UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

WASHINGTON, DC 20549

FORM 10-Q

FORM 10-Q

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

For the quarterly period endedNovember 30, 20142022

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

For the transition period from_______to _______

Commission file number 001-34274number: 000-54013

ADGS ADVISORY, INC .QUALITY ONLINE EDUCATION GROUP INC.

(Exact nameName of Registrant as Specified in itsIts Charter)

(852) 2374-0002Unit 1, 60 Riviera Dr.Markham, Ontario, CanadaL3R 5M1

Phone: 647776 8618

(Registrant’sAddress of Principal Executive Offices, Zip Code & Telephone Number, Including Area Code)Number)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.0001 par value

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐   No ☒

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates: As of most recently completed second fiscal quarter there is no active market for the registrant’s common stock.

The number of shares outstanding of each of the Issuer’s classes of common stock,issuer’s Common Stock as of the latest practicable date: Common, $.0001 par value per share; 1,484,843,869 outstanding as of April 22, 2021.January 6, 2023 was 1,760,903,032.

ADGS ADVISORY, INC.

TABLE OF CONTENTSCONTENT

PARTPart I - FINANCIAL INFORMATION

ItemITEM 1. Financial Statements

QUALITY ONLINE EDUCATION GROUP INC.

ADGS ADVISORY, INC.CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED FOR

THE QUARTER ENDED NOV 30, 2022

QUALITY ONLINE EDUCATION GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODQUARTER ENDED NOVEMBERNOV 30, 2014 (UNAUDITED)2022

Table of Contents

ADGS ADVISORY, INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2013 (UNAUDITED)

ADGS ADVISORYQUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENT OF BALANCE SHEETSSHEET

(Unaudited)AS OF NOV 30, 2022

The accompany notes are an integral part of these consolidated financial statements

QUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

FOR QUARTER ENDED NOV 30, 2022

The accompany notes are an integral part of these consolidated financial statements

QUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR QUARTER ENDED NOV 30, 2022

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

QUALITY ONLINE EDUCATION GROUP INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW

FOR QUARTER ENDED NOV 30, 2022

ADGS ADVISORY INC.

STATEMENTS OF OPERATIONS

(Unaudited)

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

QUALITY ONLINE EDUCATION GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR QUARTER ENDED NOVEMBER 30, 2022

ADGS ADVISORY INC.NOTE 1 NATURE OF BUSINESS

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)Quality Online Education Group Inc. (QOEG) is a leading E-learning company which provides comprehensive online lessons to students in different parts of the world. It locates in Toronto of Canada and has one wholly owned subsidiary company: Golden Bridge Human Resources Consulting Inc., an Ontario, Canada, based company provides tutoring services and courseware development services.

ADGS ADVISORY INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notesWe are an integralthe pioneer and leader of providing real-time online small group classes. We deliver quality education to students and noticeable results from our passionate teachers and teaching assistants. With our Artificial Intelligent system, we combined Education and Entertainment (Edu-tertainment) in part of these financial statements.the learning. It is our mission to develop confidence in our students so they can reach their goals with happiness and efficiency! The main business scope of the Group includes K12 English Online education services, courseware development and Education-technology platform development. 

NOTE 2 GOING CONCERN

Nature of operations

ADGS Advisory, Inc. (“the Company” or “ADGS”) was incorporated in the State of Delaware in September 2007 under the name Life Nutrition Products, Inc. PursuantThe Company’s ability to continue operating as a Certificate of Amendment“going concern” is dependent on its ability to its Certificate of Incorporation filed with the State of Delawareincrease revenues and effective as of July 19, 2013, the Company changed its corporate name from “Life Nutrition Products, Inc.” to “ADGS Advisory, Inc.”

The Company has been dormant since it filed its Form 10-K on February 12, 2015 for period ended August 31, 2014. For financial statement purposes, on subsequent filings, all assets onraise sufficient additional working capital. These matters raise substantial doubt about the Company’s balance sheetability to continue as of August 31, 2014 were considered disposed of or written down; and all liabilities remained on the Company’s balance sheet. Therefore, as result the Company’s auditors have disclaimed the unaudited interim financial statements included in this Report.

With the exception of the Going Concern footnote, the footnotes to the financial statements have not been updated and all assets accounts are considered to have a zero balance, and all liability account balances as of August 31, 2014 remain unchanged as of the date of this Report.

Basis of presentation

These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures for a fair presentation of these interim consolidatedgoing concern. The financial statements have been included.prepared on a going concern basis, which contemplates realization of assets and liquidation of liabilities in the ordinary course of business. The results reported inCompany plans to raise additional capital as needed. There can be no assurance that this capital will be available and if is not, the Company may be forced to substantially curtail or cease operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:

The consolidated financial statements for any interim periods are not necessarily indicativeinclude the accounts of the results that may be reported for the entire year. The accompanying consolidated financial statementsQOEG and its subsidiaries and have been prepared in accordance with the rulesgenerally accepted accounting principles (“GAAP”). All material inter-company accounts and regulationstransactions have been eliminated in consolidation.

Use of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentationEstimates:

The preparation of financial statements in conformity with generally accepted accounting principles generally acceptedrequires management to make estimates and assumptions that affect the amounts reported in the United States. These unaudited consolidated financial statements should be readand accompanying notes. Actual results could differ from those estimates.

Financial Statements in conjunction withU.S. dollars:

The reporting currency of the consolidated financial statements.

Company is the U.S. dollar (“dollar”). The unaudited condensed consolidated financial statements include all accountsdollar is the functional currency of the Company and its subsidiaries as disclosed in Note 1. All material inter-company balances and transactions have been eliminated.

As both the Company and its subsidiaries, ADGS and ADGS Tax are under common control, theCompany’s U.S. subsidiary. The financial statements of the Company have been presented as if the receipt of assets and liabilities of the subsidiaries at their net carrying amount been entered into as of March 1, 2011 in accordance with ASC 805-50-15-6. Accordingly, financial information related to periods prior to the assets and liabilities are that of the Company’s operating subsidiaries.

Going concern

The accompanying consolidated financial statements are presented on a going concern basis. The Company has a working capital deficit of $7,197,161 at November 30, 2014. Management plans to continue its efforts to raise funds through debt or equity in the near future and improve its profitability to sustain its operations.

Foreign currency translation

The Group uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in their respective functional currency, Hong Kong dollars (“HK$”), being the lawful currency in Hong Kong. Assets and liabilities of thenon-US subsidiaries are translated from H.K. Dollars intoto U.S. Dollarsdollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of incomemethods mandated by ASC 830.

Cash and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’ equity section of the balance sheets. The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:Cash Equivalents:

Revenue recognition

The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.

In fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee in monthly installments over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

Revenue recognition (…/Cont’d)

Direct cost of revenue

Direct costs of revenues generated from providing accounting, taxation, company secretarial and consultancy services consists primarily of billable employee compensation and related payroll benefits, the cost of consultants assigned to revenue generating activities and direct expenses billable to clients. Direct cost of revenues does not include an allocation of overhead costs.

Direct costs from providing consultancy service for slope inspections under fixed price contracts are recognized, as the related contact costs are incurred.

Cash

Cash represents cash in banks and cash on hand.

The Group considers all highly liquid investments originally purchased with original maturities of three months or less to be cash equivalents. Substantially allThese financial statements have not been subjected to an audit or review or compilation engagement, and no assurance is provided on them.

Revenue Recognition:

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services rendered, the cash depositssales price of the Group are held with financial institutions located in the Hong Kong, PRC. Management believes these financial institutions are of high credit quality. The group held no cash equivalents at November 30, 2013fee is fixed or determinable, and August 31, 2013.its collectability is reasonably assured.

Restricted cash

Restricted cash represents cash in banks were restricted and deposited in certain banks as security for installment loans payable to the banks.

Accounts receivable

Accounts receivable are recorded at invoiced amounts, net of allowances for doubtful accounts and discounts. The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable. Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions. The Group historically has been able to collect all of its receivable balances.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers.

Stock based compensation:

Deferred revenue

The Company entered into a contractrecords stock-based compensation in accordance with a third party to provide corporate advisory and consulting services. The agreement has a fixed term of four years, and is renewable upon maturity. These fees are deferred and are amortized to income as earned over the term ofASC 718 “Shares-Based Compensation” FASB Accounting Standards Classification using the agreement. Deferred revenue that will be recognized in next fiscal year is classified within current liabilities.

Property and equipment

Property and equipment are recorded at cost less accumulated depreciation. Maintenance, repairs and minor renewals are expensed as incurred; major renewals and improvements that extend the lives or increase the capacity of plant assets are capitalized.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the reporting period of disposition.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets after taking into account their respective estimated residual value.

The estimated useful lives of the assets are as follows:

Equity-method investment

Affiliated companies,fair value method. All transactions in which goods or services are the Company has significant influence, but not control,consideration received for the issuance of equity instruments are accounted for equity-method investment. Equity-method investment adjustments include the Company’s proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, adjustments to recognize certain differences between the Company’s carrying value and the Company’s equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Gain or losses are realized when such investments are sold.

Non-controlling interest

Non-controlling interests represents the 20% interest in ADGS Tax not owned by Almonds Kisses.

Purchased intangible assets

The Group assesses the useful lives and possible impairment of existing recognized intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

- significant underperformance relative to historical or projected future operating results;

- significant changes in the manner of use of the acquired assets or the strategy for our overall business;

- identification of other impaired assets within a reporting unit;

- disposition of a significant portion of an operating segment;

- significant negative industry or economic trends;

The intangible assets are amortized using the straight line method over a period of 10 years.

Purchased goodwill

All business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the acquisition andbased on the fair value of the net identifiable assets acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

Positive goodwill arising on acquisitions is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortized but is tested annually for impairment.

Decreases in goodwill resulting from the non-payment of contingent consideration are recognized in the period when non-payment occurs.

Negative goodwill arising on an acquisition is recognized directly in profit or loss.

The Group assesses the useful lives and possible impairment of existing goodwill when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

- significant underperformance relative to historical or projected future operating results;

- significant changes in the manner of use of the acquired assets or the strategy for our overall business;

- identification of other impaired assets within a reporting unit;

- disposition of a significant portion of business;

- significant negative industry or economic trends;

Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an accrual basis or when indications of impairment exist.

Assets under capital lease

Assets held under capital leases are recorded at the lower of the net present value of the minimum lease paymentsreceived or the fair value of the leased asset atequity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the inceptioncost of the lease. The interest elementservices received as consideration are measured and recognized based on the fair value of the finance cost is chargedequity instruments issued.

Foreign Currency:

The Company translates the financial statements of our foreign subsidiaries from the local (functional) currencies to U.S. dollars. The rates of exchange at each fiscal year end are used for translating the statementassets and liabilities and the average monthly rates of exchange for each year are used for the consolidated statements of operations and comprehensive income overloss. Gains or losses resulting from the lease period so as to produce a constant periodic rate of interest on the remaining balancetranslation of the liability for each period. Depreciation expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.

Comprehensive income

Comprehensive income includes net income and also considers the effect of other changes to stockholders’ equity thatforeign subsidiaries’ financial statements are not included in the determination of net income, but rather are reportedaccompany consolidated balance sheets as a separate component of stockholders’stockholder’s equity. The Group reports foreign currency translation adjustments

NOTE 4: STOCKHOLDERS’ EQUITY COMMON STOCK

After the acquisition and unrealized gains and lossesmerger on investments (those which are considered temporary) as components of comprehensive income.

Earnings per share

Basic earnings per share is computed onAug 31,2020, the basismanagement had canceled the original common stock of the weighted-averageCompany and authorized new share capital. It consists of 50,000,000 shares of common stock of which 39,129,789 shares were outstanding as of Aug 31, 2020 and 3,581,517 were free trading. On October 7, 2020, the Company announced to increase the number of authorized common shares to 5,000,000,000, up to 3 billion of which will be reserved in order to enact the Merger Agreement. The remainder of the increase will be reserved to fund potential new product line development, market expansion, and any further mergers and acquisitions as such opportunities arise. At the same time, an exchangeable shares structure will be used to finalize the current acquisition of QOEG.

Pursuant to the Share Exchange Agreement dated Aug 31, 2020, ADGS Advisory, Inc. (previous name before name change in May 2021) and QOEG started to exchange shares. As of Nov 30, 2022, there were 1,207,885,627 QOEG exchangeable shares that have not been exchanged to QOEG common shares. QOEG has 5,000,000,000 common shares and 20,000,000 preferred shares authorized. Among those shares, 1,751,403,669 QOEG common shares and 1,000,000 QOEG preferred shares were issued and outstanding.

NOTE 5: INCOME TAXES

The net operating loss carryovers may be subject to limitation under Internal Revenue Code due to significant changes in the Company’s common stock outstanding duringownership. The Company has provided a full valuation allowance against the fiscal years. Diluted earnings per share is computed on the basisfull amount of the weighted-average numbernet operating loss benefit, since, in the opinion of sharesmanagement, based upon the earnings history of the common stock plus any effect of dilutive potential common shares outstanding during the period using the if-converted method.

Income taxes

The Group accounts for income taxes under FASB ASC Topic 740 “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

The Group records uncertain tax positions whenCompany it is more likely than not that the tax positionsbenefit will not be sustained upon examinationrealized.

NOTE 6: LOAN FROM SHAREHOLDERS

In support of the Company’s efforts and cash requirements, it may rely on advances from shareholders until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note. The loans are payable on demand, unsecured and bears no interest.

NOTE 7: COMMITMENTS AND CONTINGENCIES

The Company has entered into a service contract with Tianjin Zhipin Education Technology Co., Ltd as one of the respective tax authority.outsourcing vendors on global online market research, education consulting and information technology consulting service in September 2021 for three years. The Company is not aware of any litigation incidental to the conduct of our business as of Nov 30, 2022.

The Group recognizes interest and penalty related to income tax matters as income tax expense. As of November 30, 2013 and 2012, there was no penalty or interest recognized as income tax expenses.

Employee benefits

Fair value measurements

FASB ASC Topic 820, “Fair Value Measurement and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Group. Unobservable inputs reflect the Group’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

The Group’s financial instruments consist principally of cash, accounts receivable, accounts payable, bank loans, and accrued liabilities. Pursuant to ASC 820, the fair value of the Group’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Group believes that the carrying amounts of all of the Group’s other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

The Company has three (3) reportable business segments: providing accounting, taxation, company secretarial, consultancy services, and consultancy service for slope inspection. The Company evaluates performance based on net operating profit. Administrative functions are centralized however, where applicable, portions of the administrative function expenses are allocated between the operating segments. In the event any services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The administrative expenses are captured discretely within each segment. The Company’s property and equipment, and accounts receivable are captured and reported discretely within each operating segment.

The following tables set forth the Company’s four main segments:

Almonds Kisses Limited (“Almonds Kisses”), a wholly owned subsidiary of ADGS Advisory Inc. (the “Company”) entered into a purchase and sale agreement (the “Purchase Agreement”) dated October 20, 2013 which was previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2013. Pursuant to the Purchase Agreement, the Company agreed to purchase all shares of T H Strategic Management Limited (“T H Strategic”), a Hong Kong, People’s Republic of China incorporated company (the “Acquisition”) for purchase consideration of approximately $516,000 (HK$4 million). T H Strategic Management Limited is engaged in providing accounting, taxation, company secretarial and consultancy services.

In consideration for acquisition of the issued and outstanding shares of TH Strategic, Almonds Kisses has agreed to pay the seller the sum of about $516,000 (HK$4 million), payable in four equal monthly installments of about $129,000 (HK$1 million) each. Almonds Kisses has paid the first installment on October 18, 2013, and the remaining installments of $129,000 each which will be due on December 15, 2013, January 15, 2014 and February 15, 2014.

The following table summarizes the estimated fair values of tangible assets acquired and liabilities assumed as of the date of the Merger:

As the purchase price exceeds the fair value of assets and liabilities acquired or assumed, goodwill will be recognized. Goodwill is calculated as the difference between the Acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill is not expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist. No acquisition related costs incurred in this acquisition.

Cash represents cash in bank and cash on hand. Cash as of November 30, 2013 and August 31, 2013 consists of the following:

All cash was maintained in Hong Kong, PRC. In Hong Kong, there are no rules or regulations mandating an obligatory insurance of bank accounts. Management believes these financial institutions are of high credit quality.

As of November 30, 2013 and August 31, 2013 the Group’s cash amounting to $129,604 and $129,312 respectively, were restricted and deposited in a bank as security for installment loans payable to the bank.

The amounts due from the Group CFO are interest free, unsecured and repayable on demand. The Advances to the CFO were funded by Group bank loans. These bank loans were secured by real property owned by the CFO. The activity for such amounts due to shareholders for the period/year ended November 30, 2013 and August 31, 2013 is as follows:

The loan from a related party is interest free, unsecured and is due and payable on August 30, 2017.

Property and equipment, net consist of the following:

Depreciation expense for the three months ended November 30, 2013 and 2012 amounted to $25,818 and $6,285 respectively.

Included in motor vehicle of the Group, the net carrying amount of $112,913 (2012: $21,025) is under capital lease with the related depreciation charge for the three months ended November 30, 2013 of $7,270 and 2012 is $1,402.

The residential property held by Motion Tech is collateral for a banking facility with a maximum amount of $2,063,850 (HK$16 million).

The Group leases a motor vehicle that is classified as capital lease. The cost of the motor vehicle under capital leases is included in the Balance Sheets as property and equipment and was $112,913 ($112,913 net of accumulated depreciation) at November 30, 2013. Amortization of assets under capital leases is included in depreciation expense. The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of November 30, 2013, are as follows:

Intangible assets consist of customer lists purchased from three unrelated parties pursuant to the agreements dated June 21, 2005, April 28, 2011 and September 30, 2013.

The intangible assets are amortized using the straight line method over a period of 10 years. Amortization expenses for the three months ended November 30, 2013 is $49,013 and 2012 is $44,875. The future amortization as of August 31 will be as follows:

The entities that comprise the Group file separate tax returns in the respective tax jurisdictions that they operate. The Company files income tax returns in the U.S. federal and state, and foreign jurisdictions such as Hong Kong, People’s Republic of China. The Inland Revenue Department of Hong Kong, People’s Republic of China would have a 7 year period that it could make changes on tax returns filed.

The Company is domiciled in the State of Delaware, U.S.A.. No provision for U.S.A. profits tax has been made as the Company has sustained losses.

The Company’s subsidiary, Almonds Kisses is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, Motion Tech is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, ADGS Advisory Limited, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $12,955 has been made for the three months ended November 30, 2013. No provision for Hong Kong profits tax has been made for 2012, as the subsidiary sustained tax losses in that period.

The Company’s subsidiary, ADGS Tax Advisory Limited, is domiciled in Hong Kong. No provision for Hong Kong profits tax has been made as the subsidiary sustained tax losses for the three months ended November 30, 2013 and 2012.

The Company’s subsidiary, Vantage Advisory Limited, is domiciled in Hong Kong. No provision for Hong Kong profits tax has been made as the subsidiary sustained tax losses for the three months ended November 30, 2013.

The Company’s subsidiary, T H Strategic Management Limited acquired on October 20, 2013, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $394 has been made for the three months ended November 30, 2013.

The Company’s income tax for the three months ended November 30, 2013 and 2012 can be reconciled to the income before income tax expenses in the statement of operations as follows: