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

UBI Blockchain Internet, Ltd.

(Formerly JA Energy)

Condensed Unaudited Consolidated Statements of Cash Flows

For the Six Months Ended February 28, 2019 and February 28, 2018

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

UBI BLOCKCHAIN INTERNET LTD.

(FORMERLY JA ENERGY)

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINESIX MONTHS ENDED MAY 31,FEBRUARY 28, 2019 AND 2018 AND 2017

(UNAUDITED)

NOTE 1 – ABOUT THE COMPANY

Organization and Capitalization of the Company

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

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

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

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

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

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

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

On April 3, 2017, the Company issued a total of 8.400,000 shares of Class C common stock to a total of 45 contractor employees and nonemployees (see Note 7).

On May 1, 2017, the Company issued 500,000 restricted shares of Class A common stock to an independent consultant for consulting services to be performed for the Company (see Note 7).

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

On August 29, 2017, upon the approval of the acquisition by the related PRC authorities, the Company issued a total of 25,000,000 shares of Class C common stock to shareholders of Shenzhen Nova E-commerce, Ltd. (“Nova”) in exchange for control of the business of Nova (see Notes 4 and 7). On April 7, 2018, Nova changed its name to UBI Shenzhen Cross Border E- Commerce Co., Ltd. (“UBI Shenzhen”).

Current Company Operations

UBI Blockchain Internet Ltd. (“UBI Delaware”) was reincorporated in Delaware on November 21, 2016 for the purpose of entering into the blockchain technology business. UBI Blockchain Internet, Ltd (“UBI Hong Kong”) was organized in the Hong Kong Special Administrative Region (the “HKSAR”) in September 2016 to facilitate local financing participations,participations. UBI Delaware opened a bank account at Abacus Federal Savings Bank in New York City. This bank account is funded by Tony Liu and is used to pay Company invoices from the U.S. UBI Hong Kong has a bank account at China Citic Bank International in Hong Kong, which is also funded by Tony Liu; this account makes disbursements relating to UBI Delaware operations in Hong Kong (such as payroll, rent, and other office expenses). UBI Hong Kong is owned and controlled by Tony Liu, CEO of UBI Delaware. UBI Hong Kong owns 30,000,000 (97%) of the 30,799,046 issued and outstanding shares of UBI Delaware Class A common stock at May 31,February 28, 2018. UBI Hong Kong has no other assets and no business operations of its own.

In December 2016, UBI Delaware engaged the services of 8 full time employees to principally work in its blockchain technology business. In January 2018, UBI Hong Kong executed an agreement with the HKSAR and The Hong Kong Polytechnic University to complete a project related to blockchain technology (see Note 12). To date, UBI Delaware has not received or earned any revenues in its blockchain technology business.

NOTE 2 - GOING CONCERN

The accompanying condensed unaudited financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. At May 31, 2018,February 28, 2019, the Company had cash of $55,245$84,014 and current liabilities of $1,732,425.$3,001,100. For the ninesix months ended May 31, 2018,February 28, 2019, the Company incurred a net loss of $2,506,613.$1,223,376. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. However, our major shareholder, who has been funding our operations in the past, has agreed to continue doing so when the Company does not generate sufficient revenue to cover its costs of operations.

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

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

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

The relevant accounting policies are listed below.

Interim Financial Statements

The consolidated balance sheet forof the Company at the end of the preceding fiscal year has been derived from the audited balance sheet and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 20172018 and is presented herein for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for all period presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the operating results for the respective full years.

Certain footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 20172018 filed with the SEC on December 7, 2017, for which notes to the financial statements as of August 31, 2017 were enhanced to include disclosures concerning “Current Company Operations” (as discussed in Note 1 above) and “Right of Rescission Contingency” (as discussed in Note 12 in below), pursuant to Post Effective Amendment Nos. 2, 4, and 5 to Form S-1 respectively filed on April 4, 2018, May 11, 2018, and June 27, 2018.

Basis of Accounting

The basis isaccompanying condensed unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States generally accepted accounting principles.of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

Principles of Consolidation

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

Earnings per Share

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

Cash and Cash Equivalents

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

Of the $84,014 cash at February 28, 2019, $84,014 was held in foreign bank accounts not insured by FDIC.

Use of Estimates

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

Inventory

Inventory, consisting of finished goods purchased from third parties, are stated at the lower of cost (first-in, first-out method) or market.

Property and Equipment

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

Intangible Assets

Intangible assets, including website development costs, and software acquired to be marketed, and office software, are carried at cost less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated economic lives of the respective assets (5 years for website development costs and 5 years for the software acquired to be marketed)marketed and 2 years for the office software).

Software development costs include payments made to independent software developers under development agreements, as well as direct costs incurred for internally developed products. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product requires both technical design documentation and game design documentation, or the completed and tested product design and a working model. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established and the evaluation is performed on a product-by-product basis. For products where proven technology exists, this may occur early in the development cycle. Software development costs related to hosted service revenue arrangements are capitalized after the preliminary project phase is complete and it is probable that the project will be completed and the software will be used to perform the function intended. Prior to a product’s release, if and when we believe capitalized costs are not recoverable, we expense the amounts. Capitalized costs for products that are canceled or are expected to be abandoned are expensed in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to “Research and development”.

Foreign Currency Translation

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

The functional currency of UBI Shenzhen is the Chinese Renminbi (“RMB”). Assets and liabilities of UBI Shenzhen are translated into United States dollars at period-end exchange rates ($1.00 = 6.40666.6844 RMB at May 31, 2018February 28,, 2019 and $1.00=6.5876$1.00 = 6.8375 RMB at August 31, 2017)2018). UBI Shenzhen revenues and expenses are translated into United States dollars at weighted average exchange rates ($1.00 = 6.3336.8566 RMB for the threesix months ended May 31, 2018February 28, 2019 and $1.00=6.528$1.00 = 6.5282 RMB for the ninesix months ended MayFebruary 28, 2018). Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

The functional currency of UBI HK is the Hong Kong Dollar (“HK$”). Assets and liabilities of UBI HK are translated into United States dollars at period-end exchange rates ($1.00 = 7.8498 HK$ at February 28, 2019 and $1.00 = 7.8494 HK$ at August 31, 2018). UBI HK revenues and expenses are translated into United States dollars at weighted average exchange rates ($1.00 = 7.8351 HK$ for the six months ended February 28, 2019 and $1.00 = 7.8360 HK$ for the six months ended February 28, 2018). Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

Transactions denominated in currencies other than the functional currency (principally the Hong Kong Dollar) are translated at the exchange rates prevailing at the dates of the transactions. Exchange gains and losses, which were not significant for the three and ninesix months ended May 31,February 28, 2019 and 2018, and 2017 were reflected in income.

Income Taxes

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

Revenue recognition

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

Stock-Based Compensation

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

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

Year end

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

Related Parties

Related parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions.

Recent Accounting Pronouncements

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

NOTE 4 – ACQUISITION OF UBI SHENZHEN CROSS BORDER E-COMMERCE CO., LTD (FORMERLY NOVA E-COMMERCE, LTD.)

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

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

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

The following proforma information (unaudited) summarizes the results of operations for the three and nine months ended May 31, 2017 as if UBI Shenzhen was acquired on May 26, 2016 (UBI Shenzhen’s date of inception). The pro forma information is not necessarily indicative of the results that would have been reported had the transaction actually occurred on May 26, 2016, not is it intended to project results of operations for any future period.

NOTE 5 – PREPAID STOCK BASED SALARIES AND CONSULTING FEES

Prepaid stock-based salaries and consulting fees at May 31, 2018February 28, 2019 and August 31, 20172018 consist of:

At May 31, 2018,February 28, 2019, there was $678,333$123,333 of unrecognized compensation costs related to shares of Class A common stock issued to a consultant pursuant to a Consulting Agreement dated April 28, 2017 with a service term of two years expiring April 30, 2019. These costs are expected to be recognized as expense in the three monthsyear ended August 31, 2018 ($185,000) and in the year ending August 31, 2019 ($493,333).2019.

NOTE 6 – INTANGIBLE ASSETS

Intangible assets at May 31, 2018February 28, 2019 and August 31, 20172018 consist of:

At May 31, 2018,February 28, 2019, the expected future amortization expense of the intangible assets was:

Website Development Costs

In January 2018, UBI Shenzhen changed the domain name for its website fromwww.oyamall.com towww.hihealth8.com. www.hihealth8.com. The change was made to, among other things, correct certain technical problems which we experienced in testing potential transactions involving Chinese currency. UBI Shenzhen’s website became operational on March 12, 2018.

UBI Shenzhen has yet to generate any revenues and management does not expect UBI Shenzhen will generate any revenues for the next few months, until such time as the Company actively marketsfrom its website. In the meantime, in order for UBI Shenzhen to begin its business operations, UBI Shenzhen will be selling third party products. In the future, management plans to develop its own products for sale. UBI Shenzhen became a wholly owned subsidiary of the Company. It was a management decision to acquire UBI Shenzhen for primarily two business reasons: 1) as a separate subsidiary, once UBI Shenzhen is fully operational, management anticipates it should generate revenues and profit for the Company; and 2) this acquisition provides a test model to utilize the blockchain technology the Company is developing to track drug products sold by UBI Shenzhen. As a test model, this will allow the Company to see if the products sold through its website are substituted with counterfeit products before they reach the final consumer. In other words, products sold through a third-party consumer will be tracked using the Company’s blockchain technology to see if there is a break in the supply chain. This will take place once the Company develops its blockchain digital tracking system. The Company will be able to monitor UBI Shenzhen shipments to the final consumer to determine if there has been any tampering with shipments in the supply chain.

