UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 3
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
LNPR Group Inc.
(Exact Name of Registrant as Specified in Charter)
| Colorado | 26-1381565 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| 5190 Neil Rd, Ste. 430, Reno, NV | 89502 | |
| (Address of Principal Executive Offices) | (Zip Code) |
| Registrant’s telephone number, including area code: | +44 7856 940110 |
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
(Title of class)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 Filer | ☐ | Accelerated Filer | ☐ | ||
| Non-accelerated Filer | ☐ | Smaller 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. ☐
EXPLANATORY NOTE
LNPR Group Inc., a Colorado corporation (the “Company”), is filing this General Form for Registration of Securities on Form 10, as amended (the “Registration Statement”), to register its common stock, par value $0.001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless otherwise mentioned or unless the context requires otherwise, when used in this Registration Statement, the terms “LNPR Group,” “Company,” “we,” “us,” and “our” refer to LNPR Group Inc.
We are subject to the requirements of Section 13(a) under the Exchange Act, which requires us to file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and we are required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.
FORWARD LOOKING STATEMENTS
This Registration Statement contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Registration Statement, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important cautionary statements in this Registration Statement that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
You should read this Registration Statement and the documents that we have filed as exhibits to this Registration Statement with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Registration Statement are made as of the date of this Registration Statement, and we do not assume any obligation to update any forward-looking statements except as required by applicable law.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
When this Registration Statement becomes effective, we will begin to file reports, proxy statements, information statements and other information with the United States Securities and Exchange Commission (the “SEC”). You may read and copy this information, for a copying fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its Public Reference Room. Our SEC filings will also be available to the public from commercial document retrieval services, and at the website maintained by the SEC at http://www.sec.gov.
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LNPR GROUP INC.
FORM 10
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| ITEM 1. | BUSINESS. |
Overview
LNPR Group Inc. was incorporated in the State of Colorado on November 6, 2007. The Company has been in the developmental stage since inception and has conducted virtually no business operations, other than organizational activities and preparation of this Registration Statement. The Company has no full-time employees and owns no real estate or personal property. The Company was formed as a vehicle to pursue a business combination and is making efforts to identify a possible business combination; however, the Company has not entered into a letter of intent concerning any target business. The business purpose of the Company is to seek the acquisition of or merger with, an existing company. We have not entered into any definitive agreement or letter of intent with any business combination target; however, we have initiated substantive discussions with a business combination target located in the U.S. Discussions have included potential acquisition structure, valuation of the target company, its business (educational artificial intelligence), etc. Due diligence has included review of financial condition of the target company, its management, etc.
We shall not undertake our initial business combination with any entity with its principal business operations in the People’s Republic of China (or, the “PRC”) (including Hong Kong and Macau).
A majority of our executive officers and/or directors are located in or have significant ties to the PRC or Hong Kong, and our auditor is located within the PRC.
As a Colorado corporation with no material operations of our own, we conduct our operations through our management, a majority of which his located in or has significant ties to the PRC or Hong Kong and our auditor is located in the PRC. We are a blank check company incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. In addition, although we do not have any specific business combination under agreement, we may pursue or consummate an initial business combination with a company located or doing business in the PRC or Hong Kong. If our target company is a PRC company, or “PRC Target Company,” we are subject to certain legal and operational risks, including, without limitation, regulatory review of overseas listing of PRC companies, restrictions on foreign ownership in certain industries, regulatory changes in the variable interest entity, or “VIE,” structure, including the validity and enforcement of the agreements in connection with such a VIE structure, if our target company is required to use such VIE structure. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard, or if our PRC Target Company fails to comply with their rules and regulations. Further, if our PRC Target Company uses a VIE structure, we will be subject to certain legal and operational risks associated with VIE’s operations in China. Specifically, if the Chinese regulatory authorities disallow the VIE structure in the future, it will likely result in a material change in our financial performance and our results of operations and/or the value of our securities post business combination, which could cause the value of such securities to significantly decline or become worthless. PRC laws and regulations which may governing a PRC Target Company’s current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in VIE’s operations, significant depreciation of the value of our securities, or a complete hindrance of our ability to offer or continue to offer our securities to investors. For a detailed description of the risks relating to the VIE structure, doing business in the PRC or Hong Kong, see “Risks Associated with Acquiring and Operating a Target Business with its Primary Operation in China and Hong Kong.
Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using entity VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on any PRC Target Company’s daily business operation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.
If we consummate our initial business combination with a PRC Target Company or a company located in Hong Kong, we may operate in the PRC primarily through our PRC and/or Hong Kong subsidiaries. We may also adopt a series of contractual arrangements with the VIEs in the PRC, in which case (i) the VIEs will be PRC-based operations companies and PRC subsidiaries will be shell companies and (ii) investors in our securities will not and may never directly own equity interest in the VIEs but will instead hold equity interest in a holding company of the PRC subsidiaries. Under the VIE arrangement, the dividends or other distributions to be paid by PRC subsidiaries to their overseas holding company will depend on such PRC subsidiaries’ entitlement to substantially all of the economic benefits of the VIEs, which are typically in the form of services fees or license fees payable by the VIEs to PRC subsidiaries under various VIE agreements. Such contractual arrangements may not be as effective as direct ownership in respect of our relationship with the VIE and we may be adversely affected if we experience difficulties in settling the amounts owed to PRC subsidiaries by the VIEs. All of these contractual arrangements may be governed by and interpreted in accordance with PRC law, and disputes arising from these contractual arrangements may be resolved in court or through arbitration in China. However, the legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements.
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As at the date of this Registration Statement, there are very few precedents and little official guidance as to how contractual arrangements should be interpreted or enforced under PRC law. The contractual arrangements have not been tested in a court of law in the PRC and there remain significant uncertainties regarding the ultimate outcome of arbitration or court decisions should legal action become necessary.
If we acquire a PRC Target Company which does not require a VIE structure, we may transfer funds to the PRC Target Company through an increase in the registered capital of or a shareholder loan to the PRC Target Company. The PRC Target Company may, in turn, make distributions or pay dividends to us. If we acquire a PRC Target Company which requires a VIE structure, the post-combination entity may rely on payments made from the VIE to the wholly foreign-owned enterprise, or “WFOE,” and subsequently the WFOE distributes funds to the post-combination entity as dividends, and cash to the PRC Target Company could be transferred through our organization in the manner as follows: (i) the holding company may transfer funds to WFOE, via additional capital contributions or shareholder loans, as the case may be; and (ii) the WFOE may provide loans to the PRC Target Company, subject to statutory limits and restrictions. Regardless of whether we have a VIE structure or direct ownership structure post-business combination, we may depend on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements.
As at the date of this Registration Statement, we have not made any dividends or distributions to our shareholders or any U.S. investors and we have not made any cash transfers as we are a blank check company with no subsidiary. Due to (i) the risks of doing business in the PRC and Hong Kong, (ii) our conduct of our operations through our principal executive office in Hong Kong, and (iii) a majority of our executive officers and/or directors are located in or have significant ties to PRC and/or Hong Kong (including our auditor being located in the PRC), we may be a less attractive partner to non-PRC or non-Hong Kong based target companies as compared to a non-PRC or non-Hong Kong based company, which may therefore make it harder for us to complete an initial business combination with a target company that is non-PRC or non-Hong Kong based and which may therefore make it more likely for us to consummate a business combination with a target company located in the PRC or Hong Kong.
Enforcement of Civil Liabilities
The following are the names of each officer and director located outside of the United States and their place of residence or current location:
| Name of Officer or Director Located Outside of U.S. | Place of Residence or Current Location |
| Paul Falconer, CEO and Director | Hong Kong |
| Eng Wah Kung, CFO and Director | Hong Kong |
| Nicola Yip | Malaysia |
We are incorporated under the laws of the State of Colorado with limited liability. A majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or such persons or to enforce against them or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
We have appointed Vcorp Services LLC as our agent to receive service of process with respect to any action brought against us.
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There are two avenues for the enforcement of a civil judgment pronounced by a court of the United States in Hong Kong, namely statute and common law. The statutory regime is available only to judgments given in the superior courts of various countries as specified under Schedules 1 and 2 of the Foreign Judgments (Reciprocal Enforcement) Order. The United States is not among those countries. The only available channel for enforcement of a U.S. judgment in Hong Kong is, therefore, under the common law. In Hong Kong, a foreign judgment for a monetary sum is enforceable at common law if the following criteria are met:
| · | It is a judgment in personam. |
| · | It must be for a liquidated sum of money. |
| · | It must be final and conclusive in accordance with the laws applicable in the foreign court. |
| · | The foreign court must have had the requisite jurisdiction to adjudicate upon the cause or matter that gave rise to the judgment. |
| · | It must not be impeachable according to the common law rules on conflict of laws in Hong Kong. Impeachable foreign judgments commonly include those which are of a penal or revenue nature, those which are obtained by fraud or in the proceedings conducted against natural justice, and those enforcement of which would be contrary to public policy. |
If the above common law criteria are satisfied, the claimant may bring a civil action in Hong Kong against the defendant to recover the liquidated sum under the U.S. judgment as a debt. Upon obtaining a judgment in Hong Kong, the claimant may proceed to enforce the Hong Kong judgment against the defendant.
Our auditor is subject to the determinations announced by the PCAOB on December 16, 2021 and, due to this, the Holding Foreign Companies Accountable Act and related regulations may have a negative affect our company.
Our shares of Common Stock may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act (the “HFCA Act”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditor for three consecutive years. Our auditor is subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our shares of Common Stock is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, the Nasdaq may reject listing of our shares of Common Stock. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if passed by the U.S. House of Representatives and signed into law, would reduce the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period for triggering the prohibition on trading. See “Risk Factors—A recent joint statement by the SEC and the PCAOB, proposed rule changes submitted by Nasdaq, and the HFCA Act each calling for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.”
Corporate History
LNPR Group Inc. was incorporated as “Univest Tech, Inc.” in the State of Colorado on November 6, 2007. The Company was originally formed to develop, and market music based on technology solutions.
After several name changes, on December 1, 2017, the Board of Directors adopted two separate amendments to its Articles of Incorporation: 1) changing the name of the Corporation to “LNPR Group Inc.”, and 2) effectuating a 40:1 reverse split of the Company’s common stock. The amendments became effective on December 4, 2017 and January 17, 2018, respectively. To correspond with the name change, the Company’s stock symbol was changed to “LNPR.”
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Business
The Company, based on proposed business activities, is a “blank check” company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act of 1934, as amended, (the “Exchange Act”) and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”), the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until the Company has successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
The Company wishes to provide a method for a foreign or domestic private company to become a reporting (“public”) company whose securities are qualified for trading in the United States secondary market such as the New York Stock Exchange (NYSE), NASDAQ, and the OTC Markets, and, as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The Company intends to either retain an equity interest (common stock) in any private company with which it engages in a business combination or the Company may receive cash and/or a combination of cash and common stock from any private company with which it completes a business combination. The Company’s desire is that the value of such consideration paid to it would be beneficial economically to the Company’s shareholders though there is no assurance of that happening.
Perceived Benefits
There are certain perceived benefits to being a reporting company with a class of publicly-traded securities. These are commonly thought to include the following:
| · | the ability to use registered securities to make acquisitions of assets or businesses; |
| · | increased visibility in the financial community; |
| · | the facilitation of borrowing from financial institutions; |
| · | improved trading efficiency; |
| · | shareholder liquidity; |
| · | greater ease in subsequently raising capital; |
| · | compensation of key employees through stock options for which there may be a market valuation; |
| · | enhanced corporate image; and |
| · | a presence in the United States capital market. |
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Potential Target Companies
A business entity, if any, which may be interested in a business combination with the Company may include the following:
| · | a company for which a primary purpose of becoming public is the use of its securities for the acquisition of assets or businesses; |
| · | a company which is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it; |
| · | a company which wishes to become public with less dilution of its common stock than would occur upon an underwriting; |
| · | a company which believes that it will be able to obtain investment capital on more favorable terms after it has become public; |
| · | a foreign company which may wish an initial entry into the United States securities market; |
| · | a special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan; and |
| · | a company seeking one or more of the other perceived benefits of becoming a public company. |
The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:
| · | Potential for growth, indicated by new technology, anticipated market expansion or new products; |
| · | Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole; |
| · | Strength and diversity of management, either in place or scheduled for recruitment; |
| · | Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources; |
| · | The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials; |
| · | The extent to which the business opportunity can be advanced; |
| · | The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and |
| · | Other relevant factors. |
In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data.
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Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company’s limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
Any private company could seek to become public by filing their own registration statement with the SEC and avoid compensating the Company in any manner and therefore there may be no perceived benefit to any private company seeking a business combination with the Company as it is obligated under SEC rules to file a Form 8-K with the SEC within four business days of completing a business combination which would include information required by Form 10 on the private company. It is possible that, prior to the Company successfully consummating a business combination with an unaffiliated entity, that entity may desire to employ or retain one or a number of members of the Company’s management for the purposes of providing services to the surviving entity. However, the offer of any post-transaction employment to members of management will not be a consideration in the Company’s decision whether to undertake any proposed transaction. As a result, the Company may not be able to complete a business combination.
No assurances can be given that the Company will be able to enter into a business combination, as to the terms of a business combination, or as to the nature of the target company.
Form of Acquisition
The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.
Dilution
It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called “tax free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other “tax free” provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders of the Company prior to such reorganization.
The present stockholders of the Company will likely not have control of a majority of the voting shares of the Company following a reorganization transaction. As part of such a transaction, all or a majority of the Company’s directors may resign and new directors may be appointed without any vote by stockholders.
Stockholder Approval of the Acquisition
In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders’ meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval.
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How We Might Seek Target Company
We may seek to locate a target company through solicitation. Such solicitation may include, but is not limited to; newspaper or magazine advertisements, mailings and other distributions to law firms, accounting firms, investment bankers, financial advisors and similar persons, the use of one or more web sites and/or similar methods. We may also utilize consultants in the business and financial communities for referrals of potential target companies.
Time and Opportunity Cost In Seeking Target Company
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
All such costs for the next 12 months and beyond such time will be paid with money in the Company’s treasury, if any, or with additional money contributed by other sources.
The Company presently has no employees apart from management. The Company’s officers and directors are engaged in outside business activities and anticipate they will devote to the Company’s business very limited time until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of the Company’s employees other than such changes, if any, incident to a business combination.
The Company is voluntarily filing this Registration Statement with the SEC and it is under no obligation to do so under the Exchange Act.
SEC Reporting
When this Registration Statement becomes effective, the Company will be a fully-reporting public reporting company and will begin to file reports, proxy statements, information statements and other information with the SEC. You may read and copy this information, for a copying fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its Public Reference Room. The Company’s SEC filings will also be available to the public from commercial document retrieval services, and at the website maintained by the SEC at http://www.sec.gov.
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| ITEM 1A. | RISK FACTORS. |
Risks Related to Our Business
Covid-19 Risk
We are now operating under a constant threat from COVID-19, (SARS-CoV-2) the novel coronavirus which has infected millions of people globally and is responsible for the deaths of nearly one million five hundred thousand people as of this Registration Statement. We will face uncertainty operating under the conditions of COVID-19. Given the severity of COVID-19, we will have limited to no control over our affairs if our management team becomes infected or if we are under lockdown or quarantine orders where we may have limited opportunity to review merger or acquisition targets. To the extent that we can work from home such accommodations may not be in the best interest of the Company and thus may impair the value of our management’s services. There are also risks additional beyond our control, for example; if we identify a target for merger or acquisition and if key members of that target are infected by COVID-19, it could significantly impair our strategy and would force us to reconsider our options if it could not be remedied with an alternate plan. If we encounter a prolonged lockdown or quarantine, we would likely encounter opportunity risks such as being unable to execute our plans, evaluate target businesses, and loss of potential business connections.
There may be conflicts of interest between our management and our non-management stockholders.
Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. A conflict of interest may arise between our management’s personal pecuniary interest and its fiduciary duty to our stockholders. Further, our management’s own pecuniary interest may at some point compromise its fiduciary duty to our stockholders. In addition, our management may become involved with other blank check companies and conflicts in the pursuit of business combinations with such other blank check companies with which they are, and may in the future, be affiliated with may arise. If we and the other blank check companies that our management is affiliated with desire to take advantage of the same opportunity, then any directors that are affiliated with both companies would abstain from voting upon the opportunity.
Our business is difficult to evaluate because we have no recent operating history.
As a company with no recent operating history or revenue and only minimal assets, there is a risk that we will be unable to continue as a going concern and consummate a business combination. We have had no recent operating history nor any revenues or earnings from operations since inception. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in our incurring a net operating loss that will increase continuously until we can consummate a business combination with a profitable business opportunity. We cannot assure you that we can identify a suitable business opportunity and consummate a business combination.
There is competition for private companies suitable for a merger transaction of the type contemplated by our management.
We are in a highly competitive market for a small number of business opportunities which could reduce the likelihood of consummating a successful business combination. We are and will continue to be an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination.
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Future success is highly dependent on the ability of our management to locate and attract a suitable acquisition.
The nature of our operations is highly speculative and there is a consequent risk of loss of your investment. The success of our plan of operation will depend to a great extent on the operations, financial condition and management of the identified business opportunity. While management intends to seek a business combination or combinations with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting that criterion. In the event we complete a business combination, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
We have no existing agreement for a business combination or other transaction.
We have no arrangement, agreement or understanding with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity. No assurances can be given that we will successfully identify and evaluate suitable business opportunities or that we will conclude a business combination. Management has not identified any particular industry or specific business within an industry for evaluation. We cannot guarantee that we will be able to negotiate a business combination on favorable terms, and there is consequently a risk that funds allocated to the purchase of our shares will not be invested in a company with active business operations.
Our management intends to devote only a limited amount of time to seeking a target company which may adversely impact our ability to identify a suitable acquisition candidate.
While seeking a business combination, management anticipates devoting no more than a few hours per week to our affairs in total. Our management has not entered into written employment agreements with us and is not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to identify and consummate a successful business combination.
The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies.
Target companies that fail to comply with SEC reporting requirements may delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about significant acquisitions, including audited financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of an acquisition. Otherwise, suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
The Company may be subject to further government regulation which would adversely affect our operations.
Although we will be subject to the reporting requirements under the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”), since we will not be engaged in the business of investing or trading in securities. If we engage in business combinations which result in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status under the Investment Company Act and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.
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Any potential acquisition or merger with a foreign company may subject us to additional risks.
If we enter into a business combination with a foreign concern, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.
Our stockholders may have a minority interest in the Company following a business combination.
If we enter into a business combination with a company with a value in excess of the value of our Company, and issue shares of our Common Stock to the stockholders of such company as consideration for merging with us, our stockholders will likely own less than 50% of the Company after the business combination. The stockholders of the acquired company would therefore be able to control the election of our board of directors and control the Company.
We may be unable to acquire a business opportunity on terms favorable to us.
There is no assurance that we will be able to acquire a business opportunity on terms favorable to us. Decisions as to which business opportunity to participate in will be unilaterally made by our management, which may act without the consent, vote or approval of our stockholders.
Because we may seek to complete a business combination through a “reverse merger,” following such a transaction we may not be able to attract the attention of major brokerage firms.
Additional risks may exist since we will assist a privately held business to become public through a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of our Company since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our post-merger company in the future.
We cannot assure you that following a business combination with an operating business, our common stock will be listed on NASDAQ or any other securities exchange or quotation system.
Following a business combination, we may seek the listing of our common stock on NASDAQ or another senior exchange. However, we cannot assure you that following such a transaction, we will be able to meet the initial listing standards of either of those or any other stock exchange, or that we will be able to maintain a listing of our common stock on either of those or any other stock exchange. After completing a business combination, until our common stock is listed on the NASDAQ or another stock exchange, we expect that our common stock would be eligible to trade on the OTC Markets, another over-the-counter quotation system, where our stockholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock. In addition, we would be subject to an SEC rule that, if it failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination.
We are highly dependent on the services of our management, the loss of whom could materially harm our business and our strategic direction. If we lose key management, cannot recruit qualified directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.
We are highly dependent on our management. We have no employment agreements in place with any members of our management. If we lose any members of management, our business may suffer. We do not carry “key-man” life insurance on the lives of any of our management. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition, our compensation costs may increase significantly.
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We might require additional capital to support our business in the future, and this capital might not be available on acceptable terms, or at all.
If our existing unrestricted cash and cash equivalents balances are not sufficient to meet our future cash requirements, we will need to access additional capital to fund our operations. We may seek to raise capital by, among other things:
| · | issuing additional shares of our Common Stock or other equity securities; |
| · | issuing convertible or other debt securities; and |
| · | borrowing funds under a credit facility. |
We may not be able to raise needed cash in a timely basis on terms acceptable to us or at all. Financings, if available, may be on terms that are dilutive or potentially dilutive to our stockholders. The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of our Common Stock. In addition, if we were to raise cash through a debt financing, the terms of the financing might impose additional conditions or restrictions on our operations that could adversely affect our business. If we require new sources of financing but they are insufficient or unavailable, we would be required to modify our operating plans to take into account the limitations of available funding, which would harm our ability to maintain or grow our business.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. If we are unable to maintain adequate internal control over financial reporting, we might be unable to report our financial information on a timely basis and might suffer adverse regulatory consequences. We have in the past and may in the future discover areas of our internal financial and accounting controls and procedures that need improvement. Our internal control over financial reporting will not prevent or detect all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company will be detected. If we are unable to maintain proper and effective internal controls, we may not be able to produce accurate financial statements on a timely basis, which could adversely affect our ability to operate our business and could result in regulatory action, and could require us to restate, our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial statements and sanctions imposed on us by the SEC.
Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial condition and results of operations.
Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Some of these policies require use of estimates and assumptions that may affect the reported value of our assets or liabilities and results of operations and are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. If those assumptions, estimates or judgments were incorrectly made, we could be required to correct and restate prior period financial statements. Accounting standard-setters and those who interpret the accounting standards (such as the Financial Accounting Standards Board, the SEC and banking regulators) may also amend or even reverse their previous interpretations or positions on how various standards should be applied. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in the need to revise and republish prior period financial statements.
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Risks Associated with Acquiring and Operating a Target Business with its Primary Operation in China and Hong Kong
A significant number of our executive officers and directors are located in or have significant ties to China and/or Hong Kong, and we may seek to acquire a company that is based in China or Hong Kong or a PRC Target Company which might require a VIE structure in an initial business combination. Because of such ties to China or Hong Kong, we may be subjected to the laws, rules and regulations of the PRC. Accordingly, we will be subject to the following risks associated with acquiring and operating a target business with its primary operation in China and Hong Kong.
