UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended May 31, 2014
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934Commission file number 001-34274
QUALITY ONLINE EDUCATION GROUP INC.
(Exact Name of Registrant as Specified in Its Charter)
| 42-1743717 | ||
(State or Organization)Incorporation or | (I.R.S. Employer Identification No.) |
Unit 1, 60 Riviera Dr.Markham, Ontario, CanadaL3R 5M1
Phone: 647776 8618
(Registrant’sAddress of Principal Executive Offices, Zip Code & Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.0001 par value
Indicate by check mark if Changed Since Last Report)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesIndicate 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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitiondefinitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | Accelerated filer | ||
| Non-accelerated filer | Smaller reporting company | ||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by a check mark whether the registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act).
State the aggregate market value of the voting and non-voting common equity held by non-affiliates: As of most recently completed second fiscal quarter there is no active market for the registrant’s common stock.
The number of shares outstanding of each of the Issuer’s classes of common stock,issuer’s Common Stock as of the latest practicable date: Common, $.0001 par value per share; 28,212,805 outstanding as of July 21, 2014.
TABLE OF CONTENTS
i
Part I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
QUALITY ONLINE EDUCATION GROUP INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE PERIODQUARTER ENDED MAY 31, 2014 (UNAUDITED)NOV 30, 2022
QUALITY ONLINE EDUCATION GROUP INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODQUARTER ENDED 31 MAY, 2014 (UNAUDITED)
Table of Contents
| Consolidated Statement of Balance Sheet | 3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 8 |
2
May 31, 2014 | August 31, 2013 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 279,817 | $ | 164,314 | ||||
| Restricted cash | 258,892 | 129,312 | ||||||
| Accounts receivable | 770,930 | 564,773 | ||||||
| Advance to a third party | 1,460,778 | 130,835 | ||||||
| Due from a related party | - | 418,658 | ||||||
| Other receivables and prepaid expenses | 249,007 | 64,071 | ||||||
| Total current assets | 3,019,424 | 1,471,963 | ||||||
| Non-current assets | ||||||||
| Property and equipment, net | 2,018,080 | 2,088,690 | ||||||
| Equity-method investment | 360,599 | 371,096 | ||||||
| Intangible assets | 801,632 | 793,840 | ||||||
| Goodwill | 475,605 | - | ||||||
| Utility and other deposits | 40,882 | 40,288 | ||||||
| Total non-current assets | 3,696,798 | 3,293,914 | ||||||
| Total assets | $ | 6,716,222 | $ | 4,765,877 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities | ||||||||
| Bank overdraft | $ | 943,124 | $ | 744,077 | ||||
| Assets held under capital lease | 10,544 | 23,775 | ||||||
| Accrued liabilities and other payables | 284,754 | 218,242 | ||||||
| Deposit received | 74,449 | - | ||||||
| Deferred revenue | 145,118 | 145,114 | ||||||
| Income tax payable | 448,157 | 152,357 | ||||||
| Bank loans – current portion | 308,606 | 107,548 | ||||||
| Total current liabilities | 2,214,752 | 1,391,113 | ||||||
| Non-current liabilities | ||||||||
| Assets held under capital lease, net of current portion | 28,257 | 88,306 | ||||||
| Deferred revenue, net of current portion | 326,516 | 435,343 | ||||||
| Bank loans, net of current portion | 2,278,188 | 2,179,237 | ||||||
| Loan from a related party | 645,055 | 750,726 | ||||||
| Total non-current liabilities | 3,278,016 | 3,453,612 | ||||||
| Total liabilities | 5,492,768 | 4,844,725 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $0.0001 par value per share, 2,000,000 authorized, none issued and outstanding | - | - | ||||||
| Common stock, $0.0001 par value per share, 50,000,000 shares authorized, 28,191,305 shares issued and outstanding as of May 31, 2014 and 25,000,000 shares issued and outstanding as of August 31, 2013 | 2,819 | 2,500 | ||||||
| Subscription receivable | (690,521 | ) | - | |||||
| Additional paid in capital | 954,572 | (2,500 | ) | |||||
| Retained earnings | 1,115,167 | 67,868 | ||||||
| Accumulated other comprehensive loss | (6,428 | ) | (10,364 | ) | ||||
| Total ADGS Advisory, Inc. stockholders’ equity | 1,375,609 | 57,504 | ||||||
| Non-controlling interest | (152,155 | ) | (136,352 | ) | ||||
| Total equity | 1,223,454 | (78,848 | ) | |||||
| Total liabilities and stockholders’ equity | $ | 6,716,222 | $ | 4,765,877 | ||||
QUALITY ONLINE EDUCATION GROUP INC.
UNAUDITED CONSOLIDATED STATEMENT OF BALANCE SHEET
AS OF NOV 30, 2022
| UNAUDITED | AUDITED | |||||||
| 30-Nov-22 | 31-Aug-22 | |||||||
| US$ | US$ | |||||||
| Current Assets: | ||||||||
| Cash | 106,457 | 179,895 | ||||||
| Account receivables | 6,495 | 41,006 | ||||||
| Other receivables | 3,998 | - | ||||||
| Prepayments and other current assets | 9,821 | - | ||||||
| Total current assets | 126,771 | 220,901 | ||||||
| Intangible assets | 759,266 | 759,266 | ||||||
| Property, plant and equipment, net | 3,213 | 3,593 | ||||||
| Total Assets | 889,250 | 983,760 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | 162,686 | 182,096 | ||||||
| Receipt in advance | 1,806,660 | 1,400,427 | ||||||
| Third party loan payable | 63,090 | 20,194 | ||||||
| Assets acquisition payable | 111,045 | 114,408 | ||||||
| Due to related party | 197,926 | 140,764 | ||||||
| Accrued liabilities and other payable | 108,222 | 16,460 | ||||||
| Total current liabilities | 2,449,629 | 1,874,349 | ||||||
| Long-term loan | ||||||||
| Long-term accounts payable | 88,836 | 91,526 | ||||||
| Total liabilities | 2,538,465 | 1,965,875 | ||||||
| Total Equity: | ||||||||
| Share capital | ||||||||
| Preferred shares, $ par value Issued and outstanding shares - | 100 | 100 | ||||||
| Common shares, $ par value Issued and outstanding shares - | 171,119 | 170,969 | ||||||
| Exchangeable shares, $ par value Issued and outstanding shares - | 120,789 | 120,789 | ||||||
| Additional paid in capital | 7,652,022 | 7,622,202 | ||||||
| Retained Earnings | (9,604,761 | ) | (8,888,264 | ) | ||||
| Accumulated other comprehensive loss | 11,516 | (7,911 | ) | |||||
| Total stockholders’ equity | (1,649,215 | ) | (982,115 | ) | ||||
| Total liabilities and stockholders’ equity | 889,250 | 983,760 | ||||||
The accompany notes to condensed consolidated financial statements (unaudited).