UBI Shenzhen employs two people principally involved in website related creation/maintenance activities. UBI Shenzhen’s expenses are being funded by loans from Tony Liu.

Software Acquired to be Marketed

On November 24, 2017, January 17, 2018 and March 15, 2018, UBI Shenzhen executed agreements with a third-party vendor to produce customized game software called Farmer Game for a total of RMB 285,000 ($44,48541,682 using the MayAugust 31, 2018 exchange rate). UBI Shenzhen expects to use the Farmer Game to attract more visitors to its website and to potentially earn revenues from users’ use of game points to purchase products sold on the website. Farmer Game is expected to be introduced to website visitors in August 2018.the near future.

Through MayIn the year ended August 31, 2018, UBI Shenzhen has paid the Farmer Game vendor a total of RMB 160,000285,000 ($24,974)41,682), of which RMB 30,000 ($4,682) has been4,388) was expensed as “Research and development” and RBM 130,000RMB 255,000 ($20,992) has been37,294) was capitalized. On June 25, 2018, UBI Shenzhen paid RMB 105,000 ($16,389) of the remaining contract balance of RMB 125,000 ($19,511) due the vendor.

NOTE 7 - STOCKHOLDERS’ EQUITY

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

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

The $1,680,000 estimated fair value of the 8,400,000 shares of Class C common stock (using a price of $0.20 per share) was recorded as prepaid expenses and was expensed evenly over the year ended December 31, 2017 (see Note 5). For the ninesix months ended May 31,February 28, 2019 and 2018, we recognized stock-based salaries expenseemployee compensation of $0 and $96,668, respectively and recognized stock-based consulting fees expense of $463,333$0 and $463,334, respectively, from these agreements.

On May 1, 2017, the Company issued 500,000 restricted shares of Class A common stock to a consultant pursuant to a Consulting Agreement dated April 28, 2017 with a service term of two years expiring April 30, 2019. The $1,480,000 estimated fair value of the 500,000 shares of Class A common stock (using a price of $2.96 per share based on a $3.95 closing trading price on April 28, 2017 less a 25% restricted stock discount) was recorded as a prepaid expense and is being expensed evenly over the 2-year service period expiring April 30, 2019. For the nine monthsyear ended MayAugust 31, 2018, we recognized stock-based consulting fees expense of $555,000$740,000 from this agreement. For the six months ended February 28, 2019 and 2018, we recognized stock-based consulting fees expense of $370,000 and $370,000, respectively, from this agreement.

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

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

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

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

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

On March 31, 2018, the Company’s Board of Directors approved issuing 150,000 Class C common unregistered restricted shares to Global Alliance Securities for consulting services. 150,000 Class C common shares were issued on August 30, 2018. The $30,000 estimated fair value of the 150,000 shares of Class C common stock (using a price of $0.20 per share) was expensed in the three months ended August 31, 2018.

NOTE 8 - RELATED PARTY TRANSACTIONS

As described in Note 10, the Company was obligated to Mr. Mark DeStefano (“DeStefano”) for a $50,000 note payable and $26,981 for payments made on behalf of the Company. Subsequently, Mr. DeStefano advanced $1,285 to the Company. During the three months ended November 30, 2016 the Company satisfied these obligations. DeStefano had voting control of the Company from June 2014 (see Note 10) to October 24, 2016 (when the Company purchased from DeStefano the 1,000,000 shares of Preferred Stock for $33,735) through his ownership of the 1,000,000 shares of Voting Preferred Stock issued and outstanding (equivalent to 50,000,000 votes).

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

Commencing March 2017, the Company has been using office space provided by an affiliate of UBI Blockchain Internet, LTD. (Hong Kong) (“UBI Hong Kong”) at a monthly rent of 22,100 Hong Kong Dollars (approximately $2,816$2,825 at the May 31,November 30, 2018 exchange rate) per month. For expediency reasons, the Company also uses bank accounts in the name of UBI Hong Kong to collect cash receipts and expend cash disbursements relating to Company operations. UBI Hong Kong owns 30,000,000 shares of the Company’s Class A common stock.

InDuring the ninesix months ended May 31, 2018,February 28, 2019, Tony Liu, chief executive officer of the Company, advanced or paid a total of $1,047,943$803,311 of expenditures on behalf of the Company. As of May 31, 2018,February 28, 2019, the total amount due to Tony Liu was $1,555,341.$2,823,678. The amount due to Tony Liu for these expenditures is interest bearing at a rate of 7% per annum. $24,024$42,168 and $52,869$18,019 interest expense was accrued for the three and nine months ended May 31,February 28, 2019 and 2018, respectively. $76,949 and $28,845 interest expense was accrued for the six months ended February 28, 2019 and 2018, respectively. As of May 31, 2018,February 28, 2019, accrued interest amounted to $63,201.$169,743. The advances and related accrued interest are due on demand.

Included in accounts payable and accrued liabilities at February 28, 2019 and August 31, 2018 is accrued salary due to Tony Liu, chief executive officer, $63,314 and $62,744, respectively.

NOTE 9 - PROVISION FOR INCOME TAXES

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

As of May 31, 2018,February 28, 2019 and August 31, 2017,2018, the Company had net operating loss carry forwards of approximately $2,500,000$3,697,000 and $1,444,000,$2,883,000, respectively, as follows:

United States net operating losses prior to 2018 may be carried forward to reduce future years taxable income for 20 years; United States net operating losses after 2017 may be carried forward indefinitely. Hong Kong net operating losses may be carried forward indefinitely. China net operating losses may be carried forward for 5 years. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements as their realization has not been determined likely to occur. Also, dueUnited States tax laws limit the amount at loss available to thebe offset against future taxable income when a substantial change in control, there are annual limitations on future United States net operating loss carry forward deductions.

ownership occurs.

At May 31, 2018February 28, 2019 and August 31, 2017,2018, deferred tax assets consisted of:

As a result of the taxTax Cuts and Jobs Act enacted on December 22, 2017, the United States corporate income tax rate was reduced from 35% to 21% effective January 1, 2018. Accordingly, we reduced our deferred income tax asset relating to our United States net operating loss carryforward (and the valuation allowance thereon) by approximately $166,000 on December 31, 2017.

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

NOTE 10 - NOTES PAYABLE – Former Related PartyDEVELOPMENT AGREEMENTS

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

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

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

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

NOTE 11 – OTHER INCOME AND EXPENSE

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

On January 27, 2017,August 2018, the Company entered into a Settlementdevelopment agreement, by and among the Company, Heilongjiang Province TongFangZhuoXin Brewing Co., Ltd. (the “Brewing Company”) and Global Blockchain Cooperation Alliance, dated August 26, 2018 (the “Brewing Company Agreement”). Pursuant to the terms of the Brewing Company Agreement, the Company agreed to provide to the Brewing Company blockchain based technology and software for the management of the Brewing Company’s manufacturing process. In exchange for the services and technology provided by the Company, the Brewing Company agreed to pay to the Company a total of RMB 7,000,000 (approximately $1,007,808), which is payable over the term of the Brewing Company Agreement in a series of milestone payments. The Company received the initial payment of RMB 400,000 (RMB 388,350 net of tax or approximately $56,223) on September 30, 2018. The balance is payable in a series of 8 payments ranging from RMB 300,000 (approximately $43,192) to RMB 1,500,000 (approximately $215,959) from time to time as each milestone is completed over a period of 27 months, with the final payment being due on or before December 31, 2020. Any disputes between the parties are to be submitted to the Beijing International Arbitration Center. The Brewing Company Agreement provides for a former landlord satisfyingbreach penalty in an amount equal to 5% of the contract amount in the event that either party defaults in its obligations pursuant to the Brewing Company Agreement.

The Company recognizes revenue under this agreement as its performance obligations under each milestone of the agreement are completed. At November 30, 2018, the Company’s performance obligations of the Phase 1 Period 1 milestone (relating to the RMB 400,000 initial payment) had been completed. At February 28, 2019, the Company has no contract assets or contract liabilities relating to this agreement.

The Hotel Group Agreement

In August 2018, the Company entered into a $35,868 accrued liabilitydevelopment agreement, by and between the Company and Harbin Madieer Hotel Group Co., Ltd. (the “Hotel Group”), dated August 26, 2018 (the “Hotel Group Agreement”). Pursuant to the terms of the Hotel Group Agreement, the Company agreed to provide to the Hotel Group a blockchain based system for $4,100. This settlement, alonghotel management. In exchange for the services and technology provided by the Company, the Hotel Group agreed to pay to the Company a total of RMB 1,000,000 (approximately $143,973) which is payable over the term of the Hotel Group Agreement in a series of milestone payments. The initial payment of RMB 400,000 (RMB $388,350 net of tax or approximately $56,222) was received on November 12, 2018. The balance is payable in a series of 2 payments of RMB 300,000 (approximately $43,192 from time to time as each milestone is completed, over a period of 11 months, with the final payment being due on or before July 31, 2019. Any disputes between the parties are to be submitted to the Beijing International Arbitration Agency or a People’s Court of the Hotel Group’s location. The Hotel Group Agreement provides for a breach penalty in an arrangement with another vendor, resultedamount equal to 5% of the contract amount in other incomethe event that either party defaults in its obligations pursuant to the Hotel Group Agreement.

