UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended November 30, 2020
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 333-221548
LEADER CAPITAL HOLDINGS CORP.
(Exact name of registrant issuer as specified in its charter)
| Nevada | 37- 1853394 | |
| (State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) | |
Room 2708-09, Metropolis Tower, 10 Metropolis Drive, Hung Hom, Hong Kong |
||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s phone number, including area code: +852-3487-6378
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| N/A | N/A | N/A |
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 [X]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
YES [ ] NO [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 [X] | Smaller reporting company [X] |
| Emerging growth company [X] |
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 [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at January 11, 2021 | |
| Common Stock, $0.0001 par value | 133,894,219 |
LEADER CAPITAL HOLDINGS CORP.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2020
TABLE OF CONTENTS
| i |
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
CONTAINED IN THIS REPORT
This quarterly report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions, future performance, anticipated expenses, or projected financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include the following:
| ● | the availability and adequacy of our cash flow to meet our requirements; | |
| ● | economic, competitive, demographic, business and other conditions in our local and regional markets; | |
| ● | general economic conditions and events and the impact they may have on us and our clients, including but not limited to the impact of COVID-19; | |
| ● | changes or developments in laws, regulations or taxes in our industry; | |
| ● | actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities; | |
| ● | competition in our industry; | |
| ● | the loss of or failure to obtain any license or permit necessary or desirable in the operation of our business; | |
| ● | changes in our business strategy, capital improvements or development plans; | |
| ● | the availability of additional capital to support capital improvements and development; and | |
| ● | other risks identified in our other filings with the U.S. Securities and Exchange Commission (the “SEC”). |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, or joint ventures we may make or collaborations or strategic partnerships we may enter into.
You should read this Form 10-Q and the documents that we have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Unless otherwise stated or the context otherwise requires, the terms “Leader Capital Holdings Corp.,” “we,” “us,” “our” and the “Company” refer collectively to Leader Capital Holdings Corp. and, where appropriate, its subsidiaries.
| ii |
PART I — FINANCIAL INFORMATION
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
INDEX TO UNAUDITED FINANCIAL STATEMENTS
| 1 |
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars except for share data)
| As of | ||||||||
| November 30, 2020 | August 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 550,505 | $ | 432,087 | ||||
| Prepayments, deposits and other receivables | 4,160,431 | 596,166 | ||||||
| Inventory | 12,409 | - | ||||||
| Due from a director | - | 189,474 | ||||||
| Due from a related company | - | 36,666 | ||||||
| Loan to a shareholder | 35,026 | 34,048 | ||||||
| Total current assets | 4,758,371 | 1,288,441 | ||||||
| Non-current assets | ||||||||
| Plant and equipment, net | 82,947 | 33,667 | ||||||
| Intangible assets | 793,628 | 818,200 | ||||||
| Goodwill | 2,974,364 | 2,974,364 | ||||||
| Operating lease right-of-use assets, net | 335,876 | 237,239 | ||||||
| Total non-current assets | 4,186,815 | 4,063,470 | ||||||
| TOTAL ASSETS | $ | 8,945,186 | $ | 5,351,911 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accrued expenses and other payables | $ | 291,439 | $ | 292,246 | ||||
| Contract liabilities | 11,042 | 2,896 | ||||||
| Operating lease liability, current | 224,794 | 189,253 | ||||||
| Loan from a shareholder | 60,075 | 60,075 | ||||||
| Tax payable | 21,449 | 31,871 | ||||||
| Due to shareholders | 106,710 | 99,730 | ||||||
| Due to a director | 1,394,194 | 1,400,459 | ||||||
| Total current liabilities | 2,109,703 | 2,076,530 | ||||||
| Non-current liabilities | ||||||||
| Operating lease liability, non-current | 115,484 | 54,095 | ||||||
| Deferred tax liabilities | 158,526 | 163,640 | ||||||
| Bonds payable | 600,000 | 600,000 | ||||||
| Convertible notes payable to related parties | 1,287,000 | 104,000 | ||||||
| Total non-current liabilities | 2,161,010 | 921,735 | ||||||
| TOTAL LIABILITIES | $ | 4,270,713 | $ | 2,998,265 | ||||
| COMMITMENTS AND CONTINGENCIES (Note 14) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $0.0001 par value; 200,000,000 shares authorized; None issued and outstanding | - | - | ||||||
| Common stock, $ 0.0001 par value; 600,000,000 shares authorized; 129,974,219 and 135,474,219 shares issued and outstanding as of November 30, 2020 and August 31, 2020, respectively | 12,998 | 13,548 | ||||||
| Additional paid-in capital | 19,626,317 | 13,647,673 | ||||||
| Accumulated other comprehensive loss | (207 | ) | - | |||||
| Accumulated deficits | (14,964,635 | ) | (11,307,575 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | $ | 4,674,473 | $ | 2,353,646 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 8,945,186 | $ | 5,351,911 | ||||
See accompanying notes to the condensed consolidated financial statements.
| 2 |
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In U.S. dollars except for share data)
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| REVENUE | $ | 22,863 | $ | 1,667 | ||||
| OPERATING EXPENSES | ||||||||
| Research and development expenses | (146,971 | ) | - | |||||
| Sales and marketing expenses | (109,702 | ) | - | |||||
| General and administrative expenses | (2,953,167 | ) | (1,238,147 | ) | ||||
| LOSS FROM OPERATIONS | (3,186,977 | ) | (1,236,480 | ) | ||||
| Interest expense | (15,446 | ) | (14,959 | ) | ||||
| Loss on change in fair value of convertible notes | (481,043 | ) | - | |||||
| OTHER INCOME | ||||||||
| Other income – from related parties | 1,823 | - | ||||||
| Other income – from non-related parties | 19,469 | 21,809 | ||||||
| 21,292 | 21,809 | |||||||
| LOSS BEFORE INCOME TAX | (3,662,174 | ) | (1,229,630 | ) | ||||
| Income tax benefit (expense) | 5,114 | (20,000 | ) | |||||
| NET LOSS | $ | (3,657,060 | ) | $ | (1,249,630 | ) | ||
| OTHER COMPREHENSIVE LOSS | ||||||||
| Foreign currency translation adjustment | (207 | ) | - | |||||
| TOTAL COMPREHENSIVE LOSS | $ | (3,657,267 | ) | $ | (1,249,630 | ) | ||
| Net loss per share - Basic and diluted | $ | (0.03 | ) | $ | (0.01 | ) | ||
| Weighted average number of shares of common stock outstanding - Basic and diluted | 136,921,376 | 113,684,073 | ||||||
See accompanying notes to the condensed consolidated financial statements.
| 3 |
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(In U.S. dollars except for share data)
| FOR THE THREE MONTHS ENDED NOVEMBER 30, 2020 | ||||||||||||||||||||||||
| COMMON STOCK | ADDITIONAL | ACCUMULATED OTHER | TOTAL | |||||||||||||||||||||
| Number
of shares | Amount | PAID
IN CAPITAL | COMPREHENSIVE LOSS | ACCUMULATED DEFICITS | STOCKHOLDERS’ | |||||||||||||||||||
| Balance as of September 1, 2020 | 135,474,219 | $ | 13,548 | $ | 13,647,673 | $ | - | $ | (11,307,575 | ) | $ | 2,353,646 | ||||||||||||
| Shares to be issued in private placement | - | - | 198,000 | - | - | 198,000 | ||||||||||||||||||
| Cancellation of restricted shares | (5,500,000 | ) | (550 | ) | 550 | - | - | - | ||||||||||||||||
| Share based compensation | - | - | 5,780,094 | - | - | 5,780,094 | ||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | (207 | ) | - | (207 | ) | ||||||||||||||||
| Net loss | - | - | - | - | (3,657,060 | ) | (3,657,060 | ) | ||||||||||||||||
| Balance as of November 30, 2020 | 129,974,219 | $ | 12,998 | $ | 19,626,317 | $ | (207 | ) | $ | (14,964,635 | ) | $ | 4,674,473 | |||||||||||
| FOR THE THREE MONTHS ENDED NOVEMBER 30, 2019 | ||||||||||||||||||||||||
| COMMON STOCK | ADDITIONAL | ACCUMULATED OTHER | TOTAL | |||||||||||||||||||||
| Number of shares | Amount | PAID IN CAPITAL | COMPREHENSIVE INCOME | ACCUMULATED DEFICITS | STOCKHOLDERS’ EQUITY | |||||||||||||||||||
| Balance as of September 1, 2019 | 105,184,073 | $ | 10,519 | $ | 1,888,909 | $ | - | $ | (1,464,746 | ) | $ | 434,682 | ||||||||||||
| Share based compensation | - | - | 4,250,000 | - | - | 4,250,000 | ||||||||||||||||||
| Net loss | - | - | - | - | (1,249,630 | ) | (1,249,630 | ) | ||||||||||||||||
| Balance as of November 30, 2019 | 105,184,073 | $ | 10,519 | $ | 6,138,909 | $ | - | $ | (2,714,376 | ) | $ | 3,435,052 | ||||||||||||
See accompanying notes to the condensed consolidated financial statements.
| 4 |
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In U.S. dollars)
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (3,657,060 | ) | $ | (1,249,630 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Loss on change in fair value of convertible notes | 481,043 | - | ||||||
| Share based compensation | 2,159,261 | 1,062,500 | ||||||
| Amortization of operating lease right-of-use assets | 69,867 | - | ||||||
| Depreciation and amortization | 35,822 | 2,314 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepayments, deposits and other receivables | 56,568 | (14,823 | ) | |||||
| Inventory | (12,291 | ) | - | |||||
| Amount due from a director | 189,474 | - | ||||||
| Deferred tax liabilities | (5,114 | ) | - | |||||
| Operating lease liabilities | (71,575 | ) | - | |||||
| Accrued expenses and other payables | (12,838 | ) | 45,405 | |||||
| Net cash used in operating activities | (766,843 | ) | (154,234 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of plant and equipment | (58,609 | ) | - | |||||
| Issuance of notes receivable | - | (401,285 | ) | |||||
| Acquisition of intangible assets | (1,023 | ) | - | |||||
| Net cash used in investing activities | (59,632 | ) | (401,285 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from shares to be issued in private placement | 198,000 | - | ||||||
| Proceeds from convertible notes issuance | 700,000 | - | ||||||
| Advance from a shareholder | 4,160 | - | ||||||
| Advance from a director | 30,401 | 175,502 | ||||||
| Net cash provided by financing activities | 932,561 | 175,502 | ||||||
| Effects of exchange rate changes on cash and cash equivalents | 12,332 | - | ||||||
| Net increase (decrease) in cash and cash equivalents | 118,418 | (380,017 | ) | |||||
| Cash and cash equivalents, beginning of period | 432,087 | 447,562 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 550,505 | $ | 67,545 | ||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
Due from a related company off-setting with advance from a director | $ | 36,666 | $ | - | ||||
See accompanying notes to the condensed consolidated financial statements.
| 5 |
LEADER CAPITAL HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO condensed consolidated FINANCIAL STATEMENTS
(UNaudited)
For the three months ended November 30, 2020 and 2019
(In U.S. dollars except for share data)
1. ORGANIZATION AND BUSINESS BACKGROUND
Leader Capital Holdings Corp. (“LCHD” or the “Company”) was incorporated on March 22, 2017 under the laws of the State of Nevada.
The Company, through its subsidiaries, mainly operates and services a mobile application investment platform.
| Company Name | Place/Date of Incorporation | Principal Activities | ||
| 1. Leader Financial Group Limited | Seychelles / March 6, 2017 | Investment Holding | ||
| 2. JFB Internet Service Limited | Hong Kong / July 6, 2017 | Provides an Investment Platform |
On August 17, 2020, LCHD, through JFB, acquired all of the issued and outstanding capital stock (the “Acquisition”) of Nice Products Inc. (“NPI”), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of the Closing Date, among the Company, JFB, NPI, the selling shareholders of NPI identified therein (each a “Seller,” and, collectively, the “Sellers”) and the representative of the Sellers identified therein. As a result of the Acquisition, the Company now owns indirectly 100% of NPI, LOC Weibo Co., Ltd. and Beijing DataComm Cloud Media Technology Co., Ltd.
The aggregate purchase price for the Acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates, resulting in a net purchase price of $3,506,042, payable in 8,415,111 shares of the Company’s common stock to the Sellers in accordance with their respective pro rata percentage.
After the completion of the Acquisition, NPI became an indirect, wholly owned subsidiary of the Company.
NPI was incorporated in the British Virgin Islands on December 17, 2018.
NPI, through its subsidiaries, mainly engages in the development of ecological-systems applications, integration of big data and promotion of OTT applications.
| Company Name | Place/Date of Incorporation | Principal Activities | ||
| 1. LOC Weibo Co., Ltd. (“LOC”) | Republic of China/September 29, 2017 | Development of ecological-systems applications, integration of big data and promotion of OTT applications | ||
| 2. Beijing DataComm Cloud Media Technology Co., Ltd. (“BJDC”) | People’s Republic of China /April 16, 2013 | Development of ecological-systems applications, integration of big data and promotion of OTT applications |
LCHD and its subsidiaries (including NPI and its subsidiaries) are hereinafter referred to as the “Company”.
| 6 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These interim condensed consolidated financial statements of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the unaudited condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”), and include the accounts of the Company and its subsidiaries. However, they do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with U.S. GAAP. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Intercompany accounts and transactions have been eliminated in consolidation.
The Company has adopted August 31 as its fiscal year end. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended August 31, 2020, which was filed with the SEC on December 15, 2020.
Going Concern
The accompanying interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
The Company has suffered recurring losses from operations, and records an accumulated deficit of $14,964,635 as of November 30, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
The Company expects to finance its operations primarily through cash flows from operations, loans from existing directors and shareholders and placements of capital stock for additional funding. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, a shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including the Company’s businesses. This outbreak could decrease spending, adversely affect demand for the Company’s services and harm its business and results of operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on its business or results of operations at this time.
These interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as going concern.
| 7 |
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.
Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its condensed consolidated financial statements.
Business combination
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of comprehensive income. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of comprehensive income.
When there is a change in ownership interests that result in a loss of control of a subsidiary, the Company deconsolidates the subsidiary from the date control is lost. Any retained non-controlling investment in the former subsidiary is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary.
Goodwill and impairment of goodwill
Goodwill represents the excess of the purchase price and related costs over the fair value of the net identified tangible and intangible assets and liabilities assumed and is not amortized. The total amount of goodwill is deductible for tax purposes.
In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value.
| 8 |
The Company estimates fair value of the applicable reporting unit or units using a discounted cash flow methodology. This methodology represents a level 3 fair value measurement as defined under ASC 820, Fair Value Measurements and Disclosures, since the inputs are not readily observable in the marketplace. The goodwill impairment testing process involves the use of significant assumptions, estimates and judgments, including projected sales, gross margins, selling, general and administrative expenses, and capital expenditures, and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. When the Company performs goodwill impairment testing, its assumptions are based on annual business plans and other forecasted results, which it believes represent those of a market participant. The Company selects a discount rate, which is used to reflect market-based estimates of the risks associated with the projected cash flows based on the best information available as of the date of the impairment assessment. Based on the annual impairment analysis, there is no impairment on the goodwill recorded in the Company’s financial statements.
Given the current macro-economic environment and the uncertainties regarding its potential impact on the Company’s business, there can be no assurance that its estimates and assumptions used in its impairment tests will prove to be accurate predictions of the future. If the Company’s assumptions regarding forecasted cash flows are not achieved, it is possible that an impairment review may be triggered and goodwill may be impaired.
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Software Development Costs
The Company expenses software development costs, including costs to develop software products or the software component of products to be marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products and, as a result, development costs that meet the criteria for capitalization were not material for the periods presented.
The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended.
On September 1, 2018 (before the acquisition of NPI (Note 1)), JFB appointed LOC to develop a mobile application in four stages for total consideration of TWD20,000,000 ($651,466), payable in the form of shares of the Company’s restricted common stock. As of August 31, 2019, the first and second stages of development for the basic functions of the mobile application have been completed, and the Company has issued a total of 908,678 of restricted common shares in aggregate at $0.50 per share for the work completed up to August 31, 2019. The Company has expensed $454,339 development costs for the first and second development stage in general and administrative expenses for the year ended August 31, 2019. In August 2020, the development of the mobile application has been completed, and the Company expensed $0.2 million development costs in general and administrative expenses for the year ended August 31, 2020. Further $600,000 was incurred for additional functions developed and $200,000 was incurred for the acquisition of the ownership of the intellectual property in the year ended August 31, 2020.
No development costs were expensed as general and administrative expenses for the three months ended November 30, 2020 and 2019.
Revenue Recognition
The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
| 9 |
The Company recognizes revenue following the five-step model prescribed under ASU 2014-09:
Step 1: Identify the contract
Step 2: Identify the performance obligations
Step 3: Determine the transaction price
Step 4: Allocate the transaction price
Step 5: Recognize revenue
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Provision of investment platform services
The Company signed an agreement with a third party whereby the Company authorized the third party to use the Company’s JFB platform and related applications for a period until December 31, 2020. Income from provision of investment platform services with the use of the Company’s mobile applications is recognized when the service is performed.
From September, 2020, the Company generated additional revenue from a new, more comprehensive mobile application, which refer to as the FinMaster mobile application (the “FinMaster App” and together with the JFB platform, the “Apps”), with similar functions as the JFB platform. Income from providing investment platform services with the use of a mobile application is recognized when the service is performed.
The Company offers a self-managed points program, which can be used in the FinMaster App to redeem merchandise or services. The Company determines the value of each point based on estimated incremental cost. Customers and advocates have a variety of ways to obtain the points. The major accounting policy for its points program is described as follows:
The Company concludes the bonus points offered linked to the purchase transaction of the points is a material right and accordingly a separate performance obligation according to ASC 606, and should be taken into consideration when allocating the transaction price of the point sales. The Company also estimates the probability of points redemption when performing the allocation. The amount allocated to the bonus points as separate performance obligation is recorded as contract liability (deferred revenue) and revenue should be recognized when future goods or services are transferred. The Company will continue to monitor when and if forfeiture rate data becomes available and will apply and update the estimated forfeiture rate at each reporting period.
Since historical information is limited for the Company to determine any potential points forfeitures and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero.
Provision of software development service and maintenance service
The Company entered into several agreements with third party customers to assist the customers in the development of their mobile communications software and mobile e-commerce software. Income from provision of software development service and maintenance service are recognized when the service is performed.
Revenue by major product line
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Provision of investment platform services | $ | 3,620 | $ | 1,667 | ||||
| Provision of software development service and maintenance service | 19,243 | - | ||||||
| $ | 22,863 | $ | 1,667 | |||||
| 10 |
Revenue by Recognition Over Time vs Point in Time
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Revenue by recognition over time | $ | 22,863 | $ | 1,667 | ||||
| Revenue by recognition at a point in time | - | - | ||||||
| $ | 22,863 | $ | 1,667 | |||||
Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues; invoices that have been issued to customers but were uncollected and have not been recognized as revenues; and amounts that will be invoiced and recognized as revenues in future periods. As of November 30, 2020, the Company’s remaining performance obligations were $11,598, which it expects to recognize as revenues over the next twelve months and the remainder thereafter.
The Company had not incurred any costs to obtain contracts.
The Company does not have amounts of contract assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are expected to be recognized as revenue within one year and are included in other payables and accrued liabilities in the consolidated balance sheet.
Contract balances
The Company’s contract liabilities consist of receipts in advance for software development and the FinMaster App. Below is the summary presenting the movement of the Company’s contract liabilities for the three months ended November 30, 2020:
| Receipt in advance | ||||
| Balance as of September 1, 2020 | $ | 2,896 | ||
| Advances received from customers related to unsatisfied performance obligations | 10,937 | |||
| Revenue recognized from beginning contract liability balance | (2,951 | ) | ||
| Exchange difference | 160 | |||
| Balance as of November 30, 2020 | $ | 11,042 | ||
Practical Expedients and Exemption
The Company has not incurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
| 11 |
Research and development expenses
Research and development (“R&D”) expenses are primary comprised of charges for R&D and consulting work performed by third parties; salaries and benefits for those employees engaged in research, design and development activities; costs related to design tools; and allocated costs.
For the three months ended November 30, 2020 and 2019, the total R&D expenses were $146,971 and $nil, respectively.
Sales and marketing expenses
Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and other compensation-related expenses to sales and marketing personnel. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing. The Company expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the three months ended November 30, 2020 and 2019, advertising costs totaled $97,361 and $nil, respectively.
From September 2019, customers or users of the FinMaster App can obtain points through any other ways such as account registration referral to the FinMaster App, frequent sign-ins to the application and sharing articles from the application to users’ own social media, etc. The Company believes these points are to encourage user engagement and generate market awareness. As a result, the Company accounts for such points as sales and marketing expenses with a corresponding liability recorded under other current liabilities of its condensed consolidated balance sheets upon the points offering. The Company estimates liabilities under the customer loyalty program based on cost of the merchandise that can be redeemed, and its estimate of probability of redemption. At the time of redemption, the Company records a reduction of inventory and other current liabilities.
Since historical information is limited for the Company to determine any potential points forfeiture and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero.
For the three months ended November 30, 2020 and 2019, redeemable point liability charged as sales and marketing expenses were $12,341 and $nil, respectively.
As of November 30, 2020 and August 31, 2020, liabilities recorded related to unredeemed points were $51,869 and $40,003, respectively, which were included in other payables (note 8).
General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions, depreciation and amortization of fixed assets, legal and other professional services fees, rental and other general corporate related expenses.
Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. The Company also reviews inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the vehicles less the estimated cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Inventory as of November 30, 2020 represents merchandise inventory which can be redeemed by deducting membership rewards points of customer loyalty program.
| 12 |
Leases
The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s consolidated balance sheets.
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
| Expected useful life | ||
| Furniture and fixture | 3 | |
| Office equipment | 3 | |
| Leasehold improvement | 3 |
Intangible asset
The Company recorded intangible assets with definite lives, including investment platform and technical know-hows. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization of intangible assets is computed using the straight-line method over their estimated useful lives.
The estimated useful lives of the Company’s intangible assets are listed below:
| Investment platform | 5 years | |
| Technical know-hows | 8 years | |
| Trademarks | 10 years |
Impairment of Long-Lived Assets (including amortizable intangible assets)
The Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If the assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment has been recorded by the Company for the three months ended November 30, 2020 and 2019.
Income taxes
Income taxes are determined in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
| 13 |
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of November 30, 2020, the Company has no accrued interest or penalties related to uncertain tax positions.
The Company conducts business in the PRC, Taiwan and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities.
Net Loss Per Share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional shares of common stock were dilutive. The following table presents a reconciliation of basic and diluted net loss per share:
For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Net loss | $ | (3,657,060 | ) | $ | (1,249,630 | ) | ||
| Weighted average number of shares of common stock outstanding - Basic and diluted* | 136,921,376 | 113,684,073 | ||||||
| Net loss per share - Basic and diluted | $ | (0.03 | ) | $ | (0.01 | ) | ||
| * | Including 11,243,986 shares that were granted and vested but not yet issued and 870,000 shares to be issued to investors for the three months ended November 30, 2020 (note 13); and including 8,500,000 shares that were granted and vested but not yet issued for the three months ended November 30, 2019. |
As of November 30, 2020 and August 31, 2020, the Company’s convertible notes payable were excluded from the diluted loss per share calculation as they were anti-dilutive.
Stock-based compensation
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 (“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the vesting period or immediately if fully vested and non-forfeitable. The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
| 14 |
Additionally, ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, permits the election of an accounting policy for forfeitures of share-based payment awards, either to recognize forfeitures as they occur or estimate forfeitures over the vesting period of the award. The Company has elected to recognize forfeitures as they occur.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2018-07 on September 1, 2019 and there was no cumulative effect of adoption.
Foreign Currencies Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Seychelles, the PRC, Taiwan and Hong Kong maintains its books and record in United States Dollars (“US$”), Renminbi (“RMB”), New Taiwanese Dollars (“NT$”) and Hong Kong Dollars (“HK$”) respectively, which are the primary currencies of the economic environment in which the entities operate (the functional currencies).
In general, for consolidation purposes, the assets and liabilities of the Company’s subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of the financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of retained earnings.
Translation of amounts from foreign currencies into US$ has been made at the following exchange rates for the respective periods:
| As of November 30, 2020 | As of August 31, 2020 | |||||||
| Period-end HK$ : US$ 1 exchange rate | 7.80 | 7.80 | ||||||
| Period-end NT$ : US$ 1 exchange rate | 28.55 | 29.37 | ||||||
| Period-end RMB : US$ 1 exchange rate | 6.58 | 6.85 | ||||||
For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Period average HK$ : US$ 1 exchange rate | 7.80 | 7.80 | ||||||
| Period average NT$ : US$ 1 exchange rate | 28.82 | N/A | ||||||
| Period average RMB : US$ 1 exchange rate | 6.72 | N/A | ||||||
| 15 |
Related Parties
Parties, which can be a corporation or an individual, are considered to be related if the Company has the ability to, directly or indirectly, control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Convertible instruments
The Company accounts for hybrid contracts that feature conversion options in accordance with U.S. GAAP. ASC 815 “Derivatives and Hedging Activities,” (“ASC 815”) requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.
The Company accounts for convertible instruments, when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, in accordance with ASC 470-20 “Debt with Conversion and Other Options” (“ASC 470-20”). Under ASC 470-20 the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract are allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations.
Fair Value of Financial Instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, deposits, accounts payable and accrued liabilities, balances due with directors and shareholders, convertible notes payable and bonds payable, approximate at their fair values because of the short-term nature of these financial instruments or the rate of interest of these instruments approximate the market rate of interest.
The Company also follows the guidance of the ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), with respect to financial assets and liabilities that are measured at fair value. ASC 820 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
| 16 |
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
| Carrying Value at | Fair Value Measurement at | |||||||||||||||
| August 31, 2020 | August 31, 2020 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| Convertible notes measured at fair value | $ | 104,000 | $ | - | $ | - | $ | 104,000 | ||||||||
| Carrying Value at | Fair Value Measurement at | |||||||||||||||
| November 30, 2020 | November 30, 2020 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| Convertible notes measured at fair value | $ | 1,287,000 | $ | - | $ | - | $ | 1,287,000 | ||||||||
A summary of changes in financial liabilities for the three months ended November 30, 2020 was as follows:
| Balance at September 1, 2020 | $ | 104,000 | ||
| Issuance of convertible notes | 700,000 | |||
| Fair value loss on issuance of convertible notes | 383,962 | |||
| Interest expenses on convertible notes | 1,957 | |||
| Change in fair value of convertible notes | 97,081 | |||
| Balance at November 30, 2020 | $ | 1,287,000 |
| 17 |
Fair value of the convertible notes is determined using the binomial model using the following assumptions at inception and on subsequent valuation dates:
| Convertible notes holders | Teh-Ling Chen | Li-Ching Yang | Jui-Chin Chen | Teh-Ling Chen | Chin-Ping Wang Chin-Nan Wang Chin-Chiang Wang | |||||||||||||||
| Appraisal Date (Inception Date) | February 24, 2020 | February 27, 2020 | March 18, 2020 | November 2, 2020 | November 25, 2020 | |||||||||||||||
| Risk-free Rate | 1.25 | % | 1.06 | % | 0.54 | % | 0.16 | % | 0.16 | % | ||||||||||
| Applicable Closing Stock Price | $ | 1.25 | $ | 1.25 | $ | 1.20 | $ | 0.12 | $ | 3.00 | ||||||||||
| Conversion Price | $ | 1.00 | (i) | $ | 1.00 | (i) | $ | 1.00 | (i) | $ | 0.40 | $ | 0.40 | |||||||
| $ | 1.50 | (ii) | $ | 1.50 | (ii) | $ | 1.50 | (ii) | ||||||||||||
| Volatility | 27.82 | % | 27.94 | % | 34.20 | % | 41.51 | % | 42.00 | % | ||||||||||
| Dividend Yield | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||
| Credit Spread | 2.71 | % | 2.96 | % | 6.88 | % | 7.52 | % | 6.93 | % | ||||||||||
| Liquidity Risk Premium | 42.09 | % | 36.26 | % | 51.08 | % | 77.62 | % | 78.14 | % | ||||||||||
| Appraisal Date | August 31, 2020 | |||||||||||||||||||
| Risk-free Rate | N/A | N/A | 0.13 | % | N/A | N/A | ||||||||||||||
| Applicable Closing Stock Price | N/A | N/A | $ | 1.00 | N/A | N/A | ||||||||||||||
| Conversion Price | N/A | N/A | $ | 0.40 | N/A | N/A | ||||||||||||||
| Volatility | N/A | N/A | 43.71 | % | N/A | N/A | ||||||||||||||
| Dividend Yield | N/A | N/A | 0.00 | % | N/A | N/A | ||||||||||||||
| Credit Spread | N/A | N/A | 3.80 | % | N/A | N/A | ||||||||||||||
| Liquidity Risk Premium | N/A | N/A | 76.69 | % | N/A | N/A | ||||||||||||||
| Appraisal Date | November 30, 2020 | November 30, 2020 | November 30, 2020 | |||||||||||||||||
| Risk-free Rate | N/A | N/A | 0.12 | % | 0.15 | % | 0.15 | % | ||||||||||||
| Applicable Closing Stock Price | N/A | N/A | $ | 3.00 | $ | 3.00 | $ | 3.00 | ||||||||||||
| Conversion Price | N/A | N/A | $ | 0.40 | $ | 0.40 | $ | 0.40 | ||||||||||||
| Volatility | N/A | N/A | 48.15 | % | 42.19 | % | 42.09 | % | ||||||||||||
| Dividend Yield | N/A | N/A | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||||
| Credit Spread | N/A | N/A | 6.95 | % | 6.95 | % | 6.95 | % | ||||||||||||
| Liquidity Risk Premium | N/A | N/A | 82.57 | % | 76.10 | % | 78.46 | % | ||||||||||||
(i) USD1.00 per share if converted on or before the one-year anniversary of the issuance date
(ii) USD1.50 per share if converted at any time after the one-year anniversary of the issuance date
| 18 |
Segment reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Management determined that the Company’s operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively in one business and industry segment: the provision of investment platform services through mobile application.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company applied the new standard beginning September 1, 2020.
Recently issued accounting pronouncements not yet adopted
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for “smaller reporting companies” for fiscal year beginning after December 15, 2022. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s consolidated financial statements and related disclosures.
| 19 |
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows.
3. ACQUISITION OF SUBSIDIARIES
On August 17, 2020, the Company acquired all of the issued and outstanding capital stock (the “Acquisition”) of NPI, pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of the Closing Date, among the Company, NPI, the selling shareholders of NPI identified therein (each a “Seller,” and, collectively, the “Sellers”) and the representative of the Sellers identified therein.
The aggregate purchase price for the Acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates, resulting in a net purchase price of $3,506,042, payable in 8,415,111 shares of the Company’s common stock to the Sellers in accordance with their respective pro rata percentage.
After the completion of the Acquisition, NPI became a wholly owned subsidiary of the Company.
The Company completed the valuations necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of goodwill was determined and recognized as of the respective acquisition date. The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed as of the closing date, August 31, 2020.
| 20 |
| Cash and cash equivalents | $ | 185,117 | ||
| Prepayments, deposits and other receivables | 145,228 | |||
| Due from a shareholder | 34,048 | |||
| Right-of-use operating lease assets | 113,590 | |||
| Plant and equipment, net | 30,365 | |||
| Intangible assets- Technical know-hows | 818,200 | |||
| Goodwill | 2,974,364 | |||
| Other payables and accrued liabilities | (383,087 | ) | ||
| Contract liabilities | (2,896 | ) | ||
| Due to shareholders | (99,730 | ) | ||
| Operating lease liability | (113,646 | ) | ||
| Tax payable | (31,871 | ) | ||
| Deferred tax liabilities | (163,640 | ) | ||
| Net purchase price | $ | 3,506,042 | ||
| Less: Outstanding NPI debt owed to the Company | ||||
| Accounts receivable | 989,854 | |||
| Notes payable | (3,066,617 | ) | ||
| $ | 1,429,279 |
The transaction resulted in a purchase price allocation of $2,974,364 to goodwill, representing the financial, strategic and operational value of the transaction to the Company. Goodwill is attributed to the premium that the Company paid to obtain the value of the business of NPI and the synergies expected from the combined operations of NPI and the Company, the assembled workforce and their knowledge and experience in provision of products and projects utilizing NPI’s technical know-hows. The total amount of the goodwill acquired is not deductible for tax purposes.
4. PLANT AND EQUIPMENT, NET
Plant and equipment as of November 30, 2020 and August 31, 2020 are summarized below:
| As of November 30, 2020 | As of August 31, 2020 | |||||||
| Furniture and fixtures | $ | 28,906 | $ | 20,159 | ||||
| Office equipment | 72,188 | 65,809 | ||||||
| Leasehold improvement | 64,741 | 18,832 | ||||||
| Total | 165,835 | 104,800 | ||||||
| Less: Accumulated depreciation | (82,888 | ) | (71,133 | ) | ||||
| Plant and Equipment, net | $ | 82,947 | $ | 33,667 | ||||
Depreciation expenses, classified as operating expenses, were $10,227 and $2,314 for the three months ended November 30, 2020 and 2019, respectively.
5. INTANGIBLE ASSETS, NET
Intangible assets costs as of November 30, 2020 and August 31, 2020 are summarized below:
| As of November 30, 2020 | As of August 31, 2020 | |||||||
| Investment platform | $ | 30,000 | $ | 30,000 | ||||
| Technical know-hows | 818,200 | 818,200 | ||||||
| Trademarks | 1,023 | - | ||||||
| Total | 849,223 | 848,200 | ||||||
| Less: Accumulated amortization | (32,095 | ) | (6,500 | ) | ||||
| Impairment | (23,500 | ) | (23,500 | ) | ||||
| Intangible assets, net | $ | 793,628 | $ | 818,200 | ||||
Amortization expense for intangible assets was $25,595 and $nil for the three months ended November 30, 2020 and 2019, respectively.
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During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company’s intangible assets. The impairment charge, if any, represented the excess of carrying amounts of the Company’s intangible assets over their fair value, using the expected future discounted cash flows. No impairment loss of intangible asset was recognized for the three months ended November 30, 2020 and 2019.
As of November 30, 2020, amortization expenses related to intangible assets for future periods are estimated to be as follows:
| 12 months ending November 30, | ||||
| 2021 | $ | 102,378 | ||
| 2022 | 102,378 | |||
| 2023 | 102,378 | |||
| 2024 | 102,378 | |||
| 2025 and thereafter | 384,116 | |||
| Total | $ | 793,628 | ||
6. RELATED PARTY TRANSACTIONS
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Professional fee - Greenpro Financial Consulting Limited (a) | $ | - | $ | 13,500 | ||||
| Other Income: | ||||||||
| Miscellaneous income from Greenpro LF Limited (b) | 1,823 | - | ||||||
| (a) | The Company incurred professional fees of $nil and $13,500 for services provided by Greenpro Financial Consulting Limited for the three months ended November 30, 2020 and 2019, respectively. The fees are due for payment to Greenpro Financial Consulting Limited upon receipt of an invoice. |
| The directors of Greenpro Financial Consulting Limited (Mr. Chong Kuang Lee and Mr. Che Chan Loke) are the directors of the investment managers of Greenpro Asia Strategic SPC. As of November 30, 2020, Greenpro Asia Strategic SPC is the holder of approximately 3.85% of the Company’s issued and outstanding common stock. | |
| (b) | Mr. Lin is a director of Greenpro LF Limited. |
7. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
| As of November 30, 2020 | As
of | |||||||
| Rental and management fee deposits | $ | 144,693 | 137,088 | |||||
| Prepaid share based compensation to directors (Note 13) | 1,200,000 | - | ||||||
| Prepaid share based compensation to consultants (Note 13) | 2,795,834 | 375,000 | ||||||
| Other prepaid expenses | 7,663 | 81,108 | ||||||
| Staff advances | 12,241 | 2,970 | ||||||
| $ | 4,160,431 | 596,166 | ||||||
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8. ACCRUED EXPENSES AND OTHER PAYABLES
| As of November 30, 2020 | As of August 31, 2020 | |||||||
| Accrued interests (Note 9, 10 and 11) | $ | 19,681 | 6,191 | |||||
| Accrued expenses | 215,524 | 240,172 | ||||||
| Unearned income | 556 | 2,222 | ||||||
| Other payables | 55,678 | 43,661 | ||||||
| $ | 291,439 | 292,246 | ||||||
The Company signed an agreement with a third party whereby it authorized the third party to use its investment platform and related applications, for a period until December 31, 2020, for an upfront service fee. An additional fee is charged upon the third party’s sale of products on the Company’s mobile application. Unearned income on this contract was $556 and $2,222 as of November 30, 2020 and August 31, 2020, respectively.
9. DUE FROM (TO) SHAREHDOLERS, DIRECTORS AND A RELATED COMPANY
| As of November 30, 2020 | As
of | |||||||
| Loan to Cheng Hung-Pin (a shareholder) | $ | 35,026 | $ | 34,048 | ||||
| Due from a director: | ||||||||
| Cheng Shui-Fung | $ | - | $ | 189,474 | ||||
| Due from a related company: | ||||||||
| Greenpro LF Limited | $ | - | $ | 36,666 | ||||
| Due to a director: | ||||||||
| Lin Yi-Hsiu | $ | 1,394,194 | $ | 1,400,459 | ||||
| Loan from Hsu Kuo-Hsun (a shareholder) | $ | 60,075 | $ | 60,075 | ||||
| Due to shareholders: | ||||||||
| Tu Yu-Cheng | $ | 103,510 | $ | 96,530 | ||||
| Cheng Hung-Pin | 800 | 800 | ||||||
| Huang Mei-Ying | 800 | 800 | ||||||
| Lo Shih-Chu | 800 | 800 | ||||||
| Chen Jun-Yuan | 800 | 800 | ||||||
| $ | 106,710 | $ | 99,730 | |||||
On March 10, 2020, LOC entered into a loan agreement with Cheng Hung-Pin and loaned him NT$1,000,000. The loan is unsecured, bears interest at a rate of 3% per annum and repayable on demand.
On July 20, 2020, the Company obtained a loan of RMB420,000 from Hsu Kuo-Hsun which accrues interest at the rate of 8% per annum. The loan is due on July 17, 2021 and Mr. Lin Yi-Hsiu would be liable when the Company fails to repay. Interest of $1,746 and $544 was accrued as of November 30, 2020 and August 31, 2020, respectively.
| 23 |
Amounts due from (to) shareholders, directors and a related company are unsecured, interest-free with no fixed payment term.
10. BONDS PAYABLE
The Company entered into a Bond Purchase Agreement with an individual third party on August 14, 2019, pursuant to which the Company issued and sold to the purchaser a bond at an aggregate purchase price of $600,000. The bond will mature three years from August 14, 2019. Interest on the bond accrues at rate of 10% per annum and is payable on semi-yearly basis. The Company may exercise its right to repay this bond at any time on or before two years from the maturity date by wiring 100% of all outstanding principal and interest to the purchaser. Interest of $17,935 and $2,935 was accrued as of November 30, 2020 and August 31, 2020, respectively.
11. CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
The Company entered into a series of Convertible Promissory Note Purchase Agreements (the “Agreements”) with certain investors between February and November, 2020. Pursuant to the Agreements, the Company issued certain Convertible Promissory Notes (the “Notes”) to the investors in a total principal amount of $930,000. A summary of the major terms of the Agreements are presented as follows:
| Principal amount | Issue date | Maturity date | Interest rate | |||||||||
| Teh-Ling Chen | $ | 110,000 | February 24, 2020 | February 24, 2022 | 6 | % | ||||||
| Li-Ching Yang | 20,000 | February 27, 2020 | February 27, 2022 | 6 | % | |||||||
| Jui-Chin Chen | 100,000 | March 18, 2020 | March 18, 2022 | 6 | % | |||||||
| Teh-Ling Chen | 100,000 | November 2, 2020 | November 2, 2022 | 6 | % | |||||||
| Chin-Ping Wang | 200,000 | November 25, 2020 | November 25, 2022 | 6 | % | |||||||
| Chin-Nan Wang | 200,000 | November 25, 2020 | November 25, 2022 | 6 | % | |||||||
| Chin-Chiang Wang | 200,000 | November 25, 2020 | November 25, 2022 | 6 | % | |||||||
| $ | 930,000 | |||||||||||
On February 24, 2020, the Company issued a convertible promissory note in the principal amount of $110,000, which accrues interest at the rate of 6% per annum, to a shareholder – Teh-Ling Chen. The note is due on February 24, 2022 and unsecured.
On February 27, 2020, the Company issued a convertible promissory note in the principal amount of $20,000, which accrues interest at the rate of 6% per annum, to a shareholder – Li-Ching Yang. The note is due on February 27, 2022 and unsecured.
On March 18, 2020, the Company issued a convertible promissory note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum, to a shareholder – Jui-Chin Chen. The note is due on March 18, 2022 and unsecured.
On August 17, 2020, the Company entered into amendments to the Notes and the convertible promissory note purchase agreements with each of the Noteholders, wherein, at the sole option of the applicable Noteholder, all or part of the unpaid outstanding principal of such Noteholder’s Note would be convertible into shares of restricted common stock of the Company at a conversion price equal to $0.40 per share. On August 18, 2020, two of the Noteholders submitted conversion notices to the Company converting all of the outstanding balances of their Notes into an aggregate of 325,000 shares of the Company’s common stock.
On November 2, 2020, the Company issued a convertible promissory note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum, to a shareholder – Teh-Ling Chen. The note is due on November 2, 2022 and unsecured.
On November 25, 2020, the Company further issued convertible promissory notes in the total principal amount of $600,000, which accrues interest at the rate of 6% per annum, to shareholders –Chin-Ping Wang, Chin-Nan Wang and Chin-Chiang Wang. The note is due on November 25, 2022 and unsecured.
| 24 |
For each of the convertible promissory notes, the Company is entitled to a one-year extension. The outstanding principal amounts of the notes are convertible at any time at the option of the holders into common stock at a conversion price of $0.4 per share. Each of the lenders may convert part of the principal outstanding in increments of $10,000 or multiples of $10,000 at any time. Accrued interest, if any, will be forfeited on any principal amount being converted.
The conversion feature is dual indexed to the Company’s stock, and is considered an embedded derivative which needs to be bifurcated from the host instrument in accordance with ASC 815.
ASC 815-15-25 provides that if an entity has a hybrid financial instrument that would require bifurcation of embedded derivatives under ASC 815, the entity may irrevocably elect to initially and subsequently measure a hybrid financial instrument in its entirety at fair value with changes in fair value recognized in earnings. The fair value election can be made instrument by instrument and shall be supported by concurrent documentation or a preexisting documented policy for automatic election.
