Quarterly Report (10-q)

 

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: March 31, 2018                                      

 

or

 

¨		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 333-198567                                                     

 

ABV CONSULTING, INC.

(Exact name of registrant as specified in its charter)

   

Nevada

46-3997344

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

Unit 1101-1102, 11/F, Railway Plaza, 39 Chatham Road S., Tsim Sha Tsui, Kowloon, Hong Kong

N/A

(Address of principal executive offices)

(Zip Code)

   

(852) 3758 2116

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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.  x YES   ¨ NO

 

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

 

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

 

Large accelerated filer	x		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨
			Emerging growth company	¨

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act  ¨ YES   x NO 

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of May 9, 2018, the registrant had 5,533,000 shares of common stock, par value $0.0001 per share, issued and outstanding.

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION			3
Item 1.	Financial Statements		3
Item 2.	Management's Discussion and Analysis of Financial Condition or Plan of Operation		4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		8
Item 4.	Controls and Procedures		8
PART II - OTHER INFORMATION			10
Item 1.	Legal Proceedings		10
Item 1A.	Risk Factors		10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		10
Item 3.	Defaults Upon Senior Securities		10
Item 4.	Mine Safety Disclosures		10
Item 5.	Other Information		10
Item 6.	Exhibits		11
SIGNATURES			12

 

2

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Index to Condensed Consolidated Financial Statements (Unaudited)		Page
Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017			F-1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017			F-2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017			F-3
Notes to Condensed Consolidated Financial Statements			F-4

  

3

 

ABV CONSULTING, INC.

Condensed Consolidated Balance Sheets

 

		March 31,				December 31,
		2018				2017
		(Unaudited)				(Audited)
ASSETS
Current Assets
Cash and cash