The Company recognizes revenue under this agreement as its performance obligations under each milestone of $47,003.the agreement are completed. At November 30, 2018, the Company’s performance obligations of the Phase 1 Period 1 milestone (relating to the RMB 400,000 initial payment) had been completed. At February 28, 2019, the Company has no contract assets or contract liabilities relating to this agreement.

NOTE 12 –11– COMMITMENTS AND CONTINGENCIES

The Hong Kong Polytechnic University Project

On January 10, 2018, the Company announced that the Hong Kong Special Administrative Region (“HKSAR”) approved in principle a grant of up to HK$3,018,750 (approximately $385,000)$386,000) to assist in financing a project entitled “Blockchain-Based Food and Drug Counterfeit Detection and Regulatory System” (“the HKPU Project”) to be jointly developed by UBI Hong Kong and The Hong Kong Polytechnic University (“HKPU”). The related agreement also provides for UBI Hong Kong to contribute up to HK $3,018,750 (approximately $385,000)$386,000) to the project cost in installments with the first installment of HK$561,198 (approximately $72,000) due upon HKSAR’s signing of the agreement (which occurred on January 5, 2018). UBI Hong Kong, owned and controlled by Tony Liu, is the largest Class A Common Stock shareholder of UBI Blockchain Internet, Ltd., (Delaware). Although the Company does not own or control UBI Hong Kong, UBI Hong Kong our principal stockholder, entered into an Assignment Agreement with UBI Delaware on May 1, 2018, whereby UBI Hong Kong assigned all of its rights, plans, ideas, tangible assets, intangible assets and intellectual property under the HKPU Project agreement to UBI Delaware, in order for UBI Delaware to commercialize the technology being developed. The project is expected to be completed by November 14, 2019. In a series of two payments made by UBI Hong Kong on January 12, 2018 and January 16, 2018, UBI Hong Kong paid its first installment of a total of HK$561,198 (approximately $71,000)$72,000) to HKPU. On February 1, 2018, HKSAR paid its first installment of HK $561,198 (approximately $71,000)$72,000) to HKPU. At this point, the project is progressing on track, and the parties believe the established budget will be sufficient to complete the project.

The agreement also provides for UBI Hong Kong to pay the remaining HK $2,457,552 (approximately $314,000) of its installments as follows: HK $687,934 (approximately $88,000) by April 1, 2018; HK$687,934 (approximately $88,000) by October 1, 2018; HK $687,934 (approximately $88,000) by April 1, 2019 and HK$393,750 (approximately $50,000) within three months of the completion of the HKPU Project. On May 11, 2018, UBI Hong Kong paid HKPU a second installment of HK $643,647 (approximately $82,000). On May 24, 2018, HKSAR also paid HKPU a second installment of HK $643,647 (approximately $82,000). On December 10, 2018, UBI Hong Kong paid HKPU a third installment of HK$ 653,647 (approximately $83,000). While UBI Hong Kong does not have the financial wherewithal to pay current installments under the agreement as due, Tony Liu has personally agreed and been able to provide funding as necessary for both operations of the Company and obligations due under the agreement.

The agreement also provides for the HKSAR to pay the remaining HK $2,457,522 (approximately $314,000) of its installments periodically within 30 days after the acceptance by the Commissioner of Innovation and Technology (“CIT”), an agency of the HKSAR, of certain Progress Reports to be submitted periodically by HKPU. The agreement provides that HKPU should provide CIT the first written Progress Report in a format acceptable to CIT covering from the Commencement Date to August 31, 2018 to be submitted on or before September 30, 2018. While noThe first written Progress Reports have yet been required or providedprogress report was timely submitted by UBI Hong Kong and HKPU to CIT, periodic telephone conversations with CIT have occurred between CIT, HKPU, and the Company from time to time concerning HKPU Project’s progress.CIT. The agreement imposes no penalties on UBI Hong Kong should it fail to make any of its installment contributions except that HKSAR principally has the right to cease their installment contributions if UBI Hong Kong fails to make its installment contributions. HKSAR may terminate the agreement if UBI Hong Kong fails to make any of its installment contributions. Further, if any of the parties are in breach of the terms of the agreement or fail in a material way to progress in accordance with the Project Proposal, HKPU shall on demand by the government pay to the Government an amount equivalent to the funds or portion thereof released for the Project.

Project Summary

The goal of this project is to provide a comprehensive solution to the worldwide problem of counterfeit medicines. Leveraging latest techniques the team wantwants to develop a low-cost, scalable, secure systemblockchain tracking platform for: (1) Manufacturers to record necessary data of the drugs during their production and transportation; (2) Distributors to trace the drugs; (3) Auditors to inspect all data; and finally (4) Consumers to verify the authenticity of the purchased product. This platform will provide suppliers of food and drug products a safety control system to determine if there was a break in the supply chain. It will identify if a product was substituted with a counterfeit or inferior product. It will help suppliers of perishable food products, reduce spoilage by tracking food shipments in the supply chain to the final consumer.

In February 2018, UBI Hong Kong performed a test at the offices of Guangxi Houde Mega Health Enterprise (“Guangxi”), a medical products company, of the e-commerce “alpha”version 1.0 blockchain tracking platform (using simulated test data provided by Guangxi). Guangxi is owned 70% by Star Bright International Investment Enterprise Ltd. Star Bright is a stockholder offeringLimited, owner of 5,000,000 resaleshares of Company Class C common shares in this registration statement.Common Stock (see Note 7). The test identified some technical issues that needneeded to be addressed;addressed and made improvements thereafter. A second round of tests was performed in July 2018 at Guangxi’s offices and at the offices of three other pharmaceutical companies. In December 2018, the Company’s research team is currently preparingmade another visit to Guangxi’s offices to prepare for a second test,third round of testing of the second test, originally scheduled for June 2018, will not be scheduled until the team believes the test will be successful.Company’s latest version of its blockchain tracking platform. The e-commerce platform will provide a digital shared accounting ledger that would make it possible to trace back a product to the very origin of the raw material used.

Once a working model of a blockchain platform is successfully operational, the Company plans to license the technology to larger food and drug third party customers, in which case the licensee can use it in accordance with the license agreement; and the Company also intends to provide the technology, when commercial ready, to third party suppliers as a paid service.

The agreement provides that the equipment acquired from the HKPU Project will belong to HKPU, who is also identified as the Beneficiary of the grant for the project and is required to provide CIT with interim and a final accounting for the proceeds of the grant as well as monies advanced by UBI Hong Kong whether the project is successful or not. While HKPU, as the Beneficiary, is provided discretion on how income arising from the intellectual property rights from the Project Materials (including among other things computer software/programs, technical materials, models, documents and materials compiled developed, produced or created by or on behalf of the Beneficiary –- the “platform”) and Project Result is to be allocated, UBI Hong Kong is the sole and absolute beneficial owner (has title to) of all of the intellectual property rights which would include the platform if successfully completed under the project.

While HKPU receives full legal and equitable title and interest in any and all of the equipment procured by the Beneficiary, the agreement does not discuss whether HKPU can discontinue its own performance in the event that either HKSAR or UBI Hong Kong fail to make the required payments. However, without funding no one would expect that HKPU would be obligated to continue its performance.

The agreement also has a provision whereby the HKSAR can terminate the grant under certain conditions. These conditions include, among other things, ethical misuse of funds received under the grant or violations of other requirements under the grant. This would include UBI Hong Kong’s failure to meet its general financial obligations as due or go into liquidation. In the event of termination, the HKSAR has the right to suspend payment under the grant or require that amounts previously paid by it be refundable under the grant.

The Company expects to use the technology learned from the HKPU Project to help it develop and market a platform system for application to control and manage the safety of food and drugs. Pursuant to an understanding with UBI Hong Kong, the Company is responsible for the installments due and other costs relating to the HKPU Project paid by UBI Hong Kong. These costs are expected to be paid by UBI Hong Kong from loans received from the Company’s CEO Tony Liu. The Company expects to recordrecords these costs as research and development expenses and increases in amounts due to Tony Liu until such time as a “technologically feasible” working model of the platform has been successfully produced.

The Company plans to commercialize our blockchain technology, by selling suppliers of food and drug products a blockchain technology platform to track the shipping of their products from itits source to the final consumer with tamper-resistant digital records that replaces the current related shipping paperwork. There are two ways we plan to commercialize the technology: 1) to license the technology to third parties, in which case the licensee can use it in accordance with the license agreement; and 2) UBI to provide the technology to third party suppliers (the supplier will pay for each use). The goal is to license our blockchain technology to streamline record-keeping for the food and drug supply chain. We also plan to provide blockchain technology, when commercial ready, to suppliers as a paid service. Our goal is to design a blockchain tracking system that eliminates counterfeit drug products being substituted in the supply chain. And, with regards to food products where lost or delayed shipments causes perishable goods lying in wait to spoil, our blockchain tracking is being designed to help expedite and monitor physical transportation. It is management’s goal to have this technology ready for commercialization soon after the fiscal year ending August 31, 2019.

Management believes that blockchain technology along with the capabilities of tamper resistance products can help bring about new safety standards for the health industry. This makes blockchain technology worthy of our research and investment. It is for this reason management made athe decision then to establish a company to research and develop blockchain technology. In order to achieve its goals, management is working to design a product tracking system, where every step a product takes in its supply chain is recorded, time-stamped and monitored to protect the integrity of the product(s) being shipped from itits source to the final consumer. This is being accomplished by tracing the movement of the product from its origin to its final consumer. Utilizing blockchain technology, every time the product moves, its location is recorded and time-stamped, and a shared accounting ledger can be reviewed to determine if there was a break in the supply chain, to see if the product was substituted with a counterfeit or inferior product.