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| May 31, | May 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (A) | (A) | |||||||||||||||
| Revenue | $ | 1,479,606 | $ | 889,591 | $ | 4,080,884 | $ | 2,795,225 | ||||||||
| Direct cost of revenue | (717,283 | ) | (546,615 | ) | (1,849,110 | ) | (1,513,654 | ) | ||||||||
| Gross profit | 762,323 | 342,976 | 2,231,774 | 1,281,571 | ||||||||||||
| General and administrative expenses | (251,312 | ) | (178,974 | ) | (853,046 | ) | (665,329 | ) | ||||||||
| Operating income | 511,011 | 164,002 | 1,378,728 | 616,242 | ||||||||||||
| Other income | 12,581 | 2,579 | 14,450 | 2,579 | ||||||||||||
| Interest expenses | (36,270 | ) | (36,247 | ) | (91,467 | ) | (99,022 | ) | ||||||||
| Profit before income taxes | 487,322 | 130,334 | 1,301,711 | 519,799 | ||||||||||||
| Less: Income tax expense | (185,234 | ) | (39,022 | ) | (270,214 | ) | (82,010 | ) | ||||||||
| Net profit before allocation of non-controlling interest | $ | 302,088 | $ | 91,312 | $ | 1,031,497 | $ | 437,789 | ||||||||
| Net loss attributable to non-controlling interest | 4,868 | 5,676 | 15,802 | 17,021 | ||||||||||||
| Net income attributable to common stockholders | $ | 306,956 | $ | 96,988 | $ | 1,047,299 | $ | 454,810 | ||||||||
| Earnings per share | ||||||||||||||||
| - Basic and diluted | $ | 0.01 | $ | 0.00 | $ | 0.04 | $ | 0.02 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| - Basic and diluted | 26,964,925 | 25,000,000 | 25,662,172 | 25,000,000 | ||||||||||||
For the Three Months Ended May 31, | For the Nine Months Ended May 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (A) | (A) | |||||||||||||||
| Net income | $ | 302,088 | $ | 91,312 | $ | 1,031,497 | $ | 437,789 | ||||||||
| Other comprehensive income/(loss) | ||||||||||||||||
| Foreign currency translation adjustment | 2,663 | (99 | ) | 3,935 | (219 | ) | ||||||||||
| Add: Comprehensive loss attributable to non-controlling interests | 4,868 | 5,676 | 15,803 | 17,021 | ||||||||||||
| Comprehensive income attributable to ADGS Advisory, Inc. | $ | 309,619 | $ | 96,889 | $ | 1,051,235 | $ | 454,591 | ||||||||
Preferred shares with US$0.0001 Par Value | Common Stock, with US$0.0001 Par Value | Additional paid-in | Accumulated Other | Non- | ||||||||||||||||||||||||||||||||||||
| Number of | Number of | capital | Subscription | Comprehensive | Retained | controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | receivable | (loss)/income | Earnings | Interest | Equity | |||||||||||||||||||||||||||||||
| Balance as of August 31, 2013 | - | - | 25,000,000 | $ | 2,500 | $ | (2,500 | ) | $ | - | $ | (10,364 | ) | $ | 67,868 | $ | (136,352 | ) | $ | (78,848 | ) | |||||||||||||||||||
| Common stock issued | - | - | 3,191,305 | 319 | 957,072 | (690,521 | ) | - | - | - | 266,870 | |||||||||||||||||||||||||||||
| Net profit/(loss) | - | - | - | - | - | - | - | 1,047,299 | (15,802 | ) | 1,031,497 | |||||||||||||||||||||||||||||
| Foreign translation gain/(loss) | - | - | - | - | - | - | 3,936 | - | (1 | ) | 3,935 | |||||||||||||||||||||||||||||
| Balance as of May 31, 2014 | - | - | 28,191,305 | $ | 2,819 | $ | 954,572 | $ | (690,521 | ) | $ | (6,428 | ) | $ | 1,115,167 | $ | (152,155 | ) | $ | 1,223,454 | ||||||||||||||||||||
For the Nine Months Ended May 31, | ||||||||
| 2014 | 2013 | |||||||
| (A) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 1,047,299 | $ | 454,591 | ||||
| Add: Net loss attributable to non-controlling interest | (15,802 | ) | (17,021 | ) | ||||
| 1,031,497 | 437,570 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation of property and equipment | 85,199 | 27,791 | ||||||
| Amortization of intangible assets | 146,998 | 134,626 | ||||||
| Loss on equity-method investment | 8,182 | 8,137 | ||||||
| Gain on disposal of fixed assets | (10,803 | ) | - | |||||
| Changes in assets and liabilities: | ||||||||
| Account receivables | (206,072 | ) | (373,137 | ) | ||||
| Other receivables | 48,731 | - | ||||||
| Utility and other deposits | (593 | ) | 718 | |||||
| Prepaid expenses | (156,322 | ) | (45,167 | ) | ||||
| Deposit received | 74,423 | - | ||||||
| Accrued liabilities | 66,483 | 130,395 | ||||||
| Temporary receipts | - | 186,366 | ||||||
| Income tax payable | 295,693 | 82,008 | ||||||
| Deferred revenue | (108,801 | ) | - | |||||
| Net cash provided by operating activities | 1,274,615 | 589,307 | ||||||
| Cash flows from investing activities: | ||||||||
| Cash paid for property and equipment | (62,746 | ) | (133,376 | ) | ||||
| Sale proceeds of property and equipment | 58,957 | - | ||||||
| Advances to a third party | (1,406,755 | ) | - | |||||
| Net increase in restricted cash | (129,531 | ) | (128,546 | ) | ||||
| Acquisition of an intangible asset, net of cash acquired | (154,789 | ) | - | |||||
| Acquisition of a subsidiary, net of cash acquired | (475,605 | ) | (574,429 | ) | ||||
| Net cash used in investing activities | (2,170,469 | ) | (836,351 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issue of stock | 266,870 | - | ||||||
| Repayment of loan from a related party | (105,690 | ) | - | |||||
| Advances made on behalf of a related party | - | (4,012,216 | ) | |||||
| Proceeds from repayment of advances made on behalf of a related party | 418,621 | 2,400,236 | ||||||
| Proceeds from bank loans | 1,343,246 | 1,223,187 | ||||||
| Repayment of bank loans | (1,043,427 | ) | (138,232 | ) | ||||
| Proceeds from capital lease | - | 125,250 | ||||||
| Repayment of capital lease | (73,282 | ) | (22,696 | ) | ||||
| Net increase in bank overdraft | 198,958 | 620,761 | ||||||
| Net cash provided by financing activities | 1,005,296 | 196,290 | ||||||
| Net increase/(decrease) in cash | 109,442 | (50,754 | ) | |||||
| Effect on change of exchange rates on cash | 6,061 | 212 | ||||||
| Cash as of Beginning of period | 164,314 | 129,001 | ||||||
| Cash as of End of period | $ | 279,817 | $ | 78,459 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Capital lease additions | $ | - | $ | 125,250 | ||||
| Bank loan interest paid | $ | 49,138 | $ | 26,685 | ||||
| Capital lease interest paid | $ | 4,693 | $ | 1,113 | ||||
3
QUALITY ONLINE EDUCATION GROUP INC.
