UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Amendment No. 1 to

FORM 10-Q/A

 

(Mark one)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended November 30, 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: 0-54236

 

UBI Blockchain Internet Ltd.

(Exact name of registrant as specified in its charter)

 

Nevada		27-3349143
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

 

Unit 03, Level 9, Core F, Smart Space, Block 3, 100 Cyberport Rd., Hong Kong, People’s Republic of China
(Address of principal executive offices)		(Zip Code)

 

(212) 372-8836

(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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] 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 [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ]

Smaller reporting company [X]

 

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

 

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section S 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [X]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of February 8, 2018, there were 30,799,046 Class A shares of common stock, par value $0.001; 6,000,000 Class B shares of common stock, par value $0.001, and 73,400,000 Class C shares of common stock, par value $0.001 of the registrant issued and outstanding.

 

Explanatory Note

 

We are filing this Amendment No. 1 on Form 10-Q/A for the quarter ended November 30, 2017 to amend our Form 10-Q originally filed with the U. S. Securities and Exchange Commission on January 16, 2018. At the request of our Independent Registered Public Accounting Firm that performs annual audits on our consolidated financial statements filed in our Form 10-K and interim reviews on our consolidated financial statements filed in quarterly Forms 10-Q, we are filing this amendment to: (a) disclose the ramifications of the January 5, 2018 SEC Order of Trading Suspension of UBI Blockchain Class A common shares; and (b) update certain other information pertaining to the Order of Trading Suspension. The updated disclosure amends Note 12 entitled “Subsequent Events” to provide information not disclosed in our originally filed Form 10-Q made on January 16, 2018 concerning the suspension of trading in our Class A common stock which commenced on January 8, 2018 and ended on January 22, 2018. Subsequent events Note 12 has also been updated to reflect the fact that while a signed financing agreement was received on January 5, 2018 to fund the project “Blockchain-Based Food and Drug Counterfeit Detection and Regulatory System,” as was disclosed as “announced” January 10, 2018 in our originally filed Form 10-Q, the funding of the first installments due upon the signing of the agreement by HKSAR and UBI Hong Kong has not yet occurred.

 

The matters described in the preceding paragraph have also been updated under “Recent Events” in this amended filing.

 

This amended Form 10-Q/A-1 does not attempt to modify or update any other disclosures set forth in the original Form 10-Q except as set forth above. Additionally, this amended Form 10-Q/A-1, except as set forth above, speaks as of the filing date of the original Form 10-Q and does not update or discuss any other Company developments after the date of the original filings.

 

 

 

Table of Contents

UBI Blockchain Internet Ltd.

Index to Form 10-Q/A

For the Quarterly Period Ended November 30, 2017

 

	Page
PART I - FINANCIAL INFORMATION	3
Item I. Financial Statements	3
Balance Sheets as of November 30, 2017 (Unaudited) and August 31, 2017	3
Statements of Operations for the Three Months Ended November 30, 2017(Unaudited)	4
Statements of Cash Flows for the Three Months Ended November 30, 2017 and November 30, 2016 (Unaudited)	5
Notes to Financial Statements (Unaudited)	6
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures about Market Risk	25
Item 4T. Controls and Procedures	25
PART II. OTHER INFORMATION	28
Item 1 — Legal Proceedings	28
Item 1A - Risk Factors	28
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3 — Defaults Upon Senior Securities	28
Item 4 — Submission of Matters to a Vote of Security Holders	28
Item 5 — Other Information	28
Item 6 – Exhibits	29
SIGNATURES	30

 

 

PART I - FINANCIAL INFORMATION

 

UBI Blockchain Internet, Ltd.

(Formerly JA Energy)

Consolidated Balance Sheets

 

		November 30, 2017				August 31, 2017
		(Unaudited)
Assets
Current Assets
Cash		$	63,006			$	15,406
Current portion of prepaid stock-based salaries and consulting fees			880,000				1,300,000
Other receivable			5,000				-
Total Current Assets			948,006				1,315,406
Office equipment, net of accumulated depreciation			15,790				17,950
Other Assets
Non-current portion of prepaid stock-based salaries and consulting fees			308,333				493,333
Website development costs			91,675				92,035
Total Other Assets			400,008				585,368
Total Assets		$	1,363,804			$	1,918,724
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities		$	125,004			$	71,425
Due to related party			804,835				514,081
Total current liabilities			929,839				585,506
Total liabilities			929,839				585,506
Stockholders’ Equity (Deficit):
Preferred Stock: $0.001 par value, 5,000,000 shares authorized, 0 and 0 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively			-				-
Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 30,799,046 and 30,717,046 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively			30,799				30,717
Class B common stock, $0.001 par value, 500,000,000 shares authorized, 6,000,000 and 6,000,000 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively			6,000				6,000
Class C common stock, $0.001 par value, 500,000,000 shares authorized, 73,400,000 and 73,400,000 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively			73,400				73,400
Additional paid in capital			7,811,721				7,475,931
Stock subscription payable			90,521				90,521
Accumulated other comprehensive income			(710	)			75
Accumulated deficit			(7,577,766	)			(6,343,426	)
Total stockholders’ equity (deficit)			433,965				1,333,218
Total liabilities and Stockholders’ Equity (Deficit)		$	1,363,804				1,918,724

 

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

 

 

UBI Blockchain Internet, Ltd.

(Formerly JA Energy)

Consolidated Statements of Operations

For the Three Months Ended

 

		November 30, 2017				November 30, 2016
		(Unaudited)				(Unaudited)
Revenue		$	-			$	-
Operating Expenses:
Employee compensation (including stock-based compensation of $72,500 and $0, respectively)			263,963				-
Consulting fees (including stock-based compensation of $532,500 and $0, respectively			532,500				25,000
Depreciation			2,119
Professional fees (including stock-based compensation of $335,872 and $0, respectively)			343,872				31,369
Occupancy			16,621				-
Other			64,449				19,500
Total Operating Expenses			1,223,524				75,869
Loss from Operations			(1,223,524	)			(75,869	)
Other Income (Expenses)
Interest expense - related party			(10,826	)			-
Gain on foreign currency exchange			10				-
Gain on settlement of bank overdraft			-				572
Total Other Income (Expenses) - net			(10,816	)			572
Net Loss			(1,234,340	)			(75,297	)
Other comprehensive income (loss):
Foreign exchange translation adjustment			(785	)			-
Comprehensive Loss		$	(1,235,125	)		$	(75,297	)
Net Loss per share of Class A, Class B, and Class C Common Stock
Basic and Diluted		$	(0.01	)		$	(0.00	)
Weighted Average Number of Class A, Class B, and Class C Common Shares
Basic and Diluted			110,214,181				30,464,249

 

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

 

 

UBI Blockchain Internet, Ltd.