If the PRC government deems that the contractual arrangements in relation to the potential PRC Target Company, and the VIE, do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We are a holding company with no operations of our own. Although we do not have any specific business combination under agreement, our initial business combination target company may include a PRC Target Company which might require a VIE structure. The PRC Target Company, through contractual arrangements, exercises effective control over the operating activities that most impact the economic performance, bears the risks of, and enjoys the rewards normally associated with ownership of the entity. As a result, through such contractual arrangements with the VIE and its shareholders, we may become the primary beneficiary of the VIE, and, therefore, may consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP or IFRS. In that case, following the consummation of a business combination with a PRC Target Company, our securities would be securities of an offshore holding company instead of shares of the VIE in China.
We would rely on WFOE’s contractual arrangements with the VIE and its shareholders to operate the business. These contractual arrangements may not be as effective as direct ownership in respect of our relationship with the VIE. Under the contractual arrangements, as a legal matter, if the VIE or any of its shareholders executing the VIE Agreements fails to perform its, his or her respective obligations under the contractual arrangements, we may have to incur substantial costs and resources to enforce such arrangements, and rely on legal remedies available under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if shareholders of a VIE were to refuse to transfer their equity interests in such VIE to us or our designated persons when we exercise the purchase option pursuant to the contractual arrangements, we may have to take a legal action to compel them to fulfill their contractual obligations.
If (i) the applicable PRC authorities invalidate the contractual arrangements for violation of PRC laws, rules and regulations, (ii) any VIE or its shareholders terminate the contractual arrangements, (iii) any VIE or its shareholders fail to perform its/his/her obligations under the contractual arrangements, or (iv) if these regulations change or are interpreted differently in the future, the PRC Target Company’s business operations in China would be materially and adversely affected, and the value of your securities would substantially decrease or even become worthless. Further, if we fail to renew the contractual arrangements upon their expiration, we would not be able to continue the business operations unless the then current PRC law allows us to directly operate businesses in China.
In addition, if any VIE or all or part of its assets would become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of the variable interest entities undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business and our ability to generate revenues.
All of the contractual arrangements will be governed by PRC law and provided for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts will be interpreted in accordance with PRC laws and any disputes will be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements. In the event we are unable to enforce the contractual arrangements, we may not be able to exercise effective control over our PRC Target Company’s operating entities that most impact the economic performance, bears the risks of, and enjoys the rewards for the purpose of consolidating the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP or IFRS (as discussed above) and we may be precluded from operating our business, which would have a material adverse effect on our financial condition and results of operations.
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Although based on industry practices, VIE contractual arrangements among WFOE, the VIE and its shareholders governed by PRC laws are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect, however, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may ultimately take a view that is contrary to the accepted industry practices with respect to VIE contractual arrangements. In addition, it is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or if adopted, what they would provide. PRC government authorities may deem that foreign ownership is directly or indirectly involved in the VIE’s shareholding structure. If our potential corporate structure and contractual arrangements are deemed by the Ministry of Industry and Information Technology, or “MIIT,” or the Ministry of Commerce, or “MOFCOM,” or other regulators having competent authority to be illegal, either in whole or in part, we may lose control of the consolidated VIE and have to modify such structure to comply with regulatory requirements. However, there can be no assurance that we can achieve this without material disruption to the PRC Target Company’s business. Furthermore, if we consummate a business combination with a PRC Target Company, and we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including, without limitation:
| · | revoking the business license and/or operating licenses of WFOE or the VIE; |
| · | discontinuing or placing restrictions or onerous conditions on our operations through any transactions among WFOE, the VIE and its subsidiaries; |
| · | imposing fines, confiscating the income from WFOE, the VIE or its subsidiaries, or imposing other requirements with which we or the VIE may not be able to comply; |
| · | placing restrictions on the VIE’s right to collect revenues; |
| · | requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, exercises effective control over the operating activities that most impact the economic performance, bears the risks of, or enjoys the rewards normally associated with ownership of the entity; or |
| · | taking other regulatory or enforcement actions against us that could be harmful to our business. |
The imposition of any of these penalties will result in a material and adverse effect on our potential ability to conduct the business. In addition, it is unclear what impact the PRC government actions will have on us and on our ability to consolidate the financial results of the VIE in our consolidated financial statements, if the PRC government authorities were to find our potential corporate structure and contractual arrangements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of the VIE or our right to receive substantially all the economic benefits and residual returns from the VIE and we are not able to restructure our ownership structure and operations in a timely and satisfactory manner, we will no longer be able to consolidate the financial results of the VIE in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, it will have a material adverse effect on our financial condition, results of operations and our securities post business combination may decline in value or be worthless.
Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to operate profitably in the PRC.
Our post-combination entity may conduct most of its operations and generate most of its revenue in the PRC. Accordingly, economic, political and legal developments in the PRC will significantly affect our post-combination entity’s business, financial condition, results of operations and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant effects on economic conditions in the PRC and the ability of businesses to operate profitably. Our post-combination entity’s ability to operate profitably in the PRC may be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation, particularly those dealing with the Internet, including censorship and other restriction on material which can be transmitted over the Internet, security, intellectual property, money laundering, taxation and other laws that affect our post-combination entity’s ability to operate its business.
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Any actions by the PRC government to exert more oversight and control over offerings (including businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong- or PRC-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
The PRC government may intervene or influence the Target Operating Entity’s business operations at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in the Target Operating Entity’s business operations post business combination and/or the value of our securities. Additionally, the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer securities to investors post business combination and cause the value of such securities to significantly decline or be worthless.
Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers. The PRC has recently proposed new rules that would require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that would significantly tighten oversight over China based internet giants. Pursuant to Article 6 of the Measures for Cybersecurity Review (Draft for Comments), companies holding data on more than 1 million users must now apply for cybersecurity approval when seeking listings in other nations due to the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.”
As we do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction, our initial business combination target company may include a PRC Target Company. Therefore, it is uncertain whether such PRC Target Company will be involved in the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Based on our understanding of currently applicable PRC laws and regulations, our business combination is not subject to the review or prior approval of the Cyberspace Administration of China (“CAC”) or the CSRC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.
The contractual arrangements under a VIE Structure may not be as effective as direct ownership in respect of our relationship with the VIE, and thus, we may incur substantial costs to enforce the terms of the arrangements, which we may not be able to enforce at all.
The contractual arrangements may not be as effective as direct ownership in respect of our relationship with the VIE. For example, the VIE and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the VIE Agreements, we rely on the performance by the VIE and its shareholders of their obligations under the contracts to exercise control over the VIE. The shareholders of the consolidated VIE may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with the VIE.
If the VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. For example, if the shareholders of the VIE refuse to transfer their equity interest in the VIE to us or our designee if we exercise the purchase option pursuant to the contractual arrangements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests in the VIE, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these or other disputes between the shareholders of the VIE and third parties were to impair our relationship with the VIE, our ability to consolidate the financial results of the VIE would be affected, which would in turn result in a material adverse effect on the business, operations and financial condition.
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Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.
The shareholders of the VIE are referred as its nominee shareholders because although they remain the holders of equity interests on record in the VIE, pursuant to the terms of the relevant power of attorney, such shareholders have irrevocably authorized the individual appointed by the WFOE to exercise their rights as a shareholder of the relevant VIE. If the VIE, or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC laws. For example, if the shareholders of the VIE were to refuse to transfer their equity interest in the VIE to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.
All of the contractual arrangements will be governed by PRC law and provided for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts will be interpreted in accordance with PRC laws and any disputes will be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. See “Risks Associated with Acquiring and Operating a Target Business with its Primary Operation in China and Hong Kong — Uncertainties with respect to the PRC legal system could adversely affect us.” Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or determined unenforceable by a competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not may consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP or IFRS, and our ability to conduct our business may be negatively affected.
In the event we were to successfully consummate a business combination with a target business with primary operation in PRC, we will be subject to restrictions on dividend payments following consummation of our initial business combination.
After we consummate our initial business combination, we may rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our other obligations. Current regulations in China would permit our operating company in China to pay dividends to us only out of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our operating company in China will be required to set aside at least 10% (up to an aggregate amount equal to half of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash dividends. In addition, if PRC Target Company’s operating company in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.
As a result of merger and acquisition regulations implemented on September 8, 2006 (amended on June 22, 2009) relating to acquisitions of assets and equity interests of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject to economic scrutiny by the PRC government authorities such that we may not be able to complete a transaction.
On September 8, 2006, the Ministry of Commerce, together with several other government agencies, promulgated the Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Regulations”, including its amendment on June 22, 2009), which implemented a comprehensive set of regulations governing the approval process by which a Chinese company may participate in an acquisition of its assets or its equity interests and by which a Chinese company may obtain public trading of its securities on a securities exchange outside the PRC. Although there was a complex series of regulations in place prior to September 8, 2006 for approval of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the M&A Regulations have largely centralized and expanded the approval process to the Ministry of Commerce, the State Administration of Industry and Commerce (SAIC), the State Administration of Foreign Exchange (SAFE) or its branch offices, the State Asset Supervision and Administration Commission (SASAC), and the CSRC. Depending on the structure of the transaction, these M&A Regulations will require the Chinese parties to make a series of applications and supplemental applications to one or more of the aforementioned agencies, some of which must be made within strict time limits and depending on approvals from one or the other of the aforementioned agencies. The application process has been supplemented to require the presentation of economic data concerning a transaction, including appraisals of the business to be acquired and evaluations of the acquirer which will permit the government to assess the economics of a transaction in addition to the compliance with legal requirements. If obtained, approvals will have expiration dates by which a transaction must be completed. Also, completed transactions must be reported to the Ministry of Commerce and some of the other agencies within a short period after closing or be subject to an unwinding of the transaction. Therefore, acquisitions in China may not be able to be completed because the terms of the transaction may not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted.
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China Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. If we seek to enter into a business combination with a PRC Target Company, additional compliance procedures may be required in connection with future offerings of our securities and our business combination process, and, if required, we cannot predict whether we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital markets, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our future business combination with a company with major operation in China. Therefore, CSRC and other Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. Additional compliance procedures may be required in connection with our business combination process, and, if required, we cannot predict whether we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
The Chinese government may exercise significant oversight and discretion over the conduct of our post-combination entity’s business and may intervene in or influence its operations at any time, which could result in a material change in its operations and/or the value of our securities. We are also currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if the PRC Target Company and the VIE were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate through a PRC Target Company and a VIE in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
For example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company’s app be removed from smartphone app stores. On July 24, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.
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As such, the PRC Target Company’s business segments may be subject to various government and regulatory interference in the provinces in which they operate. The PRC Target Company could be subject to regulations by various political and regulatory entities, including various local and municipal agencies and government sub-divisions, and these regulations may be interpreted and applied inconsistently by different agencies or authorities. The PRC Target Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply, and such compliance or any associated inquiries or investigations or any other government actions may:
| · | delay or impede our development; |
| · | result in negative publicity or increase the Company’s operating costs; |
| · | require significant management time and attention; and |
| · | subject the post-combination entity to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices. |
As we do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction, our initial business combination target company may include a PRC Target Company. Therefore, it is uncertain when and whether we and the post-combination entity will be required to obtain permission from the PRC government to list on U.S. exchanges, and even when such permission is obtained, whether it will be denied or rescinded. Further, the promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably may impact the ability or way the post-combination entity may conduct its business and could require it to change certain aspects of its business to ensure compliance, which could decrease demand for its products or services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject it to additional liabilities. As such, the post-combination entity’s operations could be adversely affected, directly or indirectly, by existing or future PRC laws and regulations relating to its business or industry, which could result in a material adverse change in the value of our securities, potentially rendering it worthless. As a result, both you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
Our initial business combination may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection and we may have to spend additional resources and incur additional time delays to complete any such business combination or be prevented from pursuing certain investment opportunities.