UNAUDITED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR QUARTER ENDED NOV 30, 2022
| UNAUDITED | UNAUDITED | |||||||
| Three Months Ended | ||||||||
| 30-Nov-22 | 30-Nov-21 | |||||||
| US$ | US$ | |||||||
| Revenues | 653,924 | 212,517 | ||||||
| Total Revenues | 653,924 | 212,517 | ||||||
| Cost of Revenue | 204,958 | 101,248 | ||||||
| Total Cost of Revenues | 204,958 | 101,248 | ||||||
| Gross Profit (Loss) | 448,966 | 111,269 | ||||||
| Operating expenses: | ||||||||
| Advertising & Marketing | 11,338 | 29,703 | ||||||
| Depreciation | 379 | 1,191 | ||||||
| Commission | 185,086 | - | ||||||
| Business consulting | 834,457 | 1,806,984 | ||||||
| Legal & Professional fees | 50,143 | 36,824 | ||||||
| General & Administrative expenses | 39,360 | 18,653 | ||||||
| Payroll & Benefits | 44,700 | 20,289 | ||||||
| Total operating expenses | 1,165,463 | 1,913,644 | ||||||
| Income from Operations | (716,497 | ) | (1,802,375 | ) | ||||
| Income before income taxes | (716,497 | ) | (1,802,375 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Income (loss) | (716,497 | ) | (1,802,375 | ) | ||||
| Foreign currency translation adjustment | - | - | ||||||
| Comprehensive income | (716,497 | ) | (1,802,375 | ) | ||||
| Earning/(loss) per share - Basic | 0.00 | 0.00 | ||||||
| Earning/(loss) per share - Diluted | 0.00 | 0.00 | ||||||
The accompany notes are as follows:an integral part of these consolidated financial statements
4
QUALITY ONLINE EDUCATION GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR QUARTER ENDED NOV 30, 2022
| Preferred Stock | Exchangeable Shares | Common Stock | Additional | Foreign currency | ||||||||||||||||||||||||||||||||||||
| Shares (‘000) | Amount $ | Shares (‘000) | Amount $ | Shares (‘000) | Amount $ | Paid in Capital | Retained Earnings | translation gain | Total | |||||||||||||||||||||||||||||||
| Balance at AUG 31, 2021 | 1,000 | 100 | 1,174,848 | 117,485 | 1,654,508 | 161,530 | $ | 5,442,572 | $ | (6,146,744 | ) | $ | (4,028 | ) | $ | (429,085 | ) | |||||||||||||||||||||||
| Effect on VIE termination | 1,048,891 | (98,326 | ) | 950,565 | ||||||||||||||||||||||||||||||||||||
| Shares issuance | 73,587 | 7,359 | 7,359 | |||||||||||||||||||||||||||||||||||||
| Capital in excess of par value | 1,464,376 | 1,464,376 | ||||||||||||||||||||||||||||||||||||||
| Net loss for the period | (1,802,375 | ) | (1,802,375 | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | - | - | - | 8,849 | 8,849 | ||||||||||||||||||||||||||||||
| Balance at NOV 30, 2021 | 1,000 | 100 | 1,174,848 | 117,485 | 1,728,095 | 168,889 | $ | 6,906,948 | $ | (6,900,228 | ) | $ | (93,505 | ) | $ | 199,689 | ||||||||||||||||||||||||
| Balance at AUG 31, 2022 | 1,000 | 100 | 1,207,885 | 120,789 | 1,749,903 | 170,969 | $ | 7,622,202 | $ | (8,888,264 | ) | $ | (7,911 | ) | $ | (982,115 | ) | |||||||||||||||||||||||
| Shares issuance | 1,500 | 150 | 150 | |||||||||||||||||||||||||||||||||||||
| Capital in excess of par value | 29,820 | 29,820 | ||||||||||||||||||||||||||||||||||||||
| Net loss for the period | (716,497 | ) | (716,497 | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | - | - | - | 19,427 | 19,427 | ||||||||||||||||||||||||||||||
| Balance at NOV 30, 2022 | 1,000 | 100 | 1,207,885 | 120,789 | 1,751,403 | 171,119 | $ | 7,652,022 | $ | (9,604,761 | ) | $ | 11,516 | $ | (1,649,215 | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
QUALITY ONLINE EDUCATION GROUP INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW
FOR QUARTER ENDED NOV 30, 2022
| UNAUDITED | UNAUDITED | |||||||
| Three Months Ended | ||||||||
| 30-Nov-22 | 30-Nov-21 | |||||||
| US$ | US$ | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | (716,497 | ) | (1,802,375 | ) | ||||
| Net income from continuing operations | ||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 380 | 1,552 | ||||||
| Stock-based compensation | - | 1,471,735 | ||||||
| Accounts receivable & other receivable | 36,637 | (192,756 | ) | |||||
| Prepayments and other assets | (9,821 | ) | 9,817 | |||||
| Accounts payables | (28,224 | ) | 275,107 | |||||
| Accrued expenses and other liabilities | 91,762 | 20,513 | ||||||
| Advanced from customers | 406,233 | 244,371 | ||||||
| Net cash provided by (used in) operating activities | (219,530 | ) | 27,964 | |||||
| Cash flows from investing activities: | ||||||||
| Additions to property, plant and equipment | - | - | ||||||
| Additions to intangible assets | - | - | ||||||
| Net cash provided (used in) investing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Due to related party | 57,162 | 14,021 | ||||||
| Proceeds from third party loan | 39,533 | (2,279 | ) | |||||
| Share subscriptions | 29,970 | - | ||||||
| Net cash provided (used in) financing activities | 126,665 | 11,742 | ||||||
| Effect of exchange rate changes on cash | 19,427 | 8,849 | ||||||
| Net increase in cash | (73,438 | ) | 48,555 | |||||
| Cash, beginning of period | 179,895 | 39,128 | ||||||
| Cash, end of period | 106,457 | 87,683 | ||||||
The Company also operates branches in Shenzhen, PRC and Bangkok, Thailand, The branchesaccompany notes are set up to attract potential clients to establish companies in Hong Kong. A full rangean integral part of services could be provided to these clients.
QUALITY ONLINE EDUCATION GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR QUARTER ENDED NOVEMBER 30, 2022
NOTE 1 NATURE OF BUSINESS
Quality Online Education Group Inc. (QOEG) is a leading E-learning company which provides comprehensive online lessons to twelve investors for the purchase of shares of Common Stockstudents in different parts of the Company at $0.30 eachworld. It locates in Toronto of Canada and has one wholly owned subsidiary company: Golden Bridge Human Resources Consulting Inc., an Ontario, Canada, based company provides tutoring services and courseware development services.
We are the pioneer and leader of providing real-time online small group classes. We deliver quality education to students and noticeable results from our passionate teachers and teaching assistants. With our Artificial Intelligent system, we combined Education and Entertainment (Edu-tertainment) in part of the learning. It is our mission to develop confidence in our students so they can reach their goals with total proceedshappiness and efficiency! The main business scope of $420,000. On April 15, 2014, another 1,290,000 shares of Common Stock at $0.30 each were issuedthe Group includes K12 English Online education services, courseware development and Education-technology platform development.
