827)  (967,039)
General and administrative expenses  (388,920)  (275,946)  (601,734)  (486,355)
Operating profit  465,947   416,481   867,717   452,240 
Other income  327   -   1,869   - 
Other expenses  (26,913)  (33,348)  (55,197)  (62,775)
Net profit  439,361   383,133   814,389   389,465 
Income tax expenses  (71,631)  (42,988)  (84,980)  (42,988)
Other comprehensive income/(loss)  (4,652)  (67)  1,270   (115)
Total comprehensive income  363,078   340,078   730,679   346,362 
Comprehensive loss attributable to non-controlling interests  5,160   5,674   10,934   11,345 
Comprehensive income attributable to ADGS Advisory, Inc. $368,238  $345,752  $741,613  $357,707 

(A)  Represents the consolidated statement of comprehensive income of Almonds Kisses Limited and subsidiaries (the “Accounting Acquirer”)

Revenue

For the Six Months Ended February 28, 2014 and February 28, 2013

Our business for the six months ended February 28, 2014 expanded rapidly. We recorded revenue of $2.6 million for the six months ended February 28, 2014, representing an increase of $0.7 million as compared to the results of $1.9 million for the same period ended February 28, 2013. The increase was primarily due to the increase of revenue stream in corporate restructuring, insolvency services and multi-disciplinary advisory services and a steady growth in accounting and corporate services.

For the Three Months Ended February 28, 2014 and February 28, 2013

We recorded revenue of $1.4 million for the three months ended February 28, 2014, representing an increase of $0.1 million as compared to $1.3 million for the same period ended February 28, 2013.

General and administrative expenses

  

For the Three Months Ended February 28,

  %  

For the Six Months Ended

February 28,

  % 
  2014  2013  change  2014  2013  change 
Revenue $1,441,268  $1,296,035   +11% $2,601,278  $1,905,634   +37%
Less: Operating expenses                        
Direct cost of revenue  (586,401)  (603,508)  -3%  (1,131,827)  (967,039)  +17%
General and administrative expenses  (388,920)  (275,946)  +41%  (601,734)  (486,355)  +24%
Operating profit $465,947  $416,481   +12% $867,717  $452,240   +92%

The significant increase in general and administrative expenses is mainly caused by the increase of revenue stream in our services which led to more general and administrative expenses incurred.

Other expense

Other expense represents the interest expense for the bank loans, bank overdrafts, capital lease and others of $26,913 for the three months ended February 28, 2014 and $55,197 for the six months ended February 28, 2014 and $33,348 for the three months ended February 28, 2013 and $62,775 for the six months ended February 28, 2013.

Other comprehensive income/(loss)

Other comprehensive income/(loss) represents the foreign currency translation adjustment of $4,652 loss for the three months ended February 28, 2014 and $1,270 for the six months ended February 28, 2014 and $67 loss for the three months ended February 28, 2013 and $115 loss for the six months ended February 28, 2013.

Liquidity and Capital Resources

As of February 28, 2014, we had cash on hand of $1,112,662, which represented an increase of $948,348 from $164,314 as of August 31, 2013, total current assets of $1,923,167, and total current liabilities of $1,667,625. Working capital at February 28, 2014 was $255,542 and the ratio of current assets to current liabilities was 1.15 to 1 as of February 28, 2014.

As of February 28, 2014 we had long term debt of $3,419,134, which represented an decrease of $34,478 from $3,453,612 as of August 31, 2013; total assets of $5,738,590 as of February 28, 2014 representing an increase of $972,713 from $4,765,877 as of August 31, 2013. The ratio of long term debts to total assets was 0.6 to 1 as of February 28, 2014.

These conditions raise doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent oncontingent upon its ability to meet its obligations,increase revenues or raise additional capital as required. For the quarter ended May 31, 2023, the Company’s gross billing were $2.53 Million, 230% increased compare to obtain additionalMay 31, 2022.

Financings and Securities Offerings

Investing Activities.

Since inception, our principal sources of operating funds have been proceeds from equity financing as may be requiredincluding the sale of our Common Stock to initial investors known to management and ultimately to attain profitability. The financial statementsprincipal shareholders of the Company. We do not include any adjustmentexpect that might result from the outcome of this uncertainty. Our management plans to continue its effortsour current cash on hand will fund our existing operations. We will need to raise additional capital in order execute our business plan and growth goals for at least the next twelve-month period thereafter. If the Company is unable to raise sufficient additional funds, it will have to execute a slower than planned growth path, reduce overhead and scale back its business plan until sufficient additional capital is raised to support further operational expansion and growth. There can be no assurance that such a plan will be successful.