Our initial business combination may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.
Pursuant to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or may affect national security, it should be subject to cybersecurity review by the CAC. Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear.
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Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective) on July 10, 2021, which requires operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the CAC. As these opinions and the draft measurers were recently issued, official guidance and interpretation of these two remain unclear in several respects at this time.
If, for example, our potential initial business combination is with a target business operating in the PRC and if the enacted version of the draft measures mandates clearance of cybersecurity review and other specific actions to be completed by the target business, we may face uncertainties as to whether such clearance can be timely obtained, or at all, and incur additional time delays to complete any such acquisition. Cybersecurity review could also result in negative publicity with respect to our initial business combination and diversion of our managerial and financial resources. We may also be prevented from pursuing certain investment opportunities if the PRC government considers that the potential investments will result in a significant national security issue.
If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, any offering and our reputation and could result in a loss of your investment in our ordinary shares, especially if such matter cannot be addressed and resolved favorably.
Recently, U.S. public companies that have substantially all of their operations in China, have been subjected to intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on our Company if we target a PRC company with respect to the initial business combination. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company. This situation may be a major distraction to our management. If such allegations are not proven to be groundless, we will be severely hampered and your investment in our securities post business combination could be rendered worthless.
Compliance with the PRC Antitrust law may limit our ability to effect our initial business combination.
The PRC Antitrust Law became effective on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust Commission and other antitrust authorities under the State Council. The PRC Antitrust Law regulates (1) monopoly agreements, including decisions or actions in concert that preclude or impede competition, entered into by business operators; (2) abuse of dominant market position by business operators; and (3) concentration of business operators that may have the effect of precluding or impeding competition. To implement the Antitrust Law, in 2008, the State Council formulated the regulations that require filing of concentration of business operators, pursuant to which concentration of business operators refers to (1) merger with other business operators; (2) gaining control over other business operators through acquisition of equity interest or assets of other business operators; and (3) gaining control over other business operators through exerting influence on other business operators through contracts or other means. In 2009, the Ministry of Commerce, to which the Antitrust Commission is affiliated, promulgated the Measures for Filing of Concentration of Business Operators (amended by the Guidelines for Filing of Concentration of Business Operators in 2014), which set forth the criteria of concentration and the requirement of miscellaneous documents for the purpose of filing. The business combination we contemplate may be considered the concentration of business operators, and to the extent required by the Antitrust Law and the criteria established by the State Council, we must file with the antitrust authority under the PRC State Council prior to conducting the contemplated business combination. If the antitrust authority decides not to further investigate whether the contemplated business combination has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt of relevant materials, we may proceed to consummate the contemplated business combination. If antitrust authority decides to prohibit the contemplated business combination after further investigation, we must terminate such business combination and would then be forced to either attempt to complete a new business combination if it was prior to 15 wait months from the closing of any offering or we would be required to return any amounts which were held in the trust account to our shareholders. When we evaluate a potential business combination, we will consider the need to comply with the Antitrust Law and other relevant regulations which may limit our ability to effect an acquisition or may result in our modifying or not pursuing a particular transaction.
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Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.
The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became effective in February 2015.
Under Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject to PRC corporate income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.
In February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC corporate income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.
We may face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. Although we currently have no plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC corporate income tax law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698 and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.
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Uncertainties with respect to the PRC legal system could adversely affect us.
A majority of our executive officers and directors are located in or have significant ties to China and/or Hong Kong, and we may seek to acquire a company that is based in China or Hong Kong in an initial business combination. The uncertainties in the interpretation and enforcement of PRC laws, rules and regulations would apply to us if we were to acquire a company that is based in China or Hong Kong regardless of whether we have a VIE structure or direct ownership structure post-business combination. Because of such ties to China or Hong Kong, we may be governed by PRC laws and regulations. PRC companies and variable interests entities are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.
Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of any offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any loans to PRC subsidiaries are subject to PRC regulations. For example, loans by us to subsidiaries in China, which are foreign invested entities (“FIEs”), to finance their activities cannot exceed statutory limits and must be registered with SAFE. On March 30, 2015, SAFE promulgated Hui Fa [2015] No.19, a notice regulating the conversion by a foreign-invested company of foreign currency into RMB. The foreign exchange capital, for which the monetary contribution has been confirmed by the foreign exchange authorities (or for which the monetary contribution has been registered for account entry) in the capital account of a foreign-invested enterprise may be settled at a bank as required by the enterprise’s actual management needs. Foreign-invested enterprises with investment as their main business (including foreign-oriented companies, foreign-invested venture capital enterprises and foreign-invested equity investment enterprises) are allowed to, under the premise of authenticity and compliance of their domestic investment projects, carry out based on their actual investment scales direct settlement of foreign exchange capital or transfer the RMB funds in the foreign exchange settlement account for pending payment to the invested enterprises’ accounts.
On May 10, 2013, SAFE released Circular 21, which came into effect on May 13, 2013. According to Circular 21, SAFE has simplified the foreign exchange administration procedures with respect to the registration, account openings and conversions, settlements of FDI-related foreign exchange, as well as fund remittances.
Circular 21 may significantly limit our ability to convert, transfer and use the net proceeds from any offering of equity securities in China, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.
We may also decide to finance the PRC Target Company’s subsidiaries by means of capital contributions. These capital contributions must be approved by MOFCOM or its local counterpart, which usually takes no more than 30 working days to complete. We may not be able to obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to the PRC Target Company’s subsidiaries. If we fail to receive such approvals, we will not be able to capitalize our PRC operations, which could adversely affect our liquidity and our ability to fund and expand our business.
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Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on the PRC Target Company’s business and results of operations we may pursue in the future.
If our initial business combination target is a PRC or Hong Kong company with operations in China or Hong Kong, its business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.
The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, the PRC Target Company’s financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, and since 2012, China’s economic growth has slowed down. Any prolonged slowdown in the Chinese economy may reduce the demand for the PRC Target Company’s products and services and materially and adversely affect its business and results of operations.
You may face difficulties in protecting your interests and exercising your rights as a stockholder if we were to conduct substantially all of our operations in China, and all of our officers and directors currently and will likely reside outside the U.S.
Although we are incorporated in Colorado, our initial business combination target may be a PRC or Hong Kong company with substantially all of its operations in China. Further, all of our current officers and directors reside outside the U.S. and substantially all of the assets of those persons are located outside of the U.S. It may be difficult for you to conduct due diligence on the Company or such directors in your election of the directors and attend shareholders meeting if the meeting is held in China. We would likely have one shareholder meeting each year at a location to be determined, potentially in China.
There are two avenues for the enforcement of a civil judgment pronounced y a court of the United States in Hong Kong, namely statute and common law. The statutory regime is available only to judgments given in the superior courts of various countries as specified under Schedules 1 and 2 of the Foreign Judgments (Reciprocal Enforcement) Order. The United States is not among those countries. The only available channel for enforcement of a U.S. judgment in Hong Kong is, therefore, under the common law. In Hong Kong, a foreign judgment for a monetary sum is enforceable at common law if the following criteria are met:
| · | It is a judgment in personam. |
| · | It must be for a liquidated sum of money. |
| · | It must be final and conclusive in accordance with the laws applicable in the foreign court. |
| · | The foreign court must have had the requisite jurisdiction to adjudicate upon the cause or matter that gave rise to the judgment. |
| · | It must not be impeachable according to the common law rules on conflict of laws in Hong Kong. Impeachable foreign judgments commonly include those which are of a penal or revenue nature, those which are obtained by fraud or in the proceedings conducted against natural justice, and those enforcement of which would be contrary to public policy. |
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If the above common law criteria are satisfied, the claimant may bring a civil action in Hong Kong against the defendant to recover the liquidated sum under the U.S. judgment as a debt. Upon obtaining a judgment in Hong Kong, the claimant may proceed to enforce the Hong Kong judgment against the defendant. As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation doing business entirely or predominantly within the U.S. with management predominantly within the U.S.
Governmental control of currency conversion may affect the value of your investment.
The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Our initial business combination target may be a PRC company with substantially all of its revenues in RMB. If a VIE structure is required for the PRC Target Company, all of our income will be primarily derived from dividend payments from PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of the PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands post business combination, we may not be able to pay dividends in foreign currencies to our security-holders.
A recent joint statement by the SEC and the PCAOB, proposed rule changes submitted by Nasdaq, and the HCFA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets, including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.
On May 20, 2020, the Senate passed the HCFA Act, requiring a foreign company to certify that it is not owned or manipulated by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect a company’s auditors for three consecutive years, the company’s securities are prohibited from trading on a national exchange.
On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HCFA Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under such process that will be implemented by the SEC.
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On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.
On September 22, 2021, the PCAOB adopted rules to create a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction.
On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions. The PCAOB has made such designations as mandated under the HFCA Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.
The PCAOB has not been able to inspect our auditor, JTC Fair Song CPA Firm, an independent registered public accounting firm with its headquarters in Shenzhen, Guangdong. As such, it is subject to the designations issued by the PCAOB on December 16, 2021. If the PCAOB is unable to inspect our accounting firm in a foreign jurisdiction during any period of three consecutive years or we become owned or controlled by a government in that foreign jurisdiction in the future, the HFCA Act, which requires that the PCAOB be permitted to inspect an issuer’s public accounting firm within three years, may result in the failure to list our shares of Common Stock on the Nasdaq or a delisting of our shares of Common Stock in the future.
The recent developments may result in prohibitions on the trading of our shares of Common Stock on the Nasdaq, if our auditors continue to fail to meet the PCAOB inspection requirement in time. If our securities are delisted and prohibited from being traded on a national securities exchange or in the over the counter trading market in the U.S. due to the PCAOB not being able to conduct inspections or full investigations of our auditor, it would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with potential delisting and prohibition would have a negative impact on the price of our securities. Also, such delisting and prohibition could significantly affect the Company’s ability to raise capital on acceptable terms, or at all, which would have a material adverse effect on the Company’s business, financial condition and prospects.
In addition, the SEC may initiate proceedings against our independent registered public accounting firm, whether in connection with an audit of our Company or other China-based companies, which could result in the imposition of penalties against our independent registered public accounting firm, such as suspension of its ability to practice before the SEC. All of these could cause our shareholders and investors to lose confidence in our reported financial information and procedures and the quality of our financial statements, which may have a material effect on our business.
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Risks Related to Our Financial Condition
We may be subject to certain tax consequences in our business, which may increase our cost of doing business.
We may not be able to structure our acquisition to result in tax-free treatment for the companies or their stockholders, which could deter third parties from entering into certain business combinations with us or result in being taxed on consideration received in a transaction. Currently, a transaction may be structured so as to result in tax-free treatment to both companies, as prescribed by various federal and state tax provisions. We intend to structure any business combination so as to minimize the federal and state tax consequences to both us and the target entity; however, we cannot guarantee that the business combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes that may have an adverse effect on both parties to the transaction.
Our business will have no revenues unless and until we merge with or acquire an operating business.
We are a development stage company and have had no revenues from operations. We may not realize any revenues unless and until we successfully merge with or acquire an operating business.