The Company elected to measure the Notes in their entirety at fair value with changes in fair value recognized as non-operating income or loss at each balance sheet date in accordance with ASC 815-15-25.
Fair value of the convertible promissory notes of $800,000 as of November 30, 2020 is determined using the binomial model, one of the option pricing methods. The valuation involves complex and subjective judgment and the Company’s best estimates of the probability of occurrence of future events, such as fundamental changes, on the valuation date. Under the binomial valuation model, the Company uses a weighted risk-free and risk interest rate (the combination of the risk free rate plus the credit spread for the underlying Notes) weighted by the probability of conversion as internally solved out by binomial model in discounting its cash flows. The main inputs to this model include the underlying share price, the expected share volatility, the expected dividend yield, the risk free and risk interest rate.
12. INCOME TAXES
For the three months ended November 30, 2020 and 2019, the local (United States) and foreign components of loss before income tax were comprised of the following:
| Three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Tax jurisdictions from: | ||||||||
| - Local | $ | (1,519,520 | ) | $ | (1,159,478 | ) | ||
| - Foreign, representing | ||||||||
| Seychelles | - | - | ||||||
| British Virgin Islands | (83,142 | ) | - | |||||
| Taiwan | (493,890 | ) | - | |||||
| PRC | (142,962 | ) | - | |||||
| Hong Kong | (1,422,660 | ) | (70,152 | ) | ||||
| Loss before income tax | $ | (3,662,174 | ) | $ | (1,229,630 | ) | ||
The components of the provision (benefit) for income taxes expenses are:
| Three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Current | $ | - | $ | 20,000 | ||||
| Deferred | (5,114 | ) | - | |||||
| Total income tax (benefit) expense | $ | (5,114 | ) | $ | 20,000 | |||
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The provision for income taxes consisted of the following:
| Three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Loss before income taxes | $ | (3,662,174 | ) | $ | (1,229,630 | ) | ||
| Statutory income tax rate | 21 | % | 21 | % | ||||
| Income tax credit computed at statutory income rate | (769,057 | ) | (258,222 | ) | ||||
| Reconciling items: | ||||||||
| Non-deductible expenses | 23,025 | - | ||||||
| Share-based payments | 453,445 | 223,125 | ||||||
| Tax effect of tax exempt entity | 17,460 | - | ||||||
| Rate differential in different tax jurisdictions | 63,240 | 3,157 | ||||||
| Valuation allowance on deferred tax assets | 206,773 | 51,940 | ||||||
| Income tax (benefit) expense | $ | (5,114 | ) | $ | 20,000 | |||
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of November 30, 2020, the operations in the United States of America incurred $2,104,494 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2037, if unutilized. As of November 30, 2020 and August 31, 2020, the Company has provided for a full valuation allowance of $441,944 and $323,322, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
Seychelles
Under the current laws of the Seychelles, LFG is registered as an international business company which governs by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.
British Virgin Islands
NPI is tax exempted in the British Virgin Islands where it was incorporated.
Taiwan
LOC is subject to corporate income tax (“CIT”) in Taiwan. With effect from January 1, 2018, the CIT rate in Taiwan is 20%. However, for profit-seeking entities with less than NT$ 500,000 (approximately $17,347) in taxable income, the CIT rate is 18% in 2018, 19% in 2019, and 20% in 2020 if taxable income exceeds NT$120,000 (approximately $4,163). As of November 30, 2020, LOC had net operating loss carry-forwards in Taiwan of $2,008,983, which will expire in various years through 2025. The Company has provided for a full valuation allowance of $401,797 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
PRC
BJDC is subject to corporate income tax (“CIT”) at 25% in accordance with the relevant tax laws and regulations of the PRC. As of November 30, 2020, BJDC had net operating loss carry-forwards in the PRC of $1,407,248, which will expire in various years through 2027. The Company has provided for a full valuation allowance of $351,812 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
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Hong Kong
JFB is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income. No provision for Hong Kong profits tax has been made in the financial statements as JFB has no assessable profits for the years. As of November 30, 2020 and August 31, 2020, the operations in Hong Kong incurred $1,643,906 and $4,350,416 of cumulative net operating losses (NOL’s) which can be carried forward indefinitely to offset future taxable income. As of November 30, 2020 and August 31, 2020, the Company has provided for a full valuation allowance of approximately $271,245 and $717,819, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
| November 30, 2020 | August 31, 2020 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | ||||||||
| – United States of America | $ | (441,944 | ) | $ | (323,322 | ) | ||
| – Taiwan | (401,797 | ) | (328,752 | ) | ||||
| – PRC | (351,812 | ) | (309,264 | ) | ||||
| – Hong Kong | (271,245 | ) | (298,764 | ) | ||||
| Less: valuation allowance | 1,466,798 | 1,260,102 | ||||||
| $ | - | $ | - | |||||
13. COMMON STOCK
On September 1, 2019, the Company entered into an employment agreement with Yi-Hsiu Lin to serve as the Chief Executive Officer of the Company for a two-year term. Pursuant to the agreement, Mr. Lin will be compensated at an annual rate of $50,000 per year (the “Base Compensation”), prorated for any partial year in cash or 2,500,000 shares of restricted common stock, which vested on September 16, 2019 and September 1, 2020. In addition, Mr. Lin may be entitled to bonus compensation of up to three (3) times Base Compensation based on his achievement of appropriate performance criteria to be determined by the board of directors or a committee thereof. The fair value of the shares of restricted common stock was $2,500,000 and $1,250,000, respectively, which was calculated based on a price per share of $0.40 and $0.50, respectively and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $250,000 and $312,500, respectively, as remuneration. Prepaid expenses were $750,000 as of November 30, 2020 (Note 7).
On September 1, 2019, the Company issued a director offer letter to Shui Fung Cheng, pursuant to which Mr. Cheng agreed to serve as a director of the Company for a one-year term. For his service as a director, Mr. Cheng will receive an annual compensation, prorated for any partial year, in the form of $30,000 in cash or 1,500,000 shares of restricted common stock. The offer letter provided that compensation, either in cash or shares of restricted common stock, shall be paid or granted immediately on September 1, 2019. The fair value of the shares of restricted common stock was $750,000, which was calculated based on a price per share of $0.50 and amortized over the service term. The offer was renewed on September 1, 2020 and all shares were granted and vested on the same date. The fair value of the shares of restricted common stock was $1,500,000, which was calculated based on a price per share of $0.40 and amortized over the service term. During the three months November 30, 2020 and 2019, the Company amortized $150,000 and $187,500, respectively, as remuneration. Prepaid expenses were $450,000 as of November 30, 2020 (Note 7).
On September 1, 2019, the Company entered into a consulting agreement with a consultant to provide business development services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $40,000 in the form of 2,000,000 shares of restricted common stock, which vested on September 15, 2019, prorated for any partial year. The fair value of the shares of restricted common stock was $1,000,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $nil and $250,000, respectively, as consulting expenses under this agreement.
On September 1, 2019, the Company entered into a consulting agreement with a consultant to provide business advisory services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $50,000 in the form of 2,500,000 shares of restricted common stock, which vested on September 15, 2019, prorated for any partial year. The fair value of the shares of restricted common stock was $1,250,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $nil and $312,500, respectively, as consulting expenses under this agreement.
| 27 |
On June 30, 2020, the Company entered into a stock forfeiture letter (the “Stock Forfeiture Letter”) with First Leader Capital Ltd., a significant stockholder of the Company and an entity solely owned and controlled by Yi-Hsiu Lin, the Company’s Chief Executive Officer and a member of the Company’s board of directors. Pursuant to the Stock Forfeiture Letter, on June 30, 2020, First Leader Capital Ltd. forfeited and surrendered 5,500,000 shares (the “Surrendered Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and the Surrendered Shares were automatically cancelled and retired (the “Stock Cancellation”). First Leader Capital Ltd. agreed to forfeit and cancel the Surrendered Shares in exchange for the benefit from reducing the Company’s outstanding Common Stock to be more in line with what management deems to be market expectations based on the Company’s current valuation. 5,500,000 shares were canceled on September 21, 2020.
On March 1, 2020, the Company entered into a consulting agreement with a consultant to provide business advisory services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $60,000 and 1,000,000 shares of restricted common stock, which vested not later than June 30, 2020, prorated for any partial year. On June 30, 2020, the Company’s board of directors approved additional 500,000 shares to the consultant in exchange for services rendered. The fair value of the shares of restricted common stock was $750,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020, the Company amortized $187,500 as consulting expenses under this agreement. Prepaid expenses were $187,500 as of November 30, 2020 (Note 7). The shares were granted on July 7, 2020.
On June 30, 2020, the Company’s board of directors agreed to grant a new employee of JFB, (i) 5,000,000 shares of Restricted Common Stock in connection with such employee’s employment (the “Inducement Shares”) and (ii) 5,000,000 shares of Restricted Common Stock upon the achievement of each of two milestones set forth in such employee’s offer letter relating to the FinMaster mobile application. In addition, on that same day, the Company’s board of directors approved an aggregate of 3,000,000 shares to a service provider in exchange for services rendered. As of August 31, 2020, 5,000,000 and 3,000,000 common shares of the Company have been issued to the employee and service provider respectively. The fair value of the shares of restricted common stock to them was $3,200,000, which was calculated based on a price per share of $0.40. On November 30, 2020, 3,116,903 shares were granted to the employee upon achievement of the milestones set forth in the employee’s offer letter. During the three months ended November 30, 2020, the Company amortized $1,246,761 and $nil, respectively, as salaries and professional fees. The shares are expected to be issued by the end of January 2021.
The Company issued 8,415,111 shares of common stock for the acquisition of NPI in August 2020 (Note 1).
On July 27, 2020, the Company issued an offer letter to Chieh Chen, pursuant to which Ms. Chen agreed to serve as an executive assistant of the Company. For her service as an executive assistant, Ms. Chen will receive a monthly compensation in the form of NT$77,000 ($2,671) for the first three months (probationary period) and thereafter NT$92,500 ($3,209) in cash. In addition, Ms. Chen will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. The fair value of the shares of restricted common stocks was $50,000, which was calculated based on a priced per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company recognized $16,667 as compensation under this arrangement.
On August 1, 2020, the Company entered into an agreement with a company for provision of consulting services by its employee to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the provider an annual compensation of $66,000, prorated for any partial year. In addition, for the services of its employees on a one-year term, the provider was granted 1,000,000 shares of restricted common stock, vested on September 15, 2020. The fair value of 1,000,000 shares granted was $1,000,000, which was calculated based on the stock price of $1.00 per share on September 15, 2020 and will be amortized over the service term. During the three months ended November 30, 2020, the Company recognized $83,333 as compensation under these arrangements. Prepaid expenses were $316,667 as of November 30, 2020 (Note 7). The shares are expected to be issued by the end of January 2021.
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On August 3, 2020, the Company issued an offer letter to Annie Chung, pursuant to which Ms. Chung agreed to serve as an executive assistant of the Company. For her service as an executive assistant, Ms. Chung will receive a monthly compensation in the form of NT$77,000 ($2,671) in cash. In addition, Ms. Chung will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. The fair value of the shares of restricted common stock was $50,000, which was calculated based on a price per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company recognized $16,667 as compensation under this arrangement.
On November 1, 2020, the Company entered into consulting agreements with two consultants to assist in monitoring and improving FinMaster APP for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultants in the form of 2,500,000 shares of restricted common stock, which vested on November 1, 2020, prorated for any partial year. The fair value of the shares of restricted common stock was $2,500,000, which was calculated based on a price per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company amortized $208,333 as consulting expenses under these agreements. Prepaid expenses were $2,291,667 as of November 30, 2020 (Note 7).
From September to November 2020, the Company entered into securities purchase agreement with several accredited investors whereby the investors purchased a total of 495,000 shares of the Company’s common stock at $0.40 per share. The Company received aggregate gross proceeds of $198,000. Pursuant to the terms of the securities purchase agreements, the investors have piggyback registration rights with respect to the shares. The shares are expected to be issued by the end of January 2021.
As of November 30, 2020, unrecognized share-based compensation expense was $6,578,238.
As of November 30, 2020, 11,243,986 shares were granted to employees (including COO, CEO and a director) and consultants and vested but not yet issued.
14. COMMITMENTS AND CONTINGENCIES
During the period ended November 30, 2020, the Company entered into agreements with independent third parties to lease office and staff quarter premises in Taiwan, Shenzhen, Beijing and Hong Kong on a monthly basis for the operations of the Company. The rental expense for the period ended November 30, 2020 and 2019 were $83,012 and $34,652, respectively.
The following table lists the future minimal payments to be paid by the Company under a non-cancellable operating lease for office space in Taiwan with an initial term of one-year as of November 30, 2020:
| Year ending November 30, | ||||
| 2021 | $ | 6,305 | ||
| 2022 | - | |||
| 2023 | - | |||
| 2024 | - | |||
As of November 30, 2020, the Company had future minimum lease payments for non-cancelable short-term operating leases of $6,305 payable to a shareholder.
The components of lease costs, lease term and discount rate with respect of leases with an initial term of at least 12 months are as follows:
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Operating lease cost – classified as general and administrative expenses | $ | 72,063 | $ | - | ||||
| Weighted Average Remaining Lease Term – Operating leases | 1.48 years | N/A | ||||||
| Weighted Average Discounting Rate – Operating leases | 5.68 | % | N/A | |||||
| 29 |
The following is a schedule, by years, of maturities of lease liabilities as of November 30, 2020:
| Operating leases | ||||
| 2021 | $ | 233,363 | ||
| 2022 | 117,307 | |||
| 2023 | - | |||
| 2024 | - | |||
| 2025 | - | |||
| Thereafter | - | |||
| Total undiscounted cash flows | 350,670 | |||
| Less: imputed interest | 10,391 | |||
| Present value of lease liabilities | $ | 340,279 | ||
Contingencies
The Labor Contract Law of the People’s Republic of China requires employers to assure the liability of the severance payments if employees are terminated due to restructuring, termination as a result of a mutual agreement or termination as a result of the expiration of a fixed-term labor contract. The Company has estimated its possible severance payments of approximately $88,000 and $86,000 as of November 30, 2020 and August 31, 2020, respectively, which have not been reflected in its consolidated financial statements, because it is more likely than not that this will not be paid or incurred.
In Taiwan, an employer can terminate an employment contract with notice (or with pay in lieu of notice) and with severance pay only due to stoppage of business or a transfer of ownership, business losses or curtailment of business operations, suspension of operations due to a force majeure event, or alteration of the business nature, forcing a reduction in the number of employees, and those employees cannot be reassigned to other suitable positions, or the employee is incapable of performing the tasks assigned. The Company has estimated its possible severance payments of approximately $46,000 and $28,000 as of November 30, 2020 and August 31, 2020, respectively, which have not been reflected in its consolidated financial statements, because it is more likely than not that this will not be paid or incurred.
15. SUBSEQUENT EVENTS
The new version of the FinMaster App was released in December 2020. The update allows general users to make in-app purchases of FinMaster points and use them on A.I. stock selection features, programs, and other merchandises.
On January 6, 2021, the Company entered into securities purchase agreement with an accredited investor whereby the investor purchased a total of 500,000 shares of the Company’s common stock at $0.40 per share. The Company received aggregate gross proceeds of $200,000.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes appearing elsewhere in this Form 10-Q and our audited financial statements and related notes for the year ended August 31, 2020 included in our most recent annual report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Company Overview
Leader Capital Holdings Corp. is an early stage technology company that conducts its operations through its wholly owned subsidiaries, Leader Financial Group Limited, a Seychelles corporation incorporated on March 6, 2017 (“LFGL”), and JFB Internet Service Limited, a Hong Kong corporation incorporated on July 6, 2017 (“JFB”).
Through LFGL, we act as the service provider for a mobile application investment platform that is owned by JFB. The platform connects investors with financial service providers in an effort to sharpen operational efficiency and seeks to address customer demands for more innovative services. It is a ready-made application created to meet the needs of financial service providers, especially trust companies and insurance companies. The platform is customizable and each financial institution can adjust the platform to better suit their client’s needs.
Use of the JFB platform is currently free; however, we have an agreement with a third party whereby we have authorized the third party to use our investment platform and related applications until December 31, 2020 for a fee.
The Company has been developing a new, more comprehensive FinMaster mobile application (“FinMaster App”), to offer to our clients for a fee, which has been made available for download as of December 2020. This FinMaster App offers one-stop shopping for multi financial services. Key services include real-time Taiwan stock market quotes, financial industry information and news, social media activities, on-line live broadcast, A.I. stock selection and other features. On August 17, 2020, the Company, through its wholly-owned subsidiary JFB Internet Service Limited, a company incorporated and existing under the laws of Hong Kong (the “Buyer”), acquired all of the issued and outstanding capital stock (the “Acquisition”) of Nice Products Inc., a company organized under the laws of the British Virgin Islands and the Company’s software ODM developer of the FinMaster APP (“NPI”), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of August 17, 2020, among the Company, the Buyer, NPI, the selling shareholders of NPI identified therein (each a “Seller,” and, collectively, the “Sellers”) and the representative of the Sellers identified therein. The aggregate purchase price for the acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates. The net purchase price for the acquisition was $3,506,042, payable in 8,415,111 shares of the Company’s common stock to the Sellers in accordance with their respective pro rata percentage.
As a result of the Acquisition, the Company now owns, indirectly through the Buyer, 100% of NPI. NPI, through its wholly-owned subsidiaries, LOC Weibo Co., Ltd. and Beijing DataComm Cloud Media Technology Co., Ltd., companies organized under the laws of the Republic of China and the laws of the People’s Republic of China, respectively, engages primarily in the development of ecological-system applications, integration of big data and promotion of OTT applications. Following the Acquisition, we were able to release the FinMaster App for download in December 2020.
We have incurred significant operating losses. As of November 30, 2020 and August 31, 2020, our accumulated deficits were $14,964,635 and $11,307,575, respectively. We generated revenue of $22,863 and $1,667 for the three months ended November 30, 2020 and 2019, respectively. Our net losses were principally attributed to general and administrative expenses.
Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
We have suffered recurring losses from operations, and recorded an accumulated deficit of $14,964,635 as of November 30, 2020. These conditions raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent upon our profit generating operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due.
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We expect to finance our operations primarily through cash flows from operations, loans from existing directors and shareholders and placements of capital stock for additional funding. In the event that we require additional funding to finance the growth of our current and expected future operations as well as to achieve our strategic objectives, a shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for our business, and adversely impact our results of operations. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.
These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as going concern.
Liquidity and Capital Resources
The following table sets forth a summary of our cash flows for the periods indicated:
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Net cash used in operating activities | $ | (766,843 | ) | $ | (154,234 | ) | ||
| Net cash used in investing activities | (59,632 | ) | (401,285 | ) | ||||
| Net cash provided by financing activities | 932,561 | 175,502 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 12,332 | - | ||||||
| Net increase (decrease) in cash and cash equivalents | 118,418 | (380,017 | ) | |||||
| Cash and cash equivalents, beginning of period | 432,087 | 447,562 | ||||||
| Cash and cash equivalents, end of period | $ | 550,505 | $ | 67,545 | ||||
Cash Used in Operating Activities
Net cash used in operating activities for the three months ended November 30, 2020 and 2019 was $766,843 and $154,234, respectively. The cash used in operating activities was mainly for payment of general and administrative expenses.
Cash Used in Investing Activities
Net cash used in investing activities for the three months ended November 30, 2020 and 2019 was $59,632 and $401,285, respectively. The net cash used in investing activities for the three months ended November 30, 2020 was related to the acquisition of plant and equipment and intangible assets. The net cash used in investing activities for the three months ended November 30, 2019 was related to the issuance of notes receivable.
Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended November 30, 2020 and 2019 was $932,561 and $175,502, respectively. The cash provided by financing activities were related to the issuance of shares and convertible notes, and advances from a shareholder and a director.
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Results of Operations
Comparison for the three months ended November 30, 2020 and 2019
| For the three months ended November 30, | ||||||||
| 2020 | 2019 | |||||||
| Revenue | $ | 22,863 | $ | 1,667 | ||||
| Research and development expenses | (146,971 | ) | - | |||||
| Sales and marketing expenses | (109,702 | ) | - | |||||
| General and administrative expenses | (2,953,167 | ) | (1,238,147 | ) | ||||
| Loss from operations | (3,186,977 | ) | (1,236,480 | ) | ||||
| Interest expenses | (15,446 | ) | (14,959 | ) | ||||
| Loss on change in fair value of convertible notes | (481,043 | ) | - | |||||
| Other income | 21,292 | 21,809 | ||||||
| Loss before income tax | (3,662,174 | ) | (1,229,630 | ) | ||||
| Income tax benefit (expense) | 5,114 | (20,000 | ) | |||||
| Net loss | $ | (3,657,060 | ) | $ | (1,249,630 | ) | ||
Revenue
We signed an agreement with a third party whereby we authorized the third party to use our investment platform and related applications, from January 1, 2018 to December 31, 2020, for an upfront service fee. An additional fee is charged upon the third party’s sale of products on our mobile application. From September 2020, we generated additional revenue from a new, more comprehensive mobile application, which we refer to as the FinMaster mobile application (the “FinMaster App” and together with the JFB platform, the “Apps”), with similar functions as the JFB platform. We also provided software maintenance services.
We generated revenue of $22,863 and $1,667 for the three months ended November 30, 2020 and 2019, respectively.