Business Strategy

Quality Online Education Group has founded in Aug 2018 in Ontario Canada with a global reach. We provide comprehensive online English lessons to students around the world. English education resource is unbalanced between areas. To address this unmet need, we have developed online and mobile education platforms, customized the content and optimized the marketing method to provide high quality yet affordable products that enable students around the world to take live online English lessons with native English-speaking teachers. We connect our students with highly qualified teachers who have gone through debt or equity, improve its profitability inour rigorous selection and training process before they deliver lessons. We hire, train, and manage our tutors from North America and the near future to sustain its operations.Philippines.

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Our market consists of students from K12 to adults. The lessons we provide are focused on the interaction and application of English.

The following

We have successfully launched a direct selling model through Mommy Influencer in different part of Southeast Asia countries. This business model is cost-effective, saving us significant sales and marketing dollars and build a summary ofbetter cash provided by or used in each of the indicated type of activities during the six months ended February 28, 2014 and February 28, 2013, respectively:

  

For the Six Months Ended

February 28,

 
Cash provided by/(used in): 

2014

(unaudited)

  

2013

(unaudited)

 
Operating activities $983,040  $453,694 
Investing activities  (609,775)  (133,366)
Financing activities  757,490   (104,018)
Effect of change of exchange rates  (407)  5 
         
Cash, beginning of period  164,314   129,001 
Cash, end of period $1,112,662  $345,316 

Net cash provided by operating activities was $983,040 for the six months ended February 28, 2014, asflow outlook compared to net cash provided by operating activitiesthe competitors who only use online advertisement. With the proper expansion of $453,694operations, coupled with the replication of our direct selling model to targeted areas around the world more than 200 cities around the globe, we expect to achieve magnitudes of exponential growth.

Company’s Plan of Operation.

We are launching small group lessons, where one teacher simultaneously teaches 2-4 students online. The one-to-many model has a lower unit price than other competitors, and may be affordable for same period ended February 28, 2013. The increase was mainly due tomore students yet yield a net profit of $740,343, plus other receivables of $93,945, prepaid expenses of $64,051 and income tax payable of $110,440, offset by accounts receivable of $(49,038), utility and other deposits of $(32,315), accrued liabilities of $(20,677), and accrued expenses for the Company and deferred revenue of $(72,534) due to the recognition of consultancy services provided to a third party with a fixed fee and term of four years.higher margin.

Net cash used in investing activities was $(609,775) for the six months ended February 28, 2014, as compared to net cash used in investing activities of $(133,366) for the six months ended February 28, 2013. The increase was mainly due to the acquisition of a subsidiary, TH Strategic Management Limited, which amounted to $475,605 paid during the six months ended February 28, 2014.

Net cash provided by financing activities was $757,490 for the six months ended February 28, 2014, as compared to net cash used in financing activities of $104,018 for the six months ended February 28, 2013. The increase was primarily caused by repayment to the Company of advances made and expenses paid on behalf of a related party of $387,159, receipt of $154,988 for future share issuances, and increase in bank loans and bank overdraft of $86,132 and $34,582, respectively. The advances to shareholder represented unsecured, non-interesting bearing loans without fixed repayment terms. Although there is no binding obligation on the part of the shareholder to repay such loans, such shareholder previously informally agreed to repay such amounts on or before November 1, 2013 but has since revised such date to May 31, 2014.

The Company had bank loans with outstanding principal of $2.3 million as of February 28, 2014. Summary of total bank loans is as follows:

Nature of loans Terms of loans Outstanding loan amount  Current annualized interest rate Collateral
          
Term loan Ranging from 1
year to 25 years
 $2,295,133  Ranging from annual rate  
from 0.38% to 6.98%
 Property and personal guarantee from related party and third party
           
    $2,295,133     

The valuations for the above collaterals on August 15, 2013 were approximately $3.7m while the total outstanding loan amount was approximately $2.3m.

