UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2018
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to _________
Commission File Number: 333-179082
| VELT INTERNATIONAL GROUP INC. |
| (Exact Name of Registrant as Specified in Its Charter) |
| Nevada | 27-5159463 | |
| (State
or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) | |
1313 N. Grand Ave., #16 Walnut, California |
91789 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (626) 262-7379
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 Section 15(d) of the 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| (Do not check if a smaller reporting company) | Emerging growth company | ☒ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer was $547,120 based on the closing price of $0.29 per share on December 10, 2018, as reported on the over-the-counter bulletin board.
There were 1,886,622 shares of issuer’s Common Stock outstanding as of December 11, 2018.
TABLE OF CONTENTS
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This Annual Report on Form 10-K , the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Velt International Group Inc. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Velt”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.
Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.
The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data are subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.
ii
History and Overview
Velt International Group Inc. (formerly A & C United Agriculture Developing Inc., or “Velt” or the “Company”) is a Nevada corporation formed on February 7, 2011. Our current principal executive office is located at 1313 N. Grand Ave. #16, Walnut, CA 91789. Tel: 626-262-7379.
On March 13, 2017, Yidan (Andy) Liu and Jun (Charlie) Huang, the principal stockholders of the Company (“Sellers”), entered into a Stock Purchase Agreement (the “Agreement”) with Chin Kha Foo, the assignee of Choa-Jung Lee, and his assigns (the “Buyers”), pursuant to which, among other things, Sellers agreed to sell to the Buyers, and the Buyers agreed to purchase from Sellers, a total of 24,000,000 shares of Common Stock of the Company of record and beneficially by Sellers (the “Purchased Shares”). The Purchased Shares represented approximately 64% of the Company’s issued and outstanding shares of Common Stock, resulting in a change of the control of the Company.
In addition to the U.S. operation, the Company established a subsidiary A & C Agriculture Developing (Europe) AB (“A&C Europe” or the “Subsidiary”) in Stockholm, Sweden on October 24, 2013, which is located at Gamla Sodertaljevagen 134A, 141 70 Segeltorp, Sweden. On August 5, 2017, the Company entered into a Stock Purchase Agreement (the “SPA”) to sell of its equity interest in A & C Europe.
Prior to the change of control, the Company’s long-term goal was focus on solving some of the major challenges in China, such as pollution and food safety issues for the general public, as well as raising funds to grow the business. The Company has changed its focus to develop mobile application system (the “mobile app”) which supports third party payment, online booking and other management functions. This mobile app allows users to get special discounts when the users purchase from merchants listed in the mobile app through its online payment system.
The mobile app relies on big data management to create a large consumer base that mostly connects with traditional retailers and some of the online stores. Although internet consumption is very popular at present, the management believes that traditional offline businesses continue to have a very large market demand. This is because the traditional offline stores can directly bring visual senses to the customers and stimulate customer desires as well as consumer confidences.
The Board of the Directors approved the reverse split of the Company’s issued and outstanding common stock whereby each twenty shares of common stock will be converted into one share of common stock. The stock split became effective with the Financial Industry Regulatory Authority (“FINRA”) on May 21, 2018.
The Company will be also focus on other revenue generated businesses in the year of 2019 which could potentially increase the profits of the Company.
During the next 12 months, we anticipate continuing our efforts to raise capital through follow up meetings with potential investors, although there is no assurance we will raise capital from any of them as we have no contracts, agreements or commitments from this or other funding sources.
Recent Developments
On December 6, 2017, the Company entered into a Mobile Application Development and Maintenance Agreement (the “Mobile Agreement”), pursuant to which, the Company will develop and design a mobile application (the “App”) for a third-party Hong Kong company. Velt will develop the App’s interface and functions, including the App’s ability to book airline ticket, train ticket and taxi cabs, and to play online games, to facilitate payments for utilities and other services, and to facilitate shipping services and so forth.
Products and Services
Our current product and service will be focus on the app system development and application. Meanwhile, we will also search for different business opportunities to be acquired by the Company.
We will continue to improve our app system in order to expand our customer base. The potential customer resource of our app system will be mainly from enterprise customers that will use our app system to serve their end-users.
Strategy
Our strategy is to target the small to medium-sized business market that will utilize our app system to serve their customer database. Except to build up a customized app system for our enterprise customers, we will also help our customers to improve and maintain the customized app system. We hope this one-stop service to will better serve our potential enterprise customers.
1
Competitive Conditions
The app services industry is highly competitive, rapidly evolving and subject to constant technological change and intense marketing by providers with similar products and services.
