UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2017

 

or

 

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

 

For the transition period from ___________ to ______________

 

Commission File Number: 333-177786

 

REBEL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Florida		45-3360079
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

 

7500A Beach Road, Unit 12-313, The Plaza Singapore 199591		+6562941531
(Address of Principal Executive Offices and Zip Code)		(Registrant’s Telephone Number, Including Area Code)

 

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

 

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

 

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

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	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. ☐

 

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

 

As of May 15, 2017, the number of shares of the registrant’s common stock, par value of $0.0001 per share, outstanding was 25,720,548. 

 

 

 

TABLE OF CONTENTS

 

		Page
PART I	Financial Information
Item 1.	Financial Statements.	1
	Condensed Consolidated Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016	2
	Condensed Consolidated Statement of Operations for the three months ending March 31, 2017 and 2016(Unaudited)	3
	Condensed Consolidated Statement of Cash Flows for the three  months ending March 31, 2017 and 2016 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II	Other Information	21
ITEM 1	LEGAL PROCEEDINGS	21
ITEM 1A.	RISK FACTORS	21
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	21
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.	Mine Safety Disclosures	22
ITEM 5.	OTHER INFORMATION	22
ITEM 6.	EXHIBITS	22
SIGNATURES		23

 

 

PART I -- FINANCIAL INFORMATION

 

ITEM 1 -- FINANCIAL STATEMENTS

 

REBEL GROUP, INC.

 

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

 

(Stated in US Dollars)

 

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

	PAGES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)	2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)	3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)	4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6 – 16

  

 

REBEL GROUP, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

 

		As of
		March 31, 2017				December 31, 2016
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents		$	201,103			$	22,321
Trade and other receivables			951,287				896,631
Total current assets			1,152,390				918,952
Property and equipment, net			29,438				29,191
Intangible assets			104,040				103,508
Long-term investment			11,283,900				12,373,380
TOTAL ASSETS		$	12,569,768			$	13,425,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank loan – current portion		$	8,504			$	11,352
Accruals and other payables			132,461				294,695
Convertible loans			178,571				-
Due to a shareholder			1,132,796				995,547
Deferred tax liabilities			1,225,665				1,606,983
TOTAL LIABILITIES		$	2,677,997			$	2,908,577
STOCKHOLDERS’ EQUITY
Common stock ($0.0001 par value; authorized 500,000,000 shares, 23,531,548 and 23,000,118 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively)			2,353				2,300
Additional paid-in capital			313,362				47,700
Retained earnings			7,302,450				7,478,850
Accumulated other comprehensive income			2,273,606				2,987,604
Total stockholders’ equity			9,891,771				10,516,454
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	12,569,768			$	13,425,031

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

REBEL GROUP, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Stated in US Dollars)

 

		For the				For the
		Three Months ended				Three Months ended
		March 31,				March 31,
		2017				2016
		(Unaudited)				(Unaudited)
Revenues, net		$	-			$	-
Cost and expenses
Cost of sales			-				-
Depreciation and amortization expenses			7,184				6,739
General and administrative expenses			168,658				62,141
Loss from operations			(175,842	)			(68,880	)
Other (expense) income
Convertible loan interest			(427	)			-
Bank loan interest			(158	)			(308	)
Interest income			27				166
Total other (expense) income			(558	)			(142	)
Loss before income tax expenses			(176,400	)			(69,022	)
Income tax expenses			-				-
Net loss			(176,400	)			(69,022	)
Other comprehensive (loss) income
Foreign currency translation adjustments			(5,836	)			1,976
Unrealized fair value loss on long-term investment arising during period			(1,089,480	)			-
Other comprehensive (loss) income, before tax			(1,095,316	)			1,976
Income tax expenses related to items of other comprehensive income			381,318				-
Other comprehensive income, net of tax			381,318				-
Comprehensive loss		$	(890,398	)		$	(67,046	)
(Loss) earnings per share (Note 9)
Basic and diluted loss per common share		$	(0.008	)		$	(0.003	)
Basic and diluted weighted average common shares outstanding			23,239,452				23,000,118

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

REBEL GROUP, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Stated in US Dollars)

 

		Common Stock																Accumulated
		The								Additional								Other
		Company								Paid-				Retained				Comprehensive
		Shares				Amount				in Capital				Earnings				Income				Total
Balance, December 31, 2016			23,000,118			$	2,300			$	47,700			$	7,478,850			$	2,987,604			$	10,516,454
Issuance of shares			531,430				53				265,662				-				-				265,715
Net loss			-				-				-				(176,400	)			-				(176,400	)
Unrealized loss on investment			-				-				-				-				(1,089,480	)			(1,089,480	)
Income tax expenses related to items of other comprehensive income			-				-				-				-				381,318				381,318
Foreign currency adjustment			-				-				-				-				(5,836	)			(5,836	)
Balance, March 31, 2017 (Unaudited)			23,531,548			$	2,353			$	313,362			$	7,302,450			$	2,273,606			$	9,891,771

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

REBEL GROUP, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

  