The Company had assets held under capital leases, which represent leases of motor vehicle. The cost of motor vehicle under capital lease was $105,646 at February 28, 2014. The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of February 28, 2014 are as follows:

  Amount 
Year ending August 31,    
2014 (Six months) $13,658 
2015  27,316 
2016  27,316 
2017  27,316 
2018  10,745 
Thereafter  - 
Total minimum lease payment $106,351 
Less: Imputed interest  (6,136)
Present value of net minimum lease payments $100,215 
Less: Current maturities of capital leases obligations  (12,004)
Long-term capital leases obligations $88,211 

Material capital expenditure commitments

We anticipate that we will require a high level of capital expenditure in the foreseeable future to fund our future growth. We intend to fundfurther develop our capital expendituressales platform by entering additional cities in Southeast Asia and future acquisitions outother countries in need of internal sourcesEnglish teaching resources. Also, we plan to develop and launch new product lines such as the test preparation training for IELTS and non-English types. Our current student base covers Japan, Thailand, France and Germany. We anticipate a more significant profit margin through increasing the student retention rate and launching new product lines, like group lessons.

Results of liquidity and/or through access to additional financing from external sources. Currently, the Company has not entered into any agreements for any potential acquisitions. As a result, there are no material capital expenditure commitments as of February 28, 2014.Operations

Contractual Obligations

The following table sets forth information regarding the Company’s contractual payment obligations excluding the bank overdrafts of $0.8 million as of February 28, 2014.

     Payment due by period 
Contractual obligations Total  < 1 year  1 - 3 years  3 - 5 years  > 5 years 
                
Borrowing:                    
- Capital lease $106,351  $13,658  $54,632  $38,0561  $- 
Bank loan  2,295,133   76,531   268,962   159,963   1,789,677 
                     
- Loan from a related party  749,923   -   -   749,923   - 
Operating lease obligation:                    
- Office rental  160,347   66,191   94,156   -   - 
  $3,311,750  $156,380  $417,750  $947,943  $1,789,677 

Off-Balance Sheet Arrangement

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

We have not entered into any financial guarantees or commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us.

We may be exposed to interest rate risk in relation to the bank loans we maintain. The interest rate risk is managed by the Directors of the Company on an ongoing basis with the primary objective of limiting the extent to which interest expense could be affected by adverse movement in interest rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s post-tax profit for the sixThree months ended February 28, 2014 would increase/decrease by $3,843May 31, 2023, as compared with the combined post-tax profit for the sixCompared to three months ended February 28, 2013 while the Company’s post-tax profitMay 31, 2022

Revenue: The Company billed our customers $2.53 million for the three months ended February 28, 2014 would increase/decrease by $230May 31, 2023 as compared withto $0.77 million for the combined post-tax profitsame period of May 31, 2022. The Company recorded revenue of $1.29 million for the three months ended February 28, 2013.May 31, 2023 as compared to $0.51 million for the same period of May 31, 2022.

Operating expenses: Total operating expenses for the three months ended May 31, 2023 was $2.09 million as compared to $0.78 million for the same period of May 31, 2022 due to decreased in operating activities namely, consulting expenses.

Net loss: Net loss for the three months ended May 31, 2023 was $1.34 million as compared to $0.49 million for the same period of May 31, 2022.

Item 3.QuantitativeContractual Obligations, Commitments and Qualitative Disclosures About Market RiskContingencies .

As of the date there are none.

Off-Balance Sheet Arrangements

We aredid not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company as(as defined byin Rule 12b-2 of the Securities Exchange Act of 1934 andAct), we are not required to provide the information under this item.called for by Item 304 of Regulation S-K.

ItemITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures .

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer,our chief executive, we have evaluated the effectivenessconducted an evaluation of our disclosure controls and procedures, (asas such term is defined inunder Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of the Exchange Act) as of the end of the period covered by this report.1934. Based on thatthis evaluation, the Principal Executive Officerour chief executive officer and Principal Financial Officerprincipal financial officer have concluded that, as of February 28, 2014, these disclosuresuch controls and procedures were effectiveto be ineffective as of November 30, 2022, to ensure that all information required to be disclosed by usthe issuer in the reports that we fileit files or submitsubmits under the Exchange Act is: (i)is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rulerules and forms;forms and (ii)to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to ourthe issuer’s management, including our Principal Executive Officerits principal executive and Principal Financial Officer,principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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There have been no changes in the Company’sManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15 (f) and 15d- 15 (f) under the Exchange Act, for the Company.