UBI’s business strategy is to incorporate the research and application of blockchain technology, along with a cluster of other new technologies, such as Internet of Things (“IoT”), pharmaceuticalvirtual reality (“VR”), augmented reality (“AR”), and artificial intelligence (“AI”), etc. into the supply chain of traditional industries, such as pharmaceuticals, food, products,agriculture, finance, art and antiques, which together, we refer to as IBSH platform.the “Blockchain+ Technology Cluster” solution. We have hired professional and technical personnel to develop a working platform. With“Blockchain+ Technology Cluster” solution for each of the development and research onabove mentioned industries, in addition to the blockchain platform we plan to build a blockchain based safety control system, tentatively(tentatively named “UBI Security Shield”, with its first application to be used) that we are currently developing for the food and drug safetyindustries.

Lease Commitments

In September 2017, UBI Shenzhen entered into two lease agreements for office space in Shenzhen China. The first lease provides for monthly rent of RMB 12,353, or approximately $1,928$1,848 per month, and expires September 2020. The second lease provides for monthly rent of RMB 8,964, or approximately $1,399$1,341 per month, and expires September 2019.

As of May 31, 2018,February 28, 2019, the future minimum lease payments under non-cancelable operating leases were:

For the three and ninesix months ended May 31,February 28, 2019, total rent expense was $34,420 and $67,073, respectively.

For the three and six months ended February 28, 2018, total rent expense was $25,359$23,069 and $65,049,$39,690, respectively.

Right of Rescission Contingency

The offer and sale of the 25,000,000 Class C Common Shares for the acquisition of UBI Shenzhen may have been in violation of the rules and regulations under the Securities Act and the interpretations of the SEC. The possible violation involves whether the Company conducted a public offering without providing the former UBI Shenzhen shareholders with a registration statement declared effective by the SEC. If a violation of the Section 5 of the Securities Act did in fact occur, anyone who acquired Class C Common Shares at a price based on an evaluation of $0.20 per share would have a right to rescind the purchase. The Securities Act generally requires that any claim brought for a violation of Section 5 of the Securities Act be brought within one year of the violation. If all the shareholders who acquired Class C Common Shares for their exchange in the ownership of UBI Shenzhen demanded rescission within that one-year period and prevailed in their claims, we would behave potentially been obligated to repay approximately $5,000,000.

In the opinion of management and company counsel, the likelihood of any of the former UBI Shenzhen shareholders making a claim for a violation of Section 5 of the Securities Act is remote because the effected shareholders are all Chinese citizens who have a close knit relationship with each other and who all voted in favor of the Company’s acquisition of UBI Shenzhen. None of these effected shareholders have made any claim to date and the one yearone-year period that they havehad to bring a claim expiresexpired August 29, 2018.

NOTE 12– SUBSEQUENT EVENT

On March 15, 2019, the Company executed an agreement with Jinzhuan Think Tank (Beijing) International Information Consulting Co., Ltd. (“Jinzhuan”). The agreement provides for Jinzhuan to arrange for the Company’s sponsorship and participation in a “Belt and Road” Think Tank Cooperation Forum where company representatives are to deliver speeches and for Jinzhuan to introduce the Company to participating government agencies, higher educational institutions, and financial institutions and to provide consulting and referral services to the Company. The agreement also provides for the Company’s payment of a RMB 611,700 (appropriately $91,500) fee to Jinzhuan for such services. This fee was paid on March 15, 2019.

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

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

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

In this Quarterly Report on Form 10-Q references to “UBI Blockchain Internet Ltd.,” “JA Energy,” “UBI Blockchain Internet, Ltd., formerly known as JA Energy,” “UBI,” “the Company”, “we,” “us,” and “our” refer to UBI Blockchain Internet Ltd. (a Delaware Company).

CompanyCorporate History

The Company was organizedincorporated in Nevada on August 26, 2010, (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporatedname “JA Energy,” as a subsidiary of Reshoot Production Company, a Nevada corporation.corporation, incorporated October 31, 2007. In May, 2011, Reshoot Production Company was incorporated October 31, 2007, and, atspun off the time of spin off was listed on the Over-the-Counter Bulletin Board.Company to its shareholders.

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

On or about September 30,In October 2014, pursuant to the Boardterms of Directors approvedan Irrevocable Asset and Liability Exchange Agreement, dated as of October 15, 2014, by and among the formationCompany, James Lusk, Mark DeStefano and T.J. Jesky, the Company transferred all of a new company calledits assets and liabilities to its wholly owned subsidiary, Peak Energy Holdings, a Nevada corporation where each shareholder in(“Peak”) and Peak issued to the Company receivedCompany’s shareholders, one share of Peak common of Peak Energy Holdingsstock for each share of common stock owned in the Company and one share of Peak preferred stock of Peak Energy for each share of preferred sharestock owned in the Company. As part ofCompany (the “Spin-Off”). Following the transaction, the Company spun-off all of its assets and liabilities intoSpin-Off, Peak Energy. Further, the spin-off subsidiary operated as an independent entity separate entity from the Company with new management operating the current core business of Peak Energy for the benefit of the original stockholders.management. The effect of this actionSpin-Off allowed the Company to explore new business opportunities without the burden of the assets and liabilities on the corporate books.

In September 2016, the Company established its headquarters in Hong Kong, and issued 30,000,000 shares of unregistered restricted Class A Common Stock, 6,000,000 shares of unregistered restricted Class B Voting Common Stock, which carries a voting weight equal to ten (10) Common Shares, and 40,000,000 shares of unregistered restricted Class C Common Stock to UBI Blockchain Internet, LTD (“UBI Hong Kong”), in exchange for $200,000. UBI Hong Kong is beneficially owned and controlled by Tony Liu our CEO and as a result of the transaction UBI Hong Kong and Tony Liu became controlling shareholders of the Company. Thereafter, the Company’s business focus was dedicated to the application of the blockchain technology to safety issues arising out of counterfeit and inferior substitute products and services in the Chinese health industry.

On November 21, 2016, the Company changed its corporate name from JA Energy (“JA”) to UBI Blockchain Internet, LTD, and changed theits state of incorporation from the State of Nevada to the State of Delaware pursuant to a plan of conversion in connection withabout which the Company adopted a new certificate of incorporation under the laws of the State of Delaware.Delaware after UBI acquired a controlling equity in JA and this transaction was treated as a reverse merger for accounting purposes.

On August 29, 2017, the Company acquired 100% ownershipAcquisition of UBI Shenzhen Cross Border E-commerce Co., Ltd. (“UBI Shenzhen”), formerly, Shenzhen Nova E-commerce, Ltd., (“Nova”) a private Shenzhen Chinese corporation in exchange for 25,000,000 unregistered restricted Class C common shares. UBI Shenzhen has yet to generate any revenues, and management does not expect UBI Shenzhen will generate any revenues for the next few months, until such time as the Company actively markets its website. In the meantime, in order for UBI Shenzhen to begin its business operations, UBI Shenzhen will be selling third party products. In the future, management plans to develop its own products for sale. UBI Shenzhen became a wholly owned subsidiary of the Company. It was a management decision to acquire UBI Shenzhen for primarily two business reasons: 1) as a separate subsidiary, once UBI Shenzhen is fully operational, management anticipates it should generate revenues and profit for the Company; and 2) this acquisition provides a test model to utilize the blockchain technology the Company is developing to track drug products sold by UBI Shenzhen. As a test model, this will allow the Company to see if the products sold through its website are substituted with counterfeit products before they reach the final consumer. In other words, products sold through a third party consumer will be tracked using the Company’s blockchain technology to see if there is a break in the supply chain. This will take place once the Company develops its blockchain digital tracking system.The Company will be able to monitor UBI Shenzhen shipments to the final consumer, to determine if there has been any tampering with shipment in the supply chain.

When UBI was first formed, management established a goal and mission to solve the safety and quality issues of food and drugs using blockchain technology. This has been an on-going problem, especially in China. For a number of years, management has observed, first-hand, the rampant counterfeit and inferior quality problems in the Chinese health industry, where food and drugs constitute the majority of products. Counterfeit food and drug products are very common in the Chinese market.

Management is working to develop a blockchain tracking system to detect if counterfeit products are substituted in the supply chain. Management desires that its technology is ready for commercialization soon after the twelve months ending August 31, 2019. This technology would include: (1) A tracking record system to monitor drugs during their production and transportation stages; (2) A method to inspect and review all tracking data; and (3) The ability for consumers to verify the authenticity of the purchased product. If these systems can be successfully developed they will provide suppliers of food and drug products and the final consumers a tracking system to monitor if there was a break in the supply chain. By being able to identify if a product was substituted with a counterfeit or inferior product in the supply chain, the manufacturer, supplies and final consumers benefit. This can be especially useful for suppliers of perishable food products, to reduce spoilage by tracking food shipments in the supply chain to the final consumer.