		Three months ended				Three months ended
		March 31, 2017				March 31, 2016
		(Unaudited)				(Unaudited)
Cash flows from operating activities:
Net loss		$	(176,400	)		$	(69,022	)
Adjustments to reconcile net income before tax to net cash provided by operating activities:
Depreciation and amortization expense			3,958				6,739
			(172,442	)			(62,283	)
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables			(22,276	)			52,298
Decrease in accruals and other payables			(21,557	)			(10,021	)
Net cash used in operating activities			(216,275	)			(20,006)
Cash flows from investing activities:
Net cash used in investing activities			-				-
Cash flows from financing activities:
Issuance of shares			53				-
Additional paid-in capital			265,662				-
Convertible loan			178,571				-
Bank loan repayment			(3,258	)			(8,263	)
Repayment to shareholder			(45,337	)			(18,880	)
Net cash provided by (used in) financing activities			395,691				(27,143	)
Increase (decrease) in cash and cash equivalents			179,416				(47,149	)
Effect of foreign currency translation			(634	)			156
Cash and cash equivalents at beginning of period			22,321				53,090
Cash and cash equivalents at end of period		$	201,103			$	6,097
Supplemental cash flow disclosures:
Cash paid for interest expense		$	158			$	308
Cash paid for income taxes		$	-			$	-
Major non cash transactions:
Unrealized fair value loss on long-term investment		$	1,089,480			$	-
Accrued convertible loan interest		$	427			$	-

 

 See accompanying notes to unaudited condensed consolidated financial statements

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

1.

Organization and nature of operations

 

Rebel Group, Inc. (f/k/a Inception Technology Group, Inc., the “Company”) was incorporated under the laws of the State of Florida on September 13, 2011. The Company organizes, promotes and hosts mixed martial arts (“MMA”) events featuring top level athletic talent. With assistance from contracted production crews, the Company also produces and distributes, through the internet and social media, and sells the rights to distribute to television stations, videos of its MMA events. The Company seeks to promote MMA in Asian countries through hosting events that attract talented fighters from all over the world.

 

On January 30, 2015, we completed the acquisition of Rebel Holdings Limited (“Rebel FC”) pursuant to a Share Exchange Agreement. (“Share Exchange Agreement,” such transaction, the “Share Exchange Transaction”), whereby the Company issued to the Rebel FC Stockholder an aggregate of 20,700,000 shares of its Common Stock, in exchange for 100% of the equity interests of Rebel FC held by the Rebel FC Stockholder. The shares of our Common Stock received by the Rebel FC Stockholder in the Share Exchange Transaction constitute approximately 90% of our issued and outstanding Common Stock giving effect to the issuance of shares pursuant to the Share Exchange Agreement. As a result of the Share Exchange Transaction, Rebel FC, together with its subsidiaries, Pure Heart Entertainment Pte Ltd. (“Pure Heart”) and SCA Capital Limited (“SCA Capital”), became the Company’s wholly-owned subsidiaries. The acquisition was accounted for as a reverse merger and recapitalization effected by the Share Exchange Transaction. Rebel FC is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

 

The exchange transaction was accounted for as a reverse acquisition in accordance with generally accepted accounting principles of America. For financial reporting purposes, this transaction is classified as a recapitalization of the Company and Pure Heart. The accompanying audited consolidated financial statements were retroactively adjusted to reflect the effects of the recapitalization of the financial statements of the Company and the historical financial statements of Pure Heart.

 

Also on January 30, 2015, we transferred 100% equity interests of Moxian Intellectual Property Limited (“Moxian IP”), our subsidiary, to Moxian, Inc. (“MOXC”) pursuant to the Equity Transfer Agreement. As a result of the Equity Transfer Transaction, Moxian IP ceased to be a subsidiary of the Company.

 

Rebel FC, which utilizes the trade name of Rebel Fighting Championship, was incorporated on October 28, 2014 in British Virgin Islands and engages in hosting and promoting MMA events since its corporation.

 

Pure Heart was incorporated under the laws of the Singapore on August 24, 2000 under the name “Sook Kee Coffeeshop Pte. Ltd.” Effective on November 27, 2002, it changed its name to “Asia Pacific Export International Pte Ltd.” It later changed its name from “Asia Pacific Export International Pte Ltd.” to “Pure Heart Entertainment Pte Ltd.” on June 7, 2013. As of October 30, 2014, it became a wholly owned subsidiary of Rebel FC. Pure Heart is an operating subsidiary of the Company and is dedicated to hosting and promoting MMA events.

 

SCA Capital, a British Virgin Islands company, was incorporated on January 7, 2011 and holds the intellectual property rights relating to the Rebel FC business. On October 28, 2014, SCA Capital became the wholly-owned subsidiary of Rebel FC.

 

2.

Summary of principal accounting policies

 

Basis of presentation

 

The unaudited condensed consolidated financial statements of the Company and its subsidiaries are prepared and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2.

Summary of principal accounting policies (Continued)

 

Basis of presentation (Continued)

 

All significant inter-company transactions and balances have been eliminated upon consolidation.

 

The Company's audited consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The fiscal year end is December 31.

 

Revenue recognition

 

Revenue is recognized when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured.

 

Use of estimates

 

The preparation of the combined financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the combined financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

 

Cash and cash equivalents consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use the Company maintained accounts at banks and have not experienced any losses from such concentrations.