Research and Development Expenses
Research and development expenses for the three months ended November 30, 2020 amounted to $146,971 which primarily represented the charges for R&D and consulting work performed by third parties and salaries and benefits for those employees engaged in research, design and development activities after our acquisition of NPI in August 2020. We did not incur any R&D expenses for the three months ended November 30, 2019.
Sales and Marketing Expenses
Sales and marketing expenses were $109,702 and $nil for the three months ended November 30, 2020 and 2019, respectively. It consists of the advertising costs amounted to $97,361 and the redeemable point liability charges of $12,341 after our acquisition of NPI in August 2020.
General and Administrative Expenses
General and administrative expenses were $2,953,167 and $1,238,147 for the three months ended November 30, 2020 and 2019, respectively. We recognized share-based compensation to directors, employees and consultants of $2,159,260 and $1,062,500 for the three months ended November 30, 2020 and 2019, respectively. Besides, we incurred more payroll costs and other administrative expenses in 2020 after our acquisition of NPI in August 2020.
Other Income
Other income for the three months ended November 30, 2020 amounted to $21,292 as compared to $21,809 in the same quarter of prior year.
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Net Loss
Our net loss was $3,657,060 and $1,249,630 for the three months ended November 30, 2020 and 2019, respectively. The net loss was mainly derived from our general and administrative expenses.
Off-Balance Sheet Arrangements
As of November 30, 2020, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2020. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Management conducted its evaluation of disclosure controls and procedures under the supervision of our principal executive officer and principal financial and accounting officer. Based upon, and as of the date of this evaluation, our principal executive officer and principal financial and accounting officer have concluded that our disclosure controls and procedures were not effective as of November 30, 2020 due to the following material weaknesses in our internal control over financial reporting.
| 1. | We do not have an audit committee – While we are not obligated to have an audit committee, it is management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial reporting. Currently, our Chief Executive Officer and directors act in the capacity of the audit committee, and do not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
| 2. | We do not have adequate written policies and procedures – Due to lack of adequate written policies and procedures for accounting and financial reporting, we did not establish a formal process to close our books monthly and account for all transactions in a timely manner. |
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| 3. | We did not implement appropriate information technology controls – As at August 31, 2020, we retained copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of our data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors. |
| 4. | We do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted in the United States commensurate with our financial reporting requirements. |
Our management does not believe that these material weaknesses had a material effect on our financial condition or results of operations or caused our condensed consolidated financial statements as of and for the period ended November 30, 2020 to contain a material misstatement.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
| 1. | Create a position to segregate duties consistent with control objectives and increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. |
| 2. | Prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions, in a timely manner. |
| 3. | Add staff members to our management team to make sure that information required to be disclosed in our reports filed and submitted under the Exchange Act is recorded, processed, summarized and reported as and when required and the staff members will have segregated responsibilities with regard to these responsibilities. |
We anticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year 2021.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended November 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
There are no material pending legal proceedings as defined by Item 103 of Regulation S-K, to which we are a party or of which any of our property is the subject, other than ordinary routine litigation incidental to the Company’s business.
There are no proceedings in which any of the directors, officers or affiliates of the Company, or any registered or beneficial holder of more than 5% of the Company’s voting securities, is an adverse party or has a material interest adverse to that of the Company.
We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by these risks. There have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended August 31, 2020.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Other than set forth below, there were no sales of unregistered securities during the quarter ended November 30, 2020 that were not previously reported on a Current Report on Form 8-K.
On November 1, 2020, the Company entered into consulting agreements with two consultants to assist in monitoring and improving FinMaster APP for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultants in the form of 2,500,000 shares of restricted common stock, which vested on November 1, 2020, prorated for any partial year. The fair value of the shares of restricted common stock was $2,500,000, which was calculated based on a price per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company amortized $208,333 as consulting expenses under these agreements. Prepaid expenses were $2,291,667 as of November 30, 2020 (Note 7).
From September to November 2020, the Company entered into securities purchase agreement with several accredited investors whereby the investors purchased a total of 495,000 shares of the Company’s common stock at $0.40 per share. The Company received aggregate gross proceeds of $198,000. Pursuant to the terms of the securities purchase agreements, the investors have piggyback registration rights with respect to the shares. The shares are expected to be issued by the end of January 2021.
On November 2, 2020, the Company issued a convertible promissory note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum, to a shareholder – Teh-Ling Chen. The note is due on November 2, 2022 and unsecured. At the sole option of the noteholder, all or part of the unpaid outstanding principal of the convertible promissory note is convertible into shares of restricted common stock of the Company at a conversion price equal to $0.40 per share.
On November 25, 2020, the Company further issued convertible promissory notes in the total principal amount of $600,000, which accrues interest at the rate of 6% per annum, to shareholders –Chin-Ping Wang, Chin-Nan Wang and Chin-Chiang Wang. The note is due on November 25, 2022 and unsecured. At the sole option of the noteholder, all or part of the unpaid outstanding principal of the convertible promissory note is convertible into shares of restricted common stock of the Company at a conversion price equal to $0.40 per share.
The Company offered and/or issued the shares of common stock described herein in reliance upon the exemption from registration afforded by Section 4(a)(2) under the Securities. The offers and issuances of the shares of common stock did not involve a “public offering” based upon the following factors: (i) the offers and/or issuances of the shares of common stock were isolated private transactions; (ii) a limited number of shares of common stock were offered to a limited number of individuals and entities; (iii) there were no public solicitations; (iv) the investment intent of the recipients; and (v) the restriction on transferability of the shares of common stock issued or issuable.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
* Filed herewith.
** Furnished herewith.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LEADER CAPITAL HOLDINGS CORP | ||
| (Name of Registrant) | ||
| Date: January 19, 2021 | ||
| By: | /s/ Yi-Hsiu Lin | |
| Name: | Yi-Hsiu Lin | |
| Title: | Chief Executive Officer, President, Treasurer and Director (Principal Executive Officer and Principal Financial Officer) | |
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Exhibit 10.1
CONSULTING AGREEMENT
This Agreement (the “Agreement”) is dated November 1, 2020 and is entered into by and between Leader Capital Holdings Corp., a Nevada Corporation, (the “Client” or “LCHD”) and Dr. Yi-Fang LIAO (the “Consultant”). This Agreement is non-exclusive.
Recitals
WHEREAS, Consultant has experience in the finance and securities industry specializing in financial information and analytical tools on mobile platforms and
WHEREAS, Consultant is willing to be engaged by Client upon the terms and conditions herein contained; and
WHEREAS, a significant portion of Client’s business and assets are comprised of Proprietary and Confidential Information, as defined below, which Client wishes to preserve and protect;
NOW, THEREFORE, in consideration of the recitals, and of the terms, covenants, and conditions set forth herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, Client and Consultant mutually agree as follows:
1. Consulting Services. Client hereby retains Consultant to render the following services to Client:
| ● | Assist in strategizing the social media forum in the FinMaster APP, | |
| ● | Assist in searching and establishing the live broadcast teams, | |
| ● | Provide research and analysis of securities and financial markets landscape in the PR China, Hong Kong and Taiwan ROC, | |
| ● | Assist in improving user experiences in Client’s FinMaster APP, | |
| ● | Assist in setting up Leader FinTech Academy. |
The manner and means by which Consultant chooses to complete the services are in Consultant’s sole discretion and control. Consultant’s obligations shall be conditioned upon receiving such information and cooperation from Client as may be reasonably necessary to perform the services.
2. Services NOT Performed by Consultant. Although Consultant may come across and may comment upon Client’s legal documents, financial statements or other documentation in the course of performing the services hereunder, Client acknowledges that Consultant is not an attorney, nor is Consultant providing auditing or accounting services or opining on representations made in any financial statements. Client further acknowledges that Client should consult with its own legal, auditing and accounting advisors regarding any matters requiring legal, auditing or accounting advice.
3. Relationship of Parties. This Agreement shall not constitute an employer-employee relationship, and it is the intent of each party that Consultant shall at all times be an independent contractor.
4. Term. The term of this Agreement shall commence on the date hereof and shall remain in effect for a period of twelve (12) months.
5. Compensation. For services provided hereunder, Consultant shall be paid the total sum of One million Five hundred thousand (1,500,000) restricted shares of LCHD. Consultant or Consultant’s employees shall only be entitled to payment or reimbursement for travel expenses, food, lodging, any per diem allowance, equipment, supplies, or similar items if expressly authorized in advance by Client.
6. Disclosure of Information. Consultant agrees that at no time (either during or subsequent to the term of this Agreement) will Consultant disclose or use, except in pursuit of the business of Client or any of its subsidiaries or affiliates, any Proprietary and Confidential Information of Client, or any subsidiary or affiliate of Client, acquired during the term of this Agreement. The term “Proprietary and Confidential Information” shall mean, but is not limited to, all information which is known or intended to be known only to Client, its subsidiaries and affiliates, and their employees, including any document, record, financial or other information of Client, or others in a confidential relationship with Client, and further relates to specific business matters such as the Client’s financial information, identity of clients and patients, policies and procedures, fee structures, trade secrets, proprietary know-how, account information, and other information relating to other business of Client, its subsidiaries and affiliates, and their employees. Consultant agrees not to remove from the premises of Client except as necessary for Consultant to perform services in accordance with the terms of this Agreement, any document, record, or other information of Client or its affiliates.
Consultant agrees to return or destroy, immediately upon termination of Consultant’s services hereunder, any and all documentation relating to Proprietary and Confidential Information of Client and of others that is in the possession of Consultant, in whatever format it may be maintained, whether provided to, or developed by, Consultant, and to provide a certificate of destruction if required by Client.
Notwithstanding the foregoing, the restrictions contained in this Section 6 shall not apply to any Proprietary and Confidential Information that (i) is a matter of public knowledge or prior personal knowledge (from a source other than a party to this Agreement or its affiliate), (ii) is independently developed by a person not a party to this Agreement without the use, directly or indirectly, of Proprietary and Confidential Information, or (iii) is required by law or the order of any court or governmental agency, or in any litigation or similar proceeding to be disclosed; provided that the disclosing party shall, prior to making any such required disclosure, notify the other party with sufficient notice to permit that party to seek an appropriate protective order.
7. Proprietary and Confidential Information of Others. Consultant acknowledges that Client does business with clients that provide Client with information of a confidential nature, and that Client has contractual obligations to preserve the confidential nature of such information. Consultant agrees to treat any information received from clients of Client as confidential, as if it were the Proprietary and Confidential Information of Client.
8. Remedies. In addition to any other remedies, which Client may have by virtue of this Agreement, Consultant agrees that in the event that a breach of the confidentiality provisions of this Agreement occurs or is threatened, Client shall be entitled to obtain an injunction against Consultant from a court of competent jurisdiction to restrain any breach of confidentiality.
9. Termination. Either party may terminate this Agreement, with or without cause, upon thirty (30) days’ advance written notice to the other, unless otherwise mutually agreed upon.
10. Limitation of Liability to Client. Notwithstanding any other provision of this Agreement, in no event shall Consultant be liable to Client for Client’s lost profits, or special, incidental, punitive or consequential damages (even if Consultant has been advised of the possibility of such damages). Furthermore, in no event shall Consultant’s liability to Client under any circumstances exceed the amount of compensation actually received by Consultant from Client under this Agreement as of a date certain. Further, Consultant will not be liable for delays or performance failures due to circumstances beyond Consultant’s control.
11. Indemnification of Consultant. Client shall indemnify, defend and hold Consultant harmless from and against any and all third party claims, liability, suits, losses, damages and judgments, joint or several, and shall pay all costs and expenses (including counsel’s fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising there from, that Consultant incurs as a result of having performed services on behalf of Client.
12. Client’s Representations. Client represents that it has the full right and authority to enter into and perform this Agreement. The consummation of the Agreement and the transactions contemplated herein do not violate any outstanding assignments, grants, licenses, encumbrances, obligations, agreements or understanding between Client and any other person or entity. Client represents and warrants to Consultant that Client is able to timely pay Consultant all fees and expenses incurred in the performance of the services hereunder.
13. Amendments. This Agreement may be amended only in a writing signed by both parties.
14. Independent Consultant; No Agency. The parties agree that at all times during the term of this Agreement, Consultant shall continue to be an independent Consultant, and is not authorized as, nor shall be deemed to be an employee, agent, partner, joint venture partner, or representative of Client. Neither party has the authority to bind the other or to incur any liability on behalf of the other, nor to direct the employees of the other. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between Client and Consultant or any employee or agent of Consultant. Consultant shall retain the right to perform services for others during the term of this Agreement.
15. Miscellaneous. No waiver by Client of any breach of this Agreement by Consultant shall be considered to be a waiver of any other breach. Should any litigation be commenced between Client and Consultant relating to any such breach, the prevailing party shall be entitled, in addition to such other relief as may be granted, reasonable costs and attorney’s fees relating to such litigation. If any term or provision of this Agreement is determined to be illegal or invalid, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. This Agreement shall be governed by the laws of the State of Nevada.
This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of November 1, 2020.
| CLIENT | |
| Leader Capital Holdings Corp. | |
| /s/ Yi-Hsiu Lin | |
| Yi-Hsiu Lin, CEO | |
| CONSULTANT | |
| /s/ Yi-Fang Liao | |
| Yi-Fang Liao |
Exhibit 10.2
CONSULTING AGREEMENT
This Agreement (the “Agreement”) is dated November 1, 2020 and is entered into by and between Leader Capital Holdings Corp., a Nevada Corporation, (the “Client” or “LCHD”) and Chia-Jung LIANG (the “Consultant”). This Agreement is non-exclusive.
Recitals
WHEREAS, Consultant has experience in the field of information technology specializing in financial information and analytical tools on mobile platforms and
WHEREAS, Consultant is willing to be engaged by Client upon the terms and conditions herein contained; and
WHEREAS, a significant portion of Client’s business and assets are comprised of Proprietary and Confidential Information, as defined below, which Client wishes to preserve and protect;
NOW, THEREFORE, in consideration of the recitals, and of the terms, covenants, and conditions set forth herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, Client and Consultant mutually agree as follows:
1. Consulting Services. Client hereby retains Consultant to render the following services to Client:
| ● | Assist in strategizing the social media forum in the FinMaster APP, | |
| ● | Assist in searching and establishing the live broadcast teams, | |
| ● | Provide research and prediction of securities and financial application mobile APP development trends in the PR China, Hong Kong and Taiwan ROC, | |
| ● | Assist in improving user experiences in Client’s FinMaster APP | |
| ● | Assist in setting up Leader FinTech Academy. |
The manner and means by which Consultant chooses to complete the services are in Consultant’s sole discretion and control. Consultant’s obligations shall be conditioned upon receiving such information and cooperation from Client as may be reasonably necessary to perform the services.
2. Services NOT Performed by Consultant. Although Consultant may come across and may comment upon Client’s legal documents, financial statements or other documentation in the course of performing the services hereunder, Client acknowledges that Consultant is not an attorney, nor is Consultant providing auditing or accounting services or opining on representations made in any financial statements. Client further acknowledges that Client should consult with its own legal, auditing and accounting advisors regarding any matters requiring legal, auditing or accounting advice.
3. Relationship of Parties. This Agreement shall not constitute an employer-employee relationship, and it is the intent of each party that Consultant shall at all times be an independent contractor.
4. Term. The term of this Agreement shall commence on the date hereof and shall remain in effect for a period of twelve (12) months.
5. Compensation. For services provided hereunder, Consultant shall be paid the total sum of One million (1,000,000) restricted shares of LCHD. Consultant or Consultant’s employees shall only be entitled to payment or reimbursement for travel expenses, food, lodging, any per diem allowance, equipment, supplies, or similar items if expressly authorized in advance by Client.
6. Disclosure of Information. Consultant agrees that at no time (either during or subsequent to the term of this Agreement) will Consultant disclose or use, except in pursuit of the business of Client or any of its subsidiaries or affiliates, any Proprietary and Confidential Information of Client, or any subsidiary or affiliate of Client, acquired during the term of this Agreement. The term “Proprietary and Confidential Information” shall mean, but is not limited to, all information which is known or intended to be known only to Client, its subsidiaries and affiliates, and their employees, including any document, record, financial or other information of Client, or others in a confidential relationship with Client, and further relates to specific business matters such as the Client’s financial information, identity of clients and patients, policies and procedures, fee structures, trade secrets, proprietary know-how, account information, and other information relating to other business of Client, its subsidiaries and affiliates, and their employees. Consultant agrees not to remove from the premises of Client except as necessary for Consultant to perform services in accordance with the terms of this Agreement, any document, record, or other information of Client or its affiliates.
Consultant agrees to return or destroy, immediately upon termination of Consultant’s services hereunder, any and all documentation relating to Proprietary and Confidential Information of Client and of others that is in the possession of Consultant, in whatever format it may be maintained, whether provided to, or developed by, Consultant, and to provide a certificate of destruction if required by Client.
Notwithstanding the foregoing, the restrictions contained in this Section 6 shall not apply to any Proprietary and Confidential Information that (i) is a matter of public knowledge or prior personal knowledge (from a source other than a party to this Agreement or its affiliate), (ii) is independently developed by a person not a party to this Agreement without the use, directly or indirectly, of Proprietary and Confidential Information, or (iii) is required by law or the order of any court or governmental agency, or in any litigation or similar proceeding to be disclosed; provided that the disclosing party shall, prior to making any such required disclosure, notify the other party with sufficient notice to permit that party to seek an appropriate protective order.
7. Proprietary and Confidential Information of Others. Consultant acknowledges that Client does business with clients that provide Client with information of a confidential nature, and that Client has contractual obligations to preserve the confidential nature of such information. Consultant agrees to treat any information received from clients of Client as confidential, as if it were the Proprietary and Confidential Information of Client.
8. Remedies. In addition to any other remedies, which Client may have by virtue of this Agreement, Consultant agrees that in the event that a breach of the confidentiality provisions of this Agreement occurs or is threatened, Client shall be entitled to obtain an injunction against Consultant from a court of competent jurisdiction to restrain any breach of confidentiality.
9. Termination. Either party may terminate this Agreement, with or without cause, upon thirty (30) days’ advance written notice to the other, unless otherwise mutually agreed upon.
10. Limitation of Liability to Client. Notwithstanding any other provision of this Agreement, in no event shall Consultant be liable to Client for Client’s lost profits, or special, incidental, punitive or consequential damages (even if Consultant has been advised of the possibility of such damages). Furthermore, in no event shall Consultant’s liability to Client under any circumstances exceed the amount of compensation actually received by Consultant from Client under this Agreement as of a date certain. Further, Consultant will not be liable for delays or performance failures due to circumstances beyond Consultant’s control.
11. Indemnification of Consultant. Client shall indemnify, defend and hold Consultant harmless from and against any and all third party claims, liability, suits, losses, damages and judgments, joint or several, and shall pay all costs and expenses (including counsel’s fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising there from, that Consultant incurs as a result of having performed services on behalf of Client.
12. Client’s Representations. Client represents that it has the full right and authority to enter into and perform this Agreement. The consummation of the Agreement and the transactions contemplated herein do not violate any outstanding assignments, grants, licenses, encumbrances, obligations, agreements or understanding between Client and any other person or entity. Client represents and warrants to Consultant that Client is able to timely pay Consultant all fees and expenses incurred in the performance of the services hereunder.
13. Amendments. This Agreement may be amended only in a writing signed by both parties.
14. Independent Consultant; No Agency. The parties agree that at all times during the term of this Agreement, Consultant shall continue to be an independent Consultant, and is not authorized as, nor shall be deemed to be an employee, agent, partner, joint venture partner, or representative of Client. Neither party has the authority to bind the other or to incur any liability on behalf of the other, nor to direct the employees of the other. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between Client and Consultant or any employee or agent of Consultant. Consultant shall retain the right to perform services for others during the term of this Agreement.
15. Miscellaneous. No waiver by Client of any breach of this Agreement by Consultant shall be considered to be a waiver of any other breach. Should any litigation be commenced between Client and Consultant relating to any such breach, the prevailing party shall be entitled, in addition to such other relief as may be granted, reasonable costs and attorney’s fees relating to such litigation. If any term or provision of this Agreement is determined to be illegal or invalid, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. This Agreement shall be governed by the laws of the State of Nevada.