Our internal control over financial reporting is the process designed by and under the supervision of our CEO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting - Guidance for Smaller Public Companies.

Due to our limited resources, the following material weaknesses in our internal control over financial reporting continued to exist at May 31, 2023:

we do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);

we do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our limited size and early stage nature of operations, segregation of all conflicting duties may not always be possible and may not be economically feasible; however, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals;

we do not have an independent audit committee of our Board of Directors;

We believe that occurred duringthese material weaknesses primarily related, in part, to our lack of sufficient staff with appropriate training in GAAP and SEC rules and regulations with respect to financial reporting functions, and the fiscal quarter coveredlack of robust accounting systems, as well as the lack of sufficient resources to hire such staff and implement these accounting systems.

If and when our financial resources allow, we plan to take a number of actions to correct these material weaknesses including, but not limited to, establishing an audit committee of our Board of Directors comprised of three independent directors, adding experienced accounting and financial personnel and retaining third-party consultants to review our internal controls and recommend improvements.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Evaluation of Changes in Internal Control over Financial Reporting

There were no material changes in our internal control over financial reporting identified in connection with the evaluation required by this reportparagraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.

Exhibits 31.1 to this Quarterly Report is the Certifications of the Chief Executive Officer and Director. This Certification is required in accordance with Section 302 of the Sarbanes-Oxley Act (the “Section 302 Certifications”). This Item 4 of this Quarterly Report, which you are currently reading, is the information concerning the Evaluation referred to above and in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

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PART II - OTHER INFORMATION

ItemITEM 1. Legal Proceedings.LEGAL PROCEEDINGS

TheThere are no legal proceedings that have occurred within the past five years concerning the Company, is not currentlyour directors, or control persons which involved a party to any pendingcriminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

ITEM 1A. RISK FACTORS

We believe there are no changes that constitute material legal proceeding nor is it aware of any proceeding contemplated by any individual, company, entity or governmental authority involvingchanges from the Company.risk factors previously disclosed in our Annual Report on Form 10-K, filed with the SEC on November 22, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.We have a total of USD $1,583,627 worth of common shares issued during the Q3 period. The following table is the breakdown.

NameCommon Shares IssuedCost Base (USD)
Hongjun Zhang20,000,000$400,000
Kun Wu10,000,000$200,000
Liangjiao Bai10,000,000$200,000
Hongmin Yu2,000,000$40,000
ChanJuan WANG5,072,464$101,449
Shan Tian869,565$17,391
Fang Yang1,433,275$28,666
Xin Feng809,754$16,195
Xue Liu434,783$8,696
Chow Chun Kit5,514,706$110,294
Aixia Hu3,676,471$73,529
Red Marketing Inc.183,824$3,676
Xuye Wu3,676,471$73,529
Luyuan Wang5,000,000$100,000
Peng Wu2,500,000$50,000
Total71,171,3131,423,425

Other than that, there were no unregistered sales of the Company’s equity securities during the quarter ended May 31, 2023, that were not otherwise disclosed in a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.There has been no default in payment of principal, interest, sinking or purchase fund instalment, or any other material default, with respect to any indebtedness of the Company.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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Item 4.  Mine Safety Disclosures.

Not applicable.

 

ItemITEM 5. Other Information.OTHER INFORMATION

None.There is no other information required to be disclosed under this item that has not previously been reported.

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Item 6. Exhibits.

31.1Exhibit No.Description
31.1Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)Director
32.1
31.2Section 1350 Certification of Principal FinancialChief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)Director
32.1Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101*The following financial information from our Quarterly Report on Form 10-Q for the quarter ended February 28, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statement of Changes in Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements

*In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant toIn accordance with the requirements of the Securities Exchange Act, of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Quality Online Education Group Inc.

By:ADGS ADVISORY, INC./s/ XuYe Wu
Name:(Registrant)XuYe Wu
Title:Chief Executive Officer, Principal Executive
Officer, Principal Financial Officer, Principal
Accounting Officer, and Director

Dated: July 17, 2023

By:/s/ Xijin Wu
Dated: May 3, 2021Name:By:Xijin Wu/s/ Xuye Wu
Title:DirectorXuye Wu
Principal Executive and Accounting Officer

Dated: July 17, 2023

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