Most of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we have. As a result, certain of these competitors may be able to adopt more aggressive pricing policies that could hinder our ability to market our services. We believe that our key competitive advantages are our ability to deliver reliable, high quality service in a cost-effective manner. We cannot provide assurances, however, that these advantages will enable us to succeed against comparable service offerings from our competitors.
Employees
As of September 30, 2018, we had 2 employees, all of whom performed operational, technical and administrative functions. No payroll will be paid to the employees before the Company generates net profits. We believe our future success will depend to a large extent on our continued ability to attract and retain highly skilled and qualified employees. We consider our employee relations to be good. None of these employees belong to labor unions.
Not Applicable to smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not Applicable to smaller reporting companies.
Our executive office address is located at 1313 N. Grand, #16, Walnut California. The lease for this facility is on a month to month basis. We pay the rent of $250.00 currently and we expect to rent another physical office in the upcoming year 2019. We believe that our leased facilities are suitable and adequate for their intended use.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
2
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market for Common Equity
Our common stock is quoted on the OTC Bulletin Board (“OTCQB”) under the symbol “VIGC”. The following table sets forth the high and low bid prices for our common stock for the two most recently completed fiscal years. Such prices are based on inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
| Fiscal 2016 | Low | High | ||||||
| First Quarter | $ | 2.00 | $ | 5.00 | ||||
| Second Quarter | $ | 2.00 | $ | 3.00 | ||||
| Third Quarter | $ | 2.09 | $ | 2.20 | ||||
| Fourth Quarter | $ | 1.05 | $ | 2.20 | ||||
| Fiscal 2017 | Low | High | ||||||
| First Quarter | $ | 1.05 | $ | 5.00 | ||||
| Second Quarter | $ | 1.42 | $ | 2.00 | ||||
| Third Quarter | $ | 0.20 | $ | 1.42 | ||||
| Fourth Quarter | $ | 0.40 | $ | 6.00 | ||||
| Fiscal 2018 | Low | High | ||||||
| First Quarter | $ | 1.60 | $ | 6.00 | ||||
| Second Quarter | $ | 1.40 | $ | 10.40 | ||||
| Third Quarter | $ | 0.75 | $ | 4.00 | ||||
| Fourth Quarter | $ | 0.25 | $ | 1.00 | ||||
| Fiscal 2019 | Low | High | ||||||
| First Quarter thru December 10, 2018 | $ | 0.29 | $ | 0.34 | ||||
Penny Stock Considerations
The trading of our common stock is deemed to be “penny stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus are subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $100,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
| ● | Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt; |
| ● | Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities; |
| ● | Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and |
| ● | Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account. |
3
Because of these regulations, broker-dealers may encounter difficulties in their attempt to buy or sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock in the market place. In addition, the liquidity for our common stock may be decreased, with a corresponding decrease in the price of our common stock. Our shares are likely to be subject to such penny stock rules for the foreseeable future.
Common Stock Currently Outstanding
As of December 11, 2018, 1,886,622 shares were issued and outstanding.
Holders
As of the date of this Report, we had about 135 stockholders of record of our common stock.
Dividends
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying any dividends in the foreseeable future. We plan to retain future earnings, if any, for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
Reports to Stockholders
We are currently subject to the information and reporting requirements of the Securities Exchange Act of 1934 and will continue to file periodic reports, and other information with the SEC. We intend to send annual reports to our stockholders containing audited financial statements.
Transfer Agent
West Coast Stock Transfer Inc. located at 721 N. Vulcan Ave. Ste. 205 Encinitas, CA 92024 is the registrar and transfer agent for our common stock.
Issuer Purchases of Equity Securities
None.
Additional Information
Copies of our annual reports on Form 10−K, quarterly reports on Form 10−Q, current reports on Form 8−K, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable to smaller reporting companies.
4
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Annual Report contains “forward-looking statements” that describe management’s beliefs and expectations about the future. We have identified forward-looking statements by using words such as “anticipate,” “believe,” “could,” “estimate,” “may,” “expect,” and “intend,” or words of similar import. Although we believe these expectations are reasonable, our operations involve a number of risks and uncertainties and actual results may be materially different than our expectations.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-K.
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
Velt International Group Inc. (formerly A & C United Agriculture Developing Inc., or “Velt” or the “Company”) is a Nevada corporation formed on February 7, 2011. Our current principal executive office is located at 1313 N. Grand Ave. #16, Walnut, CA 91789. Tel: 626-262-7379.