NOTE 2 GOING CONCERN
The Company’s ability to one shareholder with proceed of $387,000. Further 591,305 shares of Common Stock at $0.30 each were issuedcontinue operating as a “going concern” is dependent on its ability to another nine shareholders on April 29, 2014, with proceed of $177,392. Subsequentincrease revenues and raise sufficient additional working capital. These matters raise substantial doubt about the Company’s ability to the period ended May 31, 2014, 21,500 shares of Common Stock at $0.30 each were issued to one shareholder on June 30, 2014. As of May 31, 2014, there was $690,521 of proceed not yet received from the shareholders.
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements for any interim periods are not necessarily indicativeinclude the accounts of the results that may be reported for the entire year. The accompanying consolidated financial statementsQOEG and its subsidiaries and have been prepared in accordance with the rulesgenerally accepted accounting principles (“GAAP”). All material inter-company accounts and regulationstransactions have been eliminated in consolidation.
Use of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentationEstimates:
The preparation of financial statements in conformity with generally accepted accounting principles generally acceptedrequires management to make estimates and assumptions that affect the amounts reported in the United States. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes of the Company for the year ended August 31, 2013, as filed in Form 10-K with the Securities and Exchange Commission on December 24, 2013.
Financial Statements in U.S. dollars:
The reporting currency of significant accounting policies (…/Cont’d)
Cash and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’ equity section of the balance sheets. The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:
| May 31, | May 31, | |||
| 2014 | 2013 | |||
| (Unaudited) | (Unaudited) | |||
| Items in statements of income and cash flows for the three months ended | HK$7.7558=$1 | HK$7.7991=$1 | ||
| Items in statements of income and cash flows for the nine months ended | HK$7.7553=$1 | HK$7.7993=$1 | ||
The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.
Revenue Recognition:
The Company entered into a contractrecognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services rendered, the sales price of fee is fixed or determinable, and its collectability is reasonably assured.
7
Stock based compensation:
The Company records stock-based compensation in accordance with a third party to provide corporate advisory and consulting services. The agreement has a fixed term of four years, and is renewable upon maturity. These fees are deferred and are amortized to income as earned over the term ofASC 718 “Shares-Based Compensation” FASB Accounting Standards Classification using the agreement. Deferred revenue that will be recognized in next fiscal year is classified within current liabilities.
Foreign Currency:
The Company translates the financial statements of our foreign subsidiaries from the local (functional) currencies to U.S. dollars. The rates of exchange at each fiscal year end are used for translating the assets and liabilities and the average monthly rates of exchange for each year are used for the consolidated statements of operations and comprehensive loss. Gains or losses resulting from investee capital transactions, adjustmentsthe translation of the foreign subsidiaries’ financial statements are included in the accompany consolidated balance sheets as a separate component of stockholder’s equity.
NOTE 4: STOCKHOLDERS’ EQUITY COMMON STOCK
After the acquisition and merger on Aug 31,2020, the management had canceled the original common stock of the Company and authorized new share capital. It consists of shares of common stock of which shares were outstanding as of Aug 31, 2020 and were free trading. On October 7, 2020, the Company announced to recognize certain differences betweenincrease the number of authorized common shares to , up to 3 billion of which will be reserved in order to enact the Merger Agreement. The remainder of the increase will be reserved to fund potential new product line development, market expansion, and any further mergers and acquisitions as such opportunities arise. At the same time, an exchangeable shares structure will be used to finalize the current acquisition of QOEG.
Pursuant to the Share Exchange Agreement dated Aug 31, 2020, ADGS Advisory, Inc. (previous name before name change in May 2021) and QOEG started to exchange shares. As of Nov 30, 2022, there were QOEG exchangeable shares that have not been exchanged to QOEG common shares. QOEG has common shares and preferred shares authorized. Among those shares, QOEG common shares and QOEG preferred shares were issued and outstanding.
NOTE 5: INCOME TAXES
The net operating loss carryovers may be subject to limitation under Internal Revenue Code due to significant changes in the Company’s carrying value andownership. The Company has provided a full valuation allowance against the Company’s equity in net assetsfull amount of the investee atnet operating loss benefit, since, in the dateopinion of investment, impairments, and other adjustments required bymanagement, based upon the equity method. Gain or losses are realized when such investments are sold.
NOTE 6: LOAN FROM SHAREHOLDERS
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU 2010-06” “Fair Value Measurements and Disclosures”. The new guidance clarifies two existing disclosure requirements and requires two new disclosures as follows: (1) a “gross” presentation of activities (purchases, sales, and settlements) within the Level 3 rollforward reconciliation, which will replace the “net” presentation format; and (2) detailed disclosures about the transfers in and out of Level 1 and 2 measurements. This guidance is effective for the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 rollforward information, which is required for annual reporting periods beginning after December 15, 2010, and for interim reporting periods thereafter. The Company adopted the amended fair value disclosures guidance on January 1, 2012. As of May 31, 2014 and August 31, 2013, nonesupport of the Company’s financial assets or liabilities were measured at fair valueefforts and cash requirements, it may rely on a recurring basis. As of May 31, 2014 and August 31, 2013, none of the Company’s non-financial assets or liabilities was measured at fair value on a nonrecurring basis.
NOTE 7: COMMITMENTS AND CONTINGENCIES
The Company has three (3) reportable business segments: accounting and corporate services, corporate restructuring and insolvency and multi-disciplinary advisory. The Company evaluates performance based on net operating profit. Administrative functions are centralized however, where applicable, portions of the administrative function expenses are allocated between the operating segments. In the event any services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The administrative expenses are captured discretely within each segment. The Company’s property and equipment, and accounts receivable are captured and reported discretely within each operating segment.
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Three months ended May 31, 2014 | ||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Revenue from external Customer | $ | 677,061 | $ | 38,439 | $ | 764,106 | $ | - | $ | 1,479,606 | ||||||||||
| Direct cost of revenue | (222,929 | ) | (168,894 | ) | (368,009 | ) | 42,549 | (717,283 | ) | |||||||||||
| Administrative expense | (114,999 | ) | (6,529 | ) | (129,784 | ) | - | (251,312 | ) | |||||||||||
| Gross profit/(loss) | 339,133 | (136,984 | ) | 266,313 | 42,549 | 511,011 | ||||||||||||||
| Other income | 5,757 | 327 | 6,497 | - | 12,581 | |||||||||||||||
| Finance cost | (16,597 | ) | (942 | ) | (18,731 | ) | - | (36,270 | ) | |||||||||||
| Income/(loss) before income taxes | 328,293 | (137,599 | ) | 254,079 | 42,549 | 487,322 | ||||||||||||||
| Income tax | (84,762 | ) | (4,812 | ) | (95,660 | ) | - | (185,234 | ) | |||||||||||
| Net income/(loss) | $ | 243,531 | $ | (142,411 | ) | $ | 158,419 | $ | 42,549 | $ | 302,088 | |||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Total assets | $ | 1,729,640 | $ | 101,631 | $ | 2,498,838 | $ | 2,386,113 | $ | 6,716,222 | ||||||||||
| Total liabilities | $ | 1,968,347 | $ | 111,433 | $ | 2,204,694 | $ | 1,208,294 | $ | 5,492,768 | ||||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Three months ended May 31, 2013 | ||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Revenue from external customer | $ | 583,605 | $ | 69,454 | $ | 236,532 | $ | - | $ | 889,591 | ||||||||||
| Direct cost of revenue | (230,124 | ) | (250,838 | ) | (65,653 | ) | - | (546,615 | ) | |||||||||||
| Administrative expense | (117,414 | ) | (13,973 | ) | (47,587 | ) | - | (178,974 | ) | |||||||||||
| Gross profit | 236,067 | (195,357 | ) | 123,292 | - | 164,002 | ||||||||||||||
| Other income | 1,692 | 201 | 686 | - | 2,579 | |||||||||||||||
| Finance cost | (23,779 | ) | (2,830 | ) | (9,638 | ) | - | (36,247 | ) | |||||||||||
| Income before income taxes | 213,980 | (197,986 | ) | 114,340 | - | 130,334 | ||||||||||||||
| Income tax | (25,600 | ) | (3,046 | ) | (10,376 | ) | - | (39,022 | ) | |||||||||||
| Net income | $ | 188,380 | $ | (201,032 | ) | $ | 103,964 | $ | - | $ | 91,312 | |||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Total assets | $ | 3,387,689 | $ | 311,848 | $ | 816,986 | $ | 893 | $ | 4,517,416 | ||||||||||
| Total liabilities | $ | 3,111,605 | $ | 287,998 | $ | 1,350,166 | $ | 23,337 | $ | 4,773,106 | ||||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Nine months ended May 31, 2014 | ||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Revenue from external customer | $ | 1,407,278 | $ | 89,129 | $ | 2,584,477 | $ | - | $ | 4,080,884 | ||||||||||
| Direct cost of revenue | (551,706 | ) | (231,225 | ) | (1,108,728 | ) | 42,549 | (1,849,110 | ) | |||||||||||
| Administrative expense | (298,088 | ) | (18,254 | ) | (536,704 | ) | - | (853,046 | ) | |||||||||||
| Gross profit/(loss) | 557,484 | (160,350 | ) | 939,045 | 42,549 | 1,378,728 | ||||||||||||||
| Other income | - | 1,091 | 13,359 | - | 14,450 | |||||||||||||||
| Finance cost | (31,409 | ) | (2,047 | ) | (58,011 | ) | - | (91,467 | ) | |||||||||||
| Income/(loss) before income taxes | 526,075 | (161,306 | ) | 894,393 | 42,549 | 1,301,711 | ||||||||||||||
| Income tax | (108,816 | ) | (6,403 | ) | (154,995 | ) | - | (270,214 | ) | |||||||||||
| Net income/(loss) | $ | 417,259 | $ | (167,709 | ) | $ | 739,398 | $ | 42,549 | $ | 1,031,497 | |||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Total assets | $ | 1,729,640 | $ | 101,631 | $ | 2,498,838 | $ | 2,386,113 | $ | 6,716,222 | ||||||||||
| Total liabilities | $ | 1,968,347 | $ | 111,433 | $ | 2,204,694 | $ | 1,208,294 | $ | 5,492,768 | ||||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Nine months ended May 31, 2013 | ||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Revenue from external customer | $ | 1,121,233 | $ | 1,150,511 | $ | 523,481 | $ | - | $ | 2,795,225 | ||||||||||
| Direct cost of revenue | (508,172 | ) | (849,477 | ) | (156,005 | ) | - | (1,513,654 | ) | |||||||||||
| Administrative expense | (269,778 | ) | (276,981 | ) | (118,570 | ) | - | (665,329 | ) | |||||||||||
| Gross profit | 343,283 | 24,053 | 248,906 | - | 616,242 | |||||||||||||||
| Other income | 1,692 | 201 | 686 | - | 2,579 | |||||||||||||||
| Finance cost | (44,072 | ) | (36,243 | ) | (18,707 | ) | - | (99,022 | ) | |||||||||||
| Income/(loss) before income taxes | 300,903 | (11,989 | ) | 230,885 | - | 519,799 | ||||||||||||||
| Income tax | (33,928 | ) | (30,669 | ) | (17,413 | ) | - | (82,010 | ) | |||||||||||
| Net income | $ | 266,975 | $ | (42,658 | ) | $ | 213,472 | $ | - | $ | 437,789 | |||||||||
Accounting & Corporate Services | Corporate Restructuring & Insolvency | Multi-Disciplinary Advisory | Corporate & Other Income | Total | ||||||||||||||||
| Total assets | $ | 3,387,689 | $ | 311,848 | $ | 816,986 | $ | 893 | $ | 4,517,416 | ||||||||||
| Total liabilities | $ | 3,111,605 | $ | 287,998 | $ | 1,350,166 | $ | 23,337 | $ | 4,773,106 | ||||||||||
| Assets/(liabilities) | ||||
| Cash | $ | 16,189 | ||
| Account receivables | 89,685 | |||
| Accrual and other payables | (17,544 | ) | ||
| Tax payables | (25,469 | ) | ||
| Due to a related party | (22,504 | ) | ||
| Goodwill | 475,605 | |||
| Consideration | $ | 515,962 | ||
| Revenue | $ | 53,767 | ||
| Expenses | (43,551 | ) | ||
| Net income attributable to T H Strategic | $ | 10,216 |
Pro Forma Consolidated For the nine month period Ended May 31, 2014 | Pro Forma Consolidated For the nine month period Ended May 31, 2013 | |||||||
| Revenue | $ | 237,951 | $ | 217,271 | ||||
| Expenses | (133,816 | ) | (189,356 | ) | ||||
| Pro Forma Net Income Attributable To Ordinary Shareholders | $ | 104,135 | $ | 27,915 | ||||
| Pro Forma Net Income Per Share | ||||||||
| Basic | $ | 0.004 | $ | 0.001 | ||||
| Diluted | $ | 0.004 | $ | 0.001 | ||||
| Weighted average shares outstanding | ||||||||
| Basic | 25,662,172 | 25,000,000 | ||||||
| Diluted | 25,662,172 | 25,000,000 | ||||||
| May 31, | August 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| Bank balances and cash | $ | 279,817 | $ | 164,314 | ||||
Period Ended May 31, 2014 | ||||
| (Unaudited) | ||||
| Balance due at September 1, 2013 | $ | 418,658 | ||
| Amount repaid during the period | (418,621 | ) | ||
| Foreign currency translation adjustment | (37 | ) | ||
| Balance due at May 31, 2014 | $ | - | ||
Year Ended August 31, 2013 | ||||
| Balance due at September 1, 2012 | $ | 241,036 | ||
| Amount advanced during the year | 4,831,702 | |||
| Amount repaid during the year | (4,655,559 | ) | ||
| Foreign currency translation adjustment | 1,479 | |||
| Balance due at August 31, 2013 | $ | 418,658 | ||
| May 31, | August 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| Investment property | $ | 1,909,062 | $ | 1,909,062 | ||||
| Leasehold improvement | 134,005 | 85,345 | ||||||
| Furniture and fixtures | 5,632 | 5,632 | ||||||
| Office equipment | 6,730 | 6,730 | ||||||
| Motor vehicle | 87,267 | 145,407 | ||||||
| 2,142,696 | 2,152,176 | |||||||
| Less: Accumulated depreciation | (124,616 | ) | (63,486 | ) | ||||
| $ | 2,018,080 | $ | 2,088,690 | |||||
| Amount | ||||
| Year ending August 31, | ||||
| 2014 (Three months) | $ | 2,918 | ||
| 2015 | 11,673 | |||
| 2016 | 11,673 | |||
| 2017 | 11,673 | |||
| 2018 | 2,918 | |||
| Thereafter | - | |||
| Total minimum lease payment | 40,855 | |||
| Less: Imputed interest | (2,054 | ) | ||
| Present value of net minimum lease payments | 38,801 | |||
| Less: Current maturities of capital leases obligations | (10,544 | ) | ||
| Long-term capital leases obligations | $ | 28,257 | ||
| Client list 1 | Client list 2 | Client list 3 | Total | |||||||||||||
| Amortized intangible assets: | ||||||||||||||||
| Gross carrying amounts | ||||||||||||||||
| Balance as of August 31, 2013 | $ | 769,251 | $ | 1,025,667 | $ | - | $ | 1,794,918 | ||||||||
| Acquisition | - | - | 154,789 | 154,789 | ||||||||||||
| Balance as of May 31, 2014 | 769,251 | 1,025,667 | 154,789 | 1,949,707 | ||||||||||||
| Accumulated amortization | ||||||||||||||||
| Balance as of August 31, 2013 | 179,949 | 821,128 | - | 1,001,077 | ||||||||||||
| Amortization expenses | 58,025 | 77,368 | 11,605 | 146,998 | ||||||||||||
| Balance as of May 31, 2014 | 237,974 | 898,496 | 11,605 | 1,148,075 | ||||||||||||
| Total amortized intangible assets | $ | 531,277 | 127,171 | $ | 143,184 | 801,632 | ||||||||||
| Amount | ||||
| Year ending August 31, | ||||
| 2014 (Three months) | $ | 49,018 | ||
| 2015 | 194,248 | |||
| 2016 | 92,876 | |||
| 2017 | 92,876 | |||
| 2018 | 92,876 | |||
| Thereafter | 279,738 | |||
| $ | 801,632 | |||
For the Three months ended May 31, | For the Nine months ended May 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Income before tax | $ | 487,322 | $ | 130,334 | $ | 1,301,711 | $ | 519,799 | ||||||||
Expected Hong Kong income tax expense at statutory tax rate of 16.5% | $ | 80,408 | $ | 21,505 | $ | 214,782 | $ | 85,766 | ||||||||
| Tax effect of expenses not deductible for tax purpose | 18,254 | 20,038 | 60,108 | 31,913 | ||||||||||||
| Tax effect of income not taxable for tax purpose | (1,783 | ) | - | (1,783 | ) | - | ||||||||||
| Tax effect of tax losses not recognised | (916 | ) | (2,060 | ) | (2,748 | ) | (6,808 | ) | ||||||||
| Tax effect of temporary differences not recognised | 89,271 | (461 | ) | (5,973 | ) | (28,861 | ) | |||||||||
| Unrealised tax loss | - | - | 5,828 | - | ||||||||||||
| Actual income tax expense | $ | 185,234 | $ | 39,022 | $ | 270,214 | $ | 82,010 | ||||||||
8
May 31, 2014 | August 31, 2013 | |||||||
| (Unaudited) | ||||||||
| Year ending August 31, | ||||||||
| 2014 (Three months) | $ | 78,002 | $ | 107,548 | ||||
| 2015 | 284,073 | 114,303 | ||||||
| 2016 | 187,759 | 118,253 | ||||||
| 2017 | 153,681 | 90,382 | ||||||
| 2018 | 142,108 | 79,363 | ||||||
| Thereafter | 1,741,171 | 1,776,936 | ||||||
| $ | 2,586,794 | $ | 2,286,785 | |||||
May 31, 2014 | August 31, 2013 | |||||||
| (Unaudited) | ||||||||
| Deferred revenue – current portion | $ | 145,118 | $ | 145,114 | ||||
| Deferred revenue – net of current portion | 326,516 | 435,343 | ||||||
| $ | 471,634 | $ | 580,457 | |||||
| Revenue | ||||
| Year Ending August 31, | ||||
| 2014 (Three months) | $ | 36,280 | ||
| 2015 | 145,118 | |||
| 2016 | 145,118 | |||
| 2017 | 145,118 | |||
| Over five years | - | |||
| $ | 471,634 | |||
For the three months ended May 31, 2014 | For the three months ended May 31, 2013 | For the nine months ended May 31, 2014 | For the nine months ended May 31, 2013 | |||||||||||||
| Revenue:- | ||||||||||||||||
| Accounting & corporate services | $ | 35,761 | $ | 21,156 | $ | 227,503 | $ | 62,801 | ||||||||
| Corporate restructuring & insolvency | 1,558 | - | 1,558 | - | ||||||||||||
| Corporate & Other Income | 65,035 | - | 50,014 | - | ||||||||||||
| Multi-disciplinary Advisory | 396,130 | - | 1,345,225 | - | ||||||||||||
| $ | 498,484 | $ | 21,156 | $ | 1,624,300 | $ | 62,801 | |||||||||
| Direct cost of revenue:- | ||||||||||||||||
| Accounting & corporate services | $ | 7,980 | - | $ | 19,183 | - | ||||||||||
| Corporate restructuring & insolvency | 21,274 | - | 63,828 | - | ||||||||||||
| Multi-Disciplinary Advisory | 49,253 | - | 51,831 | - | ||||||||||||
| $ | 78,507 | $ | - | $ | 134,842 | $ | - | |||||||||
| Year Ending August 31, | Rental | |||
| 2014 (Three months) | $ | 32,263 | ||
| 2015 | 94,208 | |||
| Over five years | - | |||
| $ | 126,471 | |||
May 31, 2014 | August 31, 2013 | |||||||
| Assets | ||||||||
| Investment in subsidiary | $ | 1,414,116 | $ | 66,533 | ||||
| Total assets | $ | 1,414,116 | $ | 66,533 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities | ||||||||
| Accrued expenses | $ | 38,507 | $ | 9,029 | ||||
| Total current liabilities | 38,507 | 9,029 | ||||||
| Total liabilities | 38,507 | 9,029 | ||||||
| Total equity and due from shareholders | 1,375,609 | 57,504 | ||||||
| Total liabilities and stockholders' equity | $ | 1,414,116 | $ | 66,533 | ||||
| For the nine months period ended May 31, 2014 | For the nine months period ended May 31, 2013 | |||||||
| General and administrative expenses | $ | (29,877 | ) | $ | (2,727 | ) | ||
| Equity in income of subsidiary | 1,061,374 | 440,516 | ||||||
| $ | 1,031,497 | $ | 437,789 | |||||
ITEM 2. Management’s DiscussionMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and Analysis of Financial Condition and Results of Operations.