Commercialization

We plan to commercialize our blockchain technology, by sellingsuppliers of food and drug products a blockchain technology platform to track the shipping of their products from it source to the final consumer with tamper-resistant digital records that replaces the current related shipping paperwork. There are two ways we plan to commercialize the technology: 1) to license the technology to third parties, in which case the licensee can use it in accordance with the license agreement; and 2) UBI to provide the technology to third party suppliers (the supplier will pay for each use). The goal is to license our blockchain technology to streamline record-keeping for the food and drug supply chain. We also plan to provide blockchain technology, when commercial ready, to suppliers as a paid service. Our goal is to design a blockchain tracking system that eliminates counterfeit drug products being substituted in the supply chain. And, with regards to food products where lost or delayed shipments causes perishable goods lying in wait to spoil, our blockchain tracking is being designed to help expedite and monitor physical transportation. It is management’s goal to have this technology ready for commercialization soon after the fiscal year ending August 31, 2019.

Management believes that blockchain technology along with the capabilities of tamper resistance products can help bring about new safety standards for the health industry. This makes blockchain technology worthy of our research and investment. It is for this reason management made a decision then to establish a company to research and develop blockchain technology. In order to achieve its goals, management is working to design a product tracking system, where every step a product takes in its supply chain is recorded, time-stamped and monitored to protect the integrity of the product(s) being shipped from its source to the final consumer.

Shenzhen NovaCross-Border E-commerce, Ltd. (formerly known as “NOVA,” now known as “UBI(“UBI Shenzhen”)

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

The shareholders ofAbout UBI Shenzhen converted their ownership of UBI Shenzhen to UBIA’s Class C common shares. Following the conversion, UBI Shenzhen shares were canceled. In China, the conversion of shares requires the Chinese authorities to cancel UBI Shenzhen’s registered shares. On August 29, 2017, the Chinese government approved the acquisition of UBI Shenzhen. The Company issued a total of 25.000,000 shares of Class C common stock to shareholders of Shenzhen Nova E-commerce, Ltd. and their original UBI Shenzhen shares were cancelled by the Chinese government.

About Shenzhen Nova E-commerce, Ltd

UBI Shenzhen Nova E-commerce Ltd. was incorporatedformed as a private Shenzhen Chinese company on May 26, 2016, under the name Nova Cross-Border E-Commerce, and plans to operate an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products. On April 7, 2018, NOVA changed its name to UBI Shenzhen Cross Border E-Commerce Co., Ltd. (“UBI Shenzhen”). UBI Shenzhen’s website became operational in April 2017.

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

In April, 2017 Shenzhen Nova E-commerce wanted to begin its operations ofoperates an online store in China selling a wide range of products including maternal and infant products, cosmetics, wine, household goods, digital and luxury products but was unable to beginvia its operations due to technical problemsOya Mall, a cross-border e-commerce platform. This website entered into operation in processing transactions involving Chinese currency .April, 2017.

In April 2018, UBI Shenzhen (formerly Nova) has yet to generate any revenues, and management does not expect UBI Shenzhen will generate any revenues for the next few months, until such time as the Company actively markets its website (www.hihealth8.com). And, there is a possibility that UBI Shenzhen will never generate any revenues.

On April 7, 2018, NOVA changed its name from Shenzhen Nova Cross-Border E-commerce, Ltd. to UBI Shenzhen Cross Border E-CommerceE-commerce Co., Ltd. (“UBI Shenzhen”). UBI Shenzhen is registered in Qianhai Free Trade Zone, China. Its business operation isThe website changed its own e-commerce platform offering online retail service, via www.hihealth8.com. Its e-commerce platform is not part of our blockchain technology, but a platformname from www.oyamall.com to sell products on-line throughwww.hihealth8.com in April 2018. On September 1, 2018, the Company’s website. From its inception on May 26, 2016 through the present, UBI Shenzhen has been building its website and infrastructure. UBI Shenzhen commenced its pilot operation in May 2017.

It was a management decision to acquire UBI Shenzhen for primarily two business reasons: 1)became operational as a separate subsidiary, once UBI Shenzhen is fully operational, management anticipates it should generate revenues and profitmarketplace for the Company; and 2) this acquisition provides a test model to utilize the blockchain technology the Company is developing to track drug products sold by UBI Shenzhen. As a test model, this will allow the Company to see if the products sold through its website are substituted with counterfeit products before they reach the final consumer. In other words, products sold through a third party consumer will be tracked using the Company’s blockchain technology to see if there is a break in the supply chain. This will take place once the Company develops its blockchain digital tracking system. The Company will be able to monitor UBI Shenzhen shipments to the final consumer, to determine if there has been any tampering with shipment in the supply chain.

UBI Shenzhen��s original Chinese language website experienced a number of technical problems, especially dealing with Chinese currency. Management decided it would be more cost effective to establish a new website under the domain name. www.hihealth8.com. The website will allow people with Chinese currency who have a local Chinese bank account to purchase products through this website, where customers will be able to purchasecan buy products including, food, non-prescription medicine, skin care products, etc. offered on the website. For the purpose of this Registration Statement, the website is not part of this Post-Effective Amendment, but referenced for informational purposes.

UBI Shenzhen sales will take place one of two ways. When a consumer clicks to buy product(s): (a) A third seller will sell and ship directly to the consumer and UBI Shenzhen will receive an agency fee; or (b) UBI Shenzhen will process the sale from its own inventory and ship and bill the consumer directly. These two ways methods will generate business through UBI Shenzhen. There is the possibility that the website might never generate any sales or revenue for the Company.Shenzhen’s operations include, but are not limited to:

Overview

UBI Shenzhen employs two people principally involvedBlockchain Internet is a company focused on research & development and application of blockchain technology, including the combination of Internet of Things (“IoT”) and other high-tech technologies to health industry issues prevalent in website related creation/maintenance activities. UBI Shenzhen’s expenses are being funded by loans from Tony Liu.China.

Recent EventsUBI’s business focus on blockchain technology is based on management’s persistent exploration and pursuit of solutions to prevent and eliminate the health industry issues prevalent in China, i.e. the safety issues of products and services caused by counterfeits and inferior substitutes resulting in harm to human lives. Entering the 21st century, with the rise of technology innovation and progress, especially with the emergence of the blockchain technology, our management determined that an opportunity was available to discover and apply blockchain based solutions to the problem of safety and counterfeits in health products and services.

SEC Order of Trading Suspension

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

Grey Sheets

The suspension of trading eliminated our market makers and resulted in our stock placed on the grey sheets of the OTC markets. Prior to the suspension, our stock was listed on the OTC-QB.Broker-dealers are not willing or able to publicly quote grey sheets securities because of a lack of investor interest, company information availability or regulatory compliance. Grey sheet is an unsolicited market where securities do not have bid or ask quotations. The placement on grey sheets makes our stock more difficult to trade, dramatically reduces the liquidity of our stock and has a negative impact on our investors. Further, OTC Markets has blocked quotations for our securities, and they have labeled our Class A common stock as Caveat Emptor (Buyer Beware).Broker-dealers cannot publish or submit in a quotation medium to buy or sell our stock until they have complied with Exchange Act Rule 15c2-11.In the absence of a trading market or an inactive trading market, investors may be unable to liquidate their investment or make any profit from the investment. As such, our common stock is now on the grey sheets, this adversely effects the liquidity of the shares of common stock. Investors may be unable to liquidate their investment.

Hong Kong Government Grant

On January 10, 2018, the Company announced that the Hong Kong Special Administrative Region (“HKSAR”) approved in principle a grant of up to HK 3,018,750 (approximately $385,000) to assist in financing aPolytechnic University (HKPU), and has obtained approval from the Hong Kong government for the blockchain project, entitledtitled “Blockchain-Based Food and Drug Counterfeit Detection and Regulatory System” (“the HKPU Project”), coded as “UIM/331”. Information related to be jointly developed by UBIthis project is publicly available on Hong Kong Special Administration Region (“HKSAR”)’s official website at http://itf.gov.hk/l-eng/Prj-eng/Prj_Search_Index.asp. At the same time, UBI cooperates with blockchain experts and Thetechnical teams from Germany, India and other countries and regions, committed to the development of blockchain and its application in health industry.

On August 15-16, 2018, UBI together with other founders and sponsors, organized a Global Blockchain Cooperation Alliance Forum at the Company’s Hong Kong Polytechnic University (“HKPU”). The related agreement also provides forCyberport headquarters. More than 200 people who are blockchain experts, scholars, lawyers, financiers and entrepreneurs, from universities, research institutes, and media from over 20 countries and regions attended the event. UBI Hong Kongintroduced and demonstrated the results of its blockchain development and application at the conference, and proposed the concept “2018, the genesis of applied blockchain technology.”

UBI is optimistic about blockchain technology because blockchain is an innovative form of combination of computer skills such as distributed data storage, point-to-point transmission, consistent mechanisms, and encryption algorithms. Owing to contribute upits unique characteristics such as being traceable and modification resistant, decentralized and open transparent. Blockchain technology can be used to HK $3,018,750 (approximately $385,000) toeffectively address the project cost in installments with the first installmentsafety and quality issues of HK$561,198 (approximately $72,000) due upon HKSAR’s signing of the agreement (which occurred on January 5, 2018). UBI Hong Kong, ownedproducts and controlled by Tony Liu, is the largest shareholder of UBI Blockchain Internet Ltd, (Delaware). Although we do not own or control UBI Hong Kong or have rightsservices in the project or its intellectual property. UBI Hong Kong, our principal stockholder, on May 1, 2018 entered into an Assignment Agreement with UBI Delaware, whereby UBI Hong Kong assigned all of itsrights, plans, ideas, tangible assets, intangible assets and intellectual property to UBI Delaware, in order for UBI Delaware to commercializehealth industry. Monitored by the technology, being developed(See Exhibit 10.6).the factitious factors are eliminated. The project is expected to be completed by November 14, 2019. In a seriesintegration of two payments made by UBI Hong Kong on January 12, 2018,Internet of Things “IoT”, Virtual Reality “VR”, Augmented Reality “AR”, Artificial Intelligence “AI”, and January 16, 2018, UBI Hong Kong paid its first installment of a total of HK $561,198 (approximately $71,000) to HKPU. On February 1, 2018, HKSAR paid its first installment of HK $561,198 (approximately $71,000) to HKPU. At this point,other technologies will greatly improve the project is progressing on track,application level and the parties believe the established budget will be sufficient to complete the project.effectiveness.