There are doubts about our ability to continue as a going concern.
We are a “shell company” and will not commence operations until after a business combination. We have not earned any revenues and have incurred losses of $3,500 for the fiscal year ended December 31, 2020, and losses of $813 and $2,438 for the three months and nine months ended September 30, 2021, respectively. These factors raise substantial doubt about our ability to continue as a going concern.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders.
We intend to overcome the circumstances that impact our ability to remain a going concern with interim cash flow deficiencies being addressed through additional equity and debt financing. If required, we anticipate raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support our business operations; however, we may not have commitments from third parties for a sufficient amount of additional capital. We cannot be certain that any such financing will be available on acceptable terms, or at all, and our failure to raise capital, when needed, could limit our ability to continue our operations. Our ability to obtain additional funding will determine our ability to continue as a going concern. Failure to secure additional financing in a timely manner and on favorable terms may require us to curtail or cease operations, sell off our assets, seek protection from our creditors through bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of our Common Stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary, to raise additional funds, and may require that we relinquish valuable rights.
Pandemics, natural disasters and geo-political events could adversely affect our business.
Pandemics, natural disasters, including hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, weather conditions, including winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, and geo-political events, including civil unrest or terrorist attacks, that affect us, or other service providers, could adversely affect our business.
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We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We estimate that it will cost approximately $150,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could adversely affect our ability to raise capital.
Risks Related to Ownership of Our Common Stock
There is currently no trading market for our common stock.
Any of our presently outstanding shares of common stock that are “restricted securities”, as defined under Rule 144 promulgated under the Securities Act, may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which became effective on February 15, 2008. Pursuant to Rule 144, one year must elapse from the time a “shell company”, as defined in Rule 405, ceases to be “shell company” and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Exchange Act. Under Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or an issuer that has at any time previously been a reporting or non-reporting shell company, as defined in Rule 405, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a “shell company.”
At the present time, we are a “shell company” as defined in Rule 12b-2 of the Exchange Act. As such, all restricted securities presently held by existing stockholders of the Company may not be resold in reliance on Rule 144 until: (1) we cease to be a “shell company; (2) we file Form 10 information with the SEC; (3) we have filed all reports as required by Section 13 and 15(d) of the Exchange Act for 12 consecutive months; and (4) one year has elapsed from the time the Company files current Form 10 information with the SEC reflecting our status as an entity that is not a “shell company.”
There can be no assurance that we will ever meet these conditions and any purchases of our shares are subject to these restrictions on resale. A purchase of our shares may never be available for resale as we cannot assure that we will ever lose our “shell company” status.
We have never paid dividends on our common stock.
We have never paid dividends on our Common Stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy.
We intend to issue more shares in a merger or acquisition, which will result in substantial dilution to existing shareholders.
Our Articles of Incorporation authorizes the issuance of a maximum of 1,000,000,000 shares of common stock and a maximum of 10,000,000 shares of preferred stock. Any merger or acquisition effected by us may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially and adversely affected.
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Our Articles of Incorporation authorize the issuance of preferred stock.
Our Articles of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of its authorized preferred stock, there can be no assurance that we will not do so in the future.
We will be deemed a blank check company under Rule 419 of the Securities Act of 1933. In any subsequent offerings, we will have to comply with Rule 419.
If we publicly offer any securities as a condition to the closing of any acquisition or business combination while we are a blank check or “shell company”, we will have to fully comply with SEC Rule 419 and deposit all funds in escrow pending advice about the proposed transaction to our stockholders fully disclosing all information required by Regulation 14 of the SEC and seeking the vote and agreement of investment of those stockholders to whom such securities were offered; if no response is received from these stockholders within 45 days thereafter or if any stockholder elects not to invest following our advice about the proposed transaction, all funds that must be held in escrow by us under Rule 419, as applicable, will be promptly returned to any such stockholder. All securities issued in any such offering will likewise be deposited in escrow, pending satisfaction of the foregoing conditions. This is only a brief summary of Rule 419.
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| ITEM 2. | FINANCIAL INFORMATION. |
MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion summarizes the significant factors affecting the operating results, financial condition and liquidity and cash flows of our company for the years ended December 31, 2021 and 2020. You should read this discussion together with the consolidated financial statements, related notes and other financial information included in this Form 10. Except for historical information, the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward looking statements that involve risks and uncertainties, and are based upon judgments concerning various factors that are beyond our control. These risks could cause our actual results to differ materially from any future performance suggested below.
Overview
Our current business objective is to seek a business combination with an operating company. We intend to use the Company's limited personnel and financial resources in connection with such activities. We will utilize our capital stock, debt or a combination of capital stock and debt, in effecting a business combination. It may be expected that entering into a business combination will involve the issuance of restricted shares of capital stock. The issuance of additional shares of our capital stock:
| · | may significantly reduce the equity interest of our stockholders; |
| · | will likely cause a change in control if a substantial number of our shares of capital stock are issued, and most likely will also result in the resignation or removal of our present officer and director; and |
| · | may adversely affect the prevailing market price for our common stock. |
Similarly, if we issued debt securities, it could result in:
| · | default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations; |
| · | acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenants were breached without a waiver or renegotiations of such covenants; |
| · | our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and |
| · | our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding. |
On March 20, 2022, the Company identified a target operating company and started conducting due diligence on the entity. Upon satisfactory results, the Company and the target operating company will enter into a letter of intent for an upcoming merger. If the due diligence comes back as satisfactory, the Company and the target operating company will enter into a letter of intent for an upcoming merger. Through this merger, the target operating company’s principal business will become the business of the entity post-merger and the major controlling interesting will be transferred to the target operating company’s principals.
Results of Operations during the year ended December 31, 2021 as compared to the year ended December 31, 2020.
We have not generated any revenues during the years ended December 31, 2021 and 2020. We had total operating expenses of $3,500 related to general and administrative expenses during the year ended December 31, 2021, compared to total operating expenses of $3,250 during the year ended December 31, 2020. We incurred zero interest expense during both years ended December 31, 2021 and December 31, 2020. During the year ended December 31, 2021 and December 31, 2020, we had a net loss of $3,500 and $3,250, respectively, mainly due to our general and administrative expenses.
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Impairment Loss
On January 29, 2019, the Company entered into an agreement with Mr. Grimes (the “Grimes Agreement”) pursuant to which Mr. Grimes would sell to the Company certain intellectual property owned by Mr. Grimes in exchange for 25,000,000 shares of the Company’s Common Stock (the “Grimes Shares”). On March 4, 2020, at Mr. Grimes’ direction, the Company issued 22,000,000 of the Grimes Shares to Bodhisattva Investment Group (an entity controlled by Mr. Grimes) (“BIG”). On April 20, 2021, Mr. Grimes resigned from all positions within the Company. None of the intellectual property listed in the Grimes Agreement was handed over to new management. As a result, the Company recognizes an impaired loss of $25,000 in the audited financial statement of December 31, 2020 from the issue of the 25,00,000 shares according to the Asset Purchase Agreement.
Liquidity and Capital Resources
At present, the Company has no business operations and no cash resources other than that provided by management. We are dependent upon interim funding provided by management to pay professional fees and expenses. Our management has agreed to provide funding as may be required to pay for accounting fees and other administrative expenses of the Company until we enter into a business combination. We would be unable to continue as a going concern without interim financing provided by management.
If we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all. We depend upon services provided by management to fulfill our filing obligations under the Exchange Act. At present, we have no committed financial resources to pay for such services.
We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations, maintaining the filing of Exchange Act reports, the investigation, analyzing, and consummation of an acquisition for an unlimited period of time will be paid from additional money contributed by our management.
During the next 12 months we anticipate incurring costs related to:
| · | filing of Exchange Act reports; |
| · | franchise fees, registered agent fees, legal fees and accounting fees; and |
| · | investigating, analyzing and consummating an acquisition or business combination. |
We estimate that these costs will be in the range of $60,000-$80,000 per year, and that we will be able to meet these costs as necessary, to be advanced/loaned to us by management.
On December 31, 2021 we had cash of $1,085, and on December 31, 2020, we had cash of $1,085.
We currently plan to satisfy our cash requirements for the next 12 months through borrowings/advances from our management and believe we can satisfy our cash requirements. We expect that money borrowed will be used during the next 12 months to satisfy our operating costs, professional fees and for general corporate purposes. There is no written funding agreement between the Company and our management. We have only limited capital. Additional financing is necessary for us to continue as a going concern. Our independent auditors have issued an audit opinion for the years ended December 31, 2021 and 2020 with an explanatory paragraph on going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations and Commitments
As of December 31, 2021 and 2020, we did not have any contractual obligations.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial statements for the fiscal years ended December 31, 2021 and 2020, and are included elsewhere in this Form 10.
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| ITEM 3. | PROPERTIES |
We have no lease or physical office space. We believe that due to the global coronavirus pandemic, office facilities are not required for the foreseeable future and this current arrangement will remain until conditions change.
| ITEM 4. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. |
The following table and footnotes thereto sets forth information regarding the number of shares of Common Stock beneficially owned by (i) each director and named executive officer of our Company, (ii) named executive officers, executive officers, and directors of the Company as a group, and (iii) each person known by us to be the beneficial owner of 5% or more of our issued and outstanding shares of Common Stock. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table assumes 43,162,837 shares of Common Stock outstanding. Unless otherwise further indicated in the following table, the footnotes thereto and/or elsewhere in this report, the persons and entities named in the following table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and/or the footnotes thereto, the address of our named executive officers and directors in the following table is: 5190 Neil Rd, Ste. 430, Reno, NV 89502.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class(1) | ||||||
| Named Executive Officers and Directors | ||||||||
| Paul Falconer, CEO and Director(2) | 23,700,000 | (3) | 54.91% | |||||
| Eng Wah Kung, CFO and Director(4) | 0 | * | ||||||
| Nicola Yip, COO and Director(5) | 0 | * | ||||||
| Joseph Grimes, Former Chairman, President, and CEO(6) | 350,000 | (7) | * | |||||
| Executive Officers, Named Executive Officers, and Directors as a Group (Four Persons) | 24,050,000 | 55.72% | ||||||
| >5% Beneficial Owners | ||||||||
Rock Capital Limited(8) Room 1408, Tak Shing House Theater Lane 20 Des Voeux Road Central Hong Kong Hong Kong | 2,865,541 | 6.64% | ||||||
* Less than 1%
| (1) | Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this Registration Statement. | |
| (2) | Mr. Falconer was appointed as CEO and director on April 21, 2021. | |
| (3) | Includes 1,700,000 shares owned by Falconer Family Office Limited, which is controlled by Paul Falconer. | |
| (4) | Mr. Kung was appointed as CFO and director on August 13, 2021. | |
| (5) | Ms. Yip was appointed as COO and director on August 13, 2021. | |
| (6) | Mr. Grimes resigned from all positions on April 21, 2021. | |
| (7) | Shares owned by Bodhisattiva Investment Group, LLC, which is controlled by Joseph Grimes. | |
| (8) | Rock Capital Limited is controlled by Lin Kok Peng. |
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| ITEM 5. | DIRECTORS AND EXECUTIVE OFFICERS. |
The following table sets forth the names, positions and ages of our current executive officers and directors. All directors serve until the next annual meeting of stockholders or until their successors are elected and qualified. Officers are appointed by our board of directors and their terms of office are, except to the extent governed by an employment contract, at the discretion of our board of directors.
| Name | Age | Title | ||
| Paul Falconer | 54 | Chief Executive Officer and Director | ||
| Eng Wah Kung | 60 | Chief Financial Officer and Director | ||
| Nicola Yip | 28 | Chief Operating Officer and Director |
Our Chief Executive Officer
Mr. Falconer was appointed as an officer and director of the Company on April 21, 2021. He is the founder and CEO of Falconer Family Office Limited, a Private Limited Company registered in England and Wales (company number: 12812312) and in which he is the majority shareholder. The principal business of Falconer Family Office is strategic financing and IPO consulting services for high value tech start-ups who wish to list on the U.S. capital markets and have a listing valuation more than US$150 million and which can reliably forecast and reflect relevant growth rates within three years of listing. Falconer Family Office takes equity in leu of consulting services fees which, when liquidated, forms the basis of the company’s revenues.
Since 2015, Mr. Falconer has worked as an independent strategic financing and IPO consultant for high-value start-ups developing private placement equity, debt, options and convertible financing instruments and trade sale / IPO exit strategies, primarily for clients in the Tech, Gaming, Education, FinTech and Entertainment industries, and with an emphasis on Crypto / Blockchain and AI product integration.
Mr. Falconer has strong skills in conflict resolution, creative problem solving, applied innovation theory and strategic planning.
Mr. Falconer has a strong understanding of and experience in project management as well as holding a diploma in project management. He is also skilled in executive C-class coaching and mentoring especially in change management and corporate restructuring and stood as VP Coach Development for the Hong Kong International Coaching Community from 2013 to 2015.
Our Chief Financial Officer
Mr. Kung was appointed as an officer and director of the Company on August 13, 2021. He holds a Diploma in Hotel Management and Food and Beverage with Les Roches, Switzerland.
In his earlier days, Mr Kung was the general manager of several Southeast Asian hotel operations companies including Nha Trang Lodge, Vietnam and NCL Cambodia Pte Ltd. Mr. Kung has over 33 years’ experience in senior management positions in hotel and travel industry.
Associations with Companies with a Class of Securities Registered Pursuant to Section 12 or 15(d) of the Exchange Act
Prior to joining the Company, Mr. Kung has been the CFO and director of Star Alliance International Corp from which he resigned on May 16, 2018. He has also been the director and CEO for Tribal Rides International Corp., from which he resigned on May 17, 2018. Finally, Mr. Kung was the director and CEO of Glorywin Entertainment Group Inc., from which he resigned in 2015.
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Our Chief Operating Officer
Ms. Yip was appointed as an officer and director of the Company on August 13, 2021. She is the co-founder and COO of Falconer Family Office Limited, a Private Limited Company registered in England and Wales (company number: 12812312). The principal business of Falconer Family Office is strategic financing and IPO consulting services for high value tech start-ups who wish to list on the U.S. capital markets and have a listing valuation more than US$150 million and which can reliably forecast and reflect relevant growth rates within three years of listing. Falconer Family Office takes equity in lieu of consulting services fees which when liquidated, forms the basis of the company’s revenues.
Ms. Yip holds a Computer Science degree from HKUST. Since 2017, she has worked extensively within the tech startup industry with a focus on AI integration and education. Having founded and co-founded several startups, she has a deep understanding of the challenges startups face, in particular the challenges of scaling up. She brings a passion to improving user experience, product development and integration, financing and business development strategy, strategic partnerships and investors relations in startups.
Legal Proceedings
During the past ten years, none of the following events would apply to any of our directors or executive officers:
| · | A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; |
| · | Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| · | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| o | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;\ |
| o | Engaging in any type of business practice; or |
| o | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| · | Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; |
| · | Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
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| · | Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
| · | Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| o | Any Federal or State securities or commodities law or regulation; or |
| o | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or |
| o | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| · | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Committees of our Board of Directors
Our securities are not quoted on an exchange which, in general, would require that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. Because we have only three directors, none of whom are independent, we believe that the establishment of these committees would be more form over substance.
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.
Communications with the Board
Individuals may communicate with the Company's Board of Directors or individual directors by writing to management at nicola@ffogroup.co.uk or paul@ffogroup.co.uk. Management will review all such correspondence and forward to the Board of Directors a summary of all such correspondence and copies of all correspondence that, in the opinion of management, relates to the functions of the Board or committees thereof or that they otherwise determine requires their attention. Directors may review a log of all such correspondence received by the Company and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the Board of Directors and handled in accordance with its procedures established with respect to such matters.
Code of Ethics
The Company's Board of Directors has previously adopted a Code of Ethics; however, current management does not consider that Code of Ethics is valid.
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| ITEM 6. | EXECUTIVE COMPENSATION. |
Executive Compensation
The following table and related footnotes show the compensation paid to our named executive officers during the last fiscal years ended December 31, 2020 and 2021, and information concerning all compensation paid for services rendered to us in all capacities for our last two fiscal years.
| Name and Principal Position | Year-Ended | Stock Awards($) | Total($) |
| Paul Falconer, CEO and Director (1) | December 31, 2021 | 0 | 0 |
| December 31, 2020 | 0 | 0 | |
| Joseph Grimes, Former Chairman, President, and CEO (1) | December 31, 2021 | 0 | 0 |
| December 31, 2020 | 0 | 0 |
| (1) | On April 21, 2021, Joseph Grimes resigned as the Chairman of the Board, President and CEO, and appointed Paul Falconer as Director and CEO. |
Director Compensation
At this time, our Directors do not receive cash compensation for serving as members of our Board of Directors. The term of office for each Director is until his/her successor is elected at our annual meeting and qualified. The term of office for each of our officers is at the pleasure of the Board of Directors. The Board of Directors has no nominating, auditing committee or a compensation committee. Therefore, the selection of person or election to the Board of Directors was neither independently made nor negotiated at arm’s length.
During the fiscal year ended December 31, 2021, our directors received no compensation for services provided as directors.
Outstanding Equity Awards at Fiscal Year-End
None.
Equity Compensation Plan Information
None.
| ITEM 7. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Except as disclosed below, for transactions with our executive officers and directors, please see the disclosure under “EXECUTIVE COMPENSATION” above.
On January 14, 2019, Joseph Grimes was appointed as an officer and director of the Company. On January 29, 2019, the Company entered into an agreement with Mr. Grimes (the “Grimes Agreement”) pursuant to which Mr. Grimes would sell to the Company certain intellectual property owned by Mr. Grimes in exchange for 25,000,000 shares of the Company’s Common Stock (the “Grimes Shares”) On March 4, 2020, at Mr. Grimes’ direction, the Company issued 22,000,000 of the Grimes Shares to Bodhisattva Investment Group (an entity controlled by Mr. Grimes) (“BIG”). On April 20, 2021, Mr. Grimes resigned from all positions within the Company. On November 29, 2021, the Company and Mr. Grimes entered into the Mutual General Release and Settlement Agreement pursuant to which Mr. Grimes and BIG agreed to cancel 21,650,000 and retain 350,000 of the Grimes Shares. The remaining 3,000,000 shares consisting of the Grimes Shares had previously been gifted to several individuals by Mr. Grimes. Management has been attempting to enter into cancellation agreements with those shareholders but has only been successful in obtaining cancellation agreements from recipients holding an aggregate of 800,000 shares. Management has no assurances that additional shares will be cancelled and investors should invest under the presumption that the remaining 2,200,000 shares will be issued and outstanding. As additional shares are issued due to capital raising transactions, investors may be diluted and the value of their investment may decrease.
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| ITEM 8. | LEGAL PROCEEDINGS. |
We anticipate that we (including any future subsidiaries) will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations. As of the filing of this Registration Statement, we are not a party to any pending legal proceedings, nor are we aware of any civil proceeding or government authority contemplating any legal proceeding.
| ITEM 9. | MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. |
Market Information
The Company’s common stock does not trade, nor is it admitted to quotation, on any stock exchange or other trading facility. Management has no present plan, proposal, arrangement or understanding with any person with regard to the development of a trading market in any of our securities. We cannot assure you that a trading market for our common stock will ever develop. The Company has not registered its class of common stock for resale under the blue-sky laws of any state and current management does not anticipate doing so. The holders of shares of common stock, and persons who may desire to purchase shares of our common stock in any trading market that might develop in the future, should be aware that significant state blue sky law restrictions may exist which could limit the ability of stockholders to sell their shares and limit potential purchasers from acquiring our common stock.
The Company is not obligated by contract or otherwise to issue any securities and there are no outstanding securities which are convertible into or exchangeable for shares of our common stock. All outstanding shares of our common stock are “restricted securities,” as that term is defined under Rule 144 promulgated under the Securities Act because they were issued in a private transaction not involving a public offering. Accordingly, none of the outstanding shares of our common stock may be resold, transferred, pledged as collateral or otherwise disposed of unless such transaction is registered under the Securities Act or an exemption from registration is available. In connection with any transfer of shares of our common stock other than pursuant to an effective registration statement under the Securities Act, the Company may require the holder to provide to the Company an opinion of counsel to the effect that such transfer does not require registration of such transferred shares under the Securities Act.
Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, “shell companies”, like us, unless the following conditions are met:
| · | the issuer of the securities that was formerly a “shell company” has ceased to be a “shell company”; |
| · | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act; |
| · | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and |
| · | at least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company. |
Neither the Company nor its officer and director has any present plan, proposal, arrangement, understanding or intention of selling any unissued or outstanding shares of common stock in the public market subsequent to a business combination. Nevertheless, in the event that a substantial number of shares of our common stock were to be sold in any public market that may develop for our securities subsequent to a business combination, such sales may adversely affect the price for the sale of the Company’s common stock securities in any such trading market. We cannot predict what effect, if any, market sales of currently restricted shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time, if any.
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Holders of Record
As of the close of business on December 31, 2021, we had approximately 170 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. Our transfer agent is Pacific Stock Transfer Company, 6725 Via Austi Pkwy Suite 300, Las Vegas, NV 89119, (800) 785-7782, www.pacificstocktransfer.com. The transfer agent is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and operates under the regulatory authority of the SEC and FINRA.
Dividends
The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s business.
| ITEM 10. | RECENT SALES OF UNREGISTERED SECURITIES. |
The following issuances of equity securities by us were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder, during the three-year period preceding the date of this Registration Statement:
On March 6, 2019, we issued 1,500,000 shares to Baywall Inc. in exchange for services. On November 30, 2021, the Company entered into a Share Cancellation Agreement and Release with Baywall Inc. pursuant to which 1,200,000 shares were cancelled and 300,000 shares were retained by Baywall Inc.
On March 6, 2019, we issued 200,000 shares to Christophe Martino in exchange for services.
On March 6, 2019, we issued 200,000 shares to Michelle Monohan in exchange for services.
On March 6, 2019, we issued 100,000 shares to Aika Patel in exchange for services.
On March 4, 2020, we issued 22,000,000 shares to Bodhisattva Investment Group in exchange for assets.
On March 4, 2020, we issued 500,000 shares to Denise Grimes Family Trust in exchange for services.
On March 4, 2020, we issued 500,000 shares to Thomas J. Gregory in exchange for services.
On March 4, 2020, we issued 500,000 shares to Kirkwood Family Trust in exchange for services.
On March 4, 2020, we issued 300,000 shares to Peter and Susan Grimes Family Trust in exchange for services.
On March 4, 2020, we issued 100,000 shares to Susan Accongio in exchange for services.
On March 4, 2020, we issued 100,000 shares to Alice Buechele in exchange for services.
On March 4, 2020, we issued 100,000 shares to William A. Corrigan in exchange for services.
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On March 4, 2020, we issued 100,000 shares to Kevin Gregory in exchange for services.
On March 4, 2020, we issued 100,000 shares to Ray Grimes in exchange for services.
On March 4, 2020, we issued 100,000 shares to Sanjay Prasad in exchange for services.
On March 4, 2020, we issued 100,000 shares to Erica Presley in exchange for services.
On March 4, 2020, we issued 100,000 shares to Steve Ritaccio in exchange for services.
On March 4, 2020, we issued 100,000 shares to The Robert Stephen Duly Trust in exchange for services.
On March 4, 2020, we issued 100,000 shares to Paul Sorensen in exchange for services.
On March 4, 2020, we issued 100,000 shares to Rachell Vasquez in exchange for services.
On March 4, 2020, we issued 100,000 shares to Martin Golden in exchange for services.
On March 4, 2020, we issued 100,000 shares to Arthur George Woodward in exchange for services.
Effective January 13, 2022, we entered into a Consulting Agreement with Falconer Family Office Limited, a company incorporated under the laws of the United Kingdom which is controlled by Paul Falconer, our CEO (“FFO”) pursuant to which the Company issued 22,000,000 shares to Mr. Falconer and 1,700,000 shares to FFO for consulting services.
| ITEM 11. | DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED. |
We have authorized capital stock consisting of the following. The total number of shares of capital stock which the Company has the authority to issue is 1,010,000,000 shares. These shares are divided into two classes with 1,000,000,000 shares designated as Common Stock at $0.001 par value (the “Common Stock”) and 10,000,000 shares designated as Preferred Stock at $0.10 par value (the “Preferred Stock”).The Preferred Stock of the Company is issuable by authority of our Board of Directors in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as our Board of Directors may determine, from time to time. We have 43,612,837 common shares and no preferred shares outstanding as of the date hereof.
Common Stock
The holders of Common Stock have one vote per share on all matters (including election of Directors) without provision for cumulative voting. Thus, holders of more than 50% of the shares voting for the election of directors can elect all of the directors, if they choose to do so. The Common Stock is not redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued, fully paid and non-assessable. In the event of our liquidation, the holders of Common Stock will share equally in any balance of our assets available for distribution to them after satisfaction of creditors and the holders of our senior securities, whatever they may be. We may pay dividends, in cash or in securities or other property when and as declared by the Board of Directors from funds legally available therefore, but we have paid no cash dividends on our Common Stock.
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Preferred Stock
Under the Articles of Incorporation, the Board of Directors has the authority to issue Preferred Stock and to fix and determine its series, relative rights and preferences to the fullest extent permitted by the laws of the State of Colorado and such Articles of Incorporation. As of the date of this Registration Statement, no shares of Preferred Stock are issued or outstanding. The Board of Directors has no plan to issue any Preferred Stock in the foreseeable future.
Dividends
The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s business.
Warrants
As of December 31, 2021, we had no warrants issued and outstanding.
| ITEM 12. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
Under the Colorado Revised Statutes (“CRS”), director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Articles of Incorporation. The Company's Articles of Incorporation do not specifically limit the directors' immunity. Excepted from that immunity are: (a) a willful failure to deal fairly with the Company or its shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
The Company's Bylaws provide that (i) no officer or director of the Company shall liable for any acts, defaults or omissions of any other officer or director of the Company, or for any loss sustained by the Company unless the loss resulted from such officer's or director's willful misconduct, willful neglect, or gross negligence, (ii) the Company shall indemnify officers, directors and certain other individuals against all reasonable costs imposed or resulting from such person's role as an officer, director or agent of the Company unless such person is adjudged to be liable from willful misconduct, willful neglect, or gross negligence, and (iii) the Company may purchase and maintain officers and directors liability insurance.
The above discussion of the Company's Bylaws and of the CRS is not intended to be exhaustive and is respectively qualified in its entirety by such charter documents and statutes.
These indemnification provisions may be sufficiently broad to permit indemnification of the Company’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act, indemnification may be permitted to directors or executive officers; however, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
| 37 |
| ITEM 13. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
INDEX TO FINANCIAL STATEMENTS
| F-1 |
LNPR GROUP, INC.
BALANCE SHEETS
| March 31, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Current Assets | ||||||||
| Cash | $ | 1,085 | $ | 1,085 | ||||
| Total Current Assets | 1,085 | 1,085 | ||||||
| TOTAL ASSETS | $ | 1,085 | $ | 1,085 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 222,475 | $ | 218,712 | ||||
| Advances from related party | – | – | ||||||
| Total Current Liabilities | 222,475 | 218,712 | ||||||
| TOTAL LIABILITIES | 222,475 | 218,712 | ||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value $.10 per share; Authorized 10,000,000 shares, issued and outstanding -0- shares. | – | – | ||||||
| Common Stock, par value $.001 per share; Authorized 1,000,000,000 shares; Issued and outstanding 43,162,837 and 43,612,837 as of March 31, 2022 and December 31, 2021, respectively. | 609,058 | 609,858 | ||||||
| Additional paid-in capital | 258,762 | 258,762 | ||||||
| Accumulated deficit | (1,089,210 | ) | (1,085,897 | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | (221,390 | ) | (217,627 | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | 1,085 | $ | 1,085 | ||||
The accompanying notes are an integral part of these unaudited financial statements
| F-2 |
LNPR GROUP INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
| General and administrative expenses | $ | (27,463 | ) | $ | (875 | ) | ||
| Total operating expenses | (27,463 | ) | (875 | ) | ||||
| Loss from operations | (27,463 | ) | (875 | ) | ||||
| Loss before Income Tax | (27,463 | ) | (875 | ) | ||||
| Provision for income taxes | – | – | ||||||
| Net loss | $ | (27,463 | ) | $ | (875 | ) | ||
| Foreign currency translation adjustment | $ | – | $ | – | ||||
| Total comprehensive loss | $ | (27,463 | ) | $ | (875 | ) | ||
| Net loss per common share – basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Net loss per common share – diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average common shares outstanding - basic | 43,531,726 | 43,612,837 | ||||||
| Weighted average common shares outstanding - diluted | 43,531,726 | 43,612,837 | ||||||
The accompanying notes are an integral part of these unaudited financial statements
| F-3 |
LNPR GROUP, INC.
STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD ENDED MARCH 31, 2022
| Number of Common Shares Issued | Common Stock | Capital Paid in Excess of Par Value | Accumulated Deficit | Total | ||||||||||||||||
| Balance at December 31, 2021 | 43,612,837 | $ | 609,508 | $ | 258,762 | $ | (1,085,897 | ) | $ | (217,627 | ) | |||||||||
| Cancellation of common stock | (24,150,000 | ) | (24,150 | ) | – | 24,150 | – | |||||||||||||
| Issuance of common stock | 23,700,000 | 23,700 | – | – | 23,700 | |||||||||||||||
| Net loss | – | – | – | (27,463 | ) | (27,463 | ) | |||||||||||||
| Balance at March 31, 2022 | 43,162,837 | $ | 609,058 | $ | 258,762 | $ | (1,089,210 | ) | $ | (221,390 | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
LNPR GROUP INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |||||||
| Net loss | $ | (27,463 | ) | $ | (875 | ) | ||
| Changes in assets and liabilities: | ||||||||
| Share Based Compensation | 23,700 | – | ||||||
| Accrued expense and other payable | 3,763 | 875 | ||||||
| Net cash used in operating activities | – | – | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of common stock | – | – | ||||||
| Payments made to related parties | – | – | ||||||
| Advances from related party | – | – | ||||||
| Net cash used in financing activities | – | – | ||||||
| Net decrease in cash | – | – | ||||||
| Effect on changes in foreign exchange rate | – | – | ||||||
| Cash at beginning of period | 1,085 | 1,085 | ||||||
| Cash at end of period | $ | 1,085 | $ | 1,085 | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for income taxes | $ | – | $ | – | ||||
| Cash paid for interest | $ | – | $ | – | ||||
| Non-cash transactions: | ||||||||
| Expenses paid by related parties on behalf of the Company | $ | – | $ | – | ||||
| Common stocks issued to shareholder | $ | – | $ | – | ||||
The accompanying notes are an integral part of these unaudited financial statements
| F-5 |
LNPR GROUP INC.
Notes to Condensed Financial Statements
March 31, 2022
Note 1 - Organization
ORGANIZATION
New Asia Energy, Inc. (formerly known as High Desert Assets, Inc. and previously known as Univest Tech, Inc., (the "Company"), was incorporated in the State of Colorado on November 6, 2007. The Company was originally formed to develop and market music-based technology solutions.
On December 1, 2017, the Board of Directors of the Company adopted two Amendments to its Articles, changing the name of the Company to “LNPR Group Inc.,” and effectuating a 40:1 reverse split of the Company’s stock; the State of Colorado effectuated said changes on December 4, 2017; and on January 17, 2018, FINRA granted effectiveness for said changes and the ticker symbol became “LNPR.”
Note 2 - Summary of Significant Accounting Policies
This summary of significant accounting policies is presented to assist the reader in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Critical Accounting Policies and Estimates
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other long-term assets including goodwill, valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these estimates.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard CodificationTM” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company has adopted the Financial Accounting Standards Board (FASB) ASC Topic 260 regarding earnings / loss per share, which provides for calculation of “basic” and “diluted” earnings / loss per share. Basic earnings / loss per share includes no dilution and is computed by dividing net income / loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings / loss per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings / loss per share.
There were no potentially dilutive instruments outstanding during the years ended December 31, 2021 and 2020.
| F-6 |
INCOME TAXES
In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities have been adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.
The Company expects to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2021 and 2020, the Company had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. To date, the Company has not incurred any interest or tax penalties.
RELATED PARTIES
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
RECENT ACCOUNTING PRONOUNCEMENTS
There are no recent accounting pronouncements that impact the Company’s operations.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business for the 12 months following the date of these financial statements. The Company has suffered recurring losses and has working capital deficiency and negative operating cash flows.
These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of equity and/or debt financing to fund operations. The financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid temporary cash investment with an original maturity of three months or less to be cash/equivalents.
| F-7 |
SHARE-BASED COMPENSATION
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from consultants in accordance with the accounting standards regarding accounting for stock-based compensation and accounting for equity instruments that are issued to other than employees for acquiring or in conjunction with selling goods or services. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably determinable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by these accounting standards. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement if there is a term.
The Company accounts for equity instruments issued in exchange for the receipt of services from employees in the financial statements based on their fair values at the date of grant. The fair value of awards is amortized over the requisite service period.
Note 3 – Movement of Capital
As of January 25, 2022, the Company cancelled 23,350,000 common shares for a total consideration of $23,350 and issued 23,700,000 common shares at par value for a total of $23,700 which consisted of 22,000,000 shares of Common Stock to Paul Falconer (the Company’s CEO and the owner of Falconer Family Office (“FFO”) and 1,700,000 shares to FFO for services.
On February 23, 2022, the Company entered into a Mutual General Release and Settlement Agreement with Peter Grimes pursuant to which Mr. Grimes agreed to cancel 300,000 shares previously issued to him.
On February 23, 2022, we entered into a Mutual General Release and Settlement Agreement with Kirkland Family Trust pursuant to which the trust agreed to cancel 500,000 shares previously issued to it.
| F-8 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of LNPG Group Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of LNPR Group Inc. (the “Company”) as of December 31, 2021 and 2020, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ JTC Fair Song CPA Firm
JTC Fair Song CPA Firm
We have served as the Company’s auditor since 2021.
Shenzhen, China
May 18, 2022
PCAOB Firm ID: 2747
| F-9 |
LNPR GROUP INC.
AS OF DECEMBER 31, 2021 AND 2020
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 1,085 | $ | 1,085 | ||||
| TOTAL ASSETS | $ | 1,085 | $ | 1,085 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts Payable, Other Payables and Accruals | $ | 218,712 | $ | 215,212 | ||||
| TOTAL LIABILITIES | 218,712 | 215,212 | ||||||
| SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| Preferred stock, par value $.10 per share; Authorized 10,000,000 shares; issued and outstanding -0- shares. | – | – | ||||||
| Common Stock, par value $.001 per share; Authorized 1,000,000,000 shares; issued and outstanding 43,612,837 shares respectively as of December 31, 2021 and 2020. | 609,508 | 609,508 | ||||||
| Capital paid in excess of par value | 258,762 | 258,762 | ||||||
| Stock subscriptions receivable | – | – | ||||||
| Accumulated other comprehensive income | – | – | ||||||
| Accumulated deficit | (1,085,897 | ) | (1,082,397 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | (217,627 | ) | (214,127 | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ | 1,085 | $ | 1,085 | ||||
The accompanying notes are an integral part of these financial statements.
| F-10 |
LNPR GROUP INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
| Operating Expenses: | ||||||||
| General and Administrative | $ | (3,500 | ) | $ | (3,250 | ) | ||
| Total Operating Expenses | (3,500 | ) | (3,250 | ) | ||||
| Net Operating Loss | (3,500 | ) | (3,250 | ) | ||||
| Impairment Loss | – | (25,000 | ) | |||||
| Provision for Income Tax | – | – | ||||||
| Net Loss | $ | (3,500 | ) | $ | (28,250 | ) | ||
| Foreign Currency Translation Adjustment | – | – | ||||||
| Comprehensive Loss | $ | (3,500 | ) | $ | (28,250 | ) | ||
| Net Loss Per Common Share - Basic | $ | – | $ | – | ||||
| Net Loss Per Common Share - Diluted | $ | – | $ | – | ||||
| Weighted Average Common Shares Outstanding - Basic | 43,612,837 | 43,612,837 | ||||||
| Weighted Average Common Shares Outstanding - Diluted | 43,612,837 | 43,612,837 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-11 |
LNPR GROUP INC.
STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
| Number of Common Shares Issued | Common Stock | Capital Paid in Excess of Par Value | Accumulated Deficit | Total | ||||||||||||||||
| Balance at December 31, 2019 | 18,612,837 | $ | 584,508 | $ | 258,762 | $ | (1,054,147 | ) | $ | (210,877 | ) | |||||||||
| Issuance of common stock | 25,000,000 | $ | 25,000 | – | – | 25,000 | ||||||||||||||
| Net loss | – | – | – | (28,250 | ) | (28,250 | ) | |||||||||||||
| Balance at December 31, 2020 | 43,612,837 | $ | 609,508 | $ | 258,762 | $ | (1,082,397 | ) | $ | (214,127 | ) | |||||||||
| Net loss | – | – | – | (3,500 | ) | (3,500 | ) | |||||||||||||
| Balance at December 31, 2021 | 43,612,837 | $ | 609,508 | $ | 258,762 | $ | (1,085,897 | ) | $ | (217,627 | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
| F-12 |
LNPR GROUP INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
Year Ended 2021 | Year Ended 2020 | |||||||
| Net Loss | $ | (3,500 | ) | $ | (28,250 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Impairment Loss | – | 25,000 | ||||||
| Accounts payable | 3,500 | 3,500 | ||||||
| Expenses paid on behalf of Company | – | – | ||||||
| Cash used in operating activities | – | – | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | – | – | ||||||
| Borrowings from related party | – | – | ||||||
| Repayment on borrowings from related party | – | – | ||||||
| Net cash provided by (used in) financing activities | – | – | ||||||
| Net increase (decrease) in cash | – | – | ||||||
| Effects on changes in foreign exchange rate | – | – | ||||||
| Cash at beginning of the year | 1,085 | 1,085 | ||||||
| Cash at end of the year | $ | 1,085 | $ | 1,085 | ||||
| Supplemental disclosure information: | ||||||||
| Income taxes paid | $ | – | $ | – | ||||
| Interest paid | $ | – | $ | – | ||||
| Non-cash transactions: | ||||||||
| Debt settled with issuance of common stock | $ | – | $ | – | ||||
The accompanying notes are an integral part of these financial statements.
| F-13 |
LNPR GROUP INC.
FOR THE YEARS ENDED
DECEMBER 31, 2021 AND 2020
Note 1 – Organization
ORGANIZATION
New Asia Energy, Inc. (formerly known as High Desert Assets, Inc. and previously known as Univest Tech, Inc., (the "Company"), was incorporated in the State of Colorado on November 6, 2007. The Company was originally formed to develop and market music based on technology solutions.
On December 1, 2017, the Board of Directors of New Asia Energy, Inc. (the “Company”) adopted two Amendments to its Articles, changing the name of the Corporation to LNPR Group Inc., and effectuating a 40:1 reverse split of the company’s stock; the State of Colorado effectuated said changes on December 4, 2017; and on January 17, 2018, FINRA granted effectiveness for said changes and the ticker Symbol “LNPR”.
On December 24, 2018 Veng Kun Lun informed LNPR Group Inc., (the “Company”) that they are resigning from their positions as directors and/or officers of the Company. Veng Kun Lun decision to leave did not involve any disagreement with the Company on any matter relating to its operations, policies or practices.
On January 14, 2019 the Company, by written direction of the sole Director, appointed as a Director of the Company Joe Grimes which was accepted by Mr. Grimes. Mr. Grimes was also elected as Chief Executive Officer. The change of the officers and directors became effective as of December 24, 2018.
On April 21, 2021, Joseph Grimes resigned as the Chairman of the Board, President and CEO, and appointed Paul Falconer as Director and CEO.
On August 13, 2021, the Board appointed Eng Wah Kung as CFO and Nicola Yip as the COO.
Note 2 – Summary of Significant Accounting Policies
This summary of significant accounting policies is presented to assist the reader in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Critical Accounting Policies and Estimates
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other long-term assets including goodwill, valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these estimates.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
| F-14 |
NET LOSS PER SHARE
The Company has adopted the Financial Accounting Standards Board (FASB) ASC Topic 260 regarding earnings / loss per share, which provides for calculation of “basic” and “diluted” earnings / loss per share. Basic earnings / loss per share includes no dilution and is computed by dividing net income / loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings / loss per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings / loss per share.
There were no potentially dilutive instruments outstanding during the years ended December 31, 2021 and 2020.
INCOME TAXES
In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities have been adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.
The Company expects to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2021 and 2020, the Company had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. To date, the Company has not incurred any interest or tax penalties.
RELATED PARTIES
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
RECENT ACCOUNTING PRONOUNCEMENTS
There are no recent accounting pronouncements that impact the Company’s operations.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business for the 12 months following the date of these financial statements. The Company has suffered recurring losses and has working capital deficiency and negative operating cash flows.
These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of equity and/or debt financing to fund operations. The financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid temporary cash investment with an original maturity of three months or less to be cash/equivalents.
| F-15 |
Note 3 – Capital Stock
At formation, the Company was authorized to issue 50,000,000 shares of $.001 par value common stock.
Subsequently the following issuances of equity securities by us were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder, during the three-year period preceding the date of this Registration Statement:
On March 4, 2020, we issued 25,000,000 shares to Bodhisattva Investment Group in exchange for assets as valued at $0.001 per share.
On November 29, 2021, we entered into a mutual general release and settlement agreement with Bodhisattva Investment Group to cancel 21,650,000 shares previously issued to the entity.
On November 30, 2021, we entered into a share cancellation agreement with Baywall Inc. to cancel 1,200,000 shares previously issued to the entity.
On December 2, 2021, we entered into share cancellation agreements with Christophe Martino, Michelle Monohan, and, Aika Patel, individually, to cancel an aggregate of 500,000 shares previously issued to them.
Note 4 – Loss Per Share
The following table sets forth the computation of basic and diluted net loss per share:
| For the Years Ending December 31, | ||||||||
| 2021 | 2020 | |||||||
| Net loss attributable to common stockholders | $ | (3,500 | ) | $ | (28,250 | ) | ||
| Basic weighted average outstanding shares of common stock | 43,612,837 | 43,612,837 | ||||||
| Dilutive effects of common share equivalents | – | – | ||||||
| Dilutive weighted average outstanding shares of common stock | 43,612,837 | 43,612,837 | ||||||
| Net loss per share of common stock - basic and diluted | $ | 0 | $ | 0 | ||||
Note 5 – Income Taxes
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC 740.
The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows:
| December 31, 2021 | December 31, 2020 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss | $ | (3,500 | ) | $ | (28,250 | ) | ||
| Valuation allowance | 3,500 | 28,250 | ||||||
| Total deferred tax asset | $ | – | $ | – | ||||
| F-16 |
Note 6 – Related Party Transactions
On March 4, 2020, at Mr. Grimes’ direction, the Company issued 22,000,000 of the Grimes Shares to Bodhisattva Investment Group (“BIG”), an entity controlled by Mr. Grimes, the previous officer and director of the Company
On April 20, 2021, Mr. Grimes resigned from all positions within the Company.
On November 29, 2021, the Company and Mr. Grimes entered into the Mutual General Release and Settlement Agreement pursuant to which Mr. Grimes and BIG agreed to cancel 21,650,000 and retain 350,000 of the Grimes Shares.
On August 13, 2021, the Board appointed Eng Wah Kung as CFO and Nicola Yip as the COO.
On November 29, 2021, a total of 21,650,000 shares held by Bodhisattva Investment Group were cancelled.
Note 7 – Subsequent Events
Effective January 13, 2022, we entered into a Consulting Agreement with Falconer Family Office Limited, a company incorporated under the laws of the United Kingdom which is controlled by Paul Falconer, our CEO (“FFO”) pursuant to which the Company issued 22,000,000 shares to Mr. Falconer and 1,700,000 shares to FFO for consulting services.
On February 23, 2022, we entered into share cancellation agreements with Peter Grimes and Kirkwood Family Trust to cancel an aggregate of 800,000 shares previously issued to them.
On March 20, 2022, we identified a target operating company and started conducting due diligence on the entity. Although the due diligence was unsatisfactory, we plan on engaging in negotiations with management of this entity whereby management would come on either as a controlling shareholder, as management, or both.
| F-17 |
| ITEM 14. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES. |
None.
| ITEM 15. | FINANCIAL STATEMENTS AND EXHIBITS. |
| (a) | Financial Statements: |
All financial statements as set forth under Item 13 of this Registration Statement.
| (b) | Exhibits: |
*Management contract or compensatory plan or arrangement.
| 38 |
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.
LNPR Group Inc. a Colorado Corporation | ||
| Date: July 15, 2022 | By: | /s/ Paul Falconer |
| Paul Falconer | ||
Chief Executive Officer (principal executive officer) | ||
| Date: July 15, 2022 | By: | /s/ Eng Wah Kung |
| Eng Wah Kung | ||
Chief Financial Officer (principal financial and accounting officer) | ||
| 39 |