Safe Harbor for Forward-Looking Statements
Certain statements included in this MD&A constitute forward-looking statements. These statements, involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or impliedincluding those identified by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would”expressions anticipate, believe, plan, estimate, expect, intend, and similar expressions intended to identifythe extent they relate to Quality Online Education Group Inc. (ticker symbol: QOEG) or its management. These forward-looking statements. Forward-looking statements are not facts, promises, or guarantees; rather, they reflect our current views with respect toexpectations regarding future events and are based on assumptions andresults or events. These forward-looking statements are subject to risks and uncertainties. Given these uncertainties youthat could cause actual results, activities, performance, or events to differ materially from current expectations. These include risks related to revenue growth, operating results, industry, products, and litigation, as well as the matters discussed in QOEG’s MD&A under Risk Factors. Readers should not place undue reliance on any such forward-looking statements. Also, forward-lookingQOEG disclaims any obligation to publicly update or to revise any such statements represent our estimates and assumptions only as ofto reflect any change in the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future resultsCompany’s expectations or in events, conditions, or circumstances on which any such statements may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly,based, or to updatethat may affect the reasonslikelihood that actual results couldwill differ materially from those anticipated in any forward-looking statements, even if new information becomes availableset forth in the future.
The following discussion of our common stock, representing in the aggregate approximately 80.1%financial condition and results of our issued and outstanding shares of common stock.
Liquidity, Capital Resources and Plan of revenuesOperations
Going Concern
Our financial statements appearing elsewhere in this offering circular have been prepared on a going concern basis, which contemplates the realization of assets and expenses during the years. Significant items subjectsatisfaction of liabilities in the normal course of business. The Company’s ability to such estimates and assumptionscontinue as a going concern is contingent upon its ability to raise additional capital as required. For the quarter ended November 30, 2022, the Company incurred net losses of ($716,497). Initially, we intend to finance our operations through equity financings.
Our auditors have indicated that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
There are no external sources of liquidity.
Financings and Securities Offerings
Investing Activities.
Since inception, our principal sources of operating funds have been proceeds from equity financing including the sale of our Common Stock to initial investors known to management and principal shareholders of the carrying amountCompany. We do not expect that our current cash on hand will fund our existing operations. We will need to raise additional capital in order execute our business plan and growth goals for at least the estimated useful lives of long-live assets; valuation allowances for receivables, and realizable values for inventories. Accordingly, actual results could differ from those estimates.
9
Business Strategy
Quality Online Education Group has founded in Aug 2018 in Ontario Canada with a global reach. We provide comprehensive online English lessons to service these debt obligations.
Our market consists of students from K12 to adults. The lessons we provide are focused on the interaction and application of English.
We have successfully launched a direct selling model through Mommy Influencer in different part of Southeast Asia countries. This business model is cost-effective, saving us significant sales and marketing dollars and build a better cash flow outlook compared to the foregoing, ascompetitors who only use online advertisement. With the proper expansion of May 31, 2014, advancesoperations, coupled with the replication of our direct selling model to targeted areas around the world more than 200 cities around the globe, we expect to achieve magnitudes of exponential growth.
Company’s Plan of Operation.
We are launching small group lessons, where one teacher simultaneously teaches 2-4 students online. The one-to-many model has a related party have been fully repaid. The previous advances to a related party represented unsecured, non-interesting bearing loans without fixed repayment terms. Although such advances have now been repaid to the Company, such advances may have detrimentally affected our ability to do business insofar that such advances represented a major portion of the Company’s available cash. These advances were provided as a special accommodation to such related party whose personal properties were provided as collateral for bank loans obtained by the Company. Although such advances are no longer being made to such related party, such advances represented another key uncertainty insofar that, prior to repayment, there was no assurance that such advances would be repaid. In addition, such advances did not generate any income to the Companylower unit price than other competitors, and may have detrimentally affectedbe affordable for more students yet yield a higher margin.
We intend to further develop our ability to grow the business for the benefit of all of the shareholders.
Results of Operations
Three months ended November 30, 2022, as Compared to three months ended May 31, 2014 as compared to the results of operations for the three months ended May 31, 2013 and for the nine months ended May 31, 2014 as compared to the results of operations for the nine months ended May, 2013.
For the Three Months Ended May 31, | For the Nine Months Ended May 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (unaudited) | (unaudited) (A) | (unaudited) | (unaudited) (A) | |||||||||||||
| Revenue | $ | 1,479,606 | $ | 889,591 | $ | 4,080,884 | $ | 2,795,225 | ||||||||
| Direct cost of revenue | (717,283 | ) | (546,615 | ) | (1,849,110 | ) | (1,513,654 | ) | ||||||||
| Gross Profit | 762,323 | 342,976 | 2,231,774 | 1,281,571 | ||||||||||||
| General and administrative expenses | (251,312 | ) | (178,974 | ) | (853,046 | ) | (665,329 | ) | ||||||||
| Operating profit | 511,011 | (164,002 | ) | 1,378,728 | 616,242 | |||||||||||
| Other income | 12,581 | 2,579 | 14,450 | 2,579 | ||||||||||||
| Other expenses | (36,270 | ) | (36,247 | ) | (91,467 | ) | (99,022 | ) | ||||||||
| Net profit | 487,322 | 130,334 | 1,301,711 | 519,799 | ||||||||||||
| Income tax expenses | (185,234 | ) | (39,022 | ) | (270,214 | ) | (82,010 | ) | ||||||||
| Other comprehensive income/(loss) | 2,663 | (99 | ) | 3,935 | (219 | ) | ||||||||||
| Total comprehensive income | 304,751 | 91,213 | 1,035,432 | 437,570 | ||||||||||||
| Comprehensive loss attributable to non-controlling interests | 4,868 | 5,676 | 15,803 | 17,021 | ||||||||||||
| Comprehensive income attributable to ADGS Advisory, Inc. | $ | 309,619 | $ | 96,889 | $ | 1,051,235 | $ | 454,591 | ||||||||
Revenue: The increase was primarily due to the increase of revenue stream in multi-disciplinary advisory services, mainly from the increase of the surveyors consultancy fee income (consultancy fee for slope inspection) and a steady growth in accounting and corporate services.
Operating expenses: Total operating expenses
For the Three Months Ended May 31, | % | For the Nine Months Ended May 31, | % | |||||||||||||||||||||
| 2014 | 2013 | change | 2014 | 2013 | change | |||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||
| Revenue | $ | 1,479,606 | $ | 889,591 | +66 | % | $ | 4,080,884 | $ | 2,795,225 | +46 | % | ||||||||||||
| Direct cost of revenue | (717,283 | ) | (546,615 | ) | +31 | % | (1,849,110 | ) | (1,513,654 | ) | +22 | % | ||||||||||||
| Gross profit | 762,323 | 342,976 | +122 | % | 2,231,774 | 1,281,571 | +74 | % | ||||||||||||||||
| General and administrative expenses | (251,312 | ) | (178,974 | ) | +41 | % | (853,046 | ) | (665,329 | ) | +28 | % | ||||||||||||
| Operating profit | $ | 511,011 | $ | 164,002 | +211 | % | $ | 1,378,728 | $ | 616,242 | +124 | % | ||||||||||||
Net loss: Net loss for the three months ended May 31, 2013 and $219 loss for the six months ended May 31, 2013.