 

Fair value of financial instruments

 

ASC Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

 

Level 1

inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2

inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3

inputs to the valuation methodology are unobservable and significant to the fair value.

 

As of March 31, 2017 and 2016, financial instruments of the Company primarily comprise of cash, other receivable and accrued expenses, which were carried at cost on the balance sheets, and carrying amounts approximated their fair values because of their generally short maturities.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2.

Summary of principal accounting policies (Continued)

 

Convertible notes

 

In accordance with ASC subtopic 470-20, the convertible notes are initially carried at the principal amount of the convertible notes. Debt premium or discounts, which are the differences between the carrying value and the principal amount of convertible notes at the issuance date, together with related debts issuance cost, are subsequently amortized using effective interest method as adjustments to interest expense from the debt issuance date to its first redemption date. Convertible notes are classified as a current liability if they are or will be callable by the Company or puttable by the debt holders within one year from the balance sheet date, even though liquidation may not be expected within that period.

 

Foreign currency translation and transactions

 

The reporting currency of the Company is United States Dollars (“US$”), which is also the Company’s functional currency. The Singapore subsidiaries maintain their books and records in its local currency, the Singapore dollar (“SGD”), which is their functional currencies as being the primary currency of the economic environment in which these entities operate.

 

Transactions in foreign currencies other than functional currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

 

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US dollars using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period.  Adjustments resulting from the translation are recorded in investors’ equity as part of accumulated other comprehensive income.

 

Income taxes

 

The Company utilizes FASB Accounting Standard Codification Topic 740 (“ASC 740”) “Income taxes” (formerly known as SFAS No. 109, “Accounting for Income Taxes”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the combined financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

ASC 740 “Income taxes” (formerly known as Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of Statement of Financial Accounting Standards No. 109 (“FIN 48”)) clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the audited consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the statements of operations. The adoption of ASC 740 did not have a significant effect on the audited consolidated financial statements.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2.

Summary of principal accounting policies (Continued)

 

Earnings per share

 

Basic earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share.  The average market price during the year is used to compute equivalent shares.

 

FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share”, requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share.

 

Plant and equipment

 

Plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

 

Equipment                                                        3 - 5 years

 

Intangible assets

 

Intangible assets, comprising trade mark and other intangible assets, which are separable from the fixed assets, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 10 years.

 

Long-term investment

 

Investments comprise marketable securities which are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses, net of taxes, reported as a separate component of shareholders’ equity (deficit). The Company determines any realized gains or losses on the sale of marketable securities on a specific identification method, and records such gains and losses as a component of other income (expense), net in the consolidated statement of income.

 

Comprehensive income

 

The Company has adopted FASB Accounting Standard Codification Topic 220 (“ASC 220”) “Comprehensive income” (formerly known as SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.

 

Recently Issued Accounting Guidance

 

The Company does not believe other recently issued but not yet effective accounting standards from ASU 2017-08, if currently adopted, would have a material effect of the condensed consolidated financial position, results of operation and cash flows.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

3.

Property and equipment

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	Equipment		$	83,943			$	77,860
	Less:  accumulated depreciation and amortization			(54,505	)			(48,669	)
	Total property and equipment, net		$	29,438			$	29,191

 

The depreciation expenses for the three months ended March 31, 2017 and 2016 were $4,022 and $3,546, respectively.

 

4.

Intangible assets

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	Trade mark		$	16,251			$	15,684
	Other intangible assets			128,237				123,767
			$	144,488			$	139,451
	Less: accumulated amortization			(40,448	)			(35,943	)
	Net intangible assets		$	104,040			$	103,508

 

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the three months ended March 31, 2017 and 2016, totaled $3,162 and $3,193, respectively. The following table represents the total estimated amortization of intangible assets for the five succeeding years:

 

			Estimated Amortization Expense (unaudited)
	2018		$	12,823
	2019			12,823
	2020			12,823
	2021 and thereafter			65,571
			$	104,040

 

5.

Long-term investment

 

On January 30, 2015, MOXC issued a convertible promissory note to the Company for $7,782,000 (the “MOXC Note”). The MOXC Note would become due and payable on October 30, 2015. Under the MOXC Note, MOXC has the option to convert any and all amounts due under the MOXC Note into the shares of MOXC’s shares of common stock (the “MOXC Common Stock”) at the conversion price of $1.00 per share (“Conversion Price”), if the volume weighted average price (“VWAP”) of MOXC Common Stock for 30 trading days immediately prior to the date of conversion is higher than the Conversion Price. MOXC also has a right of first refusal to purchase the shares issuable upon conversion of the MOXC Note at the price of 80% of the VWAP of MOXC Common Stock for 30 trading days immediately prior to the date of the proposed repurchase by MOXC.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

5.

Long-term investment (Continued)

 

On August 14, 2015, due to the VWAP of the MOXC Common Stock for 30 trading day prior to August 14, 2015 is higher than $1.00, which triggered the clause of conversion under the MOXC Note, MOXC notified the Company that it elected to convert the amount of $3,891,000 under the MOXC Note into 3,891,000 shares of the MOXC Common Stock at the conversion price of $1.00 (“August Conversion”). As a result of the August Conversion, the remainder amount of the MOXC Note is $3,891,000.