(Formerly JA Energy)

Consolidated Statements of Cash Flows

For the Three Months Ended

 

		November 30, 2017				November 30, 2016
		(Unaudited)				(Unaudited)
Cash Flows from Operating Activities
Net Loss		$	(1,234,340	)		$	(75,297	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation expense			2,119				-
Stock-based compensation - employees			72,500				-
Stock-based compensation - consulting fees			532,500				-
Stock-based compensation - professional fees			335,872				-
Gain on settlement of bank overdraft			-				(572	)
Changes in operating assets and liabilities:
Increase in prepaid expense			(5,000	)			(9,000	)
Increase (decrease) in accounts payable and accrued liabilities			53,632				(1,285	)
Increase (decrease) in bank overdraft			-				(630	)
Increase in interest payable to related party			10,824				-
Net cash used by operating activities			(231,893	)			(86,784	)
Cash Flows from investing activities			-				-
Cash Flows from financing activities
Advances from former related party			-				1,285
Repayments to former related party			-				(28,266	)
Due to related party			279,540
Repayment of note payable to former related party			-				(50,000	)
Buyback of preferred stock			-				(33,735	)
Proceeds from sale of common stock - net			-				180,000
Contributed capital			-				17,500
Net cash provided by financing activities			279,540				86,784
Effect of exchange rate on cash			(47	)			-
Net Increase (Decrease) in Cash			47,600				-
Cash and cash equivalents at beginning of period			15,406				-
Cash and cash equivalents at end of period		$	63,006			$	-
Supplemental Cash Flow Information:
Income taxes paid		$	-			$	-
Interest paid		$	-			$	-
Non-cash Investing and Financing Activities:

 

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

 

 

UBI BLOCKCHAIN INTERNET LTD.

(FORMERLY JA ENERGY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2017 AND 2016 (UNAUDITED)

 

NOTE 1 – ABOUT THE COMPANY

 

The Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated October 31, 2007. In November 2014, Reshoot dividended its shares of JA Energy to the then stockholders of Reshoot. On November 21, 2016, the Company reincorporated in Delaware under the name UBI Blockchain Internet Ltd.

 

On September 15, 2016, the Company, with the approval of the Board of Directors agreed to issue 30,000,000 shares of unregistered restricted Class A Common Stock, 6,000,000 shares of unregistered restricted Class B Voting Common Stock, which carries a voting weight equal to ten (10) Common Shares, and 40,000,000 shares of unregistered restricted Class C Common Stock to UBI Blockchain Internet, LTD (“UBI Hong Kong”), a Hong Kong company, or assigns in exchange for $200,000. On September 26, 2016, pursuant to NRS 78.1955, the Board of Directors approved the filing of a Certificate of Designation with the Nevada Secretary of State to designate Class A, B and C common shares, par value $0.001. Concurrently with the filing of this Certificate of Designation, all Common Stock issued and outstanding became Class A Common Stock. Class B Common Stock carries a voting weight equal to ten (10) Common Shares. The Class B shares can be converted into fully paid and non-assessable Common Shares, on a one-to-one basis, at the option of the holder at any time upon written notice to the Company and its authorized transfer agent. Class C Common Stock has no voting rights. Upon the conversion or other exchange of all outstanding shares of Class B Common Stock into or for shares of Class A Common Stock, all shares of Class C Common Stock shall be automatically, without further action by any holder thereof, converted into an identical number of fully paid and non-assessable shares of Class A Common Stock on the date fixed therefore by the Board of Directors that is no less than sixty-one days and no more than one hundred and eighty days following such conversion or exchange.

 

On October 7, 2016, the 30,000,000 Class A shares and 6,000,000 Class B shares were issued.

 

On November 21, 2016, the Company reincorporated in Delaware under the name UBI Blockchain Internet Ltd. and increased the number of authorized shares from 75,000,000 to 200,000,000 shares consisting of 130,000,000 authorized shares of Class A Common Stock, 6,000,000 authorized shares of Class B Common Stock and 64,000,000 authorized shares of Class C Common Stock. On March 1, 2017, the 40,000,000 shares of Class C common stock were issued. All of the preceding shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and were issued under Regulation S to one (1) foreign entity who attested it is an accredited investor who is not a citizen or a resident of the USA.

 

On January 3, 2017, the Company appointed four new directors, accepted the resignations of its two former directors and appointed Tony Liu (who controls UBI Hong Kong) as Chief Executive Officer of the Company.

 

Commencing in the three months ended February 28, 2017, the Company started research activities in Hong Kong relating to “blockchain” technology planned to be provided for future customers.

 

On March 1, 2017, the Company issued 40,000,000 shares of Class C common stock to our chief executive officer Tony Liu pursuant to the September 15, 2016 agreement (see above).

 

On April 3, 2017, the Company issued a total of 8.400,000 shares of Class C common stock to a total of 45 contractor employees and nonemployees (see Note 6).

 

On May 1, 2017, the Company issued 500,000 restricted shares of Class A common stock to an independent consultant for consulting services to be performed for the Company (see Note 6).

 

 

On May 24, 2017, the Company increased the number of authorized common shares from 200,000,000 shares to 2,000,000,000 shares (1,000,000,000 shares of Class A common stock, 500,000,000 shares of Class B common stock, and 500,000,000 shares of Class C common stock).

 

On August 29, 2017, upon the approval of the acquisition by the related PRC authorities, the Company issued a total of 25,000,000 shares of Class C common stock to shareholders of Shenzhen Nova E-commerce, Ltd. (“Nova”) in exchange for control of the business of Nova (see Notes 4 and 6).

 

NOTE 2 - GOING CONCERN

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. At November 30, 2017, the Company had cash of $63,006 and current liabilities of $929,839. For the three months ended November 30, 2017, the Company incurred a net loss of $1,234,340. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. As described above, there was a change in control of the Company in October 2016.

 

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

The relevant accounting policies are listed below.

 

Interim Financial Statements

 

The consolidated balance sheet for the Company at the end of the preceding fiscal year has been derived from the audited balance sheet and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2017 and is presented herein for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for all period presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the operating results for the respective full years.

 

Certain footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2017 filed with the SEC on December 07, 2017 and a Post Effective Amendment No. 1 to a Form S-1 filed on February 5, 2018.

 

Basis of Accounting

 

The basis is United States generally accepted accounting principles.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of UBI Blockchain Internet Ltd. and its wholly owned subsidiary Shenzhen Nova E-commerce, Ltd. (“Nova”) from the date of acquisition of Nova on August 29, 2017 (see Note 4). All intercompany accounts and transactions have been eliminated in consolidation.

 

Earnings per Share

 

The basic earnings (loss) per share of Class A, Class B and Class C common stock is calculated by dividing the Company’s net income (loss) available to Class A, Class B and Class C common shareholders by the weighted average number of Class A, Class B and Class C common shares issued and outstanding during the period. The diluted earnings (loss) per share of Class A, Class B and Class C common stock is calculated by dividing the Company’s net income (loss) available to Class A, Class B and Class C common shareholders by the diluted weighted average number of Class A, Class B and Class C shares outstanding during the period. The diluted weighted average number of Class A, Class B and Class C shares outstanding is the basic weighted number of Class A, Class B, and Class C shares adjusted as of the first of the period for any potentially dilutive debt or equity (none for the periods presented).

 

 

Cash and Cash Equivalents

 

The Company considers all short-term investments with a maturity of three months or less at the date of purchase to be cash and cash equivalents.

 

Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

 

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful lives of the respective assets. Expenditures for repairs and maintenance are expensed as incurred.

 

Website development costs

 

Website development costs are carried at cost less accumulated amortization. Website development costs will be amortized over an estimated economic life of 5 years commencing on the date that the website is placed in service.

 

At November 30, 2017, the expected future amortization expense of website development costs is:

 

Year ended November 30,				Amount
	2018			$	18,335
	2019				18,335
	2020				18,335
	2021				18,335
	2022				18,335
	Total			$	91,675

 

Foreign Currency Translation

 

The reporting currency and functional currency of the Company is the United States Dollar.