For the Nine Months Ended May 31, | ||||||||
| 2014 | 2013 | |||||||
| (unaudited) | (unaudited) | |||||||
| Cash provided by/(used in): | ||||||||
| Operating activities | $ | 1,274,615 | $ | 589,307 | ||||
| Investing activities | (2,170,469 | ) | (836,351 | ) | ||||
| Financing activities | 1,005,296 | 196,290 | ||||||
| Effect of change of exchange rates | 6,061 | 212 | ||||||
| Cash, beginning of period | 164,314 | 129,001 | ||||||
| Cash, end of period | $ | 279,817 | $ | 78,459 | ||||
Contractual Obligations, Commitments and income tax payable of $295,693, offset by accounts receivable of $(206,072), prepaid expenses of $(156,322) and deferred revenue of $(108,801) due to the recognition of consultancy services provided to a third party with a fixed fee and term of four years.
As a result of the repayment of $418,621 to the Company for advances made to a related party, such advances have now been fully repaid. Such advances to a related party represented unsecured and non-interesting bearing loans.
Nature of loans | Terms of loans | Outstanding loan amount | Current annualized interest rate | Collateral | |||||
| Term loan | Ranging from 1 year to 25 years | $ | 2,586,794 | Ranging from annual rate from 0.38% to 6.98% | Property and personal guarantee from related party and third party | ||||
| $ | 2,586,794 | ||||||||
| Amount | ||||
| Year ending August 31, | ||||
| 2014 (three months) | $ | 2,918 | ||
| 2015 | 11,673 | |||
| 2016 | 11,673 | |||
| 2017 | 11,673 | |||
| 2018 | 2,918 | |||
| Thereafter | - | |||
| Total minimum lease payment | $ | 40,855 | ||
| Less: Imputed interest | (2,054 | ) | ||
| Present value of net minimum lease payments | $ | 38,801 | ||
| Less: Current maturities of capital leases obligations | (2,594 | ) | ||
| Long-term capital leases obligations | $ | 36,207 | ||
| Payment due by period | ||||||||||||||||||||
| Contractual obligations | Total | < 1 year | 1 - 3 years | 3 - 5 years | > 5 years | |||||||||||||||
| Borrowing: | ||||||||||||||||||||
| - Capital lease | $ | 40,855 | $ | 2,918 | $ | 23,346 | $ | 14,591 | $ | - | ||||||||||
| - Bank loan | 2,586,794 | 78,002 | 471,832 | 295,789 | 1,741,171 | |||||||||||||||
| - Loan from a related party | 645,055 | - | - | 645,055 | - | |||||||||||||||
| Operating lease obligation: | ||||||||||||||||||||
| - Office rental | 126,471 | 32,263 | 94,208 | - | - | |||||||||||||||
| Total | $ | 3,399,175 | $ | 113,183 | $ | 589,386 | $ | 955,435 | $ | 1,741,171 | ||||||||||
Off-Balance Sheet Arrangement
We did not have during the periods presented, and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company as(as defined byin Rule 12b-2 of the Securities Exchange Act of 1934 andAct), we are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer,our chief executive, we have evaluated the effectivenessconducted an evaluation of our disclosure controls and procedures, (asas such term is defined inunder Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of the Exchange Act) as of the end of the period covered by this report.1934. Based on thatthis evaluation, the Principal Executive Officerour chief executive officer and Principal Financial Officerprincipal financial officer have concluded that, as of May 31, 2014, these disclosuresuch controls and procedures were effectiveto be ineffective as of November 30, 2022, to ensure that all information required to be disclosed by usthe issuer in the reports that we fileit files or submitsubmits under the Exchange Act is: (i)is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rulerules and forms;forms and (ii)to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to ourthe issuer’s management, including our Principal Executive Officerits principal executive and Principal Financial Officer,principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15 (f) and 15d- 15 (f) under the Exchange Act, for the Company.
Our internal control over financial reporting is the process designed by and under the supervision of our CEO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting - Guidance for Smaller Public Companies.
Due to our limited resources, the following material weaknesses in our internal control over financial reporting continued to exist at November 30, 2022:
| ● | we do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); |
| ● | we do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our limited size and early stage nature of operations, segregation of all conflicting duties may not always be possible and may not be economically feasible; however, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals; |
| ● | we do not have an independent audit committee of our Board of Directors; |
We believe that occurred duringthese material weaknesses primarily related, in part, to our lack of sufficient staff with appropriate training in GAAP and SEC rules and regulations with respect to financial reporting functions, and the fiscal quarter coveredlack of robust accounting systems, as well as the lack of sufficient resources to hire such staff and implement these accounting systems.
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If and when our financial resources allow, we plan to take a number of actions to correct these material weaknesses including, but not limited to, establishing an audit committee of our Board of Directors comprised of three independent directors, adding experienced accounting and financial personnel and retaining third-party consultants to review our internal controls and recommend improvements.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Evaluation of Changes in Internal Control over Financial Reporting
There were no material changes in our internal control over financial reporting identified in connection with the evaluation required by this reportparagraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
Exhibits 31.1 to this Quarterly Report is the Certifications of the Chief Executive Officer and Director. This Certification is required in accordance with Section 302 of the Sarbanes-Oxley Act (the “Section 302 Certifications”). This Item 4 of this Quarterly Report, which you are currently reading, is the information concerning the Evaluation referred to above and in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
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ITEM 1. Legal Proceedings.
There are no legal proceedings that have occurred within the past five years concerning the Company, is not currentlyour directors, or control persons which involved a party to any pendingcriminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.
ITEM 1A. RISK FACTORS
We believe there are no changes that constitute material legal proceeding nor is it aware of any proceeding contemplated by any individual, company, entity or governmental authority involvingchanges from the Company.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.We have a total of USD $30,000 (1,500,000 shares) Reg A sales by a company called Infinity Fund Canada LTD. during the Company sold 1,400,000 shares of common stock to 12 investors for the purchase price of $0.30 per share or $420,000 in the aggregate. The securitiesQ1 period. Other than that, there were issued in reliance upon the exemption from registration pursuant to Section 4(2)no unregistered sales of the Securities Act of 1933, as amended, and Regulation S thereunder. All investors represented and warranted that they were non-U.S. persons within the meaning of Regulation S.
Item 3. Defaults Upon Senior Securities.
There has been no default in payment of principal, interest, sinking or purchase fund instalment, or any other material default, with respect to any indebtedness of the Company.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
There is no other information required to be disclosed under this item that has not previously been reported.
| Description | ||
| 31.1 | Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer | |
| Section 1350 Certification of | ||
SIGNATURES In accordance with |
Quality Online Education Group Inc.
| By: | |||
| Name: | XuYe Wu | ||
Chief Executive Officer, |
Dated: January 6, 2023
| /s/ | |||
| Name: | Xijin Wu | ||
| Title: | Director |
Dated: January 6, 2023
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