Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-K

 

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

For the fiscal year ended February 28, 2018

o     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 000-54440

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Nevada		27-4479356
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

 

2 Park Plaza Suite 400

Irvine, CA 92614

City of Industry, CA 91748

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (949) 679-3992

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share

 

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: o Yes     x No

Indicate by check mark whether the registrant (1) has filed all reports required 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 day. x Yes     o 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). x Yes     o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

Large accelerated filter	o		Accelerated filter	o
Non-accelerated filter	o	(Do not check if a smaller reporting company)	Smaller reporting company	x
Emerging growth company	o

 

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

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $9,617,450, based upon the price ($2.50) at which the common stock was last sold as of August 31, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws.

As of June 12, 2018, 15,526,896 shares of our common stock were issued and outstanding.

Documents Incorporated by Reference: None

 

 

TABLE OF CONTENTS

 

		Page
PART I
ITEM 1.	Business	2
ITEM 1A.	Risk Factors	5
ITEM 1B.	Unresolved Staff Comments	5
ITEM 2.	Properties	6
ITEM 3.	Legal Proceedings	6
ITEM 4.	Mine Safety Disclosures	6
PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matter and Issuers Purchase of Equity Securities	7
ITEM 6.	Selected Financial Data	9
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	11
ITEM 8.	Financial Statements and Supplementary Data	12
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	13
ITEM 9A.	Controls and Procedures	13
ITEM 9B.	Other Information	14
PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	15
ITEM 11.	Executive Compensation	18
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19
ITEM 13.	Certain Relationships And Related Transactions, and Director Independence	22
ITEM 14.	Principal Accounting Fees And Services	23
PART IV
ITEM 15.	Exhibits and Financial Statements Schedules	25
SIGNATURES		26

 

 

 

 

 

PART I

 

Special Note Regarding Forward-Looking Statements

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

 

·

The availability and adequacy of our cash flow to meet our requirements;

 

·

Economic, competitive, demographic, business and other conditions in our local and regional markets;

 

·

Changes or developments in laws, regulations or taxes in our industry;

 

·

Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities;

 

·

Competition in our industry;

 

·

The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;

 

·

Changes in our business strategy, capital improvements or development plans;

 

·

The availability of additional capital to support capital improvements and development; and

 

·

Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.

 

This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Use of Term

 

Except as otherwise indicated by the context, references in this Annual Report to the words "we," "our," "us," the "Company," "UCBB," or “US-China” refers to US-China Biomedical Technology. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

 

ITEM 1. DESCRIPTION OF BUSINESS

 

History and Organization

 

We were formed by the filing of Articles of Incorporation with the Secretary of State of the State of Nevada on December 20, 2010, originally as Accend Media. On or about May 22, 2012, Accend Media, and Cloud Star Corporation (“Cloud Star”), a privately-held Nevada corporation headquartered in California, entered into an Acquisition Agreement and Plan of Merger (“Merger”). Prior to the Merger, Accend Media effectuated a five-for-one forward stock split on May 7, 2012. We changed our corporate name to Cloud Star Corporation upon consummation of the Merger on May 23, 2012. On May 28, 2013, we changed our corporate name to Cloud Security Corporation. The Merger was accounted for as a reverse acquisition with Cloud Star being treated as the acquirer for accounting purposes. Accordingly, for all periods presented in this Annual Report on Form 10-K (“Form 10-K”), the financial statements of Cloud Star have been adopted as the historical financial statements of the Company known as a change in reporting entity. Accordingly, Cloud Star’s October 17, 2011 formation date is considered the date of “Inception” in the financial statements.

 

 

 

 

On December 8, 2014, we entered into a Stock Purchase Agreement (the “SPA”) with Goldenrise Development, Inc., a California corporation (“Goldenrise”). In connection with the SPA, we also agreed to effectuate a 1:100 reverse stock split of the Company’s issued and outstanding common stock (“Reverse Split”) which became effective on January 22, 2015. Under the SPA, we sold 12,000,000 shares of our common stock to Goldenrise for $180,000 which equated to approximately 92% of our outstanding shares. This transaction effectuated a change in control of the Company and the then officer and members of the board of directors resigned and were replaced by new management.

 

On March 31, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Peng Agreement”) with Zhi Lu Peng, an individual (the “Peng Purchaser”). Pursuant to the Peng Agreement, Goldenrise agreed to sell and Peng Purchaser agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92% of the Company’s outstanding shares of common stock. In consideration for these shares, Peng Purchaser agreed pay to Goldenrise a total of $400,000 as follows: (i) $100,000 upon the execution of the Peng Agreement, and (ii) $300,000 on or before June 15, 2017. An initial payment of $50,000 was made toward the purchase price, but no additional payment was received. As such, the $50,000 was returned to Peng Purchaser, and the Peng Agreement terminated by its terms on June 15, 2017 and is no further force or effect.

 

On June 28, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Dunn Agreement”) with Michael R. Dunn, the Company’s sole officer and director (the “Dunn”). Pursuant to the Dunn Agreement, Goldenrise agreed to sell and Dunn agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for these shares, Dunn agreed to pay Goldenrise a total of $400,000 as follows: (i) $180,000 on or before July 15, 2017 (extended to July 28, 2017), (ii) $180,000 was offset to monies owed by Goldenrise to Dunn; and (iii) $40,000 was withheld by Dunn and applied towards invoices related to the audit and legal fees associated with the reporting requirements of the Company through the date of Closing.

 

Concurrently, on June 28, 2017, Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., each a Chinese corporation (collectively, the “Buyers”), entered into a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, Dunn agreed to sell and Buyers agreed to purchase 6,000,000 restricted common stock shares of the Company (the “Shares”), representing approximately 46% of the Company’s then outstanding shares of common stock. In consideration for the Shares, Buyers agreed to pay to Dunn a total of $200,000 upon execution of the SPA (the “Purchase Price”). The Closing of the Dunn Agreement and SPA occurred on July 28, 2017. The Dunn Agreement and SPA resulted in a change in control of the Company.

 

On January 18, 2018, US-China Biomedical Technology, Inc. – a Nevada corporation incorporated on January 11, 2018, and our wholly-owned subsidiary – merged with and into the Company pursuant to an Agreement and Plan of Merger. In connection with the merger, the Company’s Articles of Incorporation were effectively amended to change our name to “US-China Biomedical Technology, Inc.” by and through the filing of Articles of Merger. This parent-subsidiary merger was approved by us, the parent, in accordance with Nevada Revised Statutes Section 92A.180.

 

On February 8, 2018, the Financial Industry Regulatory Authority (“FINRA”) announced the effectiveness of a change in the Company’s name to “US-China Biomedical Technology, Inc.” (the “Name Change”) and new trading symbol “UCBB” (the “Symbol Change”) which became effective on the opening of trading as of February 9, 2018.

 

Overview and Business of Issuer

 

We are an early stage medical tourism and services company. Through late 2017 our principal business was related to the software development of MyComputerKey™ and our other patented cloud computing technologies; however, due to cash flow constraints, we were unable to proceed with the further development of our software. Due to enhanced competition in the software development market and advancements in technology made by our competitors, we began evaluating alternative business plans.

 

Following the change in control of the Company pursuant to the SPA, the decision was made to put the software development on hold and to shift our primary business focus. Our newly revised business plan is directed towards medical tourism. The primary focus of our plan is the integration and development of synergistic relationships with high profiled doctors and hospitals that will act as a bridge for connecting patients and bio-technology advances in China with our Company’s network of US based doctors and hospitals. We intend to develop a scalable biomedical bridge for the US and China markets. We will provide concierge services for moving patients from China to the US with an emphasis on the following demographics:

 

(i)

cancer patient referrals that are in non-critical, non-life threatening positions,

(ii)

pre-screening and genetic testing for family members of cancer patients,

(iii)

patients suffering from Diabetes, and

(iv)

general medical services including preventative care and physicals.

 

 

 

 

The Company intends to develop working relationships with key medical innovators for possible joint ventures related to medical device manufacturing in China, including working towards obtaining China Food & Drug Administration (“CFDA”) approval for medical device sales to government owned hospitals. As of the date of this report, the Company has begun identifying qualified physicians and additions to the company’s management team to begin initiation of operations in the US. The business plan and is currently in the development phase.

 

Intellectual Property

 

Our success depends in part on our ability to protect our intellectual property and proprietary technologies.  We plan to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We plan also to rely on copyright laws to protect any future programs, devices, trademarks, and propriety processes and technology which we will utilize in executing our business plan.

 

We currently have no intellectual property related to medical tourism. We currently own all rights and patents associated with our past business endeavors such as the invention titled, “Apparatus Systems and Methods for Virtual Desktop Access and Management”, described under patent application (U.S. Serial Number 13/173,220) for systems and methods for accessing and managing a computer desktop, and with the invention titled, “System and Methods for One-Time Password Generation on a Mobile Computing Device”, described under patent application (U.S. Serial Number 14/295182) for process and methods of for one-time password on mobile computing devices. We have recorded a formal notice of assignment related to U.S. Serial Number 13/173,220with the United States Patent and Trademark Office previously held in the name of former executives of the Company, however U.S. Serial Number 14/295182 remained in the former executives name.

 

The patented system described under Serial No. 13/173220 is comprised of a removable virtual desktop Key permitting remote access and management of various computing devices that are communicatively linked to the Company’s secured cloud network. The Key allows the user secured virtual access and management of their desktop interface through a secondary computer only through unique user identification validation and a series of encrypted security file authentications including a DRM signature, a number of login credentials, and a biometric data template so even if passwords are breached the Key remains uncompromised.