On March 13, 2017, Yidan (Andy) Liu and Jun (Charlie) Huang, the principal stockholders of the Company (“Sellers”), entered into a Stock Purchase Agreement (the “Agreement”) with Chin Kha Foo, the assignee of Choa-Jung Lee, and his assigns (the “Buyers”). Pursuant to the Agreement, Sellers agreed to sell to the Buyers and the Buyers agreed to purchase from Sellers a total of 24,000,000 shares of common stock of the Company Purchased Shares, which represented approximately 64% of the Company’s issued and outstanding shares of common stock. As a result, the transaction led to a change of the control and the management team of the Company.
On August 5, 2017, the Company entered into a Stock Purchase Agreement (the “SPA”) to sell its equity interest in its subsidiary, A & C Agriculture Developing (Europe) AB, to its former officer. Although the sale was not arms-length, the Board believes the purchase price was reasonable and that it was at a price no less than it would receive from an independent third party.
Prior to the change of the management team, the Company’s long-term goal was focus on solving some of the major challenges in China, such as pollution and food safety issues for the general public, as well as raising funds to grow the business. The Company has changed its focus to develop mobile application system (the “mobile app”) which supports third party payment, online booking and other management functions. This mobile app allows users to get special discounts when the users purchase from merchants listed in the mobile app through its online payment system.
5
The mobile app relies on big data management to create a large consumer base that mostly connects with traditional retailers and some of the online stores. Although internet consumption is very popular at present, the management believes that traditional offline businesses continue to have a very large market demand. This is because the traditional offline stores can directly bring visual senses to the customers and stimulate customer desires as well as consumer confidences.
The Company continues to look for other opportunities which could potentially increase the profits of the Company in the year of 2018.
Current Operational Activities
On December 6, 2017, the Company entered into a Mobile Application Development and Maintenance Agreement (the “Mobile Agreement”). Pursuant to the Mobile Agreement, the Company develops and designs a mobile application (the “Mobile App”) for a third-party company in Hong Kong. The Mobile App allows users to book airline ticket, train ticket and taxi cabs, play online games, facilitate payments for utilities and other services, and to facilitate shipping services and so forth.
We will continue to develop our customer resources in Asia and U.S. markets.
Results of Operations
For the fiscal years ended September 30, 2018 and 2017
Revenue
There were $23,048 and $657,839 revenue generated for the years ended September 30, 2018 and 2017, respectively, which was decreased 96%. The decrease was attributable to the intentions to expand other business lines due to the change of the management team of the Company and the shrinking of the Company’s seed business.
Cost of Goods Sold
There were $nil and $745,652 cost of goods sold incurred for the years ended September 30, 2018 and 2017, respectively. The cost of goods sold decreased due to the different revenue stream.
Operating Expense
Our operating expenses consist of research and development, selling, general and administrative expenses and depreciation expense.
For the years ended September 30, 2018 and 2017, there were a total of $169,557 and $296,178 operating expenses, respectively. The decrease was primarily due to the limited operation activities incurred in this period.
6
Net Loss
We incurred net losses of $185,619 and $385,097 for the years ended September 30, 2018 and 2017, respectively.
Taxation
On December 22, 2017, the United States Congress and the Administration have approved a bill reforming the US corporate income tax code which will reduce corporate tax rate from 35% to 21%. The rate reduction would generally take effect on January 1, 2018. The carrying value of our deferred tax assets is also determined by the enacted US corporate income tax rate. Consequently, any changes in the US corporate income tax rate will impact the carrying value of our deferred tax assets. The net effect of the tax reform enactment on financial statements is $nil for the year ended September 30, 2018.
Equity and Capital Resources
We have incurred losses for the year ended September 30, 2018 and we had an accumulated deficit of $1,243,712 as of September 30, 2018. As of September 30, 2018, we had cash of $127 and a negative working capital of $227,566, compared to cash of $50,515 and a negative working capital of $35,643 as of September 30, 2017. The decrease in the working capital was primarily due to loan from a shareholder to disburse the operating expense or support the Company’s business.
We had no material commitments for capital expenditures as of September 30, 2018. We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of potential business opportunities. However, we do not anticipate that the Company will generate revenue sufficient to cover its planned operating expenses in the foreseeable future, and we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adversely effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Form 10-K, we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may not be available in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
Off-Balance Sheet Arrangements
Under SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:
| ● | Any obligation under certain guarantee contracts, | |
| ● | Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets, | |
| ● | Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and | |
| ● | Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us. |
We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable to smaller reporting companies.