The agreement also providesUBI blockchain system is based on the Ethereum framework and adopts the consortium blockchain (as defined below). This is the first generation and the first product of UBI as well. In early September 2018, the product was introduced to the market for promotion. UBI Hong Kong to paydefines the remaining HK $2,457,552 (approximately $314,000) of its installmentsconsortium blockchain as follows: HK$687,934 (approximately $88,000)1. Important product quality data must be stored in the blockchain to ensure its traceability and resistance to modification; 2. Only authorized organizations or individual are allowed to enter product data in the blockchain (characteristics of private chain); 3. Block Data in the blockchain is completely open and accessible to the public (characteristics of public chain). 4. Smart contracts are widely used in application scenarios.

UBI has developed a plan dedicated to the long-term development and application of blockchain technology to the Chinese health care industry. The Company’s goal is to reshape the trust system and innovate the business model for the Chinese health care industry by April 1, 2018; HK $687,934 (approximately $88,000) by October 1, 2018; HK $687,934 (approximately $88,000) by April 1, 2019building the UBI blockchain based Global Health Chain system. This goal has three important parts: the first one is Kang-Chain Network, which will be an internet-based blockchain network capable of worldwide coverage, which we believe will enable connections through the internet between natural persons, medical institutions, and HK$393,750 (approximately $50,000) within three monthsproviders of health products and health services. We may also describe it as a value oriented or trust internet, to differentiate it from the current information internet. A trust system, service concept, and value orientation can be built for the safeguard of human lives and health quality from the perspective of super technology and cutting-edge thinking. We believe this future model for health differentiates itself from the current health practice in that it is built on trust and safeguard to provide a professional, targeted, flexible, easy to use, peer to peer, group to group, and safe health world that is writable and readable. We believe that the Kang-Chain Network will connect everyone, regardless the location in the world, to have all one’s needs of health satisfied. We believe that the Kang-Chain Network has the potential to entirely change the health world as it is known to us today. The second part consists of the completionKang-Kang-Chain Cloud, which will fundamentally change people’s fear for and concerns about “clouds”. What is more important is that it will protect data privacy with clustered blockchain technology, so as to truly realize the data safety, privacy, permit based share, value, and socialization. Disconnected, and fragmented health data can be active and integrated with a humane premise, hence making it possible a human shared wealth to serve the human health. Kang Chain Cloud establishes a convenient cloud storage, a private safe, and information exchange of health data and information for individuals. The third part is Kang-Chain Community. Exchange and transactions between people used to be simple. However, along with the emergence of residual value, the trust between people started to disappear. People have worked hard to find a mechanism to get the lost trust back. People did not realize that the mechanism they were looking for had deviated from their original intention until today. Peer to peer is forthright and simple. This is exactly one of the HKPU Project. While UBI Hong Kong does not have the financial wherewithal to pay current installments under the agreement as due, Tony Liu has personally agreed and been able to provide funding as necessary for both operationsessential characteristics of the Companyblockchain technology, and obligations due under the agreement. On May 11, 2018 (see Note 12),one that makes the disruption of reality and return to the nature possible. UBI Hong Kong paid HKPUbelieves the peer to peer business model will replace the current ones, and will work as a second installmentcatalyst for the new communities and new business models. This also reflects the social progress and development, as well as the new normal of HK $643,647 (approximately $82,000). On May 24, 2018 (see Note 12), HKSAR also paid HKPUthe shared demand, shared value, shared interest, and mutual reliance. The satisfaction between supply and demand featuring the exchange of peer to peer, group to group, and zero distance will naturally make the cost of exchange down to zero, value and speed maximized, and trusted. The innovative Kang Chain Community will be the highlight of the UBI global public health chain. Kang Chain Community is a second installmentcommercial community formed out of HK $643,647 (approximately $82,000).an innovative model based on Kang Chain Network, and Kang Chain Cloud. This is a voluntary consumer community of the new era built on mutual understanding and trusting with their common needs and shared values.

The agreement also provides for the HKSAR to pay the remaining HK $2,457,522 (approximately $314,000) of its installments periodically within 30 days after the acceptance by the Commissioner of Innovation and Technology (“CIT”), an agency of the HKSAR, of certain Progress Reports to be submitted periodically by HKPU. The agreement provides that HKPU should provide CIT the first written Progress Report in a format acceptable to CIT covering from the Commencement Date to August 31, 2018 to be submitted on or before September 30, 2018. While no written Progress Reports have yet been required or provided to CIT, periodic telephone conversations with CIT have occurred between CIT, HKPU, and the Company from time to time concerning HKPU Project’s progress. The agreement imposes no penalties on UBI Hong Kong should it fail to make any of its installment contributions except that HKSAR principally has the right to cease their installment contributions if UBI Hong Kong fails to make its installment contributions. HKSAR may terminate the agreement if UBI Hong Kong fails to make any of its installment contributions. Further, if any of the parties are in breach of the terms of the agreement or fail in a material way to progress in accordance with the Project Proposal, The Hong Kong Polytechnic University shall on demand by the Government pay to the Government an amount equivalent to the funds or portion thereof released for the Project.

Project SummaryIndustry Trends

The goalBlockchain techniques have shown considerable adaptability in recent years, as various market sectors have sought to find ways of this project isincorporating capabilities into their operations. Especially since 2014, the blockchain began to be applied in the industry and commerce, and the blockchain application has entered a new era in 2018. Previously, the blockchain was mainly applied in the cryptocurrency, which kind of replaced the blockchain to mainly serve the financial industry. However, as the governments of various countries strengthen the supervision of virtual currency, the cryptocurrency circle will be restricted, and the blockchain will play an increasingly important role in industrial applications. Blockchain technology will be widely applied in the future in the fields of finance, medical health, games, copyright, sharing economy, social contact, cloud computing and other fields or industries. It will subvert today’s thinking and social models in many ways.

Application based on blockchain technology

Our management plans to focus its blockchain business on the health industry in China, and give priority to food and pharmaceuticals safety by providing effective technical systems, to prevent counterfeit foods and pharmaceuticals. With the development of blockchain technology, we can trace the entire process of food or pharmaceuticals in an all-round way in the integration of technology clusters such as IoT, VR, AR, AI, and robotics to provide manufacturers and consumers with the maximum symmetrical information exchange throughout the whole manufacturing and logistics process.

We are now in the early stages of blockchain technology, but we believe we have a comprehensive solution to the worldwide problem of counterfeit medicines. Leveraging latest techniques the team want to develop a low-cost, scalable, secure system for: (1) Manufacturers to record necessary datagood understanding of the drugs during their productionframework design, the transition between the health industry language and transportation; (2) Distributorsthe IT language, and the combination between the blockchain & the IoT and food & pharmaceutical technologies. We believe we are in a leading position and destined to tracehave a bright future of blockchain technology.

Healthcare market

Our management believes that with the drugs; (3) Auditorsimprovement of people’s living standards and the growing health awareness, the era of comprehensive health care has arrived. Following the article “Health China 2030” published by China government, we came to inspect all data;further understanding that healthcare, genetic testing, cell storage, precise health management, personal health data storage and finally (4) Consumersanalysis are increasingly recognized by humans and will become rigid demands. Traditional health care methods are being subverted. In 2015, “Health in China” was upgraded to verifyChina’s national strategy; in 2016, China launched the authenticity“Precision Medical Plan” with genetic testing technology as the main means; in 2016, “Health in China Outline 2030” plans to invest 60 billion yuan; in “The Development Plan for Emerging Industries of 2017”, genetic technology is included in National Document No. 1. In the United States, more than 5 million people receive genetic testing every year, creating a profit of 3 billion US dollars; Japan proposed the National Health Plan as early as in 1988 and nowadays the Japanese’s average life expectancy has reached 84 years old. Everybody needs health management. It is estimated that the market scale of China’s health industry will exceed 10 trillion yuan by 2020, according to China National Statistics Bureau.

Opportunities

Blockchain and the IoT are technologies that affect the future and are important ways and means to ensure the safety of health products and health services in the health market. UBI is the first company to enter this market. Being the first one of applying blockchain technology in the health industry will help the company position and develop itself in this field. The access in this market is of high criteria and cost. The ideas and beliefs of the purchased product. This platform will provide suppliers of food and drug products a safety control system to determine if there was a break inUBI team make us optimistic about the supply chain. It will identify if a product was substituted with a counterfeit or inferior product. It will help suppliers of perishable food products, reduce spoilage by tracking food shipments in the supply chain to the final consumer. The safety control system is be designed to prevent unforeseen conditions from occurring. It will be integrated into our technology to help us determine if there has been a break in our tracking systems. It is being developed with HKPU and is required for the completion of this project.future.

In February 2018, UBI Hong Kong performed a test atconclusion, we believe that the offices of Guangxi Houde Mega Health Enterprise (“Guangxi”), a medical products company, ofglobal health market has the e-commerce “alpha” platform (using simulated test data provided by Guangxi). Guangxi is owned 70% by Star Bright International Enterprise Ltd. Star Bright is a stockholder offering 5,000,000 resale Class C common shares in this registration statement. The test identified some technical issues that needpotential to be addressed;huge, not only because it has tremendous market dividends formed by resources that people continuously invest, but also because this market is related to human life and wellness, directly affecting the team is currently preparing for a second test. The second test, originally scheduled for June 2018,quality of human life and happiness. Therefore, we will not be scheduled untilseize the team believesemerging technology of blockchain and the test will be successful. The e-commerce platform will provide a digital shared accounting ledger that would make it possible to trace back a product to the very origin of the raw material used.

Once a working model of a platform is successfully operational, the Company intends to license the software to larger food and drug third party customers.

The agreement provides that the equipment acquiredmarket opportunities at this particular stage, from the HKPU Project will belong to HKPU, who is also identified as the Beneficiaryperspective of the grant for the project and is required to provide CIT with interim and a final accounting for the proceeds of the grantinterests as well as monies advanced by UBI Hong Kong whether the project is successful or not. While HKPU, as the Beneficiary, is provided discretion on how income arising from the intellectual property rights from the Project Materials (including among other things computer software/programs, technical materials, models, documentsresponsibility for human life and materials compiled developed, produced or created by or on behalf of the Beneficiary – the “platform.” and Project Result is to be allocated, UBI Hong Kong is the sole and absolute beneficial owner (has title to) of all of the intellectual property rights which would include the platform if successfully completed under the project.

While HKPU receives full legal and equitable title and interest in any and all of the equipment procured by the Beneficiary, the agreement does not discuss whether HKPU can discontinue its own performance in the event the either HKSAR or UBI Hong Kong fail to make the required payments. However, without funding no one would expect that HKPU would be obligated to continue its performance.

The agreement also has a provision whereby the HKSAR can terminate the grant under certain conditions. These conditions include, among other things, ethical misuse of funds received under the grant or violations of other requirements under the grant. This would include UBI Hong Kong’s failure to meet its general financial obligations as due or go into liquidation. In the event of termination, the HKSAR has the right to suspend payment under the grant or require that amounts previously paid by it be refundable under the grant.

The Company expects to use the technology learned from the HKPU Project to help it develop and market a platform systemwellness, striving for application to control and manage the safety of food and drugs. Pursuantpharmaceuticals and the safety of health services.

Our Strategy

UBI will firmly and persistently dedicate itself in research, development, application and promotion of the blockchain technology to an understandingthe health industry in China. We believe that this disruptive technology will profoundly affect the next ten years or even longer and will, in our opinion, benefit all humanity in the health industry. Our mission is to reshape the trust system and innovate the business model with blockchain technology. We will promote the wide application of blockchain technology in the entity industry and commerce, to explore further of the blockchain beyond its characteristics of value transfer.

Our growth strategy depends to a large extent on our ability to bring the products and technical service to potential customers in target markets. We plan to initially target the China market and gradually expand to Europe, the United States and the other countries and regions.

In order to achieve the company’s strategy, UBI has made a market development plan with the following milestones:

Competitive Advantages

1. Excellent technical team

In its early stage of development, UBI has been cooperating with Hong Kong the Company is responsible for the installments duePolytechnic University (HKPU) and other costs relating to the HKPU Project paid by UBI Hong Kong. These costs are expected to be paid by UBI Hong Kong from loans received support from the Company’s CEO Tony Liu. The Company expects to record these costs asHKSAR. In this context, a joint effort in research and development expensesparticipated by enterprises, universities and increasesgovernments was formed with a competitive advantage. At the same time, we work closely with international blockchain experts and technical teams. We have brought together the advantages of technology and talent.

2. Innovate blockchain application system and products through independent design and development.

The initial design of our blockchain system has firmly grasped the food and drug safety issue, an industry pain point that are widely concerned. The technicians and enterprise personnel cooperated to make analysis and design, optimize various frameworks and solutions from the perspective of the industry chain and supply chain, and has created a unique blockchain traceability system for safety purpose — consortium blockchain product. Meanwhile, we are deploying the UBI global health chain global system based on UBI blockchain technology world widely, in amountsorder to create Kang-Chain product group.

3. We have reliable resources in China’s health industry.

In China, UBI’s management has rich experience and resources in the health industry, which can be used for scientific research and development, raw material production bases and other industrial chains. The company’s management is also familiar with the international pharmaceutical market and the food market.

4. A good management team.

Our management, technical team and consulting team are the leading talents and professionals in their fields. They pursue high quality work. They are smart, responsible, charitable and gifted with vision and innovation spirit.

Target Market

Our current target market is China, where we believe food and pharmaceuticals safety has become a major challenge. Counterfeit food and pharmaceuticals are very common in China, due to Tony Liu until such time as a “technologically feasible” working modelnatural and man-made factors. Although the safety of food and pharmaceuticals is closely linked to the platform has been successfully produced.vital wellness of hundreds of millions of people, we believe that the laws and regulations governing food and pharmaceutical safety in China are not perfect or complete and may not be strictly enforced in many occasions. The occurrence of poison capsule events, vaccine incident, ginkgo leaf, licorice tablets and other major drug dealing and counterfeiting cases, have had serious affects on people’s physical and mental health.

Sources of Income and Pricing

UBI plans to develop a series of blockchain technology based products, such as private blockchain, consortium blockchain and public blockchain which are developed based on different application scenarios and market demands, and as well as the technical system platform. The company generates revenue and profits by providing services and effective products to potential target customers. The price will be determined by the market supply and demand. After initial promotion and marketing, the company’s products and services may have an impact on the existing healthcare industry. Looking ahead, emerging technologies will lead new trends in the health care industry, law enforcement, privacy protection, food and pharmaceuticals safety. UBI will produce good profit by providing specific blockchain solutions and systematic services.

Sales and Marketing

In the future, we will mainly market UBI blockchain system and products through online and offline store. Marketing will also be promoted through cross-border e-commerce platforms. Conference marketing and professional channel marketing will be utilized. Our products and designs also consider the overall needs of human beings and will be tailor-made for some clients. Currently, we are paying attention to the development, formation and demands of China’s “One Belt, One Road” infrastructure initiative.

UBI management believe that UBI’s Global Health Public Blockchain will be our flagship product. On this public blockchain, we not only provide services for health institutions, enterprises, hospitals, etc., but more importantly, our health public blockchain network will connect various communities. In this case, peer-to-peer non-centralized marketing will be realized, which will make marketing faster and lower in cost. Meanwhile, enterprises and consumers can establish a common value on consuming. It will also enable individuals in the community to establish their own health data leger on the public chain, so they can effectively and safely manage their own health data, and become the true manager of their own health. Health data can be used for individuals to improve their own health, and can also be managed to create economic and social benefits through data analysis and appropriate use based on consented and shared value built among community members.

Manufacturing

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

Government Regulation

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

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

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

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

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

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

PRC Government Regulations

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

General Regulation of Businesses

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

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

Foreign Currency Exchange

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

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

Employees

We have 18 full-time employees and we engage the services of 4447 non-employee contractors. Within our workforce, 8 employees are engaged in product and business development and 10 employees are engaged in business development, finance, human resources, facilities, information technology and general management and administration. We expect the number of full time employees to rise to more than 25 by the end of September, 2018. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages. We consider our relationship with our employees to be good.

Property

The Company owns no real property. Our administrative offices are located at: SmartSpace 3F, Level 9, Unit 908, 100 Cyberport Rd., Hong Kong, People’s Republic of China., telephone: (212) 372-8836. The Company has been using this Hong Kong office space provided by UBI Blockchain Internet, LTD. (a Hong Kong Company) (“UBI Hong Kong”) at a cost to the Company equal to UBI Hong Kong’s monthly rent of 22,100 Hong Kong Dollars (approximately $2,816$2,825 at the May 31,November 30, 2018 exchange rate). UBI Hong Kong owns 30,000,000 shares of the Company’s Class A common stock, 6,000,000 shares of the Company’s Class B common stock; and 40,000,000 shares of the Company’s C common stock.

Results of OperationsSubsequent Event

The Company filed a Registration Statement on Form S-1, that registered 20,582,000 of our Class A Common Stock, par value $0.001, and 51,700,000 shares of our Class C Common Stock, par value $0.001. The Registration Statement was declared effective on December 22, 2017. After the stock suspension Notice was issued, the Commission asked the Company to file a Post-Effective Amendment to disclose the stock suspension and its ramifications. The Company filed a Post-Effective Amendment No. 1 on February 5, 2018, Post-Effective Amendment No. 2 on April 4, 2018, Post-Effective Amendment No. 3 on April 19, 2018, Post-Effective Amendment No. 4 on May 15, 2018, and Post-Effective Amendment No. 5 on July 2, 2018. In March 2019, the Company filed an application to withdraw the post-effective amendments and on April 1, 2019, filed Post-Effective Amendment No. 6 to de-register all unsold securities. Post-Effective Amendment No. 6 to de-register all unsold securities was declared effective

Results of Operations

Three Months Ended May 31, 2018February 28, 2019 Compared to Three Months Ended May 31, 2017February 28, 2018

Revenues

DuringThere was no revenue during the three-month period ended May 31, 2018February 28, 2019 and 2017, the Company had no revenues.2018.

Expenses

For the three months ended May 31, 2018,February 28, 2019, the Company had total operating expenses of $574,931$704,836 as compared to $668,669, a decrease$655,074 for the same period in 2018, an increase of $93,738,$49,762, or 14% in 2017.8%. For the three months ended May 31, 2018,February 28, 2019 operating expenses consisted of employee compensation of $180,980$251,125 (including stock-based compensation of $0), consulting fees of $185,000 (stock-based compensation of $185,000), depreciation and amortization of $6,697, professional fees of $61,280, rent$40,000, occupancy expense of $25,359,$34,420, research and development expenses $123,247, depreciation expense $9,138 and other operating expenses of $61,906.

For the three months ended February 28, 2018, operating expenses consisted of employee compensation of $196,093 (including stock-based compensation of $24,167), consulting fees of $305,883 (stock-based compensation of $300,833), depreciation of $2,205, professional fees of $49,000, occupancy cost of $23,069, research and development expenditure of $86,717$71,779 and other operating expenses of $28,898. For the three months ended May 31, 2017, the Company’s operating expenses consisted of: employee compensation of $190,701 (including stock-based compensation of $72,500), consulting fees of $409,167, which was stock-based compensation, depreciation and amortization of $318, professional fees of $53,652 and other operating expenses of $14,831. The decrease in operating expenses resulted from the $296,667 decrease in stock-based compensation from $481,667 in 2017 to $185,000 in 2018, offset by the $202,929 increase in non stock-based operating expenses from $187,002 in 2017 to $389,931 in 2018. The increase in non stock-based operating expenses was due primarily to (1) $101,770 UBI Shenzhen operating expenses incurred in the three months ended May 31,$7,045.

In December 2018 and (2)January 2018, the incurrence of $82,035 of research and development expenses in 2018 relating to the Hong Kong Polytechnic University Project which started in January 2018.

On May 11, 2018,Company through UBI Hong Kong paid HKPU a second installment of HK $643,647 (approximately $82,000) for$83,426 and $71,779, respectively to the HKPU project. The first payment of HK$ 561,198 (approximately $71,779) was made on January 16, 2018.Project. The Company charged these paymentsthis payment as research and development expenses. The Company will continue to charge future HKPU projectProject payments as R&D expense until such time as a “technologically feasible” working model of the platform has been successfully produced.

For the three months ended May 31, 2018,February 28, 2019, the interest expense accrued for loansloan from Tony Liu was $24,024. For$42,168, an increase of $24,149, or 134%, compared to $18,019 in the three months ended May 31, 2017, there was no interest accrued for loans from Tony Liu.February 28, 2018.

Net Loss

For the three months ended May 31, 2018,February 28, 2019, the Company had a net loss of $599,112$746,918 or $(0.01) per share of Class A Class B, and Class C common stock and compared to a loss of $668,669$673,161 or $(0.01) per share of Class A Class B, and Class C common stock for the same period last year.of 2018.

NineSix Months Ended May 31, 2018February 28, 2019 Compared to NineSix Months Ended May 31, 2017February 28, 2018

Revenues

During the nine-monthsix-month period ended May 31, 2018February 28, 2019, the Company recognized $113,278 revenue from development agreements and 2017, the Company had no revenues.revenues in 2018.

Expenses

For the ninesix months ended May 31, 2018,February 28, 2019, the Company had total operating expenses of $2,453,529$1,259,592 as compared to $1,170,660$1,878,598 for the same period in 2017.2018, a decrease of $619,006, or 33%. For the ninesix months ended May 31,February 28, 2019 operating expenses consisted of employee compensation of $424,677 (including stock-based compensation of $0), consulting fees of $370,000 (stock-based compensation of $370,000), professional fees of $108,620, occupancy expense of $67,073, research and development expenses $123,247, depreciation expense $18,782 and other operating expenses of $147,193.

For the six months ended February 28, 2018, operating expenses consisted of employee compensation of $641,036$460,056 (including stock-based compensation of $96,668), consulting fees of $1,023,383$838,383 (stock-based compensation of $1,018,333)$833,334), depreciation and amortization of $11,021,$4,324, professional fees of $454,152$392,872 (stock-based compensation of $335,872), rent expenseoccupancy cost of $65,049,$39,690, research and development expenditure of $158,496$71,779 and other operating expenses of $100,392. For the nine months ended May 31, 2017, the Company’s operating expenses consisted of: employee compensation of $370,270 (including stock-based compensation of $120,833), consulting fees of $665,834 (stock-based compensation of $640,834), depreciation and amortization of $318, professional fees of $93,168 and other operating expenses of $41,070. The $1,282,869 increase in operating expenses resulted from the $689,206 increase in stock-based compensation from $761,667 in 2017 to $1,450,873 in$71,494.

In December 2018 and the $593,663 increase in non stock-based operating expenses from $408,993 in 2017 to $1,002,656 in 2018. The increase in non stock-based operating expenses was due primarily to (1) $268,427 UBI Shenzhen operating expenses incurred in the nine months ended May 31,2018, (2) the incurrence of $153,814 of research and development expenses in 2018 relating to the Hong Kong Polytechnic University Project which started in January 2018, and, (3) the $157,315 increase in UBI Hong Kong employee compensation in 2018.

On May 11, 2018,Company through UBI Hong Kong paid HKPU a second installment of HK $643,647 ($82,035) for$83,426 and $71,779, respectively to the HKPU project. The first payment of HK$ 561,198 ($71,779) was made on January 16, 2018.Project. The Company charged these paymentsthis payment as research and development expenses. The Company will continue to charge future HKPU projectProject payments as R&D expense until such time as a “technologically feasible” working model of the platform has been successfully producedproduced.

For the ninesix months ended May 31, 2018,February 28, 2019, the interest expense accrued for loansloan from Tony Liu was $52,869.

For$76,949, an increase of $48,104, or 167%, compared to $28,845 in the ninesix months ended May 31, 2017, the Company had a gain of $47,003 from settlement of accounts payable and accrued liabilities and a gain of $572 from settlement of a bank overdraft.February 28, 2018.

Net Loss

For the ninesix months ended May 31, 2018,February 28, 2019, the Company had a net loss of $2,506,613$1,223,376 or $(0.02)$(0.01) per share of Class A Class B, and Class C common stock and compared to a loss of $1,123,085$1,907,501 or $(0.03)$(0.01) per share of Class A Class B, and Class C common stock for the same period last year.of 2018.

Going Concern

At May 31, 2018,February 28, 2019, the Company had cash of $55,245$84,014 and current liabilities of $1,732,425.$3,001,100. For the ninesix months ended May 31, 2018,February 28, 2019, the Company incurred a net loss of $2,506,613.$1,223,376. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. However, our major shareholder, who has been funding our operations in the past, has agreed to continue doing so when the Company does not generate sufficient revenue to cover its costs of operations.

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

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our financial statements do not include any adjustments that might arise from this uncertainty. We will consider raising capital on terms acceptable to the Company when there are such opportunities.

Liquidity and Capital Resources

As of May 31, 2018,February 28, 2019, the Company hadhas total assets of $893,818$382,100 consisting of cash $55,245,$84,014, inventory of $25,025,$23,985, prepaid stock-based compensation of $678,333,$123,333, deposit and prepaid expensesexpense of $3.691,$31,196, office equipment of $20,729$5,217 and intangible assets of $110,795$114,355. Total liabilities is $3,001,100 as of February 28, 2019. The Company has been continuously investing in the research and total liabilitiesdevelopment of $1,732,425.blockchain systems and platforms. We will evaluate such investment when appropriate, in belief that considerable values can be created.

The Company has not generated anystarted to generate income as of May 31,from project development during the quarter ended November 30, 2018. The working capital was provided by a major shareholder of the Company. The Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities and operations. These limitations have adversely affected the Company’s ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

New Accounting Standards

Management has evaluated recently issued accounting pronouncements through May 31,November 30, 2018 and concluded that they will not have a material effect on future financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not required for smaller reporting companies.

Item 4T.4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control over Financial Reporting

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

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 May 31, 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 that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of May 31, 2018.

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

We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the quarter ended May 31, 2018. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management Plan to Remediate Material Weaknesses

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

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

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

Changes in Internal Control over Financial Reporting

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

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

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

Item 1A -— Risk Factors

See Risk Factors set forth in Part I, Item 1A of the Company’s Annual Report on 10-K for the fiscal year ended August 31, 20172018 and the discussion in Item 2 of Part I above, under “Liquidity and Capital Resources.” Additionally see Risk Factors set forth in the Form 10 Information disclosed in the Company’s Amended Current Report in Form 8-K/A filed in the Commission on November 17, 2017 and the Post Effective Amendment No. 5 to Form S-1 Filed with the Commission on July 2, 2018.

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

None.

Item 3 — Defaults Upon Senior Securities

None.

Item 4 — Submission of Matters to a Vote of Security HoldersMine Safety Disclosures

None.

Item 5 — Other Information

The Company filed a Registration Statement on Form S-1, that registered 20,582,000 of our Class A Common Stock, par value $0.001, and 51,700,000 shares of our Class C Common Stock, par value $0.001. The Registration became effective on December 22, 2017. After the stock suspension Notice was issued, the Commission asked the Company to file a Post-Effective Amendment to disclose the stock suspension and its ramifications. The Company filed a Post-Effective Amendment No. 1 on February 5, 2018, Post-Effective Amendment No. 2 on April 4, 2018, Post-Effective Amendment No. 3 on April 19, 2018, Post-Effective Amendment No. 4 on May 15, 2018, and Post-Effective Amendment No. 5 on July 2, 2018.None

Item 6 — Exhibits

SIGNATURES

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