This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of November 1, 2020.
| CLIENT | |
| Leader Capital Holdings Corp. | |
| /s/ Yi-Hsiu Lin | |
| Yi-Hsiu Lin, CEO | |
| CONSULTANT | |
| /s/ Vincent Chia-Jung Liang | |
| Vincent Chia-Jung Liang |
EXHIBIT 31.1
CERTIFICATION
I, YI-HSIU LIN, certify that:
1. I have reviewed this quarterly report on Form 10-Q of LEADER CAPITAL HOLDINGS CORP.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: January 19, 2021 | By: | /s/ Yi-Hsiu Lin |
| Yi-Hsiu Lin | ||
| Chief Executive Officer, President and Treasurer | ||
| (Principal Executive Officer, Principal Financial Officer |
EXHIBIT 32.1
CERTIFICATION
In connection with the quarterly report of LEADER CAPITAL HOLDINGS CORP. (the “Company”) on Form 10-Q for the period ended November 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Yi-Hsiu Lin, Chief Executive Officer and President (Principal Executive Officer) and Treasurer (Principal Financial Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company at the dates and for the periods indicated. |
| Date: January 19, 2021 | By: | /s/ Yi-Hsiu Lin |
| Yi-Hsiu Lin | ||
| Chief Executive Officer, President and Treasurer | ||
| (Principal Executive Officer and Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Jan. 11, 2021 |
|
| Cover [Abstract] | ||
| Entity Registrant Name | Leader Capital Holdings Corp. | |
| Entity Central Index Key | 0001715433 | |
| Document Type | 10-Q | |
| Document Period End Date | Nov. 30, 2020 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --08-31 | |
| Entity Current Reporting Status | No | |
| Entity Interactive Data Current | No | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business Flag | true | |
| Entity Emerging Growth Company | true | |
| Entity Ex Transition Period | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 133,894,219 | |
| Document Fiscal Period Focus | Q1 | |
| Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 200,000,000 | 200,000,000 |
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 600,000,000 | 600,000,000 |
| Common stock, shares issued | 129,974,219 | 135,474,219 |
| Common stock, shares outstanding | 129,974,219 | 135,474,219 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|||
| Income Statement [Abstract] | ||||
| REVENUE | $ 22,863 | $ 1,667 | ||
| OPERATING EXPENSES | ||||
| Research and development expenses | (146,971) | |||
| Sales and marketing expenses | (109,702) | |||
| General and administrative expenses | (2,953,167) | (1,238,147) | ||
| LOSS FROM OPERATIONS | (3,186,977) | (1,236,480) | ||
| Interest expense | (15,446) | (14,959) | ||
| Loss on change in fair value of convertible notes | (481,043) | |||
| OTHER INCOME | ||||
| Other income - from related parties | 1,823 | |||
| Other income - from non-related parties | 19,469 | 21,809 | ||
| TOTAL OTHER INCOME | 21,292 | 21,809 | ||
| LOSS BEFORE INCOME TAX | (3,662,174) | (1,229,630) | ||
| Income tax benefit (expense) | 5,114 | (20,000) | ||
| NET LOSS | (3,657,060) | (1,249,630) | ||
| OTHER COMPREHENSIVE LOSS | ||||
| Foreign currency translation adjustment | (207) | |||
| TOTAL COMPREHENSIVE LOSS | $ (3,657,267) | $ (1,249,630) | ||
| Net loss per share - Basic and diluted | $ (0.03) | $ (0.01) | ||
| Weighted average number of shares of common stock outstanding - Basic and diluted | [1] | 136,921,376 | 113,684,073 | |
| ||||
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Additional Paid In Capital [Member] |
Accumulated Other Comprehensive (Loss) Income [Member] |
Accumulated Deficits [Member] |
Total |
|---|---|---|---|---|---|
| Balance beginning at Aug. 31, 2019 | $ 10,519 | $ 1,888,909 | $ (1,464,746) | $ 434,682 | |
| Balance beginning, shares at Aug. 31, 2019 | 105,184,073 | ||||
| Share based compensation | 4,250,000 | 4,250,000 | |||
| Net loss | (1,249,630) | (1,249,630) | |||
| Balance ending at Nov. 30, 2019 | $ 10,519 | 6,138,909 | (2,714,376) | 3,435,052 | |
| Balance ending, shares at Nov. 30, 2019 | 105,184,073 | ||||
| Balance beginning at Aug. 31, 2020 | $ 13,548 | 13,647,673 | (11,307,575) | 2,353,646 | |
| Balance beginning, shares at Aug. 31, 2020 | 135,474,219 | ||||
| Shares to be issued in private placement | 198,000 | 198,000 | |||
| Cancellation of restricted shares | $ (550) | 550 | |||
| Cancellation of restricted shares, shares | (5,500,000) | ||||
| Share based compensation | 5,780,094 | 5,780,094 | |||
| Foreign currency translation adjustment | (207) | (207) | |||
| Net loss | (3,657,060) | (3,657,060) | |||
| Balance ending at Nov. 30, 2020 | $ 12,998 | $ 19,626,317 | $ (207) | $ (14,964,635) | $ 4,674,473 |
| Balance ending, shares at Nov. 30, 2020 | 129,974,219 |
Organization and Business Background |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Business Background | 1. ORGANIZATION AND BUSINESS BACKGROUND
Leader Capital Holdings Corp. (“LCHD” or the “Company”) was incorporated on March 22, 2017 under the laws of the State of Nevada.
The Company, through its subsidiaries, mainly operates and services a mobile application investment platform.
On August 17, 2020, LCHD, through JFB, acquired all of the issued and outstanding capital stock (the “Acquisition”) of Nice Products Inc. (“NPI”), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of the Closing Date, among the Company, JFB, NPI, the selling shareholders of NPI identified therein (each a “Seller,” and, collectively, the “Sellers”) and the representative of the Sellers identified therein. As a result of the Acquisition, the Company now owns indirectly 100% of NPI, LOC Weibo Co., Ltd. and Beijing DataComm Cloud Media Technology Co., Ltd.
The aggregate purchase price for the Acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates, resulting in a net purchase price of $3,506,042, payable in 8,415,111 shares of the Company’s common stock to the Sellers in accordance with their respective pro rata percentage.
After the completion of the Acquisition, NPI became an indirect, wholly owned subsidiary of the Company.
NPI was incorporated in the British Virgin Islands on December 17, 2018.
NPI, through its subsidiaries, mainly engages in the development of ecological-systems applications, integration of big data and promotion of OTT applications.
LCHD and its subsidiaries (including NPI and its subsidiaries) are hereinafter referred to as the “Company”. |
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These interim condensed consolidated financial statements of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the unaudited condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”), and include the accounts of the Company and its subsidiaries. However, they do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with U.S. GAAP. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Intercompany accounts and transactions have been eliminated in consolidation.
The Company has adopted August 31 as its fiscal year end. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended August 31, 2020, which was filed with the SEC on December 15, 2020.
Going Concern
The accompanying interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
The Company has suffered recurring losses from operations, and recorded an accumulated deficit of $14,964,635 as of November 30, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
The Company expects to finance its operations primarily through cash flows from operations, loans from existing directors and shareholders and placements of capital stock for additional funding. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, a shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including the Company’s businesses. This outbreak could decrease spending, adversely affect demand for the Company’s services and harm its business and results of operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on its business or results of operations at this time.
These interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as going concern.
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.
Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its condensed consolidated financial statements.
Business combination
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of comprehensive income. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of comprehensive income.
When there is a change in ownership interests that result in a loss of control of a subsidiary, the Company deconsolidates the subsidiary from the date control is lost. Any retained non-controlling investment in the former subsidiary is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary.
Goodwill and impairment of goodwill
Goodwill represents the excess of the purchase price and related costs over the fair value of the net identified tangible and intangible assets and liabilities assumed and is not amortized. The total amount of goodwill is deductible for tax purposes.
In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value.
The Company estimates fair value of the applicable reporting unit or units using a discounted cash flow methodology. This methodology represents a level 3 fair value measurement as defined under ASC 820, Fair Value Measurements and Disclosures, since the inputs are not readily observable in the marketplace. The goodwill impairment testing process involves the use of significant assumptions, estimates and judgments, including projected sales, gross margins, selling, general and administrative expenses, and capital expenditures, and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. When the Company performs goodwill impairment testing, its assumptions are based on annual business plans and other forecasted results, which it believes represent those of a market participant. The Company selects a discount rate, which is used to reflect market-based estimates of the risks associated with the projected cash flows based on the best information available as of the date of the impairment assessment. Based on the annual impairment analysis, there is no impairment on the goodwill recorded in the Company’s financial statements.
Given the current macro-economic environment and the uncertainties regarding its potential impact on the Company’s business, there can be no assurance that its estimates and assumptions used in its impairment tests will prove to be accurate predictions of the future. If the Company’s assumptions regarding forecasted cash flows are not achieved, it is possible that an impairment review may be triggered and goodwill may be impaired.
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Software Development Costs
The Company expenses software development costs, including costs to develop software products or the software component of products to be marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products and, as a result, development costs that meet the criteria for capitalization were not material for the periods presented.
The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended.
On September 1, 2018 (before the acquisition of NPI (Note 1)), JFB appointed LOC to develop a mobile application in four stages for total consideration of TWD20,000,000 ($651,466), payable in the form of shares of the Company’s restricted common stock. As of August 31, 2019, the first and second stages of development for the basic functions of the mobile application have been completed, and the Company has issued a total of 908,678 of restricted common shares in aggregate at $0.50 per share for the work completed up to August 31, 2019. The Company has expensed $454,339 development costs for the first and second development stage in general and administrative expenses for the year ended August 31, 2019. In August 2020, the development of the mobile application has been completed, and the Company expensed $0.2 million development costs in general and administrative expenses for the year ended August 31, 2020. Further $600,000 was incurred for additional functions developed and $200,000 was incurred for the acquisition of the ownership of the intellectual property in the year ended August 31, 2020.
No development costs were expensed as general and administrative expenses for the three months ended November 30, 2020 and 2019.
Revenue Recognition
The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
The Company recognizes revenue following the five-step model prescribed under ASU 2014-09:
Step 1: Identify the contract Step 2: Identify the performance obligations Step 3: Determine the transaction price Step 4: Allocate the transaction price Step 5: Recognize revenue
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Provision of investment platform services
The Company signed an agreement with a third party whereby the Company authorized the third party to use the Company’s JFB platform and related applications for a period until December 31, 2020. Income from provision of investment platform services with the use of the Company’s mobile applications is recognized when the service is performed.
From September, 2020, the Company generated additional revenue from a new, more comprehensive mobile application, which refer to as the FinMaster mobile application (the “FinMaster App” and together with the JFB platform, the “Apps”), with similar functions as the JFB platform. Income from providing investment platform services with the use of a mobile application is recognized when the service is performed.
The Company offers a self-managed points program, which can be used in the FinMaster App to redeem merchandise or services. The Company determines the value of each point based on estimated incremental cost. Customers and advocates have a variety of ways to obtain the points. The major accounting policy for its points program is described as follows:
The Company concludes the bonus points offered linked to the purchase transaction of the points is a material right and accordingly a separate performance obligation according to ASC 606, and should be taken into consideration when allocating the transaction price of the point sales. The Company also estimates the probability of points redemption when performing the allocation. The amount allocated to the bonus points as separate performance obligation is recorded as contract liability (deferred revenue) and revenue should be recognized when future goods or services are transferred. The Company will continue to monitor when and if forfeiture rate data becomes available and will apply and update the estimated forfeiture rate at each reporting period.
Since historical information is limited for the Company to determine any potential points forfeitures and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero.
Provision of software development service and maintenance service
The Company entered into several agreements with third party customers to assist the customers in the development of their mobile communications software and mobile e-commerce software. Income from provision of software development service and maintenance service are recognized when the service is performed.
Revenue by major product line
Revenue by Recognition Over Time vs Point in Time
Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues; invoices that have been issued to customers but were uncollected and have not been recognized as revenues; and amounts that will be invoiced and recognized as revenues in future periods. As of November 30, 2020, the Company’s remaining performance obligations were $11,598, which it expects to recognize as revenues over the next twelve months and the remainder thereafter.
The Company had not incurred any costs to obtain contracts.
The Company does not have amounts of contract assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are expected to be recognized as revenue within one year and are included in other payables and accrued liabilities in the consolidated balance sheet.
Contract balances
The Company’s contract liabilities consist of receipts in advance for software development and the FinMaster App. Below is the summary presenting the movement of the Company’s contract liabilities for the three months ended November 30, 2020:
Practical Expedients and Exemption
The Company has not incurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
Research and development expenses
Research and development (“R&D”) expenses are primary comprised of charges for R&D and consulting work performed by third parties; salaries and benefits for those employees engaged in research, design and development activities; costs related to design tools; and allocated costs.
For the three months ended November 30, 2020 and 2019, the total R&D expenses were $146,971 and $nil, respectively.
Sales and marketing expenses
Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and other compensation-related expenses to sales and marketing personnel. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing. The Company expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the three months ended November 30, 2020 and 2019, advertising costs totaled $97,361 and $nil, respectively.
From September 2019, customers or users of the FinMaster App can obtain points through any other ways such as account registration referral to the FinMaster App, frequent sign-ins to the application and sharing articles from the application to users’ own social media, etc. The Company believes these points are to encourage user engagement and generate market awareness. As a result, the Company accounts for such points as sales and marketing expenses with a corresponding liability recorded under other current liabilities of its condensed consolidated balance sheets upon the points offering. The Company estimates liabilities under the customer loyalty program based on cost of the merchandise that can be redeemed, and its estimate of probability of redemption. At the time of redemption, the Company records a reduction of inventory and other current liabilities.
Since historical information is limited for the Company to determine any potential points forfeiture and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero.
For the three months ended November 30, 2020 and 2019, redeemable point liability charged as sales and marketing expenses were $12,341 and $nil, respectively.
As of November 30, 2020 and August 31, 2020, liabilities recorded related to unredeemed points were $51,869 and $40,003, respectively, which were included in other payables (note 8).
General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions, depreciation and amortization of fixed assets, legal and other professional services fees, rental and other general corporate related expenses.
Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. The Company also reviews inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the vehicles less the estimated cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Inventory as of November 30, 2020 represents merchandise inventory which can be redeemed by deducting membership rewards points of customer loyalty program.
Leases
The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s consolidated balance sheets.
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
Intangible asset
The Company recorded intangible assets with definite lives, including investment platform and technical know-hows. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization of intangible assets is computed using the straight-line method over their estimated useful lives.
The estimated useful lives of the Company’s intangible assets are listed below:
Impairment of Long-Lived Assets (including amortizable intangible assets)
The Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If the assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment has been recorded by the Company for the three months ended November 30, 2020 and 2019.
Income taxes
Income taxes are determined in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of November 30, 2020, the Company has no accrued interest or penalties related to uncertain tax positions.
The Company conducts business in the PRC, Taiwan and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities.
Net Loss Per Share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional shares of common stock were dilutive. The following table presents a reconciliation of basic and diluted net loss per share:
As of November 30, 2020 and August 31, 2020, the Company’s convertible notes payable were excluded from the diluted loss per share calculation as they were anti-dilutive.
Stock-based compensation
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 (“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the vesting period or immediately if fully vested and non-forfeitable. The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Additionally, ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, permits the election of an accounting policy for forfeitures of share-based payment awards, either to recognize forfeitures as they occur or estimate forfeitures over the vesting period of the award. The Company has elected to recognize forfeitures as they occur.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2018-07 on September 1, 2019 and there was no cumulative effect of adoption.
Foreign Currencies Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Seychelles, the PRC, Taiwan and Hong Kong maintains its books and record in United States Dollars (“US$”), Renminbi (“RMB”), New Taiwanese Dollars (“NT$”) and Hong Kong Dollars (“HK$”) respectively, which are the primary currencies of the economic environment in which the entities operate (the functional currencies).
In general, for consolidation purposes, the assets and liabilities of the Company’s subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of the financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of retained earnings.
Translation of amounts from foreign currencies into US$ has been made at the following exchange rates for the respective periods:
Related Parties
Parties, which can be a corporation or an individual, are considered to be related if the Company has the ability to, directly or indirectly, control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Convertible instruments
The Company accounts for hybrid contracts that feature conversion options in accordance with U.S. GAAP. ASC 815 “Derivatives and Hedging Activities,” (“ASC 815”) requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.
The Company accounts for convertible instruments, when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, in accordance with ASC 470-20 “Debt with Conversion and Other Options” (“ASC 470-20”). Under ASC 470-20 the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract are allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations.
Fair Value of Financial Instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, deposits, accounts payable and accrued liabilities, balances due with directors and shareholders, convertible notes payable and bonds payable, approximate at their fair values because of the short-term nature of these financial instruments or the rate of interest of these instruments approximate the market rate of interest.
The Company also follows the guidance of the ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), with respect to financial assets and liabilities that are measured at fair value. ASC 820 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
A summary of changes in financial liabilities for the three months ended November 30, 2020 was as follows:
Fair value of the convertible notes is determined using the binomial model using the following assumptions at inception and on subsequent valuation dates:
(i) USD1.00 per share if converted on or before the one-year anniversary of the issuance date
(ii) USD1.50 per share if converted at any time after the one-year anniversary of the issuance date
Segment reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Management determined that the Company’s operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively in one business and industry segment: the provision of investment platform services through mobile application.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company applied the new standard beginning September 1, 2020.
Recently issued accounting pronouncements not yet adopted
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for “smaller reporting companies” for fiscal year beginning after December 15, 2022. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
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Acquisition of Subsidiaries |
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| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of Subsidiaries | 3. ACQUISITION OF SUBSIDIARIES
On August 17, 2020, the Company acquired all of the issued and outstanding capital stock (the “Acquisition”) of NPI, pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of the Closing Date, among the Company, NPI, the selling shareholders of NPI identified therein (each a “Seller,” and, collectively, the “Sellers”) and the representative of the Sellers identified therein.
The aggregate purchase price for the Acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates, resulting in a net purchase price of $3,506,042, payable in 8,415,111 shares of the Company’s common stock to the Sellers in accordance with their respective pro rata percentage.
After the completion of the Acquisition, NPI became a wholly owned subsidiary of the Company.
The Company completed the valuations necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of goodwill was determined and recognized as of the respective acquisition date. The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed as of the closing date, August 31, 2020.
The transaction resulted in a purchase price allocation of $2,974,364 to goodwill, representing the financial, strategic and operational value of the transaction to the Company. Goodwill is attributed to the premium that the Company paid to obtain the value of the business of NPI and the synergies expected from the combined operations of NPI and the Company, the assembled workforce and their knowledge and experience in provision of products and projects utilizing NPI’s technical know-hows. The total amount of the goodwill acquired is not deductible for tax purposes. |
Plant and Equipment, Net |
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Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plant and Equipment, Net | 4. PLANT AND EQUIPMENT, NET
Plant and equipment as of November 30, 2020 and August 31, 2020 are summarized below:
Depreciation expenses, classified as operating expenses, were $10,227 and $2,314 for the three months ended November 30, 2020 and 2019, respectively. |
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Intangible Assets, Net |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Net | 5. INTANGIBLE ASSETS, NET
Intangible assets costs as of November 30, 2020 and August 31, 2020 are summarized below:
Amortization expense for intangible assets was $25,595 and $nil for the three months ended November 30, 2020 and 2019, respectively.
During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company’s intangible assets. The impairment charge, if any, represented the excess of carrying amounts of the Company’s intangible assets over their fair value, using the expected future discounted cash flows. No impairment loss of intangible asset was recognized for the three months ended November 30, 2020 and 2019.
As of November 30, 2020, amortization expenses related to intangible assets for future periods are estimated to be as follows:
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Related Party Transactions |
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Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | 6. RELATED PARTY TRANSACTIONS
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Prepayments, Deposits and Other Receivables |
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Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayments, Deposits and Other Receivables | 7. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
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Accrued Expenses and Other Payables |
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Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Expenses and Other Payables | 8. ACCRUED EXPENSES AND OTHER PAYABLES
The Company signed an agreement with a third party whereby it authorized the third party to use its investment platform and related applications, for a period until December 31, 2020, for an upfront service fee. An additional fee is charged upon the third party’s sale of products on the Company’s mobile application. Unearned income on this contract was $556 and $2,222 as of November 30, 2020 and August 31, 2020, respectively. |
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Due from (to) Shareholders, Directors and a Related Company |
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| Due from (to) Shareholders, Directors and a Related Company | 9. DUE FROM (TO) SHAREHDOLERS, DIRECTORS AND A RELATED COMPANY
On March 10, 2020, LOC entered into a loan agreement with Cheng Hung-Pin and loaned him NT$1,000,000. The loan is unsecured, bears interest at a rate of 3% per annum and repayable on demand.
On July 20, 2020, the Company obtained a loan of RMB420,000 from Hsu Kuo-Hsun which accrues interest at the rate of 8% per annum. The loan is due on July 17, 2021 and Mr. Lin Yi-Hsiu would be liable when the Company fails to repay. Interest of $1,746 and $544 was accrued as of November 30, 2020 and August 31, 2020, respectively.
Amounts due from (to) shareholders, directors and a related company are unsecured, interest-free with no fixed payment term. |
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Bonds Payable |
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Nov. 30, 2020 | |
| Debt Disclosure [Abstract] | |
| Bonds Payable | 10. BONDS PAYABLE
The Company entered into a Bond Purchase Agreement with an individual third party on August 14, 2019, pursuant to which the Company issued and sold to the purchaser a bond at an aggregate purchase price of $600,000. The bond will mature three years from August 14, 2019. Interest on the bond accrues at rate of 10% per annum and is payable on semi-yearly basis. The Company may exercise its right to repay this bond at any time on or before two years from the maturity date by wiring 100% of all outstanding principal and interest to the purchaser. Interest of $17,935 and $2,935 was accrued as of November 30, 2020 and August 31, 2020, respectively. |
Convertible Notes Payable to Related Parties |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable to Related Parties | 11. CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
The Company entered into a series of Convertible Promissory Note Purchase Agreements (the “Agreements”) with certain investors between February and November, 2020. Pursuant to the Agreements, the Company issued certain Convertible Promissory Notes (the “Notes”) to the investors in a total principal amount of $930,000. A summary of the major terms of the Agreements are presented as follows:
On February 24, 2020, the Company issued a convertible promissory note in the principal amount of $110,000, which accrues interest at the rate of 6% per annum, to a shareholder – Teh-Ling Chen. The note is due on February 24, 2022 and unsecured.
On February 27, 2020, the Company issued a convertible promissory note in the principal amount of $20,000, which accrues interest at the rate of 6% per annum, to a shareholder – Li-Ching Yang. The note is due on February 27, 2022 and unsecured.
On March 18, 2020, the Company issued a convertible promissory note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum, to a shareholder – Jui-Chin Chen. The note is due on March 18, 2022 and unsecured.