7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
( formerly A & C United Agriculture Developing Inc.)
Consolidated Financial Statements
As of September 30 2018 and 2017
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||
| Consolidated Financial Statements of Velt International Group Inc. and Subsidiary | ||
| Report of Independent Registered Public Accounting Firm | F-2 | |
| Consolidated Balance Sheets as of September 30, 2018 and 2017 | F-3 | |
| Consolidated Statements of Operations and Comprehensive Loss for the Years Ended September 30, 2018 and 2017 | F-4 | |
| Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended September 30, 2018 and 2017 | F-5 | |
| Consolidated Statements of Cash Flows for the Years Ended September 30, 2018 and 2017 | F-6 | |
| Notes to Consolidated Financial Statements | F-7 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and shareholders of Velt International Group Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Velt International Group Inc. and subsidiary (the “Company”) as of September 30, 2018 and 2017, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit) and cash flows for each of the two years in the period ended September 30, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2018, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, accumulated deficit and other adverse key financial ratios which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinions
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Simon & Edward, LLP
Los Angeles, California
December 11, 2018
We have served as the Company's auditor since 2017.
F-2
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| September 30, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 127 | $ | 50,515 | ||||
| Total Current Assets | 127 | 50,515 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 6,304 | - | ||||||
| Total Noncurrent Assets | 6,304 | - | ||||||
| TOTAL ASSETS | $ | 6,431 | $ | 50,515 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Loans from a shareholder | $ | 220,930 | $ | 86,158 | ||||
| Accrued expenses | 6,763 | - | ||||||
| Total Current Liabilities | 227,693 | 86,158 | ||||||
| TOTAL LIABILITIES | 227,693 | 86,158 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Stockholders’ Deficit: | ||||||||
| Common stock, $0.001 par value; 500,000,000 shares authorized; 1,886,622 shares issued and outstanding as of September 30, 2018 and 2017 | 1,887 | 1,887 | ||||||
| Preferred stock, $0.001 par value; 20,000,000 shares authorized; nil share issued and outstanding as of September 30, 2018 and 2017 | - | - | ||||||
| Additional paid-in capital | 1,020,563 | 1,020,563 | ||||||
| Accumulated deficit | (1,243,712 | ) | (1,058,093 | ) | ||||
| Accumulated other comprehensive income | - | - | ||||||
| TOTAL STOCKHOLDERS’ DEFICIT | (221,262 | ) | (35,643 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 6,431 | $ | 50,515 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| Year Ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| Revenues | $ | 23,048 | $ | 657,839 | ||||
| Cost of goods sold | - | 745,652 | ||||||
| Gross profit | 23,048 | (87,813 | ) | |||||
| Operating expenses: | ||||||||
| Research and development | - | 1,404 | ||||||
| Selling, general and administrative expenses | 168,483 | 289,333 | ||||||
| Depreciation expense | 1,074 | 5,441 | ||||||
| Total operating expenses | 169,557 | 296,178 | ||||||
| Operating loss | (146,509 | ) | (383,991 | ) | ||||
| Gain on sale of subsidiary | - | 147 | ||||||
| Other income (loss), net | (39,110 | ) | (1,253 | ) | ||||
| Loss before income taxes | (185,619 | ) | (385,097 | ) | ||||
| Income tax expense | - | - | ||||||
| Net loss | (185,619 | ) | (385,097 | ) | ||||
| Other comprehensive loss, net of tax: | ||||||||
| Foreign currency translation adjustments | - | 1,486 | ||||||
| Other comprehensive income | - | 1,486 | ||||||
| Comprehensive loss | $ | (185,619 | ) | $ | (383,611 | ) | ||
| Earnings per common share: | ||||||||
| Weighted average shares outstanding, basic and diluted | 1,886,622 | 1,905,526 | ||||||
| Net loss per common share, basic and diluted | $ | (0.10 | ) | $ | (0.20 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
|
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) |
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
| Balance as of September 30, 2016 | 2,036,622 | $ | 2,037 | $ | 1,320,413 | $ | (672,996 | ) | $ | (1,486 | ) | $ | 647,968 | |||||||||||
| Cancellation of common stocks under equity-based compensation plans | (150,000 | ) | (150 | ) | (299,850 | ) | - | - | (300,000 | ) | ||||||||||||||
| Sale of subsidiary | - | 1,486 | 1,486 | |||||||||||||||||||||
| Net loss | - | - | - | (385,097 | ) | - | (385,097 | ) | ||||||||||||||||
| Balance as of September 30, 2017 | 1,886,622 | 1,887 | 1,020,563 | (1,058,093 | ) | - | (35,643 | ) | ||||||||||||||||
| Net loss | - | - | - | (185,619 | ) | - | (185,619 | ) | ||||||||||||||||
| Balance as of September 30, 2018 | 1,886,622 | $ | 1,887 | $ | 1,020,563 | $ | (1,243,712 | ) | $ | - | $ | (221,262 | ) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (185,619 | ) | $ | (385,097 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Gain on sale of subsidiary | - | (147 | ) | |||||
| Non-cash portion of share-based consulting fee expense | - | 79,167 | ||||||
| Depreciation expense | 1,074 | 5,441 | ||||||
| Inventory | - | 369,164 | ||||||
| Accounts receivable | - | 6,867 | ||||||
| Prepaid expense | - | 176 | ||||||
| Customer deposits | - | (156,030 | ) | |||||
| Accrued expenses | 6,763 | (7,567 | ) | |||||
| Account payable | - | (31,753 | ) | |||||
| Credit card payable | - | (801 | ) | |||||
| Net cash used in operating activities | (177,782 | ) | (120,580 | ) | ||||
| Investing Activities: | ||||||||
| Disposal of subsidiary, net of cash disposed of | - | 1,634 | ||||||
| Proceeds from sale of property and equipment | - | 1,360 | ||||||
| Purchases of property and equipment | (7,378 | ) | - | |||||
| Net cash (used in) provided by investing activities | (7,378 | ) | 2,994 | |||||
| Financing Activities: | ||||||||
| Loans from a shareholder | 324,772 | 123,770 | ||||||
| Repayment of loans from a shareholder | (190,000 | ) | (70,177 | ) | ||||
| Net cash provided by financing activities | 134,772 | 53,593 | ||||||
| Net decrease in cash | (50,388 | ) | (63,993 | ) | ||||
| Cash at beginning of the period | 50,515 | 114,508 | ||||||
| Cash at end of the period | $ | 127 | $ | 50,515 | ||||
| SUPPLEMENTAL DISCLOSURE: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income tax paid | $ | - | $ | - | ||||
| NON-CASH TRANSACTIONS: | ||||||||
| Cancellation of shares issuance | - | $ | 300,000 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
VELT INTERNATIONAL GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION
Velt International Group Inc. (formerly A & C United Agriculture Developing Inc., or “Velt” or the “Company”) is a Nevada corporation formed on February 7, 2011. Our current principal executive office is located at 1313 N. Grand Ave. #16, Walnut, CA 91789. Tel: 626-262-7379. The Company’s common stock are currently traded on the Over the Counter Bulletin Board (“OTCQB”) under the symbol “VIGC”.
In addition to the U.S. operation, the Company established a subsidiary, A & C Agriculture Developing (Europe) AB (“A&C Europe” or the “Subsidiary”) in Stockholm, Sweden on October 24, 2013, which is located at Gamla Sodertaljevagen 134A, 141 70 Segeltorp, Sweden. On August 5, 2017, the Company sold all of its equity interest in the Subsidiary to the prior President of A&C Europe.
The Company has set up a completed and mature mobile application system (the “mobile app”) which supports third party payment function, online booking and other management functions. This mobile app allows users to get special discounts when the users purchase from merchants listed in the app through its online payment systems and will rely on big data management to create a large consumer base that will mostly connect with traditional retailers and some of the online stores.
The Board of the Directors approved the reverse stock split (the “stock split”) of the Company’s issued and outstanding common stock whereby each twenty shares of common stock will be converted into one share of common stock. The stock split became effective with the Financial Industry Regulatory Authority (“FINRA”) on May 21, 2018. All share and per share amounts in the financial statements and notes thereto have been restated for all periods presented to give retroactive effect to the stock split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant inter-company balances and transactions have been eliminated on consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates, judgements and assumptions that affect certain amounts reported in the financial statements and footnotes. Accordingly, actual results could differ from those estimates.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued a new accounting standard update on revenue recognition from contracts with customers (Topic 606). The new guidance replaces all current GAAP guidance on this topic and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company elected to early adopt the new accounting standard on October 1, 2017 using the modified retrospective method, applied to those contracts which were not completed as of October 1, 2017. The adoption of Topic 606 did not have a material impact as of October 1, 2017 and therefore no cumulative adjustment was recorded.
Management believes that other than disclosed above, none of the recently issued accounting pronouncements will have a material impact on the consolidated financial statements.
Concentration of Risk
The Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash in bank.
The Company had total revenue of $23,048 and $657,839 for the years ended September 30, 2018 and 2017, respectively. For the year ended September 30, 2018, all revenue was to one customer. For the year ended September 30, 2017, the Company’s largest two customers provided with approximately 77% of sales.
F-7
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2018 and 2017, the Company had cash in bank of $127 and $50,515, respectively.
Earnings Per Share
Basic earnings per share is computed by dividing net income (loss) attribute to stockholders of common stock by the weighted-average number of common shares outstanding for the period. Diluted net earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus equivalent shares.
The Company only issued one type of shares, i.e., common shares and does not have any potentially dilutive instrument as of September 30, 2018 and 2017.
Property and equipment
Property and equipment are carried at cost and, less accumulated depreciation. Depreciation has been determined using a straight-line method over the estimated useful lives of the related assets, which are 5 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements 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 year of disposal. The Company examines the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
As of September 30, 2018, the Company’s property and equipment consists of computer equipment with a cost of $7,378 and accumulated depreciation of $1,074. As of September 30, 2017, the Company has property, plant, and equipment at a cost of nil and accumulated depreciation of nil. During the years ended September 30, 2018 and 2017, the depreciation expenses were $1,074 and $5,441, respectively.
Revenue Recognition
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products and services. We enter into contracts that include products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers.
The Company’s contracts with customers may include multiple performance obligations. Revenue relating to agreements that provide more than one performance obligation is recognized based upon the relative fair value to the customer of each performance obligation as each obligation is earned. The Company derives its revenues the follows:
Mobile Apps:
Revenue from the mobile apps is recognized when control has transferred to the customer which typically occurs when the mobile apps either upon delivery of the key code to the customer or upon the deployment of the mobile app to the App Store.
Maintenance Services:
The Company offers maintenance and function improvements services related to the mobile apps for customers. Maintenance service is considered distinct and is recognized ratably over the maintenance term.
During the year ended September 30, 2018, the Company recognized revenue from the mobile apps and maintenance services in the amount of $23,048. The Company had total revenue of $657,839 in sales of seeds for the year ended September 30, 2017.
Going Concern Assessment
The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern. These adverse conditions are negative financial trends, specifically negative working capital, recurring operating losses, accumulated deficit and other adverse key financial ratios.
The Company did not generate sufficient revenues to cover its operating expense during the year ended September 30, 2018. The Company plans to loan from Mr. Chin Kha Foo who is the majority shareholder and the President of the Company to support the Company’s normal business operating. There is no assurance, however, that the Company will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to the Company.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
F-8
NOTE 3 - RELATED PARTY TRANSACTIONS
Loans from a shareholder
On May 24, 2018, the Company issued a promissory note of $249,975, bearing interest rate at 6% and due in twelve months, to Mr. Chin Kha Foo (“Mr. Foo”) in exchange for cash. On July 17, 2018 and July 25, 2018, the Company made repayments of $100,000 and $90,000 to Mr. Foo, respectively. As of September 30, 2018, the outstanding balance for the promissory note was $59,975. For the year ended September 30, 2018, the interest expense was $3,110.
The Company borrowed from Mr. Foo to support its operation and the amount bears no interest and due on demand. The outstanding balance of the borrowings as of September 30, 2018 and 2017 were $160,955 and $86,158, respectively.
NOTE 4 – STOCKHOLDER’S EQUITY
Common stock
The Board of the Directors approved the stock split of the Company’s issued and outstanding common stock whereby each twenty shares of common stock will be converted into one share of common stock. The stock split became effective FINRA on May 21, 2018. Pursuant to the stock split, each issued and outstanding share of the common stock was exchanged for one-twentieth of a share. As a result, each stockholder now owns a reduced number of shares of the Company’s common stock. The number of the Company’s authorized shares of common stock was not affected by the stock split and the shares of common stock retain a par value of $0.001 per share.
Preferred stock
On April 23, 2018, the Company authorized 20,000,000 shares of preferred stock with $0.001 par value. As of September 30, 2018, nil share was issued and outstanding.
NOTE 5 - INCOME TAXES
The Company provides for income taxes under ASC 740 “Income Taxes”, ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company is subject to taxation in the United States. The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the period presented is offset by a valuation allowance. For the year ended September 30, 2018, the Company has incurred a net loss of approximately $187,000. Net Operating Loss (“NOL”) carry forwards of approximately $846,000 will expire, if not utilized, through 2038. The deferred tax asset has been off-set by an equal valuation allowance.
| For
the year ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| Deferred tax asset, generated from net operating loss at statutory rates | $ | 206,551 | $ | 159,948 | ||||
| Valuation allowance | (206,551 | ) | (159,948 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
In December 2017, the Tax Reform Act was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21 % effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The management does not believe that there will be any material impact on its consolidated financial statements as a result of the Tax Reform Act.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company has no commitment or contingency as of September 30, 2018.
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these consolidated financial statements were issued and determined that there were no subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.
F-9
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, in order to allow timely consideration regarding required disclosures.
The evaluation of our disclosure controls by our principal executive officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Annual Report. Our management, including our Chief Executive Officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were significant deficiency in our internal controls over Financial reporting as of September 30, 2018 and they were therefore not as effective as they could be to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The significant deficiency in our controls and procedure were lack of formal documents such as invoices and lack of evidence for proper approval and review of disbursements. Management does not believe that any of these significant deficiency materially affected the results and accuracy of its financial statements. However, in view of this discovery of such weaknesses, management has begun a review to improve them.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework that was issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of the year ended September 30, 2018. We believe that internal controls over financial reporting as set forth above shows some weaknesses and are not effective. We have identified certain weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Subsequent to the end of the period covered by this report, and in light of the weakness described above, management is in the process of designing and implementing improvements in its internal control over financial reporting and we currently plan tom hire an independent third party consultant to assist in identifying and determining the appropriate accounting procedures and controls to implement.
None
8
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table contains the name, age of our Directors and executive officers as of September 30, 2018.
| Name | Age | Position Held | Held Office Since | |||
| Chin Kha Foo | 44 | President/CEO/CFO and Director | 2017 | |||
| Liew Meng Leong | 40 | Director | 2017 |
The directors will serve until the next annual meeting of stockholders of the Company and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. The following is information concerning the business backgrounds of Mr. Chin and Mr. Liew.
Chin Kha Foo was born in Sarawak, Malaysia. He has served as an operating manager in Singapore Airlines SATS from 1994 to 2006. His duties included operating management, employee training and schedule arrangement. Since 2008 he has served as sales adviser and marketing manager for OTS Group, a Malaysian company engaged in the business of life insurance. His duties included business development and service quality control. In 1992, Mr. Foo graduated from SMK Sungai Tapang Kuching Sarawak, Malaysia.
Liew Meng Leong has over 10 years of management experiences in the fields of business development and strategy plan. From May 2013 until July 2016, Mr. Liew was the president of Yee Koo Hardware Trading and from August 2007 until April, 2013, he was the president for Golden Dynasty SND BHD. From April 2001 until June 2007, he was the engineering assistant on Asahi Denka (Singapore). Mr. Liew graduated with a Diploma degree from College Linton where he majored in Electrical and Electronics Engineering.
ITEM 11. EXECUTIVE COMPENSATION.
The compensation programs presently in effect with respect to the Chief Executive Officer, Chief Financial Officer and Chairman of the Board were established by the Board of Directors.
Executive Compensation
The following table sets forth the compensation paid to each of our principal executive officers (the “Named Executive Officers”) during the last two completed fiscal years:
SUMMARY COMPENSATION TABLE
Management Compensation
Name and Fiscal Year Ended September 30, 2018 and 2017 | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | |||||||||||||||||||||
| Chin Kha Foo FY 2018 FY 2017 (1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Yidan (Andy) Liu FY 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Yidan (Andy) Liu FY 2017 (2) | 45,000 | 0 | 0 | 0 | 0 | 0 | 45,000 | |||||||||||||||||||||
| (1) | Mr. Foo was appointed a Director and President/CEO/CFO on July 2, 2017. |
| (2) | Mr. Liu resigned as a Director and officer of the Company effective July 2, 2017. |
Compensation of Directors
Each Director that is not an officer is reimbursed the reasonable out-of-pocket expenses in connection with their travel to attend meetings of the Board of Directors. No payments were made to our current directors for the fiscal years ended 2017 and 2018.
9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of the Record Date with respect to the beneficial ownership of Common Stock by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock after the Closing Date (ii) our current directors, (iii) each person who will become a director on or after the tenth day following our mailing of this Information Statement, (iv) each of newly named executive officers and (v) all of our newly named executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote and subject to community property laws, where applicable, to our knowledge the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock that are shown as beneficially owned by them. In computing the number of shares of Common Stock owned by a person and the percentage ownership of that person, any such shares subject to options and warrants held by that person that are exercisable as of the Record Date or that will become exercisable within 60 days thereafter are deemed outstanding for purposes of that person’s percentage ownership but not deemed outstanding for purposes of computing the percentage ownership of any other person. The percent of class is based on 1,886,575 shares of common stock issued and outstanding as of the date of this report. Unless otherwise indicated, the mailing address of each individual is c/o Velt International Group Inc., 1313 N. Grand Ave., #16, Walnut, California
| Name | Number of Shares of Common stock | Percentage | ||||||
| Yidan (Andy) Liu [1] | 125,500 | 7 | % | |||||
| Jiwen Zhang [1] | 125,500 | 7 | % | |||||
| Jun (Charlie) Huang | 125,000 | 7 | % | |||||
| Chin Kha Foo | 1,132,000 | 60 | % | |||||
| Liew Meng Leong | -0- | -0- | % | |||||
| All Officers and Directors as a Group (2) | 1,132,000 | 60 | % | |||||
| [1] | Includes 10,000 shares owned by Jiwen Zhang, wife of Mr. Liu. |
Legal Proceedings
The Company is not aware of any legal proceedings in which any director, officer, or any owner of record or beneficial owner of more than 5% of any class of voting securities of the Company, or any affiliate of any such director, officer, affiliate of the Company, or security holder, or any person who will become a director upon completion of the transactions contemplated by the Agreement is a party, or any information that any such person is adverse to the Company or has a material interest adverse to the Company.
CORPORATE GOVERNANCE
The Board of Directors
As set forth in our Articles of Incorporation and Bylaws, all directors of the Company hold office until the next annual meeting of stockholders or until their successors have been duly elected and qualified. Other than as disclosed in this Information Statement, to the knowledge of the Company, are no agreements with respect to the election of directors. The Company’s executive officers serve at the discretion of the Board.
Code of Ethics
We have not adopted a written Code of Ethics at this time that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Board of Directors are reviewing the necessity of adopting such a document given we are still in the start-up exploration stage and have limited employees, officers and directors.
Nominating Committee
We do not have a Nominating Committee. Since our formation we have relied upon the personal relationships of our President to attract individuals to our Board of Directors.
10
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.
Compensation Committee
We do not have a Compensation Committee. Our entire Board of Directors review and recommend the salaries, and benefits of all employees, consultants, directors and other individuals compensated by us.
Audit Committee
We do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our Board of Directors.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the year ended September 30, 2018, we had not entered into any transactions with our sole officer or director, or persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last three fiscal years.
Director Independence
Our board of directors has determined that we do not have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
Our Common Stock is traded on the OTCQB under the symbol “VIGC”. The OTC Bulletin Board electronic trading platform does not maintain any standards regarding the “independence” of the directors for our Board and we do not believe we are subject to the requirements of any national securities exchange or an inter-dealer quotation system with respect to the need to have any and/or a majority of our directors be independent.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Simon & Edward, LLP was our independent auditor for the fiscal years ended September 30, 2018 and 2017.
The following table shows the fees paid or accrued by us for the audit and other services provided by our auditors for fiscal years ended September 30, 2018 and 2017, respectively.
| 2018 | 2017 | |||||||
| Audit Fees (i) Simon & Edward, LLP | $ | 10,000 | 15,500 | |||||
| Audit-Related Fees (ii) | - | |||||||
| Tax Fees (iii) | $ | 800 | 1,500 | |||||
| All Other Fees (iv) | - | |||||||
| Total | $ | 10,800 | $ | 17,000 | ||||
As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”
Under applicable SEC rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditors in order to ensure that they do not impair the auditors’ independence. The SEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent auditors. Until such time as we have an Audit Committee in place, the Board of Directors will pre-approve the audit and non-audit services performed by the independent auditors.
Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following documents are exhibits to this report.
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Pursuant to the requirements of Section 13 or 15(d) 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.
| VELT INTERNATIONAL GROUP INC. | ||
| Date: December 11, 2018 | By: | /s/ Chin Kha Foo |
| Chin Kha Foo | ||
| President and | ||
| Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Chin Kha Foo | Principal Executive Officer & Principal Accounting Officer & Director | December 11, 2018 | ||
| Chin Kha Foo | Principal Accounting Officer | |||
| /s/ Liew Meng Leong | Director | December 11, 2018 | ||
| Liew Meng Leong |
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