 

The functional currency of Nova is the Chinese Renminbi (“RMB”). Assets and liabilities of Nova are translated into United States dollars at period-end exchange rates ($1.00 = 6.6147 RMB at November 30, 2017). Nova revenues and expenses are translated into United States dollars at weighted average exchange rates ($1.00 = 6.6058 for the three months ended November 30, 2017). Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

 

Transactions denominated in currencies other than the functional currency (principally the Hong Kong Dollar) are translated at the exchange rates prevailing at the dates of the transactions. Exchange gains and losses, which were not significant for the three months ended November 30, 2017 and 2016 were reflected in income.

 

Income Taxes

 

The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.

 

 

Revenue recognition

 

The Company recognizes revenue from services and product sales once all the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services or products have been delivered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonably assured. For the periods presented, the Company had no revenues.

 

Stock-Based Compensation

 

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, “Compensation - Stock Compensation,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company does not have an employee stock option plan.

 

The Company follows ASC topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock issued to consultants and other non-employees. In accordance with ACS Topic 505-50, the stock issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the stock, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to expense over the period during which services are rendered.

 

Year end

 

The Company’s fiscal year-end is August 31.

 

Recent Accounting Pronouncements

 

Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations form adoption of these standards is not expected to be material.

 

NOTE 4 – ACQUISITION OF NOVA E-COMMERCE, LTD.

 

On August 29, 2017, pursuant to an Acquisition Agreement dated May 16, 2017, the Company acquired 100% ownership of Shenzhen Nova E-commerce, Ltd. (“Nova”) in exchange for 25,000,000 shares of Company Class C common stock. Nova is a Shenzhen Chinese corporation which was incorporated on May 26, 2016. Nova plans on operating an online store in China selling a wide range of products.

 

The acquisition has been accounted for as a recapitalization transaction in the accompanying consolidated financial statements. Accordingly, the financial position and results of operations of Nova prior to the August 29, 2017 date of acquisition have been excluded from the accompanying consolidated financial statements.

 

The carrying values of the assets and liabilities of Nova at the August 29, 2017 date of acquisition consisted of:

 

 

Cash		$	-
Office equipment, net			13,628
Website development costs			92,035
Total assets			105,663
Accounts payable and accrued liabilities			24,651
Due to related party			135,865
Total liabilities			160,516
Excess of liabilities over assets		$	54,853

 

The following proforma information (unaudited) summarizes the results of operations for the three months ended November 30, 2016 as if Nova was acquired on May 26, 2016 (Nova’s date of inception). The pro forma information is not necessarily indicative of the results that would have been reported had the transaction actually occurred on May 26, 2016, not is it intended to project results of operations for any future period.

 

		Three Months Ended November 30, 2016
		(Unaudited)
Revenue		$	-
Operating expenses:
Employee compensation			49,366
Consulting fees			25,000
Professional fees			31,369
Marketing			134,637
Occupancy			43,309
Other			20,817
Total operating expenses			304,498
Loss from Operations			(304,498	)
Other Income (expenses):
Gain on settlement of bank overdraft			572
Net Loss		$	(303,926	)
Net Loss per share of Class A, Class B, and Class C common stock - basic and diluted		$	(0.01	)
Weighted average number of Class A, Class B, and Class C Common Shares outstanding - basic and diluted			55,464,249

 

 

NOTE 5 – PREPAID STOCK BASED SALARIES AND CONSULTING FEES

 

Prepaid stock-based salaries and consulting fees at November 30, 2017 and August 31, 2017 consist of:

 

		Fair value of stock issuance (Note 6)				Prepaid balance at November 30, 2017				Prepaid balance at August 31, 2017
1,450,000 shares of Class C common stock issued to 7 employees on April 3, 2017 pursuant to service agreements with a service term of one year expiring December 31, 2017		$	290,000			$	24,167			$	96,667
6,950,000 shares of Class C common stock issued to 38 consultants on April 3, 2017 pursuant to service agreements with a service term of one year expiring December 31, 2017			1,390,000				115,833				463,333
500,000 shares of Class A common stock issued to a consultant on May 1, 2017 pursuant to Consulting Agreement dated April 28, 2017 with a service term of two years expiring April 30, 2019			1,480,000				1,048,333				1,233,333
Total		$	3,160,000				1,188,333				1,793,333
Current portion							(880,000	)			(1,300,000	)
Non-current portion						$	308,333			$	493,333

 

At November 30, 2017, there was $1,188,333 of unrecognized compensation costs related to shares of Class A and Class C common stock issued to employees and non-employees pursuant to service agreements. These costs are expected to be recognized as expense in the years ended November 30, 2018 ($880,000) and November 30, 2019 ($308,333).

 

NOTE 6 - STOCKHOLDERS’ EQUITY

 

Pursuant to the September 15, 2016 change in control agreement (see Note 1), a representative of UBI paid into an attorney trust account $150,000 on September 14, 2016 and $67,500 on October 11, 2016, for a total of $217,500. The $217,500 consisted of $200,000 for the newly issued shares of Class A, Class B Voting, and Class C Common Stock and $17,500 for the payment of specific expenses.

 

Starting in December 2016, the Company engaged the services of a total of 45 employees and non-employees to perform certain marketing, research and development and investor relations services. The related agreements, which were executed in March 2017, provide for the contractors to work for the Company for terms ranging from September 2016 to January 1, 2017 to December 31, 2017 for compensation including the issuance of a total of 8,400,000 shares of Class C common stock (which occurred April 3, 2017). Of the 8,400,000 shares, 5,000,000 shares were issued to Star Bright International Investment Enterprises, 100,000 shares were issued to the Company’s chief financial officer and 500,000 shares were issued to an independent Director of the Company.

 

The $1,680,000 estimated fair value of the 8,400,000 shares of Class C common stock (using a price of $0.20 per share) was recorded as prepaid expenses and is being expensed evenly over the year ended December 31, 2017 (see Note 5). For the three months ended November 30, 2017, we recognized stock-based salaries expense of $72,500 and recognized stock-based consulting fees expense of $347,500 from these agreements.

 

On May 1, 2017, the Company issued 500,000 restricted shares of Class A common stock to a consultant pursuant to a Consulting Agreement dated April 28, 2017 with a service term of two years expiring April 30, 2019. The $1,480,000 estimated fair value of the 500,000 shares of Class A common stock (using a price of $2.96 per share based on a $3.95 closing trading price on April 28, 2017 less a 25% restricted stock discount) was recorded as a prepaid expense and is being expensed evenly over the 2-year service period expiring April 30, 2019. For the three months ended November 30, 2017, we recognized stock-based consulting fees expense of $185,000 from this agreement.

 

 

On August 29, 2017, upon the regulatory approval of the transfer of Nova’s Hong Kong business license to the Company, the Company acquired 100% ownership of Nova in exchange for the Company’s issuance of a total of 25,000,000 shares of Class C common stock to the 130 owners of Nova.

 

On October 2, 2017, the Company issued a total of 82,000 restricted shares of Class A common stock to 4 individuals associated with the Company’s law firm for legal services rendered. The $335,872 estimated fair value of the 82,000 shares of Class A common stock (using a price of $4.10 per share based on a $5.12 closing trading price on October 2, 2017 less a 20% restricted stock discount) was expensed in the three months ended November 30, 2017.