 

The Company must actively manage risks related to maintaining its technology and systems which may be obsolete without further development. It may be more costly to upgrade obsolete technology and it may be more cost effective to fund the development of a replacement system or new technology all together.

 

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. Also, the efforts management has taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm the business, the brand and reputation, and the ability to compete. Also, protecting our intellectual property rights could be costly and time consuming.

 

Competition

 

Our potential competitors include Chinese based patient referral companies and agencies who provide international healthcare referral services similar to ours, such as Hope Noah Company in Beijing, Saint Lucia Consulting in Beijing, Shanghai Medical Tourism Products and Promotion Platform, and Ryavo Healthcare in Shanghai. Our potential competitors have substantially greater financial, technical, and human resources than we do, as well as established market share and the commercialization of their services. Our competitors’ services may be more effective, or more effectively marketed and sold, than any services we may commercialize and may render our services obsolete or non-competitive before we can recover the expenses of their development and commercialization. We anticipate that we will continue to face intense and increasing competition as new service providers enter the market and if we cannot maintain solid relationships with top tier physicians and hospitals. However, we believe that if we are able to further develop our business plan, establish solid relationships, and provide our own medical technology which has been developed by our majority shareholder, we may have key potential advantages over competitive services that could enable us to capture meaningful market share from our competitors. 

 

Industry Regulation

 

Our business is subject to a wide range of complex U.S. and foreign laws and regulations related to privacy. HIPPA, data protection, and intellectual property, among others. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business. Failure to comply with, or changes in, laws and regulations applicable to our businesses could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.

 

 

 

 

Trends in Medical Tourism

 

U.S. trade in health travel services (often called “medical tourism”) has grown steadily in recent years; exports (i.e., travelers coming to the United States) have doubled, and imports (U.S. travelers going abroad) have increased almost nine-fold from a low base in the early 2000’s. Despite rising costs, the U.S. health system continues to attract foreigners because of its high-quality services and its closeness to large patient markets. At the same time, more Americans are seeking more affordable care abroad, even if they must pay for their expenses out of pocket. The two most important barriers to increasing cross-border trade in health services are visa restrictions for travelers from certain countries entering the United States and a lack of coverage by many U.S. health insurers for treatments provided abroad.

 

In 2013, U.S. cross-border exports of health-related personal travel services were $3.3 billion, up from $1.6 billion in 2003, for a 7.7% compound annual growth rate (CAGR). Imports rose from $168 million in 2003 to $1.4 billion in 2013, implying a CAGR of 24%, albeit from a low base. Though health travel services represent only a small share of total trade in personal travel, they have consistently produced a trade surplus for the United States ($1.8 billion in 2013). Health travel exports grew faster than growth in spending on healthcare, with total U.S. personal healthcare expenditures rising at an average rate of 5.6% from 2002 to 2012 before slowing in 2013. The growth trend of these exports more resembles that of total U.S. travel exports, which rose 7.9% annually from 2003 to 2013.

 

About 0.5% of all air travelers entering the United States annually—between 100,000 and 200,000 people—list health treatment as a reason for visiting (this data excludes travelers from Canada and Mexico, the majority of whom travel to the United States overland). Foreign patients most often cite access to advanced medical care as their reason for traveling to this country for treatment.

 

Marketing

 

Because we are currently in the development stage of our business we have not engaged in any marketing activities. In mid-2018 we intend to implement a comprehensive integrated plan to achieve our business objectives. Our primary objectives include building brand awareness, developing lead generation programs that will drive sales and revenue, and developing an infrastructure that supports and measures our marketing activities. Our marketing activities will be driven by our website, organic and paid search optimization, direct marketing, events, social media, and eMarketing focused on small and medium sized businesses and individuals.

 

Employees

 

We currently have 2 active employees. We utilize independent contractors on a part-time/as needed basis to assist in our development activities, marketing, and financial and accounting support. We are also dependent upon our officers and directors for our future business development. As our operations expand, we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

 

Where You Can Find More Information

 

We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). These filings are not deemed to be incorporated by reference into this Form 10-K. You may read and copy any documents filed by us at the Public Reference Room of the SEC, 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings with the SEC are also available to the public through the SEC’s website at http://www.sec.gov.

 

ITEM 1A. RISK FACTORS

 

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

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

 

 

 

ITEM 2. DESCRIPTION OF PROPERTY

 

Our corporate headquarters are located at: 2 Park Plaza, Suite 400, Irvine, CA 92614. Our current rent for 5,824 square feet consisting of 10 offices, cubicles, and conference rooms is approximately $16,000 per month through March 7, 2019. The rent will increase by $0.12-0.13 per square foot each year. We believe that this space is adequate for our current and immediately foreseeable operating needs. We do not own any real property. The Company’s telephone number is (949) 679-3992.

 

ITEM 3. LEGAL PROCEEDINGS

 

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable

 

 

 

 

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “UCBB”. We consider our stock to be “thinly traded” and any reported sale prices may not be a true market-based valuation of the stock.  Some of the bid quotations from the OTC Bulletin Board set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

		High Bid				Low Bid
Year ended 2/28/2018
3/1/2017-5/31/2017		$	1.52			$	0.85
6/1/2017-8/31/2017			2.50				1.30
9/1/2017-11/30/2017			2.45				1.40
12/1/2017-2/29/2018			1.40				0.40
Year ended 2/28/2017 3/1/2016-5/31/2016		$	5.50			$	2.10
6/1/2016-8/31/2016			4.00				2.40
9/1/2016-11/30/2016			2.40				1.44
12/1/2016-2/28/2017			1.65				0.89

  

Shares eligible for future sale could depress the price of our common stock, thus lowering the value of a buyer’s investment. Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for shares of our common stock.

 

Our revenues and operating results may fluctuate significantly from quarter to quarter, which can lead to significant volatility in the price and volume of our stock. In addition, stock markets have experienced extreme price and volume volatility in recent years. This volatility has had a substantial effect on the market prices of securities of many smaller public companies for reasons unrelated or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

 

Record Holders

 

As of June 12, 2018, there were 30 registered holders of our common stock, although we believe that the number of beneficial owners is substantially greater since a significant number of shares are held in street name.

 

Dividends

 

We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

See “Securities Authorized for Issuance Under Equity Compensation Plans” included under Part II, Item 12 of this report, which is incorporated by reference into this Item 5.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

Year Ended February 28, 2017

 

None

 

 

 

 

Year Ended February 28, 2018

 

During the year ended February 28, 2018, the Company issued the shares described below in private placements pursuant to Section 4(a)(2) of the Securities Act, and Rule 506 of Regulation D, in each case on the basis that the shares were offered and sold in a non-public offering to an “accredited investor” as defined in Rule 501 of Regulation D. Additionally, at the time of the issuances, unless registered for resale, the shares were deemed to be restricted securities under the Securities Act and the certificates evidencing such shares bear a legend to that effect.

 

On July 31, 2017, the Company received a subscription for 100,000 restricted shares of common stock for net proceeds of $50,000. The Board of Directors accepted the subscription on September 14, 2017; as a result, 100,000 shares of common stock were issued to one U.S. accredited investor.

 

On October 27, 2017, the Company received a subscription for 25,000 restricted shares of common stock for net proceeds of $25,000 from one investor.

 

On December 29, 2017, the Company entered into five separate Debt Settlement Agreements with five of the Company’s debt holders whereby the Company agreed to issue 156,579 aggregate restricted common stock at $0.40 per shares in exchange for the conversion of all outstanding debt held by the debt holders. As a result, an aggregate amount of 156,579 common stock shares were committed to be issued as of February 28, 2018; the shares were actually issued March 27, 2018.

 

On December 29, 2017, the Company and its legal counsel (the “Law Firm”) agreed to convert an aggregate $74,835 in debt owed for legal services rendered through December 29, 2017 in exchange for 187,087 shares of restricted common stock, valued at $0.40 per share. The Law Firm applied the credit to the Company’s invoice on January 3, 2018, and the shares were issued to the Law Firm on April 30, 2018.

 

Subsequent issuances: On March 15, 2018, the Company entered into a subscription agreement with China-Israel Biological Technology, Co. Ltd. (“CIB”), a Chinese company associated with Mr. Qingxi Huang, President and Chief Executive Officer of the Company, pursuant to the Subscription Agreement for aggregate proceeds of $800,000 (the “Purchase Price”). The Purchase Price was paid as follows: (i) $569,805USD paid at closing, and (ii) $230,195 was applied toward the Purchase Price pursuant to a Debt Settlement Agreement entered into by the Company. The Purchase Price was paid on May 8, 2018. The shares were issued on May 25, 2018.

 

On April 23, 2018, the Company issued 15,000 restricted shares to one holder as consideration for services rendered to the Company.

 

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon one of the following exemptions:

 

(a) The shares of Common Stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, ("Securities Act"), based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an "Investor") confirmed to the Company that it or he is an "accredited investor," as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

 

(b) The shares of common stock referenced herein were issued pursuant to and in accordance with Rule 506 of Regulation D and Section 4(2) of the Securities Act. We made this determination in part based on the representations of the Investor(s), which included, in pertinent part, that such Investor(s) was an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investor(s) that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Our determination is made based further upon our action of (a) making written disclosure to each Investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of  the Company of any general solicitation or advertising for securities herein issued in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act.