On August 17, 2020, the Company entered into amendments to the Notes and the convertible promissory note purchase agreements with each of the Noteholders, wherein, at the sole option of the applicable Noteholder, all or part of the unpaid outstanding principal of such Noteholder’s Note would be convertible into shares of restricted common stock of the Company at a conversion price equal to $0.40 per share. On August 18, 2020, two of the Noteholders submitted conversion notices to the Company converting all of the outstanding balances of their Notes into an aggregate of 325,000 shares of the Company’s common stock.
On November 2, 2020, the Company issued a convertible promissory note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum, to a shareholder – Teh-Ling Chen. The note is due on November 2, 2022 and unsecured.
On November 25, 2020, the Company further issued convertible promissory notes in the total principal amount of $600,000, which accrues interest at the rate of 6% per annum, to shareholders –Chin-Ping Wang, Chin-Nan Wang and Chin-Chiang Wang. The note is due on November 25, 2022 and unsecured.
For each of the convertible promissory notes, the Company is entitled to a one-year extension. The outstanding principal amounts of the notes are convertible at any time at the option of the holders into common stock at a conversion price of $0.4 per share. Each of the lenders may convert part of the principal outstanding in increments of $10,000 or multiples of $10,000 at any time. Accrued interest, if any, will be forfeited on any principal amount being converted.
The conversion feature is dual indexed to the Company’s stock, and is considered an embedded derivative which needs to be bifurcated from the host instrument in accordance with ASC 815.
ASC 815-15-25 provides that if an entity has a hybrid financial instrument that would require bifurcation of embedded derivatives under ASC 815, the entity may irrevocably elect to initially and subsequently measure a hybrid financial instrument in its entirety at fair value with changes in fair value recognized in earnings. The fair value election can be made instrument by instrument and shall be supported by concurrent documentation or a preexisting documented policy for automatic election.
The Company elected to measure the Notes in their entirety at fair value with changes in fair value recognized as non-operating income or loss at each balance sheet date in accordance with ASC 815-15-25.
Fair value of the convertible promissory notes of $800,000 as of November 30, 2020 is determined using the binomial model, one of the option pricing methods. The valuation involves complex and subjective judgment and the Company’s best estimates of the probability of occurrence of future events, such as fundamental changes, on the valuation date. Under the binomial valuation model, the Company uses a weighted risk-free and risk interest rate (the combination of the risk free rate plus the credit spread for the underlying Notes) weighted by the probability of conversion as internally solved out by binomial model in discounting its cash flows. The main inputs to this model include the underlying share price, the expected share volatility, the expected dividend yield, the risk free and risk interest rate. |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 12. INCOME TAXES
For the three months ended November 30, 2020 and 2019, the local (United States) and foreign components of loss before income tax were comprised of the following:
The components of the provision (benefit) for income taxes expenses are:
The provision for income taxes consisted of the following:
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of November 30, 2020, the operations in the United States of America incurred $2,104,494 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2037, if unutilized. As of November 30, 2020 and August 31, 2020, the Company has provided for a full valuation allowance of $441,944 and $323,322, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
Seychelles
Under the current laws of the Seychelles, LFG is registered as an international business company which governs by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.
British Virgin Islands
NPI is tax exempted in the British Virgin Islands where it was incorporated.
Taiwan
LOC is subject to corporate income tax (“CIT”) in Taiwan. With effect from January 1, 2018, the CIT rate in Taiwan is 20%. However, for profit-seeking entities with less than NT$ 500,000 (approximately $17,347) in taxable income, the CIT rate is 18% in 2018, 19% in 2019, and 20% in 2020 if taxable income exceeds NT$120,000 (approximately $4,163). As of November 30, 2020, LOC had net operating loss carry-forwards in Taiwan of $2,008,983, which will expire in various years through 2025. The Company has provided for a full valuation allowance of $401,797 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
PRC
BJDC is subject to corporate income tax (“CIT”) at 25% in accordance with the relevant tax laws and regulations of the PRC. As of November 30, 2020, BJDC had net operating loss carry-forwards in the PRC of $1,407,248, which will expire in various years through 2027. The Company has provided for a full valuation allowance of $351,812 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
Hong Kong
JFB is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income. No provision for Hong Kong profits tax has been made in the financial statements as JFB has no assessable profits for the years. As of November 30, 2020 and August 31, 2020, the operations in Hong Kong incurred $1,643,906 and $4,350,416 of cumulative net operating losses (NOL’s) which can be carried forward indefinitely to offset future taxable income. As of November 30, 2020 and August 31, 2020, the Company has provided for a full valuation allowance of approximately $271,245 and $717,819, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
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Common Stock |
3 Months Ended |
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Nov. 30, 2020 | |
| Equity [Abstract] | |
| Common Stock | 13. COMMON STOCK
On September 1, 2019, the Company entered into an employment agreement with Yi-Hsiu Lin to serve as the Chief Executive Officer of the Company for a two-year term. Pursuant to the agreement, Mr. Lin will be compensated at an annual rate of $50,000 per year (the “Base Compensation”), prorated for any partial year in cash or 2,500,000 shares of restricted common stock, which vested on September 16, 2019 and September 1, 2020. In addition, Mr. Lin may be entitled to bonus compensation of up to three (3) times Base Compensation based on his achievement of appropriate performance criteria to be determined by the board of directors or a committee thereof. The fair value of the shares of restricted common stock was $2,500,000 and $1,250,000, respectively, which was calculated based on a price per share of $0.40 and $0.50, respectively and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $250,000 and $312,500, respectively, as remuneration. Prepaid expenses were $750,000 as of November 30, 2020 (Note 7).
On September 1, 2019, the Company issued a director offer letter to Shui Fung Cheng, pursuant to which Mr. Cheng agreed to serve as a director of the Company for a one-year term. For his service as a director, Mr. Cheng will receive an annual compensation, prorated for any partial year, in the form of $30,000 in cash or 1,500,000 shares of restricted common stock. The offer letter provided that compensation, either in cash or shares of restricted common stock, shall be paid or granted immediately on September 1, 2019. The fair value of the shares of restricted common stock was $750,000, which was calculated based on a price per share of $0.50 and amortized over the service term. The offer was renewed on September 1, 2020 and all shares were granted and vested on the same date. The fair value of the shares of restricted common stock was $1,500,000, which was calculated based on a price per share of $0.40 and amortized over the service term. During the three months November 30, 2020 and 2019, the Company amortized $150,000 and $187,500, respectively, as remuneration. Prepaid expenses were $450,000 as of November 30, 2020 (Note 7).
On September 1, 2019, the Company entered into a consulting agreement with a consultant to provide business development services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $40,000 in the form of 2,000,000 shares of restricted common stock, which vested on September 15, 2019, prorated for any partial year. The fair value of the shares of restricted common stock was $1,000,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $nil and $250,000, respectively, as consulting expenses under this agreement.
On September 1, 2019, the Company entered into a consulting agreement with a consultant to provide business advisory services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $50,000 in the form of 2,500,000 shares of restricted common stock, which vested on September 15, 2019, prorated for any partial year. The fair value of the shares of restricted common stock was $1,250,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020 and 2019, the Company amortized $nil and $312,500, respectively, as consulting expenses under this agreement.
On June 30, 2020, the Company entered into a stock forfeiture letter (the “Stock Forfeiture Letter”) with First Leader Capital Ltd., a significant stockholder of the Company and an entity solely owned and controlled by Yi-Hsiu Lin, the Company’s Chief Executive Officer and a member of the Company’s board of directors. Pursuant to the Stock Forfeiture Letter, on June 30, 2020, First Leader Capital Ltd. forfeited and surrendered 5,500,000 shares (the “Surrendered Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and the Surrendered Shares were automatically cancelled and retired (the “Stock Cancellation”). First Leader Capital Ltd. agreed to forfeit and cancel the Surrendered Shares in exchange for the benefit from reducing the Company’s outstanding Common Stock to be more in line with what management deems to be market expectations based on the Company’s current valuation. 5,500,000 shares were canceled on September 21, 2020.
On March 1, 2020, the Company entered into a consulting agreement with a consultant to provide business advisory services to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultant a fee of $60,000 and 1,000,000 shares of restricted common stock, which vested not later than June 30, 2020, prorated for any partial year. On June 30, 2020, the Company’s board of directors approved additional 500,000 shares to the consultant in exchange for services rendered. The fair value of the shares of restricted common stock was $750,000, which was calculated based on a price per share of $0.50 and amortized over the service term. During the three months ended November 30, 2020, the Company amortized $187,500 as consulting expenses under this agreement. Prepaid expenses were $187,500 as of November 30, 2020 (Note 7). The shares were granted on July 7, 2020.
On June 30, 2020, the Company’s board of directors agreed to grant a new employee of JFB, (i) 5,000,000 shares of Restricted Common Stock in connection with such employee’s employment (the “Inducement Shares”) and (ii) 5,000,000 shares of Restricted Common Stock upon the achievement of each of two milestones set forth in such employee’s offer letter relating to the FinMaster mobile application. In addition, on that same day, the Company’s board of directors approved an aggregate of 3,000,000 shares to a service provider in exchange for services rendered. As of August 31, 2020, 5,000,000 and 3,000,000 common shares of the Company have been issued to the employee and service provider respectively. The fair value of the shares of restricted common stock to them was $3,200,000, which was calculated based on a price per share of $0.40. On November 30, 2020, 3,116,903 shares were granted to the employee upon achievement of the milestones set forth in the employee’s offer letter. During the three months ended November 30, 2020, the Company amortized $1,246,761 and $nil, respectively, as salaries and professional fees. The shares are expected to be issued by the end of January 2021.
The Company issued 8,415,111 shares of common stock for the acquisition of NPI in August 2020 (Note 1).
On July 27, 2020, the Company issued an offer letter to Chieh Chen, pursuant to which Ms. Chen agreed to serve as an executive assistant of the Company. For her service as an executive assistant, Ms. Chen will receive a monthly compensation in the form of NT$77,000 ($2,671) for the first three months (probationary period) and thereafter NT$92,500 ($3,209) in cash. In addition, Ms. Chen will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. The fair value of the shares of restricted common stocks was $50,000, which was calculated based on a priced per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company recognized $16,667 as compensation under this arrangement.
On August 1, 2020, the Company entered into an agreement with a company for provision of consulting services by its employee to the Company for a one-year term. Pursuant to the agreement, the Company agreed to pay the provider an annual compensation of $66,000, prorated for any partial year. In addition, for the services of its employees on a one-year term, the provider was granted 1,000,000 shares of restricted common stock, vested on September 15, 2020. The fair value of 1,000,000 shares granted was $1,000,000, which was calculated based on the stock price of $1.00 per share on September 15, 2020 and will be amortized over the service term. During the three months ended November 30, 2020, the Company recognized $83,333 as compensation under these arrangements. Prepaid expenses were $316,667 as of November 30, 2020 (Note 7). The shares are expected to be issued by the end of January 2021.
On August 3, 2020, the Company issued an offer letter to Annie Chung, pursuant to which Ms. Chung agreed to serve as an executive assistant of the Company. For her service as an executive assistant, Ms. Chung will receive a monthly compensation in the form of NT$77,000 ($2,671) in cash. In addition, Ms. Chung will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. The fair value of the shares of restricted common stock was $50,000, which was calculated based on a price per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company recognized $16,667 as compensation under this arrangement.
On November 1, 2020, the Company entered into consulting agreements with two consultants to assist in monitoring and improving FinMaster APP for a one-year term. Pursuant to the agreement, the Company agreed to pay the consultants in the form of 2,500,000 shares of restricted common stock, which vested on November 1, 2020, prorated for any partial year. The fair value of the shares of restricted common stock was $2,500,000, which was calculated based on a price per share of $1.00 and amortized over the service term. During the three months ended November 30, 2020, the Company amortized $208,333 as consulting expenses under these agreements. Prepaid expenses were $2,291,667 as of November 30, 2020 (Note 7).
From September to November 2020, the Company entered into securities purchase agreement with several accredited investors whereby the investors purchased a total of 495,000 shares of the Company’s common stock at $0.40 per share. The Company received aggregate gross proceeds of $198,000. Pursuant to the terms of the securities purchase agreements, the investors have piggyback registration rights with respect to the shares. The shares are expected to be issued by the end of January 2021.
As of November 30, 2020, unrecognized share-based compensation expense was $6,578,238.
As of November 30, 2020, 11,243,986 shares were granted to employees (including COO, CEO and a director) and consultants and vested but not yet issued. |
Commitments and Contingencies |
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| Commitments and Contingencies | 14. COMMITMENTS AND CONTINGENCIES
During the period ended November 30, 2020, the Company entered into agreements with independent third parties to lease office and staff quarter premises in Taiwan, Shenzhen, Beijing and Hong Kong on a monthly basis for the operations of the Company. The rental expense for the period ended November 30, 2020 and 2019 were $83,012 and $34,652, respectively.
The following table lists the future minimal payments to be paid by the Company under a non-cancellable operating lease for office space in Taiwan with an initial term of one-year as of November 30, 2020:
As of November 30, 2020, the Company had future minimum lease payments for non-cancelable short-term operating leases of $6,305 payable to a shareholder.
The components of lease costs, lease term and discount rate with respect of leases with an initial term of at least 12 months are as follows:
The following is a schedule, by years, of maturities of lease liabilities as of November 30, 2020:
Contingencies
The Labor Contract Law of the People’s Republic of China requires employers to assure the liability of the severance payments if employees are terminated due to restructuring, termination as a result of a mutual agreement or termination as a result of the expiration of a fixed-term labor contract. The Company has estimated its possible severance payments of approximately $88,000 and $86,000 as of November 30, 2020 and August 31, 2020, respectively, which have not been reflected in its consolidated financial statements, because it is more likely than not that this will not be paid or incurred.
In Taiwan, an employer can terminate an employment contract with notice (or with pay in lieu of notice) and with severance pay only due to stoppage of business or a transfer of ownership, business losses or curtailment of business operations, suspension of operations due to a force majeure event, or alteration of the business nature, forcing a reduction in the number of employees, and those employees cannot be reassigned to other suitable positions, or the employee is incapable of performing the tasks assigned. The Company has estimated its possible severance payments of approximately $46,000 and $28,000 as of November 30, 2020 and August 31, 2020, respectively, which have not been reflected in its consolidated financial statements, because it is more likely than not that this will not be paid or incurred. |
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Subsequent Events |
3 Months Ended |
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Nov. 30, 2020 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 15. SUBSEQUENT EVENTS
The new version of the FinMaster App was released in December 2020. The update allows general users to make in-app purchases of FinMaster points and use them on A.I. stock selection features, programs, and other merchandises.
On January 6, 2021, the Company entered into securities purchase agreement with an accredited investor whereby the investor purchased a total of 500,000 shares of the Company’s common stock at $0.40 per share. The Company received aggregate gross proceeds of $200,000. |
Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
These interim condensed consolidated financial statements of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the unaudited condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”), and include the accounts of the Company and its subsidiaries. However, they do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with U.S. GAAP. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Intercompany accounts and transactions have been eliminated in consolidation.
The Company has adopted August 31 as its fiscal year end. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended August 31, 2020, which was filed with the SEC on December 15, 2020. |
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| Going Concern | Going Concern
The accompanying interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
The Company has suffered recurring losses from operations, and recorded an accumulated deficit of $14,964,635 as of November 30, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
The Company expects to finance its operations primarily through cash flows from operations, loans from existing directors and shareholders and placements of capital stock for additional funding. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, a shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including the Company’s businesses. This outbreak could decrease spending, adversely affect demand for the Company’s services and harm its business and results of operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on its business or results of operations at this time.
These interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as going concern. |
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| Use of Estimates | Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.
Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its condensed consolidated financial statements. |
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| Business Combination | Business combination
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of comprehensive income. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of comprehensive income.
When there is a change in ownership interests that result in a loss of control of a subsidiary, the Company deconsolidates the subsidiary from the date control is lost. Any retained non-controlling investment in the former subsidiary is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary. |
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| Goodwill and Impairment of Goodwill | Goodwill and impairment of goodwill
Goodwill represents the excess of the purchase price and related costs over the fair value of the net identified tangible and intangible assets and liabilities assumed and is not amortized. The total amount of goodwill is deductible for tax purposes.
In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value.
The Company estimates fair value of the applicable reporting unit or units using a discounted cash flow methodology. This methodology represents a level 3 fair value measurement as defined under ASC 820, Fair Value Measurements and Disclosures, since the inputs are not readily observable in the marketplace. The goodwill impairment testing process involves the use of significant assumptions, estimates and judgments, including projected sales, gross margins, selling, general and administrative expenses, and capital expenditures, and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. When the Company performs goodwill impairment testing, its assumptions are based on annual business plans and other forecasted results, which it believes represent those of a market participant. The Company selects a discount rate, which is used to reflect market-based estimates of the risks associated with the projected cash flows based on the best information available as of the date of the impairment assessment. Based on the annual impairment analysis, there is no impairment on the goodwill recorded in the Company’s financial statements.
Given the current macro-economic environment and the uncertainties regarding its potential impact on the Company’s business, there can be no assurance that its estimates and assumptions used in its impairment tests will prove to be accurate predictions of the future. If the Company’s assumptions regarding forecasted cash flows are not achieved, it is possible that an impairment review may be triggered and goodwill may be impaired. |
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| Cash and Cash Equivalents | Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. |
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| Software Development Costs | Software Development Costs
The Company expenses software development costs, including costs to develop software products or the software component of products to be marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products and, as a result, development costs that meet the criteria for capitalization were not material for the periods presented.
The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended.
On September 1, 2018 (before the acquisition of NPI (Note 1)), JFB appointed LOC to develop a mobile application in four stages for total consideration of TWD20,000,000 ($651,466), payable in the form of shares of the Company’s restricted common stock. As of August 31, 2019, the first and second stages of development for the basic functions of the mobile application have been completed, and the Company has issued a total of 908,678 of restricted common shares in aggregate at $0.50 per share for the work completed up to August 31, 2019. The Company has expensed $454,339 development costs for the first and second development stage in general and administrative expenses for the year ended August 31, 2019. In August 2020, the development of the mobile application has been completed, and the Company expensed $0.2 million development costs in general and administrative expenses for the year ended August 31, 2020. Further $600,000 was incurred for additional functions developed and $200,000 was incurred for the acquisition of the ownership of the intellectual property in the year ended August 31, 2020.
No development costs were expensed as general and administrative expenses for the three months ended November 30, 2020 and 2019. |
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| Revenue Recognition | Revenue Recognition
The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
The Company recognizes revenue following the five-step model prescribed under ASU 2014-09:
Step 1: Identify the contract Step 2: Identify the performance obligations Step 3: Determine the transaction price Step 4: Allocate the transaction price Step 5: Recognize revenue
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. |
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| Provision of Investment Platform Services | Provision of investment platform services
The Company signed an agreement with a third party whereby the Company authorized the third party to use the Company’s JFB platform and related applications for a period until December 31, 2020. Income from provision of investment platform services with the use of the Company’s mobile applications is recognized when the service is performed.
From September, 2020, the Company generated additional revenue from a new, more comprehensive mobile application, which refer to as the FinMaster mobile application (the “FinMaster App” and together with the JFB platform, the “Apps”), with similar functions as the JFB platform. Income from providing investment platform services with the use of a mobile application is recognized when the service is performed.
The Company offers a self-managed points program, which can be used in the FinMaster App to redeem merchandise or services. The Company determines the value of each point based on estimated incremental cost. Customers and advocates have a variety of ways to obtain the points. The major accounting policy for its points program is described as follows:
The Company concludes the bonus points offered linked to the purchase transaction of the points is a material right and accordingly a separate performance obligation according to ASC 606, and should be taken into consideration when allocating the transaction price of the point sales. The Company also estimates the probability of points redemption when performing the allocation. The amount allocated to the bonus points as separate performance obligation is recorded as contract liability (deferred revenue) and revenue should be recognized when future goods or services are transferred. The Company will continue to monitor when and if forfeiture rate data becomes available and will apply and update the estimated forfeiture rate at each reporting period.
Since historical information is limited for the Company to determine any potential points forfeitures and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero. |
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| Provision of Software Development Service and Maintenance Service | Provision of software development service and maintenance service
The Company entered into several agreements with third party customers to assist the customers in the development of their mobile communications software and mobile e-commerce software. Income from provision of software development service and maintenance service are recognized when the service is performed. |
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| Revenue by Major Product Line | Revenue by major product line
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| Revenue by Recognition Over Time Vs Point in Time | Revenue by Recognition Over Time vs Point in Time
Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues; invoices that have been issued to customers but were uncollected and have not been recognized as revenues; and amounts that will be invoiced and recognized as revenues in future periods. As of November 30, 2020, the Company’s remaining performance obligations were $11,598 , which it expects to recognize as revenues over the next twelve months and the remainder thereafter.
The Company had not incurred any costs to obtain contracts.
The Company does not have amounts of contract assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are expected to be recognized as revenue within one year and are included in other payables and accrued liabilities in the consolidated balance sheet. |
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| Contract Balances | Contract balances
The Company’s contract liabilities consist of receipts in advance for software development and the FinMaster App. Below is the summary presenting the movement of the Company’s contract liabilities for the three months ended November 30, 2020:
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| Practical Expedients and Exemption | Practical Expedients and Exemption
The Company has not incurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
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| Research and Development Expenses | Research and development expenses
Research and development (“R&D”) expenses are primary comprised of charges for R&D and consulting work performed by third parties; salaries and benefits for those employees engaged in research, design and development activities; costs related to design tools; and allocated costs.
For the three months ended November 30, 2020 and 2019, the total R&D expenses were $146,971 and $nil, respectively. |
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| Sales and Marketing Expenses | Sales and marketing expenses
Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and other compensation-related expenses to sales and marketing personnel. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing. The Company expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the three months ended November 30, 2020 and 2019, advertising costs totaled $97,361 and $nil, respectively.
From September 2019, customers or users of the FinMaster App can obtain points through any other ways such as account registration referral to the FinMaster App, frequent sign-ins to the application and sharing articles from the application to users’ own social media, etc. The Company believes these points are to encourage user engagement and generate market awareness. As a result, the Company accounts for such points as sales and marketing expenses with a corresponding liability recorded under other current liabilities of its condensed consolidated balance sheets upon the points offering. The Company estimates liabilities under the customer loyalty program based on cost of the merchandise that can be redeemed, and its estimate of probability of redemption. At the time of redemption, the Company records a reduction of inventory and other current liabilities.
Since historical information is limited for the Company to determine any potential points forfeiture and most merchandise can be redeemed without requiring a significant amount of points compared with the amount of points provided to users, the Company has used an estimated forfeiture rate of zero.
For the three months ended November 30, 2020 and 2019, redeemable point liability charged as sales and marketing expenses were $12,341 and $nil, respectively.
As of November 30, 2020 and August 31, 2020, liabilities recorded related to unredeemed points were $51,869 and $40,003, respectively, which were included in other payables (note 8). |
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| General and Administrative Expenses | General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions, depreciation and amortization of fixed assets, legal and other professional services fees, rental and other general corporate related expenses. |
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| Inventory | Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. The Company also reviews inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the vehicles less the estimated cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Inventory as of November 30, 2020 represents merchandise inventory which can be redeemed by deducting membership rewards points of customer loyalty program. |
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| Leases | Leases
The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s consolidated balance sheets. |
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| Plant and Equipment | Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
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| Intangible Asset | Intangible asset
The Company recorded intangible assets with definite lives, including investment platform and technical know-hows. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization of intangible assets is computed using the straight-line method over their estimated useful lives.
The estimated useful lives of the Company’s intangible assets are listed below:
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| Impairment of Long-Lived Assets (Including Amortizable Intangible Assets) | Impairment of Long-Lived Assets (including amortizable intangible assets)
The Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If the assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment has been recorded by the Company for the three months ended November 30, 2020 and 2019. |
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| Income Taxes | Income taxes
Income taxes are determined in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of November 30, 2020, the Company has no accrued interest or penalties related to uncertain tax positions.
The Company conducts business in the PRC, Taiwan and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities. |
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| Net Loss Per Share | Net Loss Per Share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional shares of common stock were dilutive. The following table presents a reconciliation of basic and diluted net loss per share:
As of November 30, 2020 and August 31, 2020, the Company’s convertible notes payable were excluded from the diluted loss per share calculation as they were anti-dilutive. |
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| Stock-based Compensation | Stock-based compensation
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 (“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the vesting period or immediately if fully vested and non-forfeitable. The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Additionally, ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, permits the election of an accounting policy for forfeitures of share-based payment awards, either to recognize forfeitures as they occur or estimate forfeitures over the vesting period of the award. The Company has elected to recognize forfeitures as they occur.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2018-07 on September 1, 2019 and there was no cumulative effect of adoption. |
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| Foreign Currencies Translation | Foreign Currencies Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Seychelles, the PRC, Taiwan and Hong Kong maintains its books and record in United States Dollars (“US$”), Renminbi (“RMB”), New Taiwanese Dollars (“NT$”) and Hong Kong Dollars (“HK$”) respectively, which are the primary currencies of the economic environment in which the entities operate (the functional currencies).
In general, for consolidation purposes, the assets and liabilities of the Company’s subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of the financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of retained earnings.
Translation of amounts from foreign currencies into US$ has been made at the following exchange rates for the respective periods:
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| Related Parties | Related Parties
Parties, which can be a corporation or an individual, are considered to be related if the Company has the ability to, directly or indirectly, control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. |
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| Convertible Instruments | Convertible instruments
The Company accounts for hybrid contracts that feature conversion options in accordance with U.S. GAAP. ASC 815 “Derivatives and Hedging Activities,” (“ASC 815”) requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.
The Company accounts for convertible instruments, when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, in accordance with ASC 470-20 “Debt with Conversion and Other Options” (“ASC 470-20”). Under ASC 470-20 the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract are allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations. |
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, deposits, accounts payable and accrued liabilities, balances due with directors and shareholders, convertible notes payable and bonds payable, approximate at their fair values because of the short-term nature of these financial instruments or the rate of interest of these instruments approximate the market rate of interest.
The Company also follows the guidance of the ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), with respect to financial assets and liabilities that are measured at fair value. ASC 820 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
A summary of changes in financial liabilities for the three months ended November 30, 2020 was as follows:
Fair value of the convertible notes is determined using the binomial model using the following assumptions at inception and on subsequent valuation dates:
(i) USD1.00 per share if converted on or before the one-year anniversary of the issuance date
(ii) USD1.50 per share if converted at any time after the one-year anniversary of the issuance date |
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| Segment Reporting | Segment reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Management determined that the Company’s operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively in one business and industry segment: the provision of investment platform services through mobile application. |
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company applied the new standard beginning September 1, 2020.
Recently issued accounting pronouncements not yet adopted
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for “smaller reporting companies” for fiscal year beginning after December 15, 2022. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
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Organization and Business Background (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Subsidiaries of Company | The Company, through its subsidiaries, mainly operates and services a mobile application investment platform.
|
Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenue by Major Product Line | Revenue by major product line
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| Schedule of Revenue by Recognition Over Time vs Point in Time | Revenue by Recognition Over Time vs Point in Time
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| Schedule of Contract Liabilities | The Company’s contract liabilities consist of receipts in advance for software development and the FinMaster App. Below is the summary presenting the movement of the Company’s contract liabilities for the three months ended November 30, 2020:
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| Schedule of Plant and Equipment Useful Lives | Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
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| Schedule of Useful Lives of Company's Intangible Assets | The estimated useful lives of the Company’s intangible assets are listed below:
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| Schedule of Reconciliation of Basic and Diluted Net Loss Per Share | The following table presents a reconciliation of basic and diluted net loss per share:
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| Schedule of Foreign Currency Translation | Translation of amounts from foreign currencies into US$ has been made at the following exchange rates for the respective periods:
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| Schedule of Fair Value Hierarchy and Financial Assets Liabilities | The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
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| Schedule of Change in Financial Liability | A summary of changes in financial liabilities for the three months ended November 30, 2020 was as follows:
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| Schedule of Fair Value Assumption of Convertible Notes | Fair value of the convertible notes is determined using the binomial model using the following assumptions at inception and on subsequent valuation dates:
(i) USD1.00 per share if converted on or before the one-year anniversary of the issuance date
(ii) USD1.50 per share if converted at any time after the one-year anniversary of the issuance date |
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Acquisition of Subsidiaries (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed as of the closing date, August 31, 2020.
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Plant and Equipment, Net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Plant and Equipment, Net | Plant and equipment as of November 30, 2020 and August 31, 2020 are summarized below:
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Intangible Assets, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets Cost | Intangible assets costs as of November 30, 2020 and August 31, 2020 are summarized below:
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| Schedule of Amortization Expenses Related to Intangible Assets | As of November 30, 2020, amortization expenses related to intangible assets for future periods are estimated to be as follows:
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Related Party Transactions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Transactions |
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Prepayments, Deposits and Other Receivables (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Prepayments, Deposits and Other Receivables |
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Accrued Expenses and Other Payables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Expenses and Other Payables |
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Due from (to) Shareholders, Directors and a Related Company (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due From To Shareholders Directors And Related Company | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Due from (to) Shareholders, Directors and a Related Company |
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Convertible Notes Payable to Related Parties (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes Payable | A summary of the major terms of the Agreements are presented as follows:
|
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Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income/(Loss) Before Income Taxes | For the three months ended November 30, 2020 and 2019, the local (United States) and foreign components of loss before income tax were comprised of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Provision Benefit for Income Taxes | The components of the provision (benefit) for income taxes expenses are:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Provision for Income Taxes | The provision for income taxes consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets |
|
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Lease Minimum Rent Payments | The following table lists the future minimal payments to be paid by the Company under a non-cancellable operating lease for office space in Taiwan with an initial term of one-year as of November 30, 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Lease Costs, Lease Term and Discount Rate | The components of lease costs, lease term and discount rate with respect of leases with an initial term of at least 12 months are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities of Lease Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of November 30, 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Business Background (Details Narrative) - NPI [Member] - USD ($) |
1 Months Ended | |
|---|---|---|
Aug. 17, 2020 |
Aug. 31, 2020 |
|
| Equity acquired, percentage | 100.00% | |
| Purchase price for the acquisition | $ 4,850,000 | |
| Net purchase price | $ 3,506,042 | |
| Shares issued for acquisition | 8,415,111 | 8,415,111 |
Organization and Business Background - Schedule of Subsidiaries of Company (Details) |
3 Months Ended |
|---|---|
Nov. 30, 2020 | |
| LOC Weibo Co., Ltd [Member] | |
| Company Name | LOC Weibo Co., Ltd. ("LOC") |
| Place/Date of Incorporation | Republic of China/September 29, 2017 |
| Principal Activities | Development of ecological-systems applications, integration of big data and promotion of OTT applications |
| Beijing DataComm Cloud Media Technology Co., Ltd. [Member] | |
| Company Name | Beijing DataComm Cloud Media Technology Co., Ltd. ("BJDC") |
| Place/Date of Incorporation | People's Republic of China /April 16, 2013 |
| Principal Activities | Development of ecological-systems applications, integration of big data and promotion of OTT applications |
| Leader Financial Group Limited [Member] | |
| Company Name | Leader Financial Group Limited |
| Place/Date of Incorporation | Seychelles / March 6, 2017 |
| Principal Activities | Investment Holding |
| JFB Internet Service Limited [Member] | |
| Company Name | JFB Internet Service Limited |
| Place/Date of Incorporation | Hong Kong / July 6, 2017 |
| Principal Activities | Provides an Investment Platform |
Summary of Significant Accounting Policies - Schedule of Revenue by Major Product Line (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Revenues | $ 22,863 | $ 1,667 |
| Investment Platform Services [Member] | ||
| Revenues | 3,620 | 1,667 |
| Software Development Service and Maintenance Service [Member] | ||
| Revenues | $ 19,243 | |
Summary of Significant Accounting Policies - Schedule of Revenue by Recognition Over Time vs Point in Time (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Revenues | $ 22,863 | $ 1,667 |
| Revenue by Recognition Over Time [Member] | ||
| Revenues | 22,863 | 1,667 |
| Revenue by Recognition at a Point in Time [Member] | ||
| Revenues | ||
Summary of Significant Accounting Policies - Schedule of Contract Liabilities (Details) |
3 Months Ended |
|---|---|
|
Nov. 30, 2020
USD ($)
| |
| Accounting Policies [Abstract] | |
| Balance as of September 1, 2020 | $ 2,896 |
| Advances received from customers related to unsatisfied performance obligations | 10,937 |
| Revenue recognized from beginning contract liability balance | (2,951) |
| Exchange difference | 160 |
| Balance as of November 30, 2020 | $ 11,042 |
Summary of Significant Accounting Policies - Schedule of Plant and Equipment Useful Lives (Details) |
3 Months Ended |
|---|---|
Nov. 30, 2020 | |
| Furniture and Fixtures [Member] | |
| Plant and equipment expected useful lives | 3 years |
| Office Equipment [Member] | |
| Plant and equipment expected useful lives | 3 years |
| Leasehold Improvement [Member] | |
| Plant and equipment expected useful lives | 3 years |
Summary of Significant Accounting Policies - Schedule of Useful Lives of Company's Intangible Assets (Details) |
3 Months Ended |
|---|---|
Nov. 30, 2020 | |
| Investment Platform [Member] | |
| Useful Lives of Company's Intangible Assets | 5 years |
| Technical know-hows [Member] | |
| Useful Lives of Company's Intangible Assets | 8 years |
| Trademarks [Member] | |
| Useful Lives of Company's Intangible Assets | 10 years |
Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Loss Per Share (Details) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|||
| Accounting Policies [Abstract] | ||||
| Net Loss | $ (3,657,060) | $ (1,249,630) | ||
| Weighted average number of shares of common stock outstanding - Basic and diluted | [1] | 136,921,376 | 113,684,073 | |
| Net loss per share - Basic and diluted | $ (0.03) | $ (0.01) | ||
| ||||
Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Loss Per Share (Details) (Parenthetical) - shares |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Shares granted and vested but not yet issued | 11,243,986 | 8,500,000 |
| Securities Purchase Agreement [Member] | Investors [Member] | ||
| Number of shares issued | 870,000 | |
Summary of Significant Accounting Policies - Schedule of Foreign Currency Translation (Details) |
Nov. 30, 2020 |
Aug. 31, 2020 |
Nov. 30, 2019 |
|---|---|---|---|
| Period-end HK [Member] | |||
| Foreign currency translation exchange rate | 7.80 | 7.80 | |
| Period-end NT [Member] | |||
| Foreign currency translation exchange rate | 28.55 | 29.37 | |
| Period-end RMB [Member] | |||
| Foreign currency translation exchange rate | 6.58 | 6.85 | |
| Period average HK [Member] | |||
| Foreign currency translation exchange rate | 7.80 | 7.80 | |
| Period average NT [Member] | |||
| Foreign currency translation exchange rate | 28.82 | ||
| Period average RMB [Member] | |||
| Foreign currency translation exchange rate | 6.72 |
Summary of Significant Accounting Policies - Schedule of Fair Value Hierarchy and Financial Assets Liabilities (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Convertible notes measured at fair value | $ 1,287,000 | $ 104,000 |
| Level 1 [Member] | ||
| Convertible notes measured at fair value | ||
| Level 2 [Member] | ||
| Convertible notes measured at fair value | ||
| Level 3 [Member] | ||
| Convertible notes measured at fair value | $ 1,287,000 | $ 104,000 |
Summary of Significant Accounting Policies - Schedule of Change in Financial Liability (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Accounting Policies [Abstract] | ||
| Balance at September 1, 2019 | $ 104,000 | |
| Issuance of convertible notes | 700,000 | |
| Fair value loss on issuance of convertible notes | 383,962 | |
| Interest expenses on convertible notes | 1,957 | |
| Change in fair value of convertible notes | 97,081 | |
| Balance at August 31, 2020 | $ 1,287,000 | |
Summary of Significant Accounting Policies - Schedule of Fair Value Assumption of Convertible Notes (Details) (Parenthetical) - $ / shares |
Nov. 30, 2020 |
Aug. 17, 2020 |
||
|---|---|---|---|---|
| Conversion Price | $ 0.40 | |||
| Teh-Ling Chen [Member] | ||||
| Conversion Price | [1] | $ 1.00 | ||
| Teh-Ling Chen [Member] | Before One-year Anniversary [Member] | ||||
| Conversion Price | 1.00 | |||
| Teh-Ling Chen [Member] | After One-year Anniversary [Member] | ||||
| Conversion Price | 1.50 | |||
| Li-Ching Yang [Member] | ||||
| Conversion Price | [1] | 1.00 | ||
| Li-Ching Yang [Member] | Before One-year Anniversary [Member] | ||||
| Conversion Price | 1.00 | |||
| Li-Ching Yang [Member] | After One-year Anniversary [Member] | ||||
| Conversion Price | 1.50 | |||
| Jui-Chin Chen [Member] | ||||
| Conversion Price | [1] | 1.00 | ||
| Jui-Chin Chen [Member] | Before One-year Anniversary [Member] | ||||
| Conversion Price | 1.00 | |||
| Jui-Chin Chen [Member] | After One-year Anniversary [Member] | ||||
| Conversion Price | $ 1.50 | |||
| ||||
Acquisition of Subsidiaries (Details Narrative) - USD ($) |
1 Months Ended | ||
|---|---|---|---|
Aug. 17, 2020 |
Aug. 31, 2020 |
Nov. 30, 2020 |
|
| Goodwill | $ 2,974,364 | $ 2,974,364 | |
| NPI [Member] | |||
| Purchase price for the acquisition | $ 4,850,000 | ||
| Net purchase price | $ 3,506,042 | ||
| Shares issued for acquisition | 8,415,111 | 8,415,111 | |
| Goodwill | $ 2,974,364 |
Acquisition of Subsidiaries - Summary of Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Business Combinations [Abstract] | ||
| Cash and cash equivalents | $ 185,117 | |
| Prepayments, deposits and other receivables | 145,228 | |
| Due from a shareholder | 34,048 | |
| Right-of-use operating lease assets | 113,590 | |
| Plant and equipment, net | 30,365 | |
| Intangible assets- Technical know-hows | 818,200 | |
| Goodwill | $ 2,974,364 | 2,974,364 |
| Other payables and accrued liabilities | (383,087) | |
| Contract liabilities | (2,896) | |
| Due to shareholders | (99,730) | |
| Operating lease liability | (113,646) | |
| Tax payable | (31,871) | |
| Deferred tax liabilities | (163,640) | |
| Net purchase price | 3,506,042 | |
| Less: Outstanding NPI debt owed to the Company Accounts receivable | 989,854 | |