 

NOTE 7 - RELATED PARTY TRANSACTIONS

 

As described in Note 9, the Company was obligated to Mr. Mark DeStefano (“DeStefano”) for a $50,000 note payable and $26,981 for payments made on behalf of the Company. Subsequently, Mr. DeStefano advanced $1,285 to the Company. During the three months ended November 30, 2016 the Company satisfied these obligations. DeStefano had voting control of the Company from June 2014 (see Note 9) to October 24, 2016 (when the Company purchased from DeStefano the 1,000,000 shares of Preferred Stock for $33,735) through his ownership of the 1,000,000 shares of Voting Preferred Stock issued and outstanding (equivalent to 50,000,000 votes).

 

For the three months ended November 30, 2016, consulting fees paid to former related parties consists of a total of $15,000 paid to the two then directors of the Company and $10,000 paid to an entity controlled by DeStefano.

 

Commencing March 2017, the Company has been using office space provided by an affiliate of UBI Blockchain Internet, LTD. (Hong Kong) (“UBI Hong Kong”) at a monthly rent of 22,100 Hong Kong Dollars (approximately $2,830 at the November 30, 2017 exchange rate) per month. For expediency reasons, the Company also uses bank accounts in the name of UBI Hong Kong to collect cash receipts and expend cash disbursements relating to Company operations. UBI Hong Kong owns 30,000,000 shares of the Company’s Class A common stock.

 

In the three months ended November 30, 2017, Tony Liu, chief executive officer of the Company, paid a total of $279,540 of expenditures on behalf of the Company. As of November 30, 2017, the total amount due to Tony Liu was $783,647. The amount due to Tony Liu for these expenditures is interest bearing at a rate of 7% per annum. $10,826 interest expense was accrued for the three months ended November 30, 2017. As of November 30, 2017, accrued interest amounted to $21,188. The advances and related accrued interest are due on demand.

 

NOTE 8 - PROVISION FOR INCOME TAXES

 

The Company accounts for income taxes under FASB Accounting Standard Codification ASC 740 “Income Taxes”. ASC 740 requires use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

 

As of November 30, 2017, the Company had net operating loss carry forwards of approximately $1,737,713 that may be available to reduce future years’ taxable income through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements as their realization has not been determined likely to occur. Also, due to the change in control, there are annual limitations on future net operating loss carry forward deductions.

 

At November 30, 2017 and August 31, 2017, deferred tax assets consisted of:

 

 

		November 30, 2017				August 31, 2017
Net operating loss carryforwards		$	608,200			$	505,486
Valuation allowance			(608,200	)			(505,486	)
Deferred tax assets - net		$	-			$	-

 

All tax years remain subject to examination by the respective tax authorities.

 

NOTE 9 - NOTES PAYABLE – Former Related Party

 

On April 4, 2014, the Company issued a One-year Promissory Note (“the Note”) in the amount of $50,000 to Mark DeStefano (“DeStefano) (see Note 7). The Note bore interest at 12% percent per annum with interest due each month. In the event that interest was not paid within three days frsom the time it was due the Note was to be considered in default and was to be fully due and payable. Additional consideration for the Note included the Chief Executive Officer of the Company giving the note holder his voting proxy for all of the shares he held with the exception of voting on a tender offer or a sale of the Company’s assets. As of May 8, 2014, the Note was in default.

 

On May 5, 2014, the Company issued a second One-Year Promissory Note (“the Second Note”) in the amount of $20,000 to the same stockholder noted above. The Second Note was issued with the restriction that the funds be used specifically to pay the Company’s Patent Counsel for fees to finalize certain patent filings and was secured by all patents and patent applications held by the Company. The Second Note was to bear interest at 12% percent per annum with interest due each month. In the event that interest was not paid within three days from the time it was due, the Second Note would be considered in default and would be fully due and payable.

 

On June 6, 2014, the Company received notices that it was in default of the two Promissory Notes described above. Rather than default on the Notes, the Company issued 1,000,000 shares of $0.001 par value Voting Preferred Stock in exchange for Notes Payable totaling $20,000 plus forgiveness of interest totaling $1,900. Additionally, the Company agreed to designate with the State of Nevada Secretary of State that each share of preferred carries the voting power of 50 common shares. Finally, the shareholder agreed to cancel the shares upon full payment of the $50,000 Note, without accrued interest and the sale of five units of the MDU.

 

In October 2016, the $50,000 note payable was satisfied.

 

NOTE 10 – OTHER INCOME AND EXPENSE

 

During the three months ended November 30, 2016, the Company settled a bank overdraft of $942 for $370. This settlement resulted in income of $572.

 

On January 27, 2017, the Company entered into a Settlement Agreement with a former landlord satisfying a $35,868 accrued liability for $4,100. This settlement, along with an arrangement with another vendor, resulted in other income of $47,003.

 

NOTE 11 – LEASE COMMITMENTS

 

In September 2017, Nova entered into two lease agreements for office space in Shenzhen China, the first lease provides for monthly rent of RMB 12,353, or approximately $1,868 per month, and expires September 2020. The second lease provides for monthly rent of RMB 8,964, or approximately $1,357 per month, and expires September 2019.

 

 

As of November 30, 2017, the future minimum lease payments under non-cancelable operating leases were:

 

Year ended November 30, 2018		$	38,700
Year ended November 30, 2019			35,986
Year ended November 30, 2020			18,680
Total		$	93,366

 

For the three months ended November 30, 2017, total rent expense was $16,621.

 

NOTE 12 – SUBSEQUENT EVENTS

 

On December 26, 2017, the Company’s Board of Directors approved a 3 for 1 common stock dividend of the Company’s issued and outstanding Class A and Class B common stock. On January 2, 2018, the Company was advised by FINRA to resubmit its request as a forward stock split instead of a stock dividend.

 

On January 4, 2018, the Company’s Board of Directors approved a 4 for 1 forward stock split for holders of record on January 10, 2018 of the Company’s issued and outstanding shares of Class A and Class B common stock. For each share of Class A common stock held, stockholders were to receive an additional 3 shares of Class A common stock, For each share of Class B common stock held, stockholders were to receive an additional 3 shares of Class B common stock. On January 18, 2018, the Company’s Board of Directors decided to cancel the proposed 4-for-1 forward stock split.

 

On January 5, 2018, the Securities and Exchange Commission announced the temporary suspension of trading in the Company’s securities from January 8, 2018 to January 22, 2018 because of (i) questions regarding the accuracy of assertions, since at least September 2017, by the Company in filings with the Commission regarding the Company’s business operations; and (ii) concerns about recent, unusual and unexplained market activity in the Company’s Class A common stock since at least November 2017.

 

On January 8, 2018, the Company and its Chief Executive Officer Tony Liu agreed to settle $100,000 of the debt due Tony Liu in exchange for the Company’s issuance to Tony Liu of 35,000,000 shares of preferred stock to be designated with voting rights equal to 35% of the total voting power of all classes of capital stock. Mr. Liu also agreed to continue to loan the Company money to keep it operational for the next 12 months.

 

On January 10, 2018, the Company announced that the Hong Kong Special Administrative Region (“HKSAR”) approved in principle a grant of up to HK 3,018,750 (approximately $386,000) to assist in financing a project entitled “Blockchain-Based Food and Drug Counterfeit Detection and Regulatory System” to be jointly developed by UBI Hong Kong and The Hong Kong Polytechnic University (“HKPU”). The related agreement also provides for UBI Hong Kong to contribute up to HK$3,018,750 (approximately $386,000) to the project cost in installments with the first installment of HK$561,198 (approximately $72,000) due upon HKSAR’s signing of the agreement. The project is expected to be completed by November 14, 2019. To date, under the signed agreement received from HKSAR on January 5, 2018 funding of the first installments by HKSAR and UBI Hong Kong has not yet occurred.

 

 

Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q/A contains forward-looking statements. When used in this Quarterly Report on Form 10-Q/A, the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Quarterly Report on Form 10-Q/A. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Quarterly Report on Form 10-Q/A. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q/A, except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

 

In this form 10-Q/A references to “UBI Blockchain Internet, Ltd.,” “JA Energy,” “the Company”, “we,” “us,” and “our” refer to UBI Blockchain Internet Ltd. (a Delaware Company).

 

Critical Accounting Policies

 

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2017 filed with the Securities and Exchange Commission on December 07, 2017.

 

Corporate History

 

The Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated October 31, 2007, and, at the time of spin off was listed on the Over-the- Counter Bulletin Board.

 

From August 2010 to May 2014 the Company was in the business of designing a suite of modular, self-contained, fully automated, climate controlled units for distributed production of energy. While some of these products were proven to be technologically viable, none were ever developed to the point where they were ready for introduction to the marketplace.

 

On or about September 30, 2014, the Board of Directors approved the formation of a new company called Peak Energy Holdings, a Nevada corporation, where each shareholder in the Company received one share of common of Peak Energy Holdings for each share of common stock owned in the Company and one share of preferred stock of Peak Energy for each share of preferred share owned in the Company. As part of the transaction, the Company spun-off all its assets and liabilities into Peak Energy. Further, the spin-off subsidiary operated as an independent entity separate entity from the Company with new management operating the current core business of Peak Energy for the benefit of the original stockholders. The effect of this action allowed the Company to explore new business opportunities without the burden of the assets and liabilities on the corporate books.

 

On November 21, 2016, the Company changed its corporate name to UBI Blockchain Internet, LTD, and changed the state of incorporation from the State of Nevada to the State of Delaware pursuant to a plan of conversion about which the Company adopted a new certificate of incorporation under the laws of the State of Delaware.

 

On May 16, 2017, the Company acquired 100% ownership of Shenzhen Nova E-commerce, Ltd., a private Shenzhen Chinese corporation in exchange for 25,000,000 unregistered restricted Class C common shares. In April 2017 Shenzhen Nova E-commerce began its operations of an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products.

 

UBI Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry, by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs. With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source within the context of the internet of things to the final consumer.

 

Overview

 

UBI’s Blockchain Internet business includes research and application of blockchain technology, which includes Internet of Things (“IoT”) technology, pharmaceutical research and manufacturing technology for the health industry, and platform trading technology for the financial capital markets, which together, we refer to as IBSH technology. These technologies include well-established technologies, such as Big Health Industry Technology and Financial Capital Market Technology. There are also emerging, forward-looking, technologies such as blockchain and IoT technologies. We are familiar with big health and financial capital markets; however, we are not yet familiar with blockchain and the Internet of Things. We have matured in the above-mentioned technology in the chest holds 50% of the health and financial capital of the part. For the other 50%, we have hired professional and technical personnel to conduct research and master the same time, and universities and other research institutions to discuss cooperation and establish a joint R & D center platform. IBSH technologies will be our core focus technologies. They will become our patented intellectual property. With the development of our technologies, we will conduct systematic research integration, development of a complete set of safety control system, tentatively named “UBI Security Shield” which will be first applied to food and drug safety control.

 

 

UBI has formed a research team dedicated to the application and research of IBSH technology to achieve the company’s business goals.

 

IBSH technical definition: The blockchain, Internet of things, big health industry, financial capital market technology integration technology. Our technology has two major characteristics: First, the forward-looking and innovative technology, blockchain and the Internet of things is a technology for the future world with forward-looking and innovative technologies. Second, management believe the commercial value of our technology will have a strong practical application and it will combine with the industry to deliver a commercial value.

 

Blockchain, refers to a distributed database that is used to maintain a continually growing list of ordered records (called blocks). Each block contains a timestamp and a link to the previous block. Blockchain has the characteristics of “decentralization” and “tamper-proof”.

 

Internet of Things, embedded physical devices, vehicles (also referred to as “networking devices” and “smart devices”), buildings and other objects embedded in electronic technology, software, sensors, and brakes are connected via the Internet and enable these objects to collect and exchange data for network connectivity. IoT allows remote sensing or remote control of objects through existing network infrastructures to create opportunities for more direct integration of the physical world into computer-based systems and to increase efficiency, accuracy and economic scale.

 

Industry Trends

 

Recent advances in streamlining video, monitoring sensors, high-speed broadband internet, introducing wireless standards (such as Bluetooth low-power) and other technologies have brought many new opportunities and new choices to the modern society and to humankind. Traditional industries also have new opportunities due to technological advances and innovations. The emergence and development of blockchain and IoT technologies.

 

Management believes Blockchain technology has shown considerable adaptability and acceptance in recent years and many market segments are seeking to integrate blockchain technology into their operations. Although technology is mainly used in the financial services industry at present, the blockchain has also begun to enter into more markets. For example, counterfeit drugs in the pharmaceutical industry are hindered by using the characteristics of blockchain technology “tamper proof”. The adaptability of blockchain to a broad range of industries has led to the growing attention it has received in the past few years.

 

Blockchain technology and the Internet of things has aroused widespread concern and applied research. IBM, Bill Gates Foundation, Samsung, Tsinghua University, Peking University, Hong Kong Polytechnic University and China Wanxiang Group have started the research.

 

UBI management believes that blockchain technology and the Internet of things have contributed to the emergence of industry information and technology solutions. By integrating the block chain technology with IoT as the core, it is possible to establish a seamless industrial chain and achieve food and drug safety control and enterprise relationship management. Internet of Things is an extension and continuation of the Internet. The Internet of Things can increase the popularity and wider use of the Internet by integrating objects that interact through radio frequency identification (RFID) devices, infrared sensors, global positioning systems, laser scanners, and other information sensing devices so that the height distributed network of devices communicate with humans and other devices in real time. The Internet of Things is a completely new opportunity for a host of new applications based on the Internet of Things that promise to improve the quality of life. In recent years, the Internet of Things has been integrated with the blockchain, exchange and communication to realize the intelligent identification, location, tracking, monitoring and management of the network. This technology is still in its infancy.

 

 

A universal healthcare system covers all citizens seeking to achieve efficiencies by integrating the basic functions of healthcare delivery, health insurance, distribution of healthy food and drug safety and labor relations management. Based on the full integration of internet of things with blockchain technology, this technology can change old systems. Blockchain technology is a distributed database that maintains a continuously-growing list of records called blocks. Each block contains a timestamp and a link to a previous block. The data in a block cannot be altered retrospectively. Blockchain has characteristics such as decentralization, openness and transparency, autonomy, security of information that “tamper-proof”, and anonymity, these features can strengthen solution to drug and food safety issues, as well as getting more meaningful solution to enterprise labor relations management. Management believes the age of blockchain and IoT is coming.

 

Blockchain technology-based applications

 

UBI management plans to focus its operations on the integrated health industry, providing food and drug safety and effectiveness protocols, as well as preventing counterfeiting or counterfeiting of foods and medicines. With the advancement of blockchain technology, we can trace the source of food or medicine in the context of the Internet of Things.

 

We are now in the early stages of blockchain technology, but we have good research, technical framework design, industry language and IT language conversion recognition of how blockchain and IoT interface with food and drug technology. Soon, we will utilize the technology in food and drug safety control.

 

Blockchain technology has a very wide range of potential applications. Blockchain is a distributed ledger agreement that allows projects or transactions to be registered in a transparent manner and was originally developed for use in various industries to provide a wide range of services including banking, stock trading, real estate and even worldwide diamond sales. More and more financial giants are joining blockchain technology applications, research and development, including IBM, Microsoft, Intel, Blockstream and Thomson Reuters to accelerate further Blockchain technology as a development system. As the blockchain technology is becoming mature and secure, it can play a role in many areas and management believes that the application area and development potential of blockchain technology provide the Company with an opportunity to grow.

 

Health Care Business Consideration

 

UBI management believes the global IoT in the healthcare market is growing at a significant rate of growth due to the growing demand for advanced healthcare information systems and the growing prevalence of chronic diseases and lifestyle-related diseases.

 

IoT’s application in healthcare, such as telemedicine, medication administration, clinical surgery and workflow management, inpatient care, etc., helps with compilation services related to diagnosis, treatment, care and rehabilitation. They improve communication between patients and healthcare workers, reducing medication errors and providing better coordinated care.

 

The Market Opportunity

 

Blockchain and the Internet of Things are technologies that affect the future. UBI Company took the lead in entering this market. First, using IBSH technology in the big health industry, will help position the company in this field. The standard of this market access is hard and the cost is high. The UBI team is optimistic about the future.

 

Blockchain technology can play a role in many fields. Blockcchain transactions are theoretically real-time. The block-based distributed accounting technology, combined with its artificial intelligence and internet of things technologies, makes it possible for countless of smart technologies to connect to internet for greater security, allowing technicians to return to the point at which the problem occurred. One of potential applications of this technology is the creation of registers based on blockchain of IoT devices, and the use of artificial intelligence programs to perform automated intelligent diagnostics and more advanced functions, which can ultimately lead engineers and technicians to virtualize clock backwards. At the same time, blockchain technology can reduce audit costs; reduce distrust of central node, so that flow of financial assets is more transparent and convenient. In fact, current blockchain technology is indeed application of digital electronic payments to “block chain +” transition extension from financial sector gradually to IoT and other non-financial areas which will trigger more and greater industrial restructuring and revolution.

 

 

The Internet of Things is based on computer science, including network, electronics, radio frequency, induction, wireless, artificial intelligence, bar code, cloud computing, automation, embedded technology as an integrated technology. Internet of things is called the third wave of the world information industry revolution, after computer revolution, and the second internet revolution. Management believes that within 10 years, Internet of Things will be widely used in intelligent medicine, intelligent transportation, environmental protection, government work, public safety, safety home, intelligent home appliance, industrial monitoring, elderly care, personal health, intelligent building, green agriculture and breeding, surveillance, imaging, computers, mobile phones and other fields.

 

Blockchain technology is a good solution for: infrastructure investment, high maintenance costs and data security issues. Blockchain technology supports IoT which is an extension and more advanced stage of internet. Blockchain technology research and application will make IoT networking more efficient. Blockchain technology creates a shared, distributed, digital book between network nodes to record transactions, rather than storing them on a central server. This eliminates the need for central verification. It provides a way to create a consensus network without having to trust a single node, and data store does not need to be stored in a central server, but by sharing it to all nodes in network. Blockchain technology can also solve medical field of data privacy and other issues, such as custody of electronic medical records, safe storage of genetic data, and drug security.

 

Our Strategy

 

Our Group will plan to grasp the new technologies that will affect the future world, establish a new business model based on the industrial and capital advantages that we have already formed, and create the technical advantages of UBI’s IBSH. Managements wants UBI to become a world leader in excellence.

 

Our growth strategy depends to a large extent on our ability to reach potential customers who successfully bring their products to target markets. We plan to initially target the China market and gradually expand to Europe and the United States and beyond.

 

To achieve corporate strategy, the company intends:

 

●

Research and develop IBSH core technologies to establish the leading position in this field

 

At present, we have initially established the technical framework and the core of the main body, with the combination of food and drug use, access to our first phase of research and experimental results, that can be practical applications, and continuous technological upgrading.

 

●

Research and development of the main product and core product group

 

UBI’s planned first product will be a food and drug safety monitoring and control system. It will also be our core product. At the same time, we plan to systematically develop healthy big data and cloud computing, food products, health and service products, cross-border e-commerce platform and global health and culture platform.

 

●

Create brand awareness and drive marketing company products and services in key markets

 

We plan to position the Company’s marketing as creating and building a corporate brand image globally. All this will start in China.

 

●

Employ global professional and technical personnel, scholars, professional management personnel

 

 

We plan to hire professionals from all over the world. Together to create UBI a shared platform.

 

●

Coordinate with strategic partners in each of the target markets for marketing and distribution

 

We believe that international markets represent a significant growth opportunity for us and we intend to expand sales of our intended products and services globally through selected retailers and strategic partnerships. We plan to work with key partners in the target markets to provide marketing and distribution expertise and assistance. Although it may be challenging to gain market acceptance in these markets, we believe the assistance of such experts will expedite the process.

 

Competitive Strengths

 

1. Unique IBSH technology

 

Our technology is advanced, not only for its scientific characteristics, but also for maneuverability, derived from the design and understanding of technical structures. Technology itself is spiritual.

 

2. Creating a creative business platform through independent design and development.

 

We intend to build a comprehensive platform, including blockchain technology, the Internet of Things, the health industry and the stock market. Once established, this platform will support UBI’s global operations.

 

3. We have a good network in the health industry in China

 

In China, we believe the company’s management has a good network in the integration of the health industry, which can be used for scientific research and development, raw material production bases and other industrial chains. The company’s management is also familiar with the international pharmaceutical market and the food market.

 

4. A good management team

 

Our management believes the Company’s management and consulting team, are the industry’s leading talent and professionals. They have a professional, quality, wisdom, and innovation.

 

Target Market

 

At present, food and drug safety is a major challenge for human beings. Counterfeit food and drug products are very common in the Chinese market. These problems are derived from nature problems and human factors. The laws and regulations are not perfect and complete and law enforcement is not seriously implemented in many occasions. The occurrence of poison capsule events, vaccine cases, ginkgo leaf, licorice tablets and other major drug cases, seriously affecting people’s physical and mental health. Therefore, the safety of food and medicine is closely linked to the vital interests of hundreds of millions of people. So UBI’s market for food and drug safety goals is accurate and huge.

 

Sources of Income and Pricing

 

We plan to build a platform and a number of products that will generate revenues and generate profits by delivering services and effective products to potential targets customers. The price will be determined by demand and market pricing. After initial publicity, the company’s products and services may have an impact on the health care industry. As we look to the future, emerging technologies will trigger new trends in the security, law enforcement, privacy, food and drug safety aspects of the healthcare industry.

 

Sales and Marketing

 

In the future marketing of UBI platform and products, we will mainly go through the Internet of Things to do online and offline store marketing. Marketing will also be promoted through cross-border e-commerce platforms. Conference marketing and professional channel marketing will be utilized. Our products and designs consider the overall needs of the population and will be tailor-made for some clients. We are currently paying attention to the development, formation and needs of “one belt, one road” markets.

 

 

Management believes Chinese consumers are more likely to consider buying a product if they see it mentioned on a social-media site and more likely to purchase a product or service if a friend or acquaintance recommends it on a social-media site by word of mouth.

 

Chinese consumers rely heavily upon peer-to-peer recommendations over general mass advertising. In general, the Chinese populace is skeptical of information from news sources and advertising and rely more on word-of-mouth from friends, family, and key opinion leaders, many of whom share information on social media.

 

Manufacturing

 

The Company does not now engage in any manufacturing but may engage in manufacturing of products to be sold on the Company’s website in the future.

 

Shenzhen Nova E-commerce, Ltd.

 

On May 16, 2017, the Board of Directors of the Company ratified and approved an Acquisition Agreement with Shenzhen Nova E-commerce, Ltd., (“NOVA”), a private Shenzhen Chinese corporation. Under the terms of the Agreement UBI acquired 100% ownership of Nova in exchange for 25,000,000 unregistered restricted Class C common shares by UBI. With the NOVA ownership completed, the former 130 NOVA shareholders received UBI Class C common shares based on their pro-rata ownership of NOVA. With the NOVA acquisition completed and the name of the permit holder changed to UBI, and NOVA became a 100% owned subsidiary of the UBI.

 

The shareholders of NOVA converted their ownership of NOVA to UBIA’s Class C common shares. Following the conversion, NOVA shares were canceled. In China, the conversion of shares requires the Chinese authorities to cancel NOVA’s registered shares. The takeover formally takes place when the government cancels NOVA shares. The Chinese government approved the acquisition as of August 29, 2017.

 

About Shenzhen Nova E-commerce, Ltd

 

Shenzhen Nova E-commerce Ltd. (“NOVA”) was incorporated on May 26, 2016 and currently operates an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products. Nova’s website became operational in April 2017.

 

Nova’s operations prior to the date of acquisition, included, but was not limited to:

 

	●	Researching and developing business opportunities unique to a Chinese customer base
	●	Building corporate infrastructure and administration
	●	Integration of multiple technologies and programs
	●	Building Business Relationships
	●	Human resource staffing
	●	Training personnel
	●	Equipment procurement
	●	Building the corporate website
	●	Developing marketing strategies to capitalize on commercialization activities
	●	Establish and maintain strategic collaborations with product suppliers
	●	Obtain financing to implement the business activities

 

 

NOVA is registered in Qianhai Free Trade Zone, China. Its business operation is an e-commerce platform offering online retail service, via OYA Mall. From its inception on May 26, 2016 through April 2017, NOVA has been building its website and infrastructure. Nova has commenced its pilot operation in May 2017.

 

NOVA’s Chinese language website is: www.oyamall.com. The website is operational, where customers can buy products, including food, non-prescription medicine, skin care products etc. offered on the website. The website is not part of this Annual report, but referenced for informational purposes.

 

Recent Events

 

SEC Order of Trading Suspension

 

On January 5, 2018, the Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of UBI Blockchain Internet, Ltd. at 9:30 a.m. EST on January 8, 2018, and terminating at 11:59 p.m. EST, on January 22, 2018. The Commission temporarily suspended trading in the securities of UBIA because of (i) questions regarding the accuracy of assertions, since at least September 2017, by UBIA in filings with the Commission regarding the company’s business operations; and (ii) concerns about recent, unusual and unexplained market activity in the company’s Class A common stock since at least November 2017.

 

Stock Listing

 

The suspension of trading eliminated our market makers and resulted in the listing of our stock on the grey sheets of the OTC markets. Prior to the suspension, our stock was listed on the OTC-QB. Broker-dealers are not willing or able to publicly quote grey sheets securities because of a lack of investor interest, company information availability or regulatory compliance. Grey sheet is an unsolicited market where securities do not have bid or ask quotations. The listing on grey sheets makes our stock more difficult to trade, dramatically reduces the liquidity of our stock and has a negative impact on our investors. As such, our common stock being listed on the grey sheets has adversely effected the liquidity of the shares of common stock. Investors may be unable to liquidate their investment.

 

Hong Kong Government Grant

 

On January 10, 2018, the Company announced that the Hong Kong Special Administrative Region (“HKSAR”) approved in principle a grant of up to HK 3,018,750 (approximately $386,000) to assist in financing a project entitled “Blockchain-Based Food and Drug Counterfeit Detection and Regulatory System” to be jointly developed by UBI Hong Kong and The Hong Kong Polytechnic University (“HKPU”). The related agreement also provides for UBI Hong Kong to contribute up to HK$3,018,750 (approximately $386,000) to the project cost in installments with the first installment of HK$561,198 (approximately $72,000) due upon HKSAR’s signing of the agreement. This represents the completion of a project that commenced in November 2016 when UBI and HKPU began discussions to build blockchain-based technology and research platforms with the mission of resolving important food and drug safety issues. The parties applied for government funding when they filed their technology research and development project with HKSPA. The estimated completion date of the project is the second quarter of 2019. To date, under the signed agreement received from HKSAR on January 5, 2018 funding of the first installments by HKSAR and UBI Hong Kong has not yet occurred.

 

Government Regulation

 

We are or may become subject to a variety of laws and regulations in the State of Delaware, where we are incorporated, the United States and the People’s Republic of China (“PRC”) that involve matters central to our business, including laws and regulations regarding privacy, data protection, data security, data retention, consumer protection, advertising, electronic commerce, intellectual property, manufacturing, anti-bribery and anti-corruption, and economic or other trade prohibitions or sanctions. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.

 

In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data, the scope of which is changing, subject to differing interpretations, and may be inconsistent among different jurisdictions. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure to comply with our privacy or security policies or privacy-related legal obligations by us or third-party service-providers or the failure or perceived failure by third-party apps, with which our users choose to share their data, to comply with their privacy policies or privacy-related legal obligations as they relate to the data shared with them, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand and operating results.

 

We plan to develop solutions to ensure that data transfers from the E.U. provide adequate protections to comply with the E.U. Data Protection Directive. If we fail to develop such alternative data transfer solutions, one or more national data protection authorities in the European Union could bring enforcement actions seeking to prohibit or suspend our data transfers to the U.S. and we could also face additional legal liability, fines, negative publicity, and resulting loss of business.

 

 

Governments are continuing to focus on privacy and data security and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations, or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly increase our operating costs.

 

The labeling, distribution, importation, marketing, and sale of our intended products are subject to extensive regulation by various U.S. state and federal and foreign agencies, including the CPSC, Federal Trade Commission, Food and Drug Administration, or FDA, Federal Communications Commission, and state attorneys general, as well as by various other federal, state, provincial, local, and international regulatory authorities in the countries in which our intended products and services are distributed or sold. If we fail to comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant monetary fines, other penalties, or claims, which could harm our operating results or our ability to conduct our business.

 

The global nature of our business operations also create various domestic and foreign regulatory challenges and subject us to laws and regulations such as the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, and similar anti-bribery and anti-corruption laws in other jurisdictions, and our intended products are also subject to U.S. export controls, including the U.S. Department of Commerce’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office of Foreign Assets Controls. If we become liable under these laws or regulations, we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could harm our brand or otherwise impact the growth of our business. Any costs incurred as a result of compliance or other liabilities under these laws or regulations could harm our business and operating results.

 

PRC Government Regulations

 

Because our business and employees are located in the PRC, our business is also regulated by the national and local laws of the PRC. We believe our conduct of business complies with existing PRC laws, rules and regulations.

 

General Regulation of Businesses

 

We believe we are in material compliance with all applicable labor and safety laws and regulations in the PRC, including the PRC Labor Contract Law, the PRC Production Safety Law, the PRC Regulation for Insurance for Labor Injury, the PRC Unemployment Insurance Law, the PRC Provisional Insurance Measures for Maternity of Employees, PRC Interim Provisions on Registration of Social Insurance, PRC Interim Regulation on the Collection and Payment of Social Insurance Premiums and other related regulations, rules and provisions issued by the relevant governmental authorities from time to time.

 

According to the PRC Labor Contract Law, we are required to enter into labor contracts with our employees. We are required to pay no less than local minimum wages to our employees. We are also required to provide employees with labor safety and sanitation conditions meeting PRC government laws and regulations and carry out regular health examinations of our employees engaged in hazardous occupations. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative and criminal liability in the case of serious violations. In addition, according to the PRC Social Insurance Law, employers like our PRC subsidiaries in China must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance, and housing funds.

 

 

Foreign Currency Exchange

 

The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended (2008). Under these Rules, RMB is freely convertible for current account items, such as trade and service-related foreign exchange transactions, but not for capital account items, such as direct investment, loan or investment in securities outside China unless the prior approval of, and/or registration with, the State Administration of Foreign Exchange of the People’s Republic of China, or SAFE, or its local counterparts (as the case may be) is obtained.

 

Pursuant to the Foreign Currency Administration Rules, foreign invested enterprises, or FIEs, in China may purchase foreign currency without the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange (subject to a cap approved by SAFE) to satisfy foreign exchange liabilities or to pay dividends. In addition, if a foreign company acquires a subsidiary in China, the acquired company will also become an FIE. However, the relevant PRC government authorities may limit or eliminate the ability of FIEs to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside China are still subject to limitations and require approvals from, and/or registration with, SAFE.

 

 

Employees

 

We have 18 full-time employees and we engage the services 44 non-employee contractors. Within our workforce, 8 employees are engaged in product development and 10 employees are engaged in business development, finance, human resources, facilities, information technology and general management and administration. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages. We consider our relationship with our employees to be good.

 

Results of Operations

 

Revenues

 

During the three-month period ended November 30, 2017 and 2016, the Company had no revenues.

 

Expenses

 

For the three months ended November 30, 2017, the Company had total operating expenses of $1,223,524 as compared to $75,869 in 2016. For the three months ended November 30, 2017, operating expenses consisted of salaries of $263,963 (including stock-based compensation of $72,500, consulting fees of $532,500 (stock-based compensation), legal and professional fees of $343,872 (including stock-based compensation of $335,872) and other general and administrative expenses of $83,189. For the three months ended November 30, 2016, the Company’s operating expenses consisted of: consulting fees of $25,000, legal and professional fee of $31,369 and other general and administrative expenses of $10,500. The increase in operating expenses resulted from the Company’s effort to develop Blockchain technology-based applications

 

For the three months ended November 30, 2017, the interest expense accrued for loan from Tony Liu was $10,826.

For the three months ended November 30, 2016, the Company had a gain of $572 from settlement of bank overdraft.

 

Net Loss

 

For the three months ended November 30, 2017, the Company had a net loss of $1,234,340 or $(0.01) per share of Class A and Class C common stock and compared to a loss of $75,297 or $0.00 per share of Class A and Class C common stock for the same period last year.

 

Going Concern

 

The financial statements included with this quarterly report have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of November 30, 2017, the Company had cash of 63,006 and current liabilities of $929,839. For the three months ended November 30, 2017, the Company incurred a net loss of $1,234,340. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company’s services, to provide financing for marketing and promotion and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our financial statements do not include any adjustments that might arise from this uncertainty.

 

 

Liquidity and Capital Resources

 

As of November 30, 2017, the Company has total assets of $1,363,804 consisting of cash $63,006, prepaid stock-based compensation of $1,188,333, prepaid expense of $5,000, office equipment of $15,790 and capitalized website development costs of $91,675 and total liabilities of $929,839.

 

The Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities and operations. These limitations have adversely affected the Company’s ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from services and product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

 

New Accounting Standards

 

Management has evaluated recently issued accounting pronouncements through November 30, 2017 and concluded that they will not have a material effect on future financial statements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not required for smaller reporting companies.

 

Item 4T. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the “material weaknesses” described below under “Management’s report on internal control over financial reporting,” which are in the process of being remediated as described below under “Management Plan to Remediate Material Weaknesses.”

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

 

	●	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
	●	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and
	●	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting as of November 30, 2017. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of November 30, 2017.

 

 

A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result of management’s review of the investigation issues and results, and other internal reviews and evaluations that were completed after the end of quarter related to the preparation of management’s report on internal controls over financial reporting required for this quarterly report on Form 10-Q, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:

 

	1)	lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and
	2)	insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the quarter ended November 30, 2017. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Management Plan to Remediate Material Weaknesses

 

Management is pursuing the implementation of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control 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. However, 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.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

Item 1A - Risk Factors

 

See Risk Factors set forth in Part I, Item 1A of the Company’s Annual Report on 10-K for the fiscal year ended August 31, 2017 and the discussion in Item 2 of Part I above, under “Liquidity and Capital Resources.” Additionally see Risk Factors set forth in the Form 10 Information disclosed in the Company’s Amended Current Report in Form 8-K/A filed in the Commission on November 17, 2017.

 

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

 

On October 2, 2017, the Board of Directors approved the issuance 82,000 unregistered restricted Class A common stock in exchange for legal services. We did not engage in any form of general solicitation or general advertising in connection with this transaction. The shareholders were provided access to all material information, which they requested and all information necessary to verify such information and was afforded access to our management in connection with this transaction. The shares of common stock issued contained a legend restricting transferability absent registration or applicable exemption. We relied upon Section 4(2) of the Securities Act for the offer and sale. We believed that Section 4(2) was available because the offer and sale did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale.

 

The 82,000 Class A were subsequently registered in a S-1 Registration Statement that became effective on December 22, 2017.

 

Item 3 — Defaults Upon Senior Securities

 

None.

 

Item 4 — Submission of Matters to a Vote of Security Holders

 

None.

 

Item 5 — Other Information

 

The Company filed a Registration Statement on Form S-1, that registered 20,582,000 of our Class A Common Stock, par value $0.001, and 51,700,000 shares of our Class C Common Stock, par value $0.001. The Registration became effective on December 22, 2017.

 

 

Item 6 — Exhibits

 

Exhibit Number		Ref		Description of Document
31.1				Certifications of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2				Certifications of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1				Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2				Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101		*		The following materials from this Quarterly Report on Form 10-Q/A for the quarter ended November 30, 2017, formatted in XBRL (eXtensible Business Reporting Language):
				(1) Balance Sheets at November 30, 2017 (Unaudited) and August 31, 2017 (Audited).
				(2) Unaudited Statements of Operations for the three-month periods ended November 30, 2017 and 2017.
				(3) Unaudited Statements of Cash Flows for the three-month periods ended November 30, 2017 and 2017.
				(4) Notes to the financial statements (Unaudited).

 

●

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

SIGNATURES

 

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

 

	UBI Blockchain Internet, Ltd. Registrant
Date: February 8, 2018	By:	/s/ Tony Liu
	Name:	Tony Liu Principal Executive Officer
Date: February 8, 2018	By:	/s/ Chan Cheung
	Name:	Chan Cheung Principal Accounting Officer