 

 

 

 

(c) The shares of Common Stock referenced herein were issued pursuant to and in accordance with Rule 903 of Regulation S of the Act. We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Act on the basis that the sale of the shares was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor represented to us that the investor was not a "U.S. person", as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. The agreement executed between us and each investor included statements that the securities had not been registered pursuant to the Act and that the securities may not be offered or sold in the United States unless the securities are registered under the Act or pursuant to an exemption from the Act. Each investor agreed by execution of the agreement for the shares: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; (ii) that we are required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Act. All certificates representing the shares were or upon issuance will be endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.

 

Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA

 

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

  

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K (THIS “FORM 10-K”), CONSTITUTE “FORWARD LOOKING STATEMENTS” WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE “REFORM ACT”). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “BELIEVES”, “EXPECTS”, “MAY”, “SHOULD”, OR “ANTICIPATES”, OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF US-CHINA BIOMEDICAL TECHNOLOGY, INC. (“THE COMPANY”, “WE”, “US” OR “OUR”) TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-K, UNLESS ANOTHER DATE IS STATED, ARE TO FEBRUARY 28, 2018.

 

Overview of Current Operations

 

As of May 2017, we determined it is in the best interest to shift the corporation’s primary business focus and put all cloud computing software development on hold. As such, we have sought out and are in the process of developing a newly revised business plan which will shift the Company’s primary focus to medical tourism and the integration and development of synergistic relationships with high profiled doctors and hospitals that will act as a bridge for connecting patients and bio-technology advances in China with the Company’s network of US based doctors and hospitals. The Company intends to develop a scalable biomedical bridge for the US and China markets. The Company would provide concierge services for moving patients from China to the US with a focus on the following demographics:

 

(v)

cancer patient referrals that are in non-critical, non-life threatening positions,

(vi)

pre-screening and genetic testing for family members of cancer patients,

(vii)

patients suffering from Diabetes, and

(viii)

general medical services including preventative care and physicals.

 

 

 

 

The Company intends to develop working relationships with key medical innovators for possible joint ventures related to medical device manufacturing in China, including working towards obtaining CFDA approval for medical device sales to government owned hospitals. As of the date of this report, the Company has begun identifying qualified physicians and additions to the company’s management team to begin initiation of operations in the US. The business plan and is currently in the development phase.

 

RESULTS OF OPERATIONS

 

We had no revenues in the years ending February 28, 2018 (“2018”) and February 28, 2017 (“2017”).

 

During the 2018 and 2017 periods, we incurred general and administrative expenses of $515,522 and $43,999, respectively. In the 2018 period general and administrative expense included approximately $49,000 of accounting fees, $12,000 of health insurance, $124,000 of legal fees, $109,000 of payroll expenses, $10,000 of investor relations, $166,000 of rent expense, $6,000 of stock compensation, $7,000 of telephone expense, $7,000 of transfer agent fees, and $13,000 of travel expense. During the 2017 period, we recorded a gain on the cancellation of accounts payable for invoices outstanding in the years 2012 through 2014 and incurred approximately $36,000 of accounting fees, $11,000 of legal fees, and $14,000 of investor relations. Management has not received communications from these vendors to collect on these amounts.

 

Our net loss increased to $482,164 for the 2018 period from $44,799 for the 2017 period. The increase was attributable to higher general and administration costs as described above. 

 

Summary of any product research and development that we will perform for the term of our plan of operation.

 

We may continue the development of multiple versions of our MyComputerKey™ product, including an APP version for mobile phones and tablets. During the 2018 and 2017 periods, we did not incur costs associated with research and development activities.

 

Expected purchase or sale of plant and significant equipment

 

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

 

Significant changes in the number of employees

 

As of February 28, 2018, we have two active employees. We utilize independent contractors on a part-time/as needed basis to assist in our development activities, marketing, and financial and accounting support. We are also dependent upon our officers and directors for our future business development. As our operations expand, we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

  

LIQUIDITY AND CAPITAL RESOURCES

 

As of February 28, 2018, we had cash and cash equivalents of $56,407 and a working capital deficit of $291,025 as compared to cash and cash equivalents of $3,366 and a working capital deficit of $8,110 as of February 28, 2017.

 

We had total liabilities of $352,432 as of February 28, 2018 consisting of accounts payable as compared to $14,151 as of February 28, 2017.

 

We had a total stockholders’ deficit of $271,806 and an accumulated deficit of $2,225,843 as of February 28, 2018.

 

During 2018, we used $400,889 of cash in operating activities which was attributable primarily to our net loss of $482,164, offset by gain on settlement of debt of $45,000, common stock issued for settlement of accounts payable of $74,836, common stock issued for services of $15,000, and the net change in operating assets and liabilities of $45,264. During 2017, we used $63,814 of cash in operating activities which was attributable primarily to our net loss of $44,799 and a $16,515 reduction of accounts payable.

 

 

 

 

During 2018 and 2017, we received $0 and $64,500 respectively in capital contributions from Goldenrise including $57,037 received in 2016 from a 2015 stock sale. As of July 28, 2018, Goldenrise is no longer a shareholder. On January 13, 2018, the Company and Goldenrise entered into a Debt Settlement Agreement whereby the Company paid an aggregate $45,000 in exchange for the extinguishment of all $90,000 in debt held by Goldenrise. During 2018, we had net cash provided by financing activities of $453,931, which consisted of $75,000 of proceeds from sale of common stock, $152,632 of proceeds from notes payable, and $226,299 of proceeds from related party notes payable.

     

Since inception, we have processed compensation to our former Chief Executive Officer as an independent contractor under Form 1099 instead of processing it as payroll under Form W-2. We do not expect that any fees or penalties incurred as a result will cause any meaningful or significant misreporting of our financial condition and results of operations for the years ended February 28, 2018, February 28, 2017 or going forward.

 

Additional capital is required in order to develop our new business plan. We just completed a sale of $800,000 in common stock under Regulation S to one of our majority shareholders in exchange for 2,000,000 shares of restricted stock. The purchase price was paid partially in cash and partially by and through a debt settlement agreement.

 

Since we have no liquidity and have suffered losses, we depend to a great degree on the ability to attract external financing in order to conduct our business activities and expand our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. If we are unable to raise additional capital from conventional sources, including increases in related party and non-related party loans and/or additional sales of stock, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. We have no commitments to provide us with financing in the future, other than described above. Our independent registered public accounting firm included an explanatory paragraph raising substantial doubt about the Company’s ability to continue as a going concern.

 

Notwithstanding, we anticipate generating losses and therefore may be unable to continue operations in the future. We anticipate that we will require additional capital in order to grow our business by increasing headcount and our budget for fiscal year ending 2019. We may use a combination of equity and/or debt instruments to funds our growth strategy or enter into a strategic arrangement with a third party. 

 

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

 

None.

 

Recent Pronouncements

 

The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's financial position and results of operations.

 

Off-Balance Sheet Arrangements

 

None.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

 

 

 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

Index to Financial Statements

 

Report of Independent Registered Public Accounting Firm(s)	F-1
Balance Sheets as of February 28, 2018 and 2017	F-3
Statements of Operations for the years ended February 28, 2018 and 2017	F-4
Statements of Stockholders’ Deficit for the years ended February 28, 2018 and 2017	F-5
Statements of Cash Flows for the years ended February 28, 2018 and 2017	F-6
Notes to Audited Financial Statements	F-7

 

 

 

 

 

 

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Shareholders

Cloud Security Corporation

 

We have audited the accompanying balance sheet of Cloud Security Corporation (the “Company”) as of February 28, 2017 and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cloud Security Corporation as of February 28, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses and requires working capital to continue to develop, operate and market its products. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Note 2. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ dbbmckennon

 

Newport Beach, California

June 14, 2017

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the shareholders and the board of directors of US-China Biomedical Technology, Inc.

 

Opinion on the Financial Statements

 
We have audited the accompanying balance sheet of US-China Biomedical Technology, Inc. (the "Company") as of February 28, 2018, the related statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ TAAD LLP

 

TAAD LLP

 

We have served as the Company's auditor since 2017

Diamond Bar, CA

June 13, 2018

 

 

 

 

 

 

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(FORMERLY CLOUD SECURITY CORPORATION)

BALANCE SHEETS

 

 

		February 28, 2018				February 28, 2017
ASSETS
Current Assets:
Cash		$	56,407			$	3,366
Prepaid expenses			5,000				2,500
Deposit			–				175
Total current assets			61,407				6,041
Deposit			19,219				–
TOTAL ASSETS		$	80,626			$	6,041
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	18,153			$	14,151
Accrued payroll - related parties			35,175				–
Accrued payroll - non-related parties			27,806				–
Notes payable and accrued interest			45,000				–
Related party notes payable and accrued interest			226,299				–
TOTAL LIABILITIES			352,433				14,151
Commitments and contingencies
			–				–
Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued and outstanding at February 28, 2018 and 2017, respectively			–				–
Common stock, $0.001 par value, 190,000,000 shares authorized; 13,510,646 and 13,026,980 shares issued and outstanding at February 28, 2018 and 2017, respectively			13,510				13,027
Additional paid-in capital			1,940,526				1,722,542
Accumulated deficit			(2,225,843	)			(1,743,679	)
Total stockholders' deficit			(271,807	)			(8,110	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	80,626			$	6,041

 

 

See accompanying notes to financial statements

 

 

 

 

 

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(FORMERLY CLOUD SECURITY CORPORATION)

STATEMENTS OF OPERATIONS

 

		For the Year Ended February 28, 2018				For the Year Ended February 28, 2017
General and administrative		$	515,522			$	43,999
Gain on settlement of debt			45,000				–
Interest expense			(10,737	)			–
Loss before provision for income taxes			(481,258	)			(43,999	)
Provision for income taxes			906				800
Net loss		$	(482,164	)		$	(44,799	)
Weighted average shares basic and diluted			13,152,315				13,026,980
Weighted average basic and diluted loss per common share		$	(0.04	)		$	(0.00	)

 

 

See accompanying notes to financial statements

 

 

 

 

 

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(FORMERLY CLOUD SECURITY CORPORATION)

STATEMENTS OF STOCKHOLDERS' DEFICIT

 

		Common Stock								Additional Paid-in				Accumulated				Total Stockholders'
		Shares				Amount				Capital				Deficit				Deficit
Balance at February 28, 2016			13,026,980			$	13,027			$	1,658,042			$	(1,698,880	)		$	(27,811	)
Capital contribution			–				–				64,500				–				64,500
Net loss			–				–				–				(44,799	)			(44,799	)
Balance at February 28, 2017			13,026,980				13,027				1,722,542				(1,743,679	)			(8,110	)
Proceeds from issuance of common stock			125,000				125				74,875				–				75,000
Common stock issued for accounts payable			187,087				187				74,649				–				74,836
Common stock issued for services			15,000				15				5,985				–				6,000
Common stock issued for settlement of notes payable and accrued interest			156,579				156				62,476				–				62,632
Net loss			–				–				–				(482,164	)			(482,164	)
Balance at February 28, 2018			13,510,646			$	13,510			$	1,940,527			$	(2,225,843	)		$	(271,806	)

 

See accompanying notes to financial statements

 

 

 

 

 

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(FORMERLY CLOUD SECURITY CORPORATION)

STATEMENTS OF CASH FLOWS

 

 

		For the Year Ended February 28, 2018				For the Year Ended February 28, 2017
Cash flows from operating activities:
Net loss		$	(482,164	)		$	(44,799	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on settlement of debt			(45,000	)			–
Write-off of security deposit			175				–
Common stock issued for settlement of accounts payable			74,836				–
Common stock issued for services			6,000				–
Changes in operating assets and liabilities:
Prepaid expenses			(21,719	)			(2,500	)
Accounts payable			4,002				(16,515	)
Accrued liabilities			62,981				–
Net cash used in operating activities			(400,889	)			(63,814	)
Cash flows from financing activities:
Proceeds from sale of common stock			75,000				–
Capital contributions			–				64,500
Proceeds from notes payable			152,632				–
Proceeds from related party notes payable			226,299				–
Net cash provided by financing activities			453,931				64,500
Net change in cash			53,041				686
Cash, beginning of period			3,366				2,680
Cash, end of period		$	56,407			$	3,366
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	–			$	–
Taxes		$	906			$	–

 

See accompanying notes to financial statements

 

 

 

 

US-CHINA BIOMEDICAL TECHNOLOGY, INC.

(FORMERLY CLOUD SECURITY CORPORATION)

NOTES TO FINANCIAL STATEMENTS

 

1.	Organization and Business

 

US-China Biomedical Technology, Inc., formerly Cloud Security Corporation and Accend Media (the “Company”), was incorporated in the State of Nevada on December 20, 2010. On May 22, 2012, the Company merged with Cloud Star Corporation (“Cloud Star”), a privately held Nevada corporation incorporated on October 17, 2011 headquartered in California (the “Merger”). Cloud Star’s then Chief Executive Officer assigned his rights and interests in technology named “The VirtualKey Desktop Solution” (“MyComputerKey”) and additional cloud security technology products to the Company in connection with the Merger. Following the Merger, the Company conducted the business of Cloud Star and changed its name from “Accend Media” to “Cloud Star Corporation”. On May 28, 2013, the Company changed its corporate name to “Cloud Security Corporation”.

 

The Company’s principal business through July 2017 has been the software development of MyComputerKey; however, due to cash flow constraints, we have been unable to proceed with development of this software. The Company is currently evaluating alternative business ventures, as discussed below. During 2016, the Company received a patent and is continuing to evaluate its intellectual property and business strategies including raising additional capital for further development of our product, MyComputerKey™. While the Company is contemplating alternative business ventures, it intends to either further consider the development of its technology for application in a new business venture, or may consider the sale of such technology.

 

On December 8, 2014, the Company entered into a stock purchase agreement (the “SPA”) with Goldenrise Development, Inc., a California corporation (“Goldenrise”) whereby the Company sold 12,000,000 shares of its common stock for $180,000 to Goldenrise representing approximately 92% of our outstanding shares. In connection with the SPA, we also agreed to effectuate a 1:100 reverse stock split of the Company’s issued and outstanding common stock (“Reverse Split”) which became effective on January 22, 2015. The Company’s then directors and officers immediately preceding the close of this transaction resigned at closing. Goldenrise designated the current directors and officers of the Company. The transaction effectuated a change in control of the Company.

 

On March 31, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Peng Agreement”) with Zhi Lu Peng, an individual (the “Peng Purchaser”). Pursuant to the Peng Agreement, Goldenrise agreed to sell and Peng Purchaser agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for these shares, Peng Purchaser was required pay to Goldenrise a total of $400,000 as follows: (i) $100,000 upon the execution of the Peng Agreement, and (ii) $300,000 on or before June 15, 2017. The purchase price was not fully funded, $50,000 towards the purchase price that was remitted was returned to Peng Purchaser, and the Peng Agreement terminated by its terms on June 15, 2017 and is no further force or effect.

 

On June 28, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Dunn Agreement”) with Michael R. Dunn, the Company’s sole officer and director (the “Dunn”). Pursuant to the Dunn Agreement, Goldenrise agreed to sell and Dunn agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for the shares, the Dunn will pay to Goldenrise a total of $400,000 as follows: (i) $180,000 on or before July 15, 2017 (extended to July 28, 2017), (ii) $180,000 shall be withheld by Dunn and applied towards monies owed by Goldenrise to Dunn; and (iii) $40,000 shall be with withheld by Dunn and applied towards invoices related to the audit and legal fees associated with the reporting requirements of the Company through the date of Closing.

 

Concurrently, on June 28, 2017, Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., each a Chinese corporation (collectively, the “Buyers”), entered into a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, Dunn agreed to sell and Buyers agreed to purchase 6,000,000 restricted common stock shares of the Company (the “Shares”), representing approximately 46.06% of the Company’s outstanding shares of common stock. In consideration for the Shares, Buyers agreed to pay to Dunn a total of $200,000 upon execution of the SPA (the “Purchase Price”). The Closing of the SPA was extended mutually by the parties and closed on July 28, 2017. The Purchase Price was wired directly to the Company for the benefit of Dunn.

 

Prior to the Closing of the Dunn Agreement with Goldenrise, on July 25, 2017, the Company entered into an unsecured promissory note with Goldenrise in the amount of $90,000 (the “Note”) (See Note 4). As such, when remitting the purchase price under the Dunn Agreement, $90,000 was paid to Goldenrise as payment under the Dunn Agreement and $90,000 was retained in the Company’s account as payment from Goldenrise to the Company for the Note. The Dunn Agreement purchase price has been paid in full.

 

 

 

 

The Closing of the Dunn Agreement and SPA occurred on July 28, 2017. The Dunn Agreement and SPA resulted in a change in control of the Company.

  

In August 2017, the Company began considering a revised business plan wherein the Company’s primary focus will be the integration and development of synergistic relationships with high profiled doctors and hospitals that will act as a bridge for connecting patients and bio-technology advances in China with the Company’s network of US based doctors and hospitals. The Company intends to develop a scalable biomedical bridge for the US and China markets. The bridge would provide concierge services for moving patients from China to the US with a focus on the following demographics: (i) cancer patient referrals that are in non-critical, non-life threatening positions, (ii) pre-screening and genetic testing for family members of cancer patients, (iii) patients suffering from Diabetes, and (iv) general medical services including preventative care and physicals. The Company intends to develop working relationships with key medical innovators for possible joint ventures related to medical device manufacturing in China, including working towards obtaining CFDA approval for medical device sales to government owned hospitals. As of the date of this report, the Company has not yet implemented this business plan and is currently in the development phase.

 

On December 29, 2017, the Board of Directors of the Company approved the incorporation of US-China Biomedical Technology, Inc. (“US-China”) in the state of Nevada as a wholly-owned subsidiary of the Company. US-China was incorporated on January 11, 2018. Mr. Qingxi Huang is the sole officer and Director of US-China.

 

Matters Relating to Former Officers and Directors

 

On January 31, 2017, our former Chief Executive Officer, President, and Chairman of the Board of Directors, Ning Liu resigned after being detained in China. Mr. Liu’s legal troubles are unrelated to the Company, have had no effect on our operations, and we do not believe this poses any business risk.

 

On November 23, 2017, our former Chief Executive Officer and Director, Michael R. Dunn, passed away unexpectedly.

 

On January 9, 2018, Ms. Amanda Huang resigned as the Senior Vice President of the Company effective immediately. The Board approved and accepted Ms. Huang’s resignation as the Company’s Senior Vice President on January 10, 2018.

 

2.	Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited interim financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission (“SEC”). In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments.

 

Going Concern Considerations and Management’s Plans

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. The Company has no revenues, has incurred net losses, and has an accumulated deficit of $2,225,843 as of February 28, 2018. The Company currently has limited liquidity and limited access to capital. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date of the financial statements are issued. If the Company is unable to obtain adequate capital, we could be forced to cease operations.

 

Management anticipates the Company will be dependent, for the foreseeable future, on additional capital to fund further development of our infrastructure and to fund operations until such time we have sufficient revenues to meet our cost structure. Additional capital is required in order to fund the Company’s operations. In light of management’s efforts, there are no assurances that the Company will be successful in obtaining sufficient capital to continue as a going concern.

 

 

 

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Risks and Uncertainties

 

We have a limited operating history and have not commenced planned principal operations.

 

Our business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond our control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on our financial condition and our results of operations.

 

We currently have no sales, marketing or distribution capabilities. Therefore, to commercialize our products, we expect to collaborate with third parties to perform these functions. We have no experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our future products directly. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, we will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. While the product has been beta tested by three companies in the business-to-business market; the mass consumer market, including direct and indirect channels has not been tested.

 

While the Company holds patents for some of its technology, the Company must actively manage risks related to maintaining its technology and systems which may be obsolete without further development. It may be more costly to upgrade obsolete technology and it may be more cost effective to fund the development of a replacement system or new technology all together.

 

We do not own any manufacturing facilities and we intend to utilize contract manufacturers to meet manufacturing needs. Accordingly, if any of our proposed products become available for widespread sale, we may not be able to arrange for the manufacture of such product in sufficient quantities at an acceptable cost, or at all, which could materially adversely affect our future prospects.

 

Our industry is characterized by rapid changes in technology and customer demands. As a result, our products may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, our products must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, we may not be able to adapt new or enhanced products to emerging industry standards, and our new products may not be favorably received.

  

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimate is the determination of timing and the amount of costs to be capitalized for software development and any related impairment of such assets, estimates of fair value attributable to common stock, as well as the carrying value acquired technologies for which development has not been completed and tested.

 

 

 

 

Fair Value of Financial Instruments

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

 

	Level 1	- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
	Level 2	- Include other inputs that are directly or indirectly observable in the marketplace.
	Level 3	- Unobservable inputs which are supported by little or no market activity.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

  

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2018 and February 28, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, receivable deposits, accounts payable, accrued payroll and related costs, and related-party advances. Fair values for these items were assumed to approximate carrying values because of their short-term in nature or they are payable on demand. Cash of $56,407 and $3,366 represent the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at February 28, 2018 and February 28, 2017, respectively.

 

Basic Loss per Common Share

 

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of February 28, 2018 and February 28, 2017, the Company had no shares of potentially dilutive shares that have been excluded from the diluted loss per share computations as they would be antidilutive for the periods presented.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740 - Income Taxes, which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carry forwards. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within the provision for income taxes.

 

 

 

 

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

 

Stock-Based Compensation

 

ASC 718, Share-Based Payment requires that compensation cost related to share-based payment transactions for employees be recognized in the financial statements. Share-based payment transactions within the scope of ASC 718 include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.

 

ASC 718 requires disclosure of the fair value and other characteristics of stock options and more prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based compensation on reported net loss. The Company has reflected the expense of such stock based compensation based on the fair value at the grant date for awards consistent with the provisions of ASC 718.

  

In connection with ASC 718, the fair value of our share-based compensation has been determined using the quoted market prices of the Company’s common stock. For stock options, we will be utilizing the Black-Scholes pricing model. The fair value of the shares and options granted are amortized as compensation expense on a straight line basis over the requisite service period of the award, which is generally the vesting period. The fair value calculations involve significant judgments, assumptions, estimates and complexities that impact the amount of compensation expense to be recorded in current and future periods. Upon option exercise, the Company issues new shares of stock.

  

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, codified into ASC 505 Equity. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement at various performance completion dates, and for unvested instruments, at each reporting date. Compensation expense, once recorded, may not be reversed.

 

New Accounting Pronouncements

 

We have reviewed all recently issued accounting pronouncements and these were disclosed in the Company’s most recently filed Form 10-K or are not believed by us to have a material impact on the Company's present or future financial statements, based on our current operations.

 

3.	Related Party Transactions

 

Due to Related Party

 

During the year ended February 28, 2018, Mr. Dunn advanced and was repaid funds through entities affiliated with him, net of repayments to the Company to fund certain operating expenses. The advances are due on demand and do not bear interest. The amounts due to Mr. Dunn of February 28, 2018 and 2017 were $0 and $0, respectively.

 

 

 

 

Related Party Transactions

 

On June 28, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Dunn Agreement”) with Michael R. Dunn, the Company’s sole officer and director (the “Dunn”). Pursuant to the Dunn Agreement, Goldenrise agreed to sell and Dunn agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for the shares, the Dunn will pay to Goldenrise a total of $400,000 as follows: (i) $180,000 on or before July 15, 2017 (extended to July 28, 2017), (ii) $180,000 shall be withheld by Dunn and applied towards monies owed by Goldenrise to Dunn; and (iii) $40,000 shall be with withheld by Dunn and applied towards invoices related to the audit and legal fees associated with the reporting requirements of the Company through the date of Closing.

 

Concurrently, on June 28, 2017, Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., each a Chinese corporation (collectively, the “Buyers”), entered into a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, Dunn agreed to sell and Buyers agreed to purchase 6,000,000 restricted common stock shares of the Company (the “Shares”), representing approximately 46.06% of the Company’s outstanding shares of common stock. In consideration for the Shares, Buyers agreed to pay to Dunn a total of $200,000 upon execution of the SPA (the “Purchase Price”). The Closing of the SPA was extended mutually by the parties and closed on July 28, 2017. The Purchase Price was wired directly to the Company for the benefit of Dunn.

 

Prior to the Closing of the Dunn Agreement with Goldenrise, on July 25, 2017, the Company entered into an unsecured promissory note with Goldenrise in the amount of $90,000 (the “Note”) (See Note 4). As such, when remitting the purchase price under the Dunn Agreement, $90,000 was wired to Goldenrise as payment under the Dunn Agreement and $90,000 remained in the Company’s account as payment from Goldenrise to the Company for the Note. The Dunn Agreement purchase price has been paid in full.

 

During the year ended February 28, 2018, the buyers funded the Company with related party notes payable of $223,694 with an interest rate of 10% per annum. As of February 28, 2018, the buyers were owed $223,695 plus accrued interest of $2,605. During the year ended February 28, 2018, the Company recorded $2,605 of interest expense towards the buyers’ related party notes payable. Subsequent to year end, the buyer’s notes payable and accrued interest were converted into shares of common stock as part of the SPA. See Note 7.

 

Facility Lease

 

Commencing on June 1, 2017, the Company entered into an agreement with a company for which Michael Dunn served as Chief Executive Officer to sublease 5,824 square feet of office space at a monthly rental amount of $16,962 plus approximately $300 per month for parking spaces. The terms of the sublease were approximately the same as those of the underlying lease with the Landlord, except the sublease was on a month-to-month basis.

 

As of February 28, 2018, the Company has terminated the month-to-month lease agreement described above and, effective March 7, 2018, entered into a new lease with the Landlord. The new lease has a minimum term of 35 months, expiring January 31, 2021, and requires the following minimum payments, excluding property taxes and other common area costs: months 1 through 11 - $16,016 per month totaling $176,176; months 12 through 23 - $16,715 per month totaling $200,580; and months 24 through 35 - $17,472 per month totaling $209,664.

 

During the year ended February 28, 2018, the Company incurred $165,706 in rent expense.

 

Accrued Payroll

 

The Company approved compensation to Michael Dunn in the amount of $5,000 per month beginning in June 2017. As of February 28, 2018 and 2017, the Company has recorded accrued and unpaid payroll due to Mr. Dunn of $30,000 and $0, respectively.

 

As of February 28, 2018 and 2017, the Company approved compensation to Amanda Huang, our former Senior Vice President in the amount of $5,000 per month beginning in June 2017. The Company has recorded accrued and unpaid payroll due to Ms. Huang of $1,977 and $0, respectively.

 

As of February 28, 2018 and 2017, there is accrued and unpaid payroll to non-related parties of $27,806 and $0, respectively.

 

 

 

 

4.	Notes Payable

 

On June 8, 2017, the Company issued an unsecured note payable to an unrelated third party in the amount of $25,000. The note together with accrued interest of $5,000 is payable upon demand. The note and accrued interest of $30,000 was converted into 75,000 shares of common stock on December 29, 2017. During the year ended February 28, 2018, the Company recorded interest expense of $5,000.

  

On July 25, 2017, the Company entered into an unsecured promissory note with Goldenrise, a former related party before change of control on June 28, 2017, in the amount of $80,000, which was increased to $90,000 by the Parties (the “Note”). The Note together with accrued interest is due and payable on August 31, 2017. The note does not bear interest. The Note was settled for $45,000 on January 13, 2018 and thus the Company recorded a gain on settlement of $45,000 during the year ended February 28, 2018. The note was repaid on April 2, 2018. The amounts due as of February 28, 2018 was $45,000. The funds were to be used for transaction related costs which was to be repaid in August 2017 from anticipated future financing activities of the Company. The Company has been unable to secure this financing and the Note remains outstanding. Due to the outstanding balance not being paid, Mr. Dunn, who was the purchaser of 12,000,000 shares under the Dunn Agreement, will not provide the $40,000 in funds to be used for legal and accounting until such time as the loan is paid in full to Goldenrise.

 

On September 28, 2017, the Company issued an unsecured note payable to an unrelated third party in the amount of $12,500. The note together with accrued interest of $2,500 that was earned upon issuance of the note is payable upon demand. The note and accrued interest of $15,000 was converted into 37,500 shares of common stock on December 29, 2017. During the year ended February 28, 2018, the Company recorded interest expense of $2,500.

 

On October 7, 2017, the Company borrowed $7,000 from an unrelated third party. The note with no accrued interest was converted into 18,750 shares of common stock on December 29, 2017.

 

On October 23, 2017, the Company issued an unsecured note payable to an unrelated third party in the amount of $8,000. The note bears interest at a rate of 10% per annum and is payable upon demand. The note and accrued interest of $8,132 was converted into 20,329 shares of common stock on December 29, 2017. During the year ended February 28, 2018, the Company recorded interest expense of $132.

 

On October 27, 2017, the Company borrowed $2,000 from an unrelated third party. The amount was to be repaid within 30 days. The note with no accrued interest was converted into 5,000 shares of common stock on December 29, 2017.

 

5.	Capital Stock

 

Authorizations and Designations

 

The Company is authorized to issue 190,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value preferred stock. As of February 28, 2018, no preferred stock has been issued.

 

On July 31, 2017, the Company sold 100,000 shares of restricted common stock for $50,000.

 

On October 27, 2017, the Company sold 25,000 shares of restricted common stock for $25,000.

 

On December 29, 2017, the Company issued 187,087 shares of restricted common stock for settlement of $74,836 of accounts payable for legal services.

 

On December 29, 2017, the Company issued 15,000 shares of restricted common stock for $6,000 of accounting services.

 

See Notes 3 and 4 for common stock issued for conversions of related party notes payable and notes payable.

 

 

 

 

2014 Stock Incentive Plan

 

The Board of Directors adopted the 2014 Stock Incentive Plan (the “Plan”). The Plan provides for the grant, at the discretion of the Compensation Committee of the Board of Directors, of stock awards, of common stock, restricted stock, awards of common stock, or stock options to purchase common stock of the Company, with a maximum of 150,000 shares. As of February 28, 2018, 131,875 shares are available for issuance under the Plan.

 

Capital Contributions

 

During the year ended February 28, 2017, Goldenrise, the Company’s former majority shareholder, contributed $64,500 to fund business operations of the Company. Upon Goldenrise’s sale of all interest in the Company on July 28, 2017, Goldenrise has no interest in the Company, with the exception of the outstanding Note for $90,000, and there will be no further commitments to fund such costs in the future.

 

6.	Income Taxes

  

As of February 28, 2018, the Company had net operating loss carry forwards of approximately $1,243,000 that may be available to reduce future years' federal taxable income for 20 years through 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these net operating loss carry forwards. Net operating losses will begin to expire in 2022.

 

The following table presents the current income tax provision for federal and state income taxes for the years ended February 28, 2018 and February 28, 2017:

 

		For the Year Ended February 28, 2018				For the Year Ended February 28, 2017
Current tax provisions:
Federal		$	–			$	–
State			906				800
Total provision for income taxes		$	906			$	800

 

Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended February 28, 2018 and February 28, 2017:

 

		For the Year Ended February 28, 2018				For the Year Ended February 28, 2017
US federal statutory income tax rate			-21%				-34%
State tax - net of benefit			-6%				-6%
Total provision for income taxes			0%				0%
Non-deductible expenses, net of federal benefit			3%				0%
Increase in valuation allowance			24%				40%
Minimum state taxes			1%				1%
Total provision for income taxes			1%				1%

 

 

 

 

 

 

 

The components of the Company's deferred tax assets for federal and state income taxes as of February 28, 2018 and February 28, 2017 consisted of the following:

 

		February 28, 2018				February 28, 2017
Non-current deferred tax assets
Net operating loss carry forwards		$	870,900			$	322,000
Less: valuation allowance			(870,900	)			(322,000	)
Net deferred tax assets		$	–			$	–

  

During the years ended February 28, 2018 and February 28, 2017, the valuation allowance increased approximately $548,900 and $17,000, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of February 28, 2018. Net operating losses may be limited as a result of the merger with Cloud Security and the sale of stock to Goldenrise. The deferred tax assets have been reduced to the 21% Federal tax rate for 2018.

 

The United States federal tax return years 2013 through 2017 are still subject to tax examination by the United States Internal Revenue Service, however, the Company does not have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the years 2013 to 2017 and currently does not have any ongoing tax examinations.

 

The United States federal and California state tax returns for 2018 are on extension.

 

7.        Subsequent Events

 

Subsequent to year end, we entered into a subscription agreement for the sale of 2,000,000 shares of our common stock to our largest shareholder for $800,000. $230,195 of the purchase price was applied  to the settlement of related party notes payable and accrued interest and the remaining $569,805 was paid in cash. Also subsequent to year end, we issued 15,000 shares of common stock to one holder as compensation for services.

 

 

 

 

 

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2018. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting  as defined in Exchange Act Rule 13a-15(f). 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 February 28, 2018. 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 its internal controls over financial reporting were not effective as of February 28, 2018.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.  In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2013, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

 

1.

We do not have an Independent Audit Committee – The Company does not have an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.

 

2.

We did not maintain appropriate cash controls – As of February 28, 2018, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts.

 

3.

We did not implement appropriate information technology controls – As at February 28, 2018, the Company retains copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.

 

Accordingly, the Company concluded that these control deficiencies resulted in a possibility that a material misstatement of the 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 the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of February 28, 2018, based on criteria established in Internal Control—Integrated Framework issued by COSO. 

 

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.

 

On November 19, 2017, Mr. Michael R. Dunn, the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and director, died unexpectedly. As a result, the Company’s Chairman of the Board of Directors, Mr. Qingxi (“Sunny”) Huang, was appointed as the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer. This change affected our internal control over financial reporting during the year ended February 28, 2018.

 

Pursuant to Regulation S-K Item 308(b), this Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this Form 10-K.

 

Continuing Remediation Efforts to address deficiencies in Company’s Internal Control over Financial Reporting

 

Once the Company is engaged in stable business operations and has sufficient personnel and resources available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:

 

1.

Our Board of Directors will nominate an independent audit committee or a financial expert on our Board of Directors.

 

2.

We will appoint additional personnel to assist with the preparation of the Company’s monthly financial reporting, including preparation of the monthly bank reconciliations.

 

 

 

 

ITEM 9B. OTHER INFORMATION

 

 

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Identification of Directors and Executive Officers.

 

The following table sets forth the names, ages and positions of our executive officers and directors. All directors serve for a term set to expire at the next annual meeting of stockholders of the Company or until their successors are elected and qualified. All officers are appointed by our board of directors and their terms of officer are, except to the extent governed by an employment contract, at the discretion of our board of directors.

 

Name		Age		Position & Offices Held
Qingxi Huang(1)		43		Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Chairman
Former Officers & Directors
Michael Dunn(2)		65		Former Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Chairman
Derek Yu(3)		32		Former CFO and Director
Sam Liu(4)		56		Former CEO, CFO, President, Secretary and Treasurer, and Chairman
Jie Lai(5)		25		Former Director
Amanda Huang (6)		54		Former Senior Vice President

 

(1)

Mr.  Huang was appointed as a director on July 28, 2017. On November 28, 2017, Mr. Huang was appointed as Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer to fill the vacancy left by the unexpected passing of Mr. Dunn on November 19, 2017

(2)

Mr. Dunn served as Director from February 11, 2015 to November 19, 2017. On June 23, 2017, he was appointed as CEO, CFO, President, Secretary, Treasurer and chairman. On November 19, 2017, Mr. Dunn passed away unexpectedly.

(3)

Mr. Yu was appointed as a director on February 11, 2015. On January 13, 2017, Mr. Yu was appointed as the Company’s Chief Executive Officer, President, Secretary and Chairman of the Board. Mr. Yu resigned from all positions on

(4)

Mr. Liu was appointed on February 11, 2015 and on January 13, 2017, Mr. Ning (Sam) Liu resigned as Chief Executive Officer, President, Secretary and Chairman of the Board of Directors (the “Board”) effective immediately.

(5)

Mr. Lai was appointed as a director on February 11, 2015 and resigned on June 23, 2017.

(6)

Ms. Huang was appointed as Senior Vice President on July 28, 2017 and resigned on January 9, 2018.

 

Biographies of Current Directors and Executive Officers

 

Qingxi “Sunny” Huang – 43 – Mr. Huang is currently a director of HK0039, a Hong Kong listed public company, President of Central Bio-MD Valley Technology Co. Ltd., President of Anson Biological Technology Co., Ltd. and Cihuaiji (chronic disease management and wisdom medical service platform for cancer and diabetes). Mr. Huang is also President of Extong, a third-party trading platform for the elderly health industry, and President of Jiuzhouhaorongtong, a third-party internet financial services platform in China. In 2017, Central Bio-MD was named the best growth enterprise in the Yuhua District and Mr. Qingzi was names the most advanced individual.

 

Mr. Huang founded Sanry business development organization and is known for being one of the first entrepreneurs of the Hunan Province. Thereafter, he founded Hunan Anson Bio-Technology Enterprise (group) and acted as president of the Anson Trauma and Burns Treatment center, the leading brand of nano silver antibacterial application.

 

In 2011, Mr. Huang was elected as President of the Hunan Association for Medical Devices Industry, the most authoritative and largest organization of medical equipment business organizations in the Hunan Province.

 

 

 

 

In 2012, Mr. Huang founded Bio-MD Valley Technology Co., Ltd., a company committed to constructing the central biological Silicon Valley and One-Stop venture incubator platform in medical equipment and biological technology in China. In 2013, Central Bio-MD won the key construction project award of Hunan, Changsha and Yuhua District. In 2014, he was appointed as Council member of China Glory Society, the largest charity, poverty alleviation organization in China. In 2016, he was appointed as Executive President and Executive Secretary of Zhisland Tribes of Hunan Island, China's most high-end entrepreneurial club.

 

Mr. Huang received his first degree in mathematics from Hunan Normal University earning in 1996 and second degree in computer applications from the Chinese Computer Correspondence College. In 2012, he was appointed as MBA Master Tutor for the business school of Hunan Normal University

 

Significant Employees

 

None

 

Family Relationships

 

None.

 

Involvement in Certain Legal Proceedings.

 

Our directors, executive officers and control persons have not been involved in any of the following events during the past ten years and which is material to an evaluation of the ability or the integrity of our directors or executive officers:

 

1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

 

4.

being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

5.

any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity;

 

6.

Any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; and

 

7.

Any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of Form 10-K, all current executive officers, directors and persons who beneficially own more than ten percent of our common stock are current in their Section 16(a) reporting.

 

 

 

  

Board of Directors

 

Our board of directors currently consists of four members. All directors serve for a term set to expire at the next annual meeting of stockholders of the Company or until their successors are elected and qualified.

 

Audit Committee

 

The Company does not presently have an Audit Committee. No qualified financial expert has been hired because the Company is too small to afford such expense.

 

Committees and Procedures

 

1.

The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size.

 

2.

The view of the Board of Directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the board and the company are so small.

  

3.

The members of the Board who acts as nominating committee are not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).

 

4.

The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders.

 

5.

The basis for the view of the Board of Directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company.

 

6.

The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations.

 

7.

There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background.

 

8.

The nominating committee's process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

 

Code of Ethics

 

The officers, directors and employees of the Company are held to the highest standards of honest and ethical conduct when conducting the affairs of the Company. All such individuals must act ethically at all times in connection with services provided to the Company. We have not, however, adopted a formal, written corporate code of ethics that applies to our officers, directors and employees.

 

Limitation of Liability of Directors

 

Pursuant to the Nevada Revised Statute, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director's liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

 

 

 

 

Nevada Anti-Takeover Law and Charter and By-law Provisions

 

The anti-takeover provisions of Sections 78.411 through 78.444 of the Nevada Revised Statute apply to us. Section 78.438 of the Nevada law prohibits the Company from merging with or selling more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for two years after the date on which the shareholder acquired our shares, unless the transaction is approved by our Board of Directors. The provisions also prohibit the Company from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than two years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control.

  

Director Independence

 

Our board of directors has determined that currently Michael Dunn and Jie Lai qualify as “independent” as the term is used in Item 407 of Regulation S-K as promulgated by the SEC and in the listing standards of The Nasdaq Stock Market, Inc. - Marketplace Rule 4200.

  

ITEM 11. EXECUTIVE COMPENSATION

 

(1)

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officer during the years ended February 28, 2017 in all capacities for the accounts of our named executive officers:

 

Summary Compensation Table

Stock

Option

All Other

Name and Position

Year

Salary

Bonus

Awards ($)

Awards ($)

Compensation

Total ($)

Qingxi “Sunny” Huang

2017

$

–

–

–

$

–

–

$

–

President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman(1)

2018

$

–

–

–

$

–

–

$

–

Amanda Huang

2017

$

–

–

–

$

–

–

$

–

Former Senior Vice President(2)

2018

$

26,977

–

–

$

–

–

$

–

Michael R. Dunn

2017

$

–

–

–

$

–

–

$

–

Former Officer and Director(3)

2018

$

30,000

–

–

$

–

–

$

–

Derek Yu

2017

$

–

–

–

$

–

–

Former Officer and Director(4)

2018

$

–

–

–

$

–

–

$

–

Sam (Ning) Liu

2017

$

–

–

–

$

–

–

$

–

Former Officer and Director(5)

2018

$

–

–

–

$

–

–

$

–

Jie Lai

2017

$

–

–

–

$

–

–

$

–

Former Director (6)

2018

$

–

–

–

$

–

–

$

–

_______________

(1)	Mr. Huang became a director on July 28, 2017. On November 28, 2017, he was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman.
(2)	Amanda Huang was appointed as Senior Vice President on July 28, 2017 and resigned on January 9, 2018.
(3)	Michael Dunn was appointed as a director on February 11, 2015 and as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman on June 23, 2017. Mr. Dunn passed away on November 19, 2018.
(4)	Derek Yu was appointed as a director on February 11, 2015 and as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer on January 13, 2017. On June 23, 2017, Mr. Yu resigned from all positions.
(5)	Mr. Liu was appointed on February 11, 2015 as Chief Executive Officer, President, Secretary and Chairman of the Board of Directors of the Company and resigned from all positions on January 13, 2017.
(6)	Mr. Lie was appointed on February 11, 2015 as a director and resigned on June 23, 2017.

 

 

 

 

Grants of Plan-Based Awards

 

We did not grant any plan based awards to executive officers in the year ended February 28, 2018.

 

Outstanding Equity Awards at Fiscal Year-End

 

None.

 

Option Exercises and Stock Vested

 

None.

 

Employment Agreements

 

We do not have any current employment agreements with our named executive officers.

 

Potential Payments upon Termination

 

None.

 

Compensation of Directors

 

No compensation was paid to any director (other than compensation set forth under Executive Compensation) for services rendered during the fiscal years ended February 28, 2018.

 

All directors receive reimbursement for reasonable out-of-pocket expenses in attending Board of Directors meetings and for promoting our business.

 

From time to time we may engage certain members of the Board of Directors to perform services on our behalf.  In such cases, we compensate the members for their services at rates no more favorable than could be obtained from unaffiliated parties.  

  

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 12, 2018 by the following persons:

 

·

each person who is known to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock;

 

·

each of our directors and executive officers; and

 

·

all of our directors and executive officers as a group.

 

Beneficial ownership is determined in accordance with the rules and regulations of the SEC.  The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from June 12, 2018, and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from June 12, 2018.

 

 

 

 

Name and Address of Beneficial Owner (1)		Number of Shares Beneficially Owned				Percentage of Outstanding Shares of Common Stock (2)
Qingxi “Sunny” Huang (3)			0				0.0%
All Directors and Officers as a Group			0				0.0%
Beneficial Shareholders of Common Stock greater than 5%
Central Bio-MD Valley Technology Co. Ltd.(4)			1,500,000				9.66%
China Israel Biological Technology Co. Ltd.(5)			6,632,000				42.71%
Michael Dunn (6)			3,300,000				21.25%
Amanda Huang(7)			1,018,000				6.56%

_______________

(1)	Unless otherwise stated, the address is 2 Park Plaza, Suite 400, Irvine, CA 92614.

 

(2)	Percent of Class is based on 15,526,896 shares issued and outstanding as of May 31, 2018. There are no shares of preferred stock issued and outstanding as of the date of this filing.
(3)	Qingxi Huang is current President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman of the Board. Mr. Huang’s beneficial ownership includes 0 shares of common stock directly owned and 0 shares issuable upon the exercise of stock options. Mr. Huang is an indirect beneficiary of 8,132,000 shares of common stock owned by China Israel Biotechnology Co. Ltd. and Central Bio-MD Valley Technology Co., Ltd.
(4)	Central Bio-MD Valley Technology Co., Ltd. (“CBV”), is a Chinese corporation, having an address at 21F, Hualing Building, 111 Furong Rd, Changsha, Hunan Province, China. CBV is controlled by Huang “Sunny” Qingxi. Beneficial ownership includes 1,500,000 shares of common stock issued pursuant to the SPA which closed on July 28, 2017.
(5)	China Israel Biological Technology Co. Ltd. (“CIB”), is a Chinese corporation, having an address at 21F, Hualing Building, 111 Furong Rd, Changsha, Hunan Province, China. CIB is owned 100% by Central Bio-MD Valley Technology Co., Ltd. Beneficial ownership includes 6,632,000 shares of common stock issued pursuant to the SPA which closed on July 28, 2017 and subscription for 2,000,000 common stock shares which were issued May 25, 2018.
(6)	Michael R. Dunn is the Company’s former President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman of the Board of the Company; his beneficial ownership includes 3,300,000 shares of common stock, as acquired from Goldenrise Development on July 28, 2017 and 0 shares issuable upon the exercise of stock options. Mr. Dunn passed away November 19, 2017. Mr. Dunn’s beneficial ownership is currently in probate and controlled by Andrew Dunn, as administrator of the Dunn estate.
(7)	Amanda Huang is the former Senior Vice President of the Company; her beneficial ownership includes 1,018,000 shares of common stock.

 

Changes in Control

 

As previously reported on Form 8-K/A filed August 30, 2017, on June 28, 2017, Goldenrise Development, Inc., a California corporation (“Goldenrise”) and the Company entered into a Stock Purchase Agreement (the “Dunn Agreement”) with Michael R. Dunn, the Company’s sole officer and director (the “Dunn”). Pursuant to the Dunn Agreement, Goldenrise agreed to sell and Dunn agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for the shares, the Dunn will pay to Goldenrise a total of $400,000 as follows: (i) $180,000 on or before July 15, 2017 (extended to July 28, 2017), (ii) $180,000 shall be withheld by Dunn and applied towards monies owed by Goldenrise to Dunn; and (iii) $40,000 shall be with withheld by Dunn and applied towards invoices related to the audit and legal fees associated with the reporting requirements of the Company through the date of Closing.

 

 

 

 

Concurrently, on June 28, 2017, Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., each a Chinese corporation (collectively, the “Buyers”), entered into a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, Dunn agreed to sell and Buyers agreed to purchase 6,000,000 restricted common stock shares of the Company (the “Shares”), representing approximately 46.06% of the Company’s outstanding shares of common stock. In consideration for the Shares, Buyers agreed to pay to Dunn a total of $200,000 upon execution of the SPA (the “Purchase Price”). The Closing of the SPA was extended mutually by the parties and closed on July 28, 2017.  The Purchase Price was wired directly to the Company for the benefit of Dunn.

 

The Closing of the Dunn Agreement and SPA effected a change in control of the Company. There were no arrangements or understandings among members of both the former and new control groups and their associates with respect to election of officers or other matters.

 

Other than the foregoing, we are not aware of any arrangements that may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-K.

  

Securities Authorized for Issuance Under Equity Compensation Plans. The following provides information concerning compensation plans under which our equity securities are authorized for issuance as of February 28, 2018:

 

(a)

(b)

(c)

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of Securities Remaining Available for future issuance under equity compensation plans (excluding Securities reflected in column (a))

Equity compensation plans approved by security holders

–

–

–

Equity compensation plans not approved by security holders (1)

–

$

–

131,875

Total

–

$

–

131,875

_______________

(1)

2014 Stock Incentive Plan. On January 27, 2014, our board of directors adopted the 2014 Stock Incentive Plan (“Plan”). The purpose of our Plan is to advance the best interests of the company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either stock options or compensation stock under the plan is 150,000 shares, subject to adjustment. Our board of directors administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. Any decision made, or action taken, by our board of directors arising out of or in connection with the interpretation and administration of the plan is final and conclusive. The board of directors, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the Company, and such other persons as the board of directors or compensation committee may select, and permit holders of common stock options to exercise such options prior to full vesting therein and hold the common stock issued upon exercise of the option as common stock. Stock options may also be granted by our board of directors or compensation committee to non-employee directors of the company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the Company. In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the Plan. Our board of directors may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our board of directors may deem appropriate and in our best interest. The maximum aggregate number of shares of common stock that may be issued and sold under all awards granted under the plan is 131,875 shares, and as of February 28, 2018, we have issued 18,125 shares under the Plan.  Since March 1, 2014, we have issued an aggregate 18,125 shares under the Plan.

 

 

 

  

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Director Independence

 

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of common stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Director” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

According to the NASDAQ definition, Qingxi Huang is not an independent director because he is also an executive officer of the Company..

 

Related Party Transactions

 

On June 28, 2017, Goldenrise and the Company entered into a Stock Purchase Agreement (the “Dunn Agreement”) with Michael R. Dunn, the Company’s sole officer and director (the “Dunn”). Pursuant to the Dunn Agreement, Goldenrise agreed to sell and Dunn agreed to purchase 12,000,000 restricted common stock shares of the Company, representing approximately 92.12% of the Company’s outstanding shares of common stock. In consideration for the shares, the Dunn will pay to Goldenrise a total of $400,000 as follows: (i) $180,000 on or before July 15, 2017 (extended to July 28, 2017), (ii) $180,000 shall be withheld by Dunn and applied towards monies owed by Goldenrise to Dunn; and (iii) $40,000 shall be with withheld by Dunn and applied towards invoices related to the audit and legal fees associated with the reporting requirements of the Company through the date of Closing.

 

Concurrently, on June 28, 2017, Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., each a Chinese corporation (collectively, the “Buyers”), entered into a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, Dunn agreed to sell and Buyers agreed to purchase 6,000,000 restricted common stock shares of the Company (the “Shares”), representing approximately 46.06% of the Company’s outstanding shares of common stock. In consideration for the Shares, Buyers agreed to pay to Dunn a total of $200,000 upon execution of the SPA (the “Purchase Price”). The Closing of the SPA was extended mutually by the parties and closed on July 28, 2017. The Purchase Price was wired directly to the Company for the benefit of Dunn.

 

Prior to the Closing of the Dunn Agreement with Goldenrise, on July 25, 2017, the Company entered into an unsecured promissory note with Goldenrise in the amount of $90,000 (the “Note”) (See Note 4). As such, when remitting the purchase price under the Dunn Agreement, $90,000 was wired to Goldenrise as payment under the Dunn Agreement and $90,000 remained in the Company’s account as payment from Goldenrise to the Company for the Note. The Dunn Agreement purchase price has been paid in full.

 

During the year ended February 28, 2018, the buyers funded the Company with related party notes payable of $223,694 with an interest rate of 10% per annum. As of February 28, 2018, the buyers were owed $223,695 plus accrued interest of $2,605. During the year ended February 28, 2018, the Company recorded $2,605 of interest expense towards the buyers’ related party notes payable. Subsequent to year end, the buyer’s notes payable and accrued interest were converted into shares of common stock. See Note 7 to the accompanying financial statements.

 

Other than the foregoing, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.

 

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:

 

·

Disclosing such transactions in reports where required;

 

·

Disclosing in any and all filings with the SEC, where required;

 

·

Obtaining disinterested directors consent; and

 

·

Obtaining shareholder consent where required.

 

 

 

 

Review, Approval or Ratification of Transactions with Related Persons

 

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

  

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Appointment of Auditors

 

On April 30, 2015 dbbmckennon was appointed as the Company’s independent registered public accounting firm. On September 28, 2017, dbbmckennon resigned as the registered independent registered public accountant.

 

The Company appointed TAAD LLP (“TAAD”) as the Company’s registered independent public accounting firm as of October 12, 2017. The decision to appoint TAAD was approved by the Board of Directors of the Company on October 13, 2017. TAAD was the former auditor of the Company between October 17, 2014 and April 30, 2015.

 

dbbmckennon audited the Company’s financial statements for the fiscal years ended February 28, 2017 and February 29, 2016.

 

TAAD has audited the Company’s financial statements for the fiscal year ended February 28, 2018.

 

Audit Fees

 

dbbmckennon billed us $10,000 in fees for the audit of our financial statements for the year ended February 28, 2017 and $5,000 for the review of our quarterly financials for the quarter ended May 31, 2017.

 

TAAD billed us an aggregate of $13,000 for the review of our quarterly financial statements for quarters ended August 31, 2017, November 30, 2017, and an aggregate of $9,500 for the audit of our financial statements for the year ended February 28, 2018.

 

Audit Related Fees

 

None. 

 

Tax Fees

 

We have not yet incurred tax preparation fees for the year ended February 28, 2018 which we expect will be similar to 2017. TAAD billed us an aggregate of $5,000 for tax preparation fees for our tax returns for the years ended February 28, 2017 and 2016. This amount was paid during our year ended February 28, 2018.

 

All Other Fees

 

None.

 

Pre-Approval Policies and Procedures

 

We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, our board of directors pre-approves all services to be provided by TAAD and the estimated fees related to these services.

 

 

 

 

All audit, audit related, and tax services were pre-approved by our board of directors, which concluded that the provision of such services TAAD was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. Our pre-approval policies and procedures provide for the board of directors’ pre-approval of specifically described audit, audit-related, and tax services on an annual basis, but individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policies and procedures also require specific approval by our board of directors if total fees for audit-related and tax services would exceed total fees for audit services in any fiscal year. The policies and procedures authorize the audit committee to delegate to one or more of its members pre-approval authority with respect to permitted services.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART IV

 

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

 

 

Exhibit No.		Description
3.1		Articles of Incorporation of Accend Media. (now known as Cloud Security Corp), incorporated by reference to our Registration Statement on Form S-1 filed on April 29, 2011
3.2		Bylaws, incorporated by reference to our Registration Statement on Form S-1 filed on April 29, 2011
3.3		Articles of Amendment to Articles of Incorporation, incorporated by reference to our Current Report on Form 8-K dated May 22, 2012.
3.4		Articles of Merger, incorporated by reference to our Current Report on Form 8-K dated May 22, 2012.
3.5		Articles of Merger, incorporated by reference to our Current Report on Form 8-K dated May 28, 2013.
3.5		Articles of Merger, incorporated by reference to our Current Report on Form 8-K dated May 28, 2013.
3.6		Articles of Merger, incorporated by reference to our Current Report on Form 8-K dated February 9, 2018
10.1		2014 Stock Incentive Plan, incorporated by reference to our Registration Statement on Form S-8 filed on February 20, 2014.
10.2		Stock Purchase Agreement, dated December 8, 2014 between Cloud Security Corp. and Goldenrise Development, Inc., incorporated by reference to our Current Report on Form 8-K dated December 12, 2014.
10.3		Stock Purchase Agreement, dated June 28, 2017 between Cloud Security Corp., Goldenrise Development, Inc. and Michael R. Dunn, incorporated by reference to our Current Report on Form 8-K dated June 29, 2017.
10.4		Stock Purchase Agreement dated June 28, 2017, by and between Mr. Michael R. Dunn and China Israel Biotechnology Co. Ltd. and Central Bio-MD Technology Co. Ltd., incorporated by reference to our Current Report on Form 8-K dated August 1, 2017
10.5		Subscription Agreement by and between the Company and CIB, incorporated by reference to our Current Report on Form 8-K dated May 24, 2018
10.6		Debt Settlement Agreement between the Company and CIB, incorporated by reference to our Current Report on Form 8-K dated May 24, 2018
31.1		Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer *
31.2		Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer *
32.1		Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 *
32.2		Chief Financial Officer Certification pursuant to 18 U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 *

 

101.INS		XBRL Instances Document*
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

______________

* Filed herewith

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

	US-CHINA BIOMEDICAL TECHNOLOGY, INC.
Date: June 13, 2018	/s/ Qingxi Huang
	Name: Qingxi Huang
	Title: Chief Executive Officer and President (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer)

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Title		Date
/s/ Qingxi Huang		President, Chief Executive Officer, Chief Financial Officer Secretary and Chairman of the Board		June 13, 2018
Qingxi Huang