 

On September 28, 2015, MOXC notified the Company that it elected to convert the remainder of the MOXC Note, of $3,891,000 into 3,891,000 shares of the MOXC Common Stock (“September Conversion”). After the August Conversion and September Conversion, consequently, all of the MOXC Note was converted into the total of 7,782,000 shares of the MOXC Common Stock with no amount of the MOXC Note is outstanding as of December 31, 2015.

 

For the year ended December 31, 2015, the gain on disposal of a subsidiary was $6,782,000.

 

On June 20, 2016, MOXC has approved a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-2 (the “Reverse Stock Split”). As a result, 3,891,000 shares and 7,782,000 shares of the MOXC Common Stock are outstanding as of March 31, 2017 and 2016 respectively.

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	Cost		$	7,782,000			$	7,782,000
	Fair value adjustment (including the effect of reverse stock split of $3,891,000 on June 20, 2016)			4,591,380				31,128,000
	Total property and equipment, net		$	12,373,380			$	38,910,000

 

As of March 31, 2017 and December 31, 2016, the fair value of MOXC was $2.90 and $3.18, respectively. For the periods ended March 31, 2017 and 2016, the fair value loss of ($1,089,480) and $nil were recognized respectively. The Company has no intention to sell the investment in the near future.

 

6.

Bank loan

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	Repayable within one year		$	8,504			$	12,746
	Repayable after one year			-				6,639
	Total bank loan		$	8,504			$	19,385

 

The interest expenses for the three months ended March 31, 2017 and 2016 were $158 and $308, respectively.

 

On August 15, 2014, Pure Heart and DBS Bank entered into a banking facility (the “Banking Facility”), pursuant to which DBS Bank disbursed Singapore dollar $50,000 to Pure Heart for working capital. The interest rate of the loan is 6.00% per annum on monthly outstanding balance. The term for the banking facility is three years. Pure Heart shall repay in 36 installments for Singapore dollar $1,522 each month. Mr. Leong Khian Kiee and Mr. Leong Aan Yee, Justin, the directors of Pure Heart personally guaranteed the Banking Facility jointly and severally.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

7.

Convertible loans

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	Repayable within one year		$	178,571			$	-

 

The interest expenses for the three months ended March 31, 2017 and 2016 were $427 and $nil, respectively.

 

On March 15, 2017, the Company, Leong Khian Kiee, and Lee Bon Peng (“Lee”) entered into a Convertible Loan Agreement to document the loan of Singapore Dollars (“S$”) 50,000 ($35,715) that Lee advanced to the Company on March 15, 2017 and which shall be repayable on March 14, 2018, with an interest of 10% per annum. Pursuant to the Convertible Loan Agreement Lee has the option to convert the principal amount of the loan, into 71,430 shares of Company’s common stock in lieu of repayment of the loan amount. The foregoing description of the Convertible Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Convertible Loan Agreement a copy of which is filed as Exhibit 10.1 and is incorporated by reference herein.

 

On March 24, 2017, the Company, Leong Khian Kiee, and Chiam Mui Ken (“Chiam”) entered into a Convertile Loan Agreement to document the loan of S$200,000 ($142,856) that Chiam advanced to the Company on March 24, 2017 and shall be repayable on March 23, 2018 (“Maturity Date”), with an interest of 10% per annum. Chiam shall have the option to extend the term of the loan from the Maturity Date to March 23, 2019 (“Extended Maturity Date”). Chiam may convert all of the principal amount, into shares of Company’s common stock (“Conversion Right”) at any time for the period commencing on the date hereof and ending on March 23, 2019 (“Conversion Period”). In the event that the Conversion Right is exercised within 7 Business Days immediately following the Maturity Date, the conversion will be based on the share price of $0.50. In the event that the Conversion Right is exercised after the Maturity Date but within 7 Business Days immediately following the Extended Maturity Date, the conversion will be based on the share price of $0.60. The foregoing description of the Convertible Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Convertible Loan Agreement a copy of which is filed as Exhibit 10.2 and is incorporated by reference herein.

 

8.

Due to a shareholder

 

As of March 31, 2017 and December 31, 2016, the due to shareholder is $1,132,796 and $995,547 respectively. The amount is unsecured, interest free and has no fixed terms of repayment.

 

9.

Stockholders’ equity

 

Prior to April 16, 2013, the authorized capital stock of the Company consisted of 250,000,000 shares of Common Stock with a par value of $0.0001. The Company issued 9,000,000 shares of our Common Stock to Marilyn Stark (the “Stark”), our former CEO and former sold Director, on September 13, 2011 for cash in the amount of $9,000 (per share price of $0.001).

 

The Company sold 2,500,000 shares of Common Stock to a group of Investors on March 14, 2012 for cash in the amount of $37,500 (per share price of $0.015).

 

On February 27, 2013, Stark entered into a Securities Purchase Agreement with (the “Purchase Agreement”) with three accredited investors (the “Purchasers”), pursuant to which Stark sold to the Purchasers her 9,000,000 shares of Common Stock of the Company.

 

On April 16, 2013, the Company amended its Articles of Incorporation to implement a 20-for-1 forward split (“Forward Split”). As a result of the Forward Split, the number of outstanding Common Stock increased from 11,500,000 shares to 230,000,000 shares and the par value of Common Stock remains the same.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

9.

Stockholders’ equity (Continued)

 

On April 25, 2013, the Company entered into a Share Exchange Agreement with Moxian BVI and Medicode Group Limited, the sole stockholder of Moxian BVI (the “Moxian Stockholder”), pursuant to which .the Company acquired the operating business of Moxian BVI and its subsidiaries and the Company ceased being a shell company as such term is defined under Rule 12b-2 under the Exchange Act. Since the incorporation of the business of Moxian BVI, the Company changed its business to develop social network platform that integrates social media and business into one single platform.

 

On July 9, 2014, the Company amended its Articles of Incorporation (the “Amendments”) to implement a 1-for-5 reverse split of its issued and outstanding Common Stock (“Reverse Split”).

 

On July 23, 2014, the Financial Industry Regulatory Authority approved and declared the Amendments to be effective. As a result, 230,000,000 shares of Common Stock prior to the Reverse Split decreased and without any further action from the Company’s stockholders, to 46,000,000 shares of common stock. The Reverse Split will not alter the total number of the authorized shares or the par value of the shares of the Company.

 

On December 5, 2014, the Company implemented a 1-for-20 reverse stock split of its issued and outstanding Common Stock. As a result, the number of total outstanding shares become 2,300,118.

 

On January 30, 2015, the Company, Rebel FC and the stockholder of Rebel FC who owned 100% of Rebel FC (the “Rebel FC Stockholder”) entered into and consummated transactions pursuant to a Share Exchange Agreement, whereby the Company issued to the Rebel FC Stockholder an aggregate of 20,700,000 shares of its Common Stock, in exchange for 100% of the equity interests of Rebel FC held by the Rebel FC Stockholder. The shares of our Common Stock received by the Rebel FC Stockholder in the Share Exchange Transaction constitute approximately 90% of our issued and outstanding Common Stock giving effect to the issuance of shares pursuant to the Share Exchange Agreement. As a result of the Share Exchange Transaction, Rebel FC, together with its subsidiaries, Pure Heart and SCA Capital, became the Company’s wholly-owned subsidiaries.

 

On January 31, 2017, February 10, 2017, February 22, 2017 and March 18, 2017 the Company total issued 531,430 shares.

 

As of March 31, 2017, there were 23,531,548 shares of common stock issued and outstanding.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

10.

Earnings per share

 

			For the				For the
			Three months ended				Three months ended
			March 31,				March 31,
			2017				2016
			(Unaudited)				(Unaudited)
	Net loss attributable to common shareholders for computing basic net income per common stock		$	(176,400	)		$	(69,022	)
	Weighted-average shares of common stock outstanding in computing net income per common stock of the Company
	Basic			23,239,452				23,000,118
	Dilutive shares
	-   Convertible loan			34,921				-
	-   Anti-dilutive effect of convertible loan			(34,921	)			-
	Diluted			23,239,452				23,000,118
	Basic loss per share		$	(0.008	)		$	(0.003	)
	Diluted loss per share		$	(0.008	)		$	(0.003	)

 

11.

Taxation

 

Rebel FC and SCA Capital are incorporated in the British Virgin Islands and are not subject to income taxes under the current laws of the British Virgin Islands.

 

Pure Heart was incorporated in Singapore and is subject to Singapore corporate income tax at 17%. No income tax expenses for the three months ended March 31, 2017 and year ended December 31, 2016.

 

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the three months ended March 31, 2017 and year ended December 31, 2016, the Company had no unrecognized tax benefits.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

  

11.

Taxation (Continued)

 

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

 

			As of March 31,
			2017				2016
			(Unaudited)				(Unaudited)
	Income tax expense is comprised of:
	Current income tax		$	-			$	-
	Deferred income tax expense			381,318				-
	Total provision for income taxes		$	381,318			$	-

 

Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred income tax was measured using the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of March 31, 2017 and 2016 are presented below:

 

			As of March 31,
			2017				2016
			(Unaudited)				(Unaudited)
	Unrealized fair value loss on long-term investment		$	(1,089,480	)		$	-

  

The enterprise income tax payable as follows:

  

				As of
				March 31, 2017				December 31, 2016
				(Unaudited)
	Income tax payable		$	-			$	-

 

12.	Related party transactions

 

12.1 Nature of relationships with related parties

 

	Name		Relationships with the Company
	Mr. Leong Khian Kiee		Shareholder
	Mr. Leong Aan Yee Justin		Shareholder

 

12.2 Related party balances

 

As at March 31, 2017 and December 31, 2016, amounts due to shareholders were $1,132,796 and $995,547 respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

 

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

12.	Related party transactions (Continued)

 

A summary of changes in the amount due to Mr. Leong Khian Kiee is as follows:

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	At beginning of period/ year		$	978,974			$	758,064
	Advance from shareholder			153,822				220,910
	At end of period/ year		$	1,132,796			$	978,974

 

A summary of changes in the amount due to Mr. Leong Aan Yee Justin is as follows:

 

			As of
			March 31, 2017				December 31, 2016
			(Unaudited)
	At beginning of period/ year		$	16,573			$	16,573
	Advance from shareholder			-				-
	At end of period/ year		$	16,573			$	16,573

  

13.	Commitments and contingencies

 

Operating Lease

 

There has been no commitment as at March 31, 2017.

 

Legal Proceeding

 

There has been no legal proceeding in which the Company is a party for the three months ended March 31, 2017.

  

14.	Subsequent events

 

As reported on the Current Report on Form 8-K filed by the Company on May 12, 2017, on May 9, 2017, the Company added Mr. Teng Chee Keong to its Board of Directors, effective May 12, 2017.

 

On May 5, 2017, the Company entered into an Investment Agreement with Pure Heart, Khian Kiee Leong, a member of the Company’s board of directors, and Teng Chee Keong, who was recently appointed as a director of the Company’s board of directors effective May 12, 2017. Mr. Teng was appointed to the Company’s board of directors as a condition of the Investment Agreement. Pursuant to the Investment Agreement, Mr. Teng agreed to lend US $300,000 to the Company, which is to be repaid by May 4, 2018, which can be extended to May 4, 2019 at the option of Mr. Teng and has an annual interest rate of 10%. Under the Loan, Mr. Teng has the option, in lieu of repayment under the Loan, to convert the Loan into shares of the Company’s Common Stock after the maturity date of the Loan, at a conversion price of $0.50 if the conversion is made within 7 days of the maturity date and at a conversion price of $0.60 if the conversion is made within 7 days of the extended maturity date. Mr. Khian Kiee Leong, a member of the Company’s board of directors, agreed to personally guarantee the Loan. Further pursuant to the Investment Agreement, Mr. Teng agreed to subscribe to purchase US $700,000 of shares of the Company’s common stock at a price of $0.50 per share for a total of 1,400,000 shares of the Company’s common stock. The Investment Agreement closed on May 12, 2017. The foregoing description of the Investment Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Investment Agreement a copy of which is filed as Exhibit 10.3 and is incorporated by reference herein.

 

Since April 1, 2017, and through the date of filing of this report, the Company issued 679,000 shares of its common stock for aggregate proceeds totaling $339,500.

 

On May 3, 2017, the Company issued 70,000 shares of its Common Stock to Mr. Chow Hong Ong as payment for his services in the capacity of a director of the Company.

 

On May 3, 2017, the Company issued 40,000 shares of its Common Stock to a service provider as payment for his sponsorship services that he provided to the Company.

 

Other than the foregoing, there were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our financial statements for the three months March 31, 2017.

  

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD-LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

 

In the following, “we,” “us,” or “our,” are references to the combined business of (i) the Company (ii) Rebel FC; (iii) Pure Heart and (iv) SCA Capital.

 

Overview

 

The Company, through Rebel FC, organizes, promotes and hosts MMA events featuring top level athletic talent with assistance from contracted production crews. The Company also seeks to produce and distribute videos of its MMA events, through the internet, social media, and selling the rights to such videos to distribute to television stations.

 

 

The Company aims to promote MMA in Asian countries through hosting events that attract talented fighters from all over the world. MMA is unarmed combat involving the use of a combination of techniques from different disciplines of martial arts, including, without limitation, grappling, submission holds, kicking and striking. The styles of martial arts range from Brazilian Jiu-Jitsu, Judo, Karate, Boxing, Muay Thai, Wrestling, Jeet Kune Do, Taekwondo, Sanshou and various other forms of martial arts. Unlike boxing, where athletes can only strike with their fists and only above the belt, the fighters in MMA can use punches, kicks, elbows, knee strikes, takedowns and submissions to win a contest.

 

The Company has not yet held any MMA events in 2017. The Company plans to hold four events in China in 2017, with two in Shanghai and two in Shenzhen. The Company plans to charge between RMB 180 to 3,888 (US $26.14 to US $564.54) for tickets to these planned events, with the final price to be determined based on the location of the event.

 

The Company has an event planned with Qingdao Quanyao Sports Consulting Co. Ltd, a Chinese entity incorporated in Qingdao, China (“QQSC”), which is scheduled to take place in Shanghai on August 12, 2017 (the “August Event”). In connection with the August event, QQSC entered into a Venue Rental Agreement with Kerry Hotel in Pudong, Shanghai on April 19, 2017 (the “Venue Agreement”). Pursuant to the Venue Agreement QQSC has agreed to reserve various rooms at the Kerry Hotel in Pudong for the August Event. The Company has paid the deposit for the Venue Agreement to QQSC.

 

The Company also has an event planned with QQSC scheduled to take place in Shenzhen on September 2, 2017 (the “September Event”). In connection with the September Event, QQSC has entered into a Stadium Rental Contract with Shenzhen Gymnasium Stadium Operation Management Co., Ltd. on April 14, 2017 (the “Stadium Agreement.”) Pursuant to the Stadium Agreement, QQSC agreed to lease the Shenzhen stadium and its auxiliary facilities for the purpose of holding the September Event. The Company has paid the deposit for the Stadium Agreement to QQSC.

 

The Company also has a planned event in Shanghai in November of 2017 and an event planned in Shenzen in December of 2017. However, there can be no assurance that such events will occur, or even if they do occur there can be no guarantee that such events will be successful or profitable.

 

The Company is currently negotiating for the acquisition of QQSC. This acquisition is planned to be effectuated through a wholly owned subsidiary of Pure Heart which is in the process of being incorporated. However, there can be no assurance that such discussions can be successful or that such acquisition can be accomplished at all, or if accomplished, done so on terms acceptable to the Company.

 

Results of Operations

 

For the three months ended March 31, 2017 compared with the three months ended March 31, 2016

 

Gross Revenues

 

The Company received sales revenues of $0 in the three months ended March 31, 2017 and in the three months ended March 31, 2016.

 

Operating Expenses

 

Operating expenses for the three months ended March 31, 2017 and three months ended March 31, 2016 were $168,658 and $62,141, respectively. The expenses for each such period consisted of filing fees, professional fees, payroll and benefits and other general expenses. The increase in expenses was due to operational expansion for planned events later in the year.

 

Other Income

 

Other income for the three months ended March 31, 2017 and three months ended March 31, 2016 were nil.

 

Net Income

 

Net loss for the three months ended March 31, 2017 and three months ended March 31, 2016 were ($176,400) and ($69,022) respectively. Basic and diluted net loss per share amounted to $0.008 and $0.003 respectively for the three months ended March 31, 2017 and three months ended March 31, 2016.

 

 

Liquidity and Capital Resources  

 

At March 31, 2017, we had working capital deficit of ($299,942) and cash on hand of $201,103 as compared to working capital deficit of ($382,642) and cash on hand of $22,321 as of December 31, 2016.

 

Net cash used in operating activities for the three months ended March 31, 2017 was $216,275 as compared to net cash used in operating activities of $20,006 for the three months ended March 31, 2016. The cash used in operating activities is mainly for filing fees, professional fees, payroll and benefits and general expenses.

 

The increase of net cash for operating activities in the quarter ended March 31, 2017 was due to increased expenses for planned events.

 

Net cash provided by/(used in) financing activities for the three months ended March 31, 2017 was $395,691 as compared to ($27,143) for the three months ended March 31, 2016.

 

We will likely require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities.

 

The Company has issued 531,430 shares of its Common Stock for aggregate proceeds totaling $265,662 in the three months ended March 31, 2017.

 

On March 15, 2017 and March 24, 2017, the Company entered into two convertible note agreements with two investors, as further described in Part II, Item II below (the “Note Agreements”). Pursuant to the Note Agreements, the investors lent Pure Heart $35,715 and $142,856, respectively. Both loans under the Note Agreements are convertible at the option of the investors into shares of the Company’s Common Stock. Under the $35,715 loan, the investor has the option, in lieu of repayment under the loan, to convert the loan into 71,430 shares of the Company’s Common Stock. Under the $142,856 loan, the Investor has the right to convert the loan into shares of the Company’s Common Stock at $0.50 per share. Mr. Leong, a member of the Company’s board of directors, agreed to personally guarantee the loans under the Note Agreements. The foregoing description of the Note Agreements is not complete and is qualified in its entirety by reference to the full text of the form of Note Agreements, copies of which are filed as Exhibit 10.1 and 10.2, respectively and are incorporated by reference herein.

 

On May 5, 2017, the Company entered into an Investment Agreement with Pure Heart, Khian Kiee Leong, a member of the Company’s board of directors, and Teng Chee Keong, who was recently appointed as a director of the Company’s board of directors effective May 12, 2017, as further described in Part II, Item II below. Mr. Teng was appointed to the Company’s board of directors, as a condition of the Investment Agreement.

 

Pursuant to the Investment Agreement, Mr. Teng agreed to lend US $300,000 to the Company (the “Loan”) with repayment to be made by May 4, 2018, which can be extended to May 4, 2019 at the option of Mr. Teng. Under the Loan, Mr. Teng has the option, in lieu of repayment under the Loan, to convert the Loan into shares of the Company’s Common Stock after the maturity date of the Loan, at a conversion price of $0.50 if the conversion is made within 7 days of the maturity date and at a conversion price of $.60 if the conversion is made within 7 days of the extended maturity date. Mr. Leong, a member of the Company’s board of directors, agreed to personally guarantee the Loan. Further pursuant to the Investment Agreement, Mr. Teng agreed to subscribe to purchase US $700,000 of shares of the Company’s common stock at a price of $.50 per share for a total of 1,400,000 shares of the Company’s Common Stock. The Investment Agreement closed on May 12, 2017. The foregoing description of the Investment Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Investment Agreement a copy of which is filed as Exhibit 10.3 and is incorporated by reference herein.

 

 

The Company requires additional capital to operate its business. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results.

 

Critical Accounting Policies and Estimates

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation and the fair value of our stock, stock-based compensation, debt discount and the valuation allowance relating to the Company’s deferred tax assets.

 

Recently Issued Accounting Pronouncements

 

Reference is made to the “Recent Accounting Pronouncements” in Note 2 to the Financial Statements included in this Report for information related to new accounting pronouncement, none of which had a material impact on our consolidated financial statements, and the future adoption of recently issued accounting pronouncements, which we do not expect will have a material impact on our consolidated financial statements. 

 

Off-Balance Sheet Arrangements

 

As of March 31, 2017, we did not have any off-balance sheet arrangements. 

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

(a)      Evaluation of Disclosure Controls and Procedures.

 

Pursuant to Rule 13a- 15(b) under the Exchange Act, the Company carried out an evaluation, with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company's CEO concluded that the material weaknesses disclosed in the Company's Form 10-K for the year ended December 31, 2016 continue to exist and accordingly, the Company's disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's CEO, as appropriate, to allow timely decisions regarding required disclosure.

 

(b)      Changes in Internal Control over Financial Reporting.

 

As reported on the Form 8-K filed by the Company on January 27, 2016, on January 25, 2016, the Company added Tomas Urbanec to its Board of Directors.

 

As reported on the Current Report on Form 8-K filed by the Company on May 12, 2017, the Company added Mr. Teng Chee Keong to its Board of Directors, effective May 12, 2017.

  

Other than the foregoing, there was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is not currently party to any legal proceedings or threatened legal proceedings, the adverse outcome of which, individually or in the aggregate, it believes would have a material adverse effect on its business, consolidated financial condition and consolidated results of operations.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

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

 

Issuance of Common Stock:

 

During the three months ended March, 31 2017, the Company sold 531,430 shares of its Common Stock for aggregate proceeds totaling $265,715.

 

Since April 1, 2017, and through the date of filing of this report, the Company issued 679,000 shares of its common stock for aggregate proceeds totaling $339,500.

 

On May 3, 2017, the Company issued 70,000 shares of its Common Stock to Mr. Chow Hong Ong as payment for his services in the capacity of a director of the Company.

 

On May 3, 2017, the Company issued 40,000 shares of its Common Stock to a service provider as payment for his sponsorship services that he provided to the Company.

 

Issuance of Promissory Notes:

 

On March 15, 2017, the Company entered into a Convertible Loan Agreement with Pure Heart, Khian Kiee Leong, a member of the Company’s board of directors, and an investor, pursuant to which the investor lent $50,000 Singapore Dollars ($ 35,715 USD) to Pure Heart (the “Loan”). The Loan carries an annual interest rate of 10% and has a maturity date of March 14, 2018. Under the Loan, the investor has the option, in lieu of repayment under the Loan, to convert the Loan into 71,430 shares of the Company’s Common Stock. Mr. Leong agreed to personally guarantee the Loan. The foregoing description of the Convertible Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Convertible Loan Agreement a copy of which is filed as Exhibit 10.1 and is incorporated by reference herein.

 

On March 24, 2017, the Company entered into a Convertible Loan Agreement with Pure Heart, Khian Kiee Leong, a member of the Company’s board of directors, and an investor, pursuant to which the investor lent $200,000 Singapore Dollars ($142,856 USD) to Pure Heart (the “Loan”). The Loan carries an annual interest rate of 10% and has a maturity date of March 23, 2018. Under the Loan, the investor has the option, in lieu of repayment under the Loan, to convert the Loan into shares of the Company’s Common Stock at a conversion price of $0.50 per share. Mr. Leong agreed to personally guarantee the Loan. The foregoing description of the Convertible Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Convertible Loan Agreement a copy of which is filed as Exhibit 10.2 and is incorporated by reference herein.

 

Issuance Pursuant to Investment Agreement:

 

On May 5, 2017, the Company entered into an Investment Agreement with Pure Heart, Khian Kiee Leong, a member of the Company’s board of directors, and Teng Chee Keong, who was recently appointed as a director of the Company’s board of directors effective May 12, 2017. Mr. Teng was appointed to the Company’s board of directors as a condition of the Investment Agreement. Pursuant to the Investment Agreement, Mr. Teng agreed to lend US $300,000 to the Company (the “Loan”), which is to be repaid by May 4, 2018, which can be extended to May 4, 2019 at the option of Mr. Teng and has an annual interest rate of 10%. Under the Loan, Mr. Teng has the option, in lieu of repayment under the Loan, to convert the Loan into shares of the Company’s Common Stock after the maturity date of the Loan, at a conversion price of $0.50 if the conversion is made within 7 days of the maturity date and at a conversion price of $.60 if the conversion is made within 7 days of the extended maturity date. Mr. Khian Kiee Leong, a member of the Company’s board of directors, agreed to personally guarantee the Loan. Further pursuant to the Investment Agreement, Mr. Teng agreed to subscribe to purchase US $700,000 of shares of the Company’s common stock at a price of $.50 per share for a total of 1,400,000 shares of the Company’s Common Stock. The Investment Agreement closed on May 12, 2017. The foregoing description of the Investment Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Investment Agreement a copy of which is filed as Exhibit 10.3 and is incorporated by reference herein.

 

 

The above issuances were made pursuant to the exemption from registration contained in Regulation S promulgated under the Securities Act.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosure

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Not applicable.

 

ITEM 6. EXHIBITS.

 

(a) The following exhibits are filed herewith:

 

10.1	Form of Convertible Loan Agreement Dated March 15, 2017.
10.2	Form of Convertible Loan Agreement Dated March 23, 2017.
10.3	Form of Investment Agreement Date May 5, 2017.
31.1	Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Rebel Group, Inc.
	By:	/s/ Aan Yee Leong, Justin
Date: May 15, 2017		Aan Yee Leong, Justin
		President, Chief Executive Officer, Director Principal Executive Officer, Principal Financial and Accounting Officer

 

 

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