| Less: Outstanding NPI debt owed to the Company Notes payable | (3,066,617) | |
| Aggregate fair values of the assets acquired and liabilities assumed | $ 1,429,279 |
Plant and Equipment, Net (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 10,227 | $ 2,314 |
Plant and Equipment, Net - Schedule of Plant and Equipment, Net (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Total | $ 165,835 | $ 104,800 |
| Less: Accumulated depreciation | (82,888) | (71,133) |
| Plant and Equipment, net | 82,947 | 33,667 |
| Furniture and Fixtures [Member] | ||
| Total | 28,906 | 20,159 |
| Office Equipment [Member] | ||
| Total | 72,188 | 65,809 |
| Leasehold Improvement [Member] | ||
| Total | $ 64,741 | $ 18,832 |
Intangible Assets, Net (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization of intangible assets | $ 25,595 | |
| Impairment losses of intangible asset | ||
Intangible Assets, Net - Schedule of Intangible Assets Cost (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Total | $ 849,223 | $ 848,200 |
| Less: Accumulated amortization | (32,095) | (6,500) |
| Impairment | (23,500) | (23,500) |
| Intangible assets, net | 793,628 | 818,200 |
| Investment Platform [Member] | ||
| Total | 30,000 | 30,000 |
| Technical know-hows [Member] | ||
| Total | 818,200 | 818,200 |
| Trademarks [Member] | ||
| Total | $ 1,023 |
Intangible Assets, Net - Schedule of Amortization Expenses Related to Intangible Assets (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| 2021 | $ 102,378 | |
| 2022 | 102,378 | |
| 2023 | 102,378 | |
| 2024 | 102,378 | |
| 2025 and thereafter | 384,116 | |
| Total | $ 793,628 | $ 818,200 |
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|||||
| Greenpro Financial Consulting Limited [Member] | ||||||
| Professional fee | [1] | $ 13,500 | ||||
| Greenpro LF Limited [Member] | ||||||
| Other income: Miscellaneous income | [2] | $ 1,823 | ||||
| ||||||
Related Party Transactions - Schedule of Related Party Transactions (Details) (Parenthetical) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|||
| Greenpro Financial Consulting Limited [Member] | ||||
| Professional fees | [1] | $ 13,500 | ||
| Directors [Member] | Greenpro Asia Strategic SPC [Member] | ||||
| Ownership percentage | 3.85% | |||
| ||||
Prepayments, Deposits and Other Receivables - Schedule of Prepayments, Deposits and Other Receivables (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Receivables [Abstract] | ||
| Rental and management fee deposits | $ 144,693 | $ 137,088 |
| Prepaid share based compensation to directors (Note 13) | 1,200,000 | |
| Prepaid share based compensation to consultants (Note 13) | 2,795,834 | 375,000 |
| Other prepaid expenses | 7,663 | 81,108 |
| Staff advances | 12,241 | 2,970 |
| Prepayments, deposits and other receivables | $ 4,160,431 | $ 596,166 |
Accrued Expenses and Other Payables (Details Narrative) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Unearned income | $ 556 | $ 2,222 |
Accrued Expenses and Other Payables - Schedule of Accrued Expenses and Other Payables (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued interests (Note 9, 10 and 11) | $ 19,681 | $ 6,191 |
| Accrued expenses | 215,524 | 240,172 |
| Unearned income | 556 | 2,222 |
| Other payables | 55,678 | 43,661 |
| Accrued expenses and other payables | $ 291,439 | $ 292,246 |
Due From (To) Shareholders, Directors And A Related Company (Details Narrative) |
Jul. 20, 2020
CNY (¥)
|
Nov. 30, 2020
USD ($)
|
Aug. 31, 2020
USD ($)
|
Mar. 10, 2020
TWD ($)
|
|---|---|---|---|---|
| Loan to shareholders | $ 35,026 | $ 34,048 | ||
| Accrued interest | 19,681 | 6,191 | ||
| Hsu Kuo-Hsun [Member] | ||||
| Debt interest rate | 8.00% | |||
| Debt instrument maturity date | Jul. 17, 2021 | |||
| Accrued interest | $ 1,746 | $ 544 | ||
| Hsu Kuo-Hsun [Member] | RMB [Member] | ||||
| Loan obtained amount | ¥ | ¥ 420,000 | |||
| Loan Agreement [Member] | Cheng Hung-Pin [Member] | ||||
| Debt interest rate | 3.00% | |||
| Loan Agreement [Member] | Cheng Hung-Pin [Member] | TWD [Member] | ||||
| Loan to shareholders | $ 1,000,000 |
Due From (To) Shareholders, Directors And A Related Company - Schedule of Due from (to) Shareholders, Directors and a Related Company (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Loan to Cheng Hung-Pin (a shareholder) | $ 35,026 | $ 34,048 |
| Due from a director: Cheng Shui-Fung | 189,474 | |
| Due from a related company: Greenpro LF Limited | 36,666 | |
| Due to a director: Lin Yi-Hsiu | 1,394,194 | 1,400,459 |
| Loan from Hsu Kuo-Hsun (a shareholder) | 60,075 | 60,075 |
| Due to shareholders | 106,710 | 99,730 |
| Tu Yu-Cheng [Member] | ||
| Due to shareholders | 103,510 | 96,530 |
| Cheng Hung-Pin [Member] | ||
| Due to shareholders | 800 | 800 |
| Huang Mei-Ying [Member] | ||
| Due to shareholders | 800 | 800 |
| Lo Shih-Chu [Member] | ||
| Due to shareholders | 800 | 800 |
| Chen Jun-Yuan [Member] | ||
| Due to shareholders | $ 800 | $ 800 |
Bonds Payable (Details Narrative) - USD ($) |
Aug. 14, 2019 |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|---|
| Accrued interest | $ 19,681 | $ 6,191 | |
| Bond Purchase Agreement [Member] | |||
| Aggregate purchase price | $ 600,000 | ||
| Debt term | 3 years | ||
| Debt maturity date | Aug. 14, 2019 | ||
| Debt interest rate percentage | 10.00% | ||
| Debt description | The Company may exercise its right to repay this bond at any time on or before two years from the maturity date by wiring 100% of all outstanding principal and interest to the purchaser. | ||
| Accrued interest | $ 17,935 | $ 2,935 |
Convertible Notes Payable to Related Parties (Details Narrative) - USD ($) |
3 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 25, 2020 |
Nov. 02, 2020 |
Aug. 18, 2020 |
Mar. 18, 2020 |
Feb. 27, 2020 |
Feb. 24, 2020 |
Nov. 30, 2020 |
Aug. 31, 2020 |
Aug. 17, 2020 |
|||
| Convertible promissory note | $ 1,287,000 | $ 104,000 | |||||||||
| Conversion price | $ 0.40 | ||||||||||
| Shares issued upon conversion | 325,000 | ||||||||||
| Debt convertible terms of conversion feature | For each of the convertible promissory notes, the Company is entitled to a one-year extension. The outstanding principal amounts of the notes are convertible at any time at the option of the holders into common stock at a conversion price of $0.4 per share. Each of the lenders may convert part of the principal outstanding in increments of $10,000 or multiples of $10,000 at any time. | ||||||||||
| Fair value of the convertible promissory notes | $ 1,287,000 | $ 104,000 | |||||||||
| Binomial Model [Member] | |||||||||||
| Fair value of the convertible promissory notes | $ 800,000 | ||||||||||
| Teh-Ling Chen [Member] | |||||||||||
| Convertible promissory note | $ 100,000 | $ 110,000 | |||||||||
| Debt interest rate percentage | 6.00% | 6.00% | 6.00% | ||||||||
| Debt maturity date | Nov. 02, 2022 | Feb. 24, 2022 | Feb. 24, 2022 | ||||||||
| Conversion price | [1] | $ 1.00 | |||||||||
| Li-Ching Yang [Member] | |||||||||||
| Convertible promissory note | $ 20,000 | ||||||||||
| Debt interest rate percentage | 6.00% | 6.00% | |||||||||
| Debt maturity date | Feb. 27, 2022 | Feb. 27, 2022 | |||||||||
| Conversion price | [1] | $ 1.00 | |||||||||
| Jui-Chin Chen [Member] | |||||||||||
| Convertible promissory note | $ 100,000 | ||||||||||
| Debt interest rate percentage | 6.00% | 6.00% | |||||||||
| Debt maturity date | Mar. 18, 2022 | Mar. 18, 2022 | |||||||||
| Conversion price | [1] | $ 1.00 | |||||||||
| Chin-Ping Wang, Chin-Nan Wang and Chin-Chiang Wang [Member] | |||||||||||
| Convertible promissory note | $ 600,000 | ||||||||||
| Debt interest rate percentage | 6.00% | ||||||||||
| Debt maturity date | Nov. 25, 2022 | ||||||||||
| |||||||||||
Convertible Notes Payable to Related Parties - Schedule of Convertible Notes Payable (Details) - USD ($) |
3 Months Ended | ||||
|---|---|---|---|---|---|
Nov. 02, 2020 |
Mar. 18, 2020 |
Feb. 27, 2020 |
Feb. 24, 2020 |
Nov. 30, 2020 |
|
| Principal amount | $ 930,000 | ||||
| Teh-Ling Chen [Member] | |||||
| Principal amount | $ 110,000 | ||||
| Issue date | Feb. 24, 2020 | ||||
| Maturity date | Nov. 02, 2022 | Feb. 24, 2022 | Feb. 24, 2022 | ||
| Interest rate | 6.00% | 6.00% | 6.00% | ||
| Li-Ching Yang [Member] | |||||
| Principal amount | $ 20,000 | ||||
| Issue date | Feb. 27, 2020 | ||||
| Maturity date | Feb. 27, 2022 | Feb. 27, 2022 | |||
| Interest rate | 6.00% | 6.00% | |||
| Jui-Chin Chen [Member] | |||||
| Principal amount | $ 100,000 | ||||
| Issue date | Mar. 18, 2020 | ||||
| Maturity date | Mar. 18, 2022 | Mar. 18, 2022 | |||
| Interest rate | 6.00% | 6.00% | |||
| Teh-Ling Chen [Member] | |||||
| Principal amount | $ 100,000 | ||||
| Issue date | Nov. 02, 2020 | ||||
| Maturity date | Nov. 02, 2022 | ||||
| Interest rate | 6.00% | ||||
| Chin-Ping Wang [Member] | |||||
| Principal amount | $ 200,000 | ||||
| Issue date | Nov. 25, 2020 | ||||
| Maturity date | Nov. 25, 2022 | ||||
| Interest rate | 6.00% | ||||
| Chin-Nan Wang [Member] | |||||
| Principal amount | $ 200,000 | ||||
| Issue date | Nov. 25, 2020 | ||||
| Maturity date | Nov. 25, 2022 | ||||
| Interest rate | 6.00% | ||||
| Chin-Chiang Wang [Member] | |||||
| Principal amount | $ 200,000 | ||||
| Issue date | Nov. 25, 2020 | ||||
| Maturity date | Nov. 25, 2022 | ||||
| Interest rate | 6.00% |
Income Taxes (Details Narrative) |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Nov. 30, 2020
USD ($)
|
Nov. 30, 2020
TWD ($)
|
Nov. 30, 2019
USD ($)
|
Aug. 31, 2020
USD ($)
|
Aug. 31, 2019 |
Aug. 31, 2018 |
|
| Cumulative net operating losses | $ (3,186,977) | $ (1,236,480) | ||||
| Statutory income tax rate | 21.00% | 21.00% | 21.00% | |||
| United States of America [Member] | ||||||
| Cumulative net operating losses | $ 2,104,494 | |||||
| Net operating loss expiration date | The NOL carryforwards begin to expire in 2037, if unutilized. | The NOL carryforwards begin to expire in 2037, if unutilized. | ||||
| Deferred tax assets full valuation allowance | $ 441,944 | $ 323,322 | ||||
| Taiwan [Member] | ||||||
| Net operating loss expiration date | expire in various years through 2025. | expire in various years through 2025. | ||||
| Foreign income tax rate | 20.00% | 20.00% | 19.00% | 18.00% | ||
| Operating loss carryforward | $ 2,009,893 | |||||
| Deferred tax assets full valuation allowance | 401,797 | 328,752 | ||||
| Taiwan [Member] | Maximum [Member] | ||||||
| Taxable income | 17,347 | |||||
| Taiwan [Member] | Maximum [Member] | TWD [Member] | ||||||
| Taxable income | $ 500,000 | |||||
| Taiwan [Member] | Minimum [Member] | ||||||
| Taxable income | $ 4,163 | |||||
| Taiwan [Member] | Minimum [Member] | TWD [Member] | ||||||
| Taxable income | $ 120,000 | |||||
| PRC [Member] | ||||||
| Net operating loss expiration date | expire in various years through 2027. | expire in various years through 2027. | ||||
| Foreign income tax rate | 25.00% | 25.00% | ||||
| Operating loss carryforward | $ 1,407,248 | |||||
| Deferred tax assets full valuation allowance | 351,812 | 309,264 | ||||
| Hong Kong [Member] | ||||||
| Cumulative net operating losses | 1,643,906 | 4,350,416 | ||||
| Deferred tax assets full valuation allowance | $ 271,245 | $ 298,764 | ||||
| Statutory income tax rate | 16.50% | |||||
Income Taxes - Schedule of Income/(Loss) Before Income Taxes (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Loss before income tax | $ (3,662,174) | $ (1,229,630) |
| Local [Member] | ||
| Tax jurisdictions from: Local | (1,519,520) | (1,159,478) |
| Seychelles [Member] | ||
| Tax jurisdictions from: Foreign, representing | ||
| British Virgin Islands [Member] | ||
| Tax jurisdictions from: Foreign, representing | (83,142) | |
| Taiwan [Member] | ||
| Tax jurisdictions from: Foreign, representing | (493,890) | |
| PRC [Member] | ||
| Tax jurisdictions from: Foreign, representing | (142,962) | |
| Hong Kong [Member] | ||
| Tax jurisdictions from: Foreign, representing | $ (1,422,660) | $ (70,152) |
Income Taxes - Schedule of Components of Provision Benefit for Income Taxes (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Income Tax Disclosure [Abstract] | ||
| Current | $ 20,000 | |
| Deferred | (5,114) | |
| Total income tax (benefit) expense | $ (5,114) | $ 20,000 |
Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Income Tax Disclosure [Abstract] | ||
| Loss before income taxes | $ (3,662,174) | $ (1,229,630) |
| Statutory income tax rate | 21.00% | 21.00% |
| Income tax credit computed at statutory income rate | $ (769,057) | $ (258,222) |
| Non-deductible expenses | 23,025 | |
| Share-based payments | 453,445 | 223,125 |
| Tax effect of tax exempt entity | 17,460 | |
| Rate differential in different tax jurisdictions | 63,240 | 3,157 |
| Valuation allowance on deferred tax assets | 206,773 | 51,940 |
| Income tax (benefit) expense | $ (5,114) | $ 20,000 |
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) |
Nov. 30, 2020 |
Aug. 31, 2020 |
|---|---|---|
| Less: valuation allowance | $ 1,466,798 | $ 1,260,102 |
| Deferred tax assets | ||
| United States of America [Member] | ||
| Deferred tax assets: Net operating loss carryforwards | (441,944) | (323,322) |
| Taiwan [Member] | ||
| Deferred tax assets: Net operating loss carryforwards | (401,797) | (328,752) |
| PRC [Member] | ||
| Deferred tax assets: Net operating loss carryforwards | (351,812) | (309,264) |
| Hong Kong [Member] | ||
| Deferred tax assets: Net operating loss carryforwards | $ (271,245) | $ (298,764) |
Common Stock (Details Narrative) |
1 Months Ended | 3 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Nov. 30, 2020
USD ($)
$ / shares
shares
|
Nov. 01, 2020
USD ($)
$ / shares
shares
|
Sep. 02, 2020
USD ($)
$ / shares
|
Aug. 17, 2020
shares
|
Aug. 03, 2020
USD ($)
$ / shares
shares
|
Aug. 03, 2020
TWD ($)
shares
|
Aug. 02, 2020
USD ($)
$ / shares
shares
|
Jul. 27, 2020
USD ($)
$ / shares
shares
|
Jul. 27, 2020
TWD ($)
shares
|
Jun. 30, 2020
USD ($)
Milestone
$ / shares
shares
|
Jun. 30, 2020
Milestone
$ / shares
shares
|
Mar. 02, 2020
USD ($)
$ / shares
shares
|
Sep. 02, 2019
USD ($)
$ / shares
shares
|
Aug. 31, 2020
$ / shares
shares
|
Nov. 30, 2020
USD ($)
$ / shares
shares
|
Nov. 30, 2020
TWD ($)
shares
|
Nov. 30, 2019
USD ($)
|
|
| Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||
| Aggregate number of shares of common stock granted | shares | 11,243,986 | 11,243,986 | |||||||||||||||
| Revenues | $ 22,863 | $ 1,667 | |||||||||||||||
| Unrecognized share-based compensation | $ 6,578,238 | 6,578,238 | |||||||||||||||
| NPI [Member] | |||||||||||||||||
| Business acquisition, number of shares issued | shares | 8,415,111 | 8,415,111 | |||||||||||||||
| JFB Internet Service Limited [Member] | |||||||||||||||||
| Fair value of restricted common stock | $ 3,200,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 0.40 | $ 0.40 | |||||||||||||||
| JFB Internet Service Limited [Member] | Milestones [Member] | |||||||||||||||||
| Number of common stock shares issued | shares | 5,000,000 | ||||||||||||||||
| JFB Internet Service Limited [Member] | Inducement Shares [Member] | |||||||||||||||||
| Number of common stock shares issued | shares | 5,000,000 | ||||||||||||||||
| Number of milestone | Milestone | 2 | 2 | |||||||||||||||
| Common stock description | The Company's board of directors agreed to grant a new employee of JFB Internet Service Limited, a wholly owned subsidiary of the Company, (i) 5,000,000 shares of Restricted Common Stock in connection with such employee's employment (the "Inducement Shares") and (ii) 5,000,000 shares of Restricted Common Stock upon the achievement of each of two milestones set forth in such employee's offer letter relating to the FinMaster mobile application. In addition, on that same day, the Company's board of directors approved an aggregate of 3,000,000 shares to a service provider in exchange for services rendered. | ||||||||||||||||
| JFB Internet Service Limited [Member] | Consultant Shares [Member] | |||||||||||||||||
| Aggregate number of shares of common stock granted | shares | 3,000,000 | ||||||||||||||||
| Service provider [Member] | JFB Internet Service Limited [Member] | |||||||||||||||||
| Fair value of restricted common stock | $ 1,246,761 | ||||||||||||||||
| Aggregate number of shares of common stock granted | shares | 3,116,903 | ||||||||||||||||
| Stock Forfeiture Letter [Member] | |||||||||||||||||
| Number of shares forfeited and surrendered | shares | 5,500,000 | ||||||||||||||||
| Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||||||||
| Loanout Agreement [Member] | |||||||||||||||||
| Employment agreement term | 1 year | ||||||||||||||||
| Base compensation | $ 66,000 | 83,333 | |||||||||||||||
| Number of restricted common stock shares issued | shares | 1,000,000 | ||||||||||||||||
| Fair value of restricted common stock | $ 1,000,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 1.00 | ||||||||||||||||
| Prepaid expenses | $ 316,667 | 316,667 | |||||||||||||||
| Yi-Hsiu Lin [Member] | |||||||||||||||||
| Employment agreement term | 2 years | ||||||||||||||||
| Base compensation | $ 50,000 | ||||||||||||||||
| Number of restricted common stock shares issued | shares | 2,500,000 | ||||||||||||||||
| Fair value of restricted common stock | $ 1,250,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 0.50 | ||||||||||||||||
| Amortization | 250,000 | 312,500 | |||||||||||||||
| Prepaid expenses | 750,000 | 750,000 | |||||||||||||||
| Mr. Cheng [Member] | |||||||||||||||||
| Employment agreement term | 1 year | ||||||||||||||||
| Base compensation | $ 30,000 | ||||||||||||||||
| Number of restricted common stock shares issued | shares | 1,500,000 | ||||||||||||||||
| Fair value of restricted common stock | $ 1,500,000 | $ 750,000 | |||||||||||||||
| Share issued price per share | $ / shares | $ 0.40 | $ 0.50 | |||||||||||||||
| Amortization | 150,000 | 187,500 | |||||||||||||||
| Prepaid expenses | 450,000 | 450,000 | |||||||||||||||
| Consultant [Member] | Consulting Agreement [Member] | Business Development Services [Member] | |||||||||||||||||
| Employment agreement term | 1 year | ||||||||||||||||
| Number of restricted common stock shares issued | shares | 2,000,000 | ||||||||||||||||
| Fair value of restricted common stock | $ 1,000,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 0.50 | ||||||||||||||||
| Amortization | 250,000 | ||||||||||||||||
| Consultant fee | $ 40,000 | ||||||||||||||||
| Consultant [Member] | Consulting Agreement [Member] | Business Advisory Services [Member] | |||||||||||||||||
| Employment agreement term | 1 year | 1 year | |||||||||||||||
| Number of restricted common stock shares issued | shares | 1,000,000 | 2,500,000 | |||||||||||||||
| Fair value of restricted common stock | $ 750,000 | $ 1,250,000 | |||||||||||||||
| Share issued price per share | $ / shares | $ 0.50 | $ 0.50 | |||||||||||||||
| Amortization | $ 312,500 | ||||||||||||||||
| Consultant fee | $ 60,000 | $ 50,000 | |||||||||||||||
| Number of additional restricted common stock shares issued | shares | 500,000 | ||||||||||||||||
| Consultant [Member] | Consulting Agreement [Member] | Business Advisory Services Two [Member] | |||||||||||||||||
| Prepaid expenses | 187,500 | 187,500 | |||||||||||||||
| Consultant fee | 187,500 | ||||||||||||||||
| Chieh Chen [Member] | |||||||||||||||||
| Base compensation | $ 16,667 | ||||||||||||||||
| Number of restricted common stock shares issued | shares | 50,000 | 50,000 | 50,000 | 50,000 | |||||||||||||
| Fair value of restricted common stock | $ 50,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 1.00 | ||||||||||||||||
| Compensation expense | $ 2,671 | $ 3,209 | |||||||||||||||
| Chieh Chen [Member] | TWD [Member] | |||||||||||||||||
| Compensation expense | $ 77,000 | $ 92,500 | |||||||||||||||
| Annie Chung [Member] | |||||||||||||||||
| Base compensation | $ 16,667 | ||||||||||||||||
| Number of restricted common stock shares issued | shares | 50,000 | 50,000 | |||||||||||||||
| Fair value of restricted common stock | $ 50,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 1.00 | ||||||||||||||||
| Common stock description | In additions, Ms. Chung will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. | In additions, Ms. Chung will be granted 50,000 shares of restricted common stock upon completion of the first year of service and 50,000 shares of restricted common stock if she meets the criteria established by the Company. | |||||||||||||||
| Compensation expense | $ 2,671 | ||||||||||||||||
| Annie Chung [Member] | TWD [Member] | |||||||||||||||||
| Compensation expense | $ 77,000 | ||||||||||||||||
| Two Consultant [Member] | Consulting Agreement [Member] | |||||||||||||||||
| Number of restricted common stock shares issued | shares | 2,500,000 | ||||||||||||||||
| Fair value of restricted common stock | $ 2,500,000 | ||||||||||||||||
| Share issued price per share | $ / shares | $ 1.00 | ||||||||||||||||
| Amortization | 208,333 | ||||||||||||||||
| Prepaid expenses | $ 2,291,667 | $ 2,291,667 | |||||||||||||||
| Investors [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||
| Share issued price per share | $ / shares | $ 0.40 | $ 0.40 | |||||||||||||||
| Number of common stock shares issued | shares | 870,000 | 870,000 | |||||||||||||||
| Proceeds from purchased shares | $ 198,000 | ||||||||||||||||
Commitments and Contingencies (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
Aug. 31, 2020 |
|
| Rental expense | $ 83,012 | $ 34,652 | |
| Future minimum lease payments for non-cancelable short-term operating leases | $ 350,670 | ||
| Initial lease term | 12 months | ||
| Taiwan [Member] | |||
| Future minimum lease payments for non-cancelable short-term operating leases | $ 6,305 | ||
| Severance payments | 46,000 | $ 28,000 | |
| PRC [Member] | |||
| Severance payments | $ 88,000 | $ 86,000 | |
Commitments and Contingencies - Schedule of Operating Lease Minimum Rent Payments (Details) |
Nov. 30, 2020
USD ($)
|
|---|---|
| 2022 | $ 233,363 |
| 2023 | 117,307 |
| 2024 | |
| Taiwan [Member] | |
| 2021 | 6,305 |
| 2022 | |
| 2023 | |
| 2024 |
Commitments and Contingencies - Schedule of Components of Lease Costs, Lease Term and Discount Rate (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 30, 2020 |
Nov. 30, 2019 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease cost - classified as general and administrative expenses | $ 72,063 | |
| Weighted Average Remaining Lease Term - Operating leases | 1 year 5 months 23 days | 0 years |
| Weighted Average Discounting Rate - Operating leases | 5.68% | 0.00% |
Commitments and Contingencies - Schedule of Maturities of Lease Liabilities (Details) |
Nov. 30, 2020
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| 2021 | $ 233,363 |
| 2022 | 117,307 |
| 2023 | |
| 2024 | |
| 2025 | |
| Thereafter | |
| Total undiscounted cash flows | 350,670 |
| Less: imputed interest | 10,391 |
| Present value of lease liabilities | $ 340,279 |
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Securities Purchase Agreement [Member] |
Jan. 06, 2021
USD ($)
$ / shares
shares
|
|---|---|
| Purchased shares of common stock | shares | 500,000 |
| Share price per share | $ / shares | $ 0.40 |
| Aggregate gross proceeds shares of common stock | $ | $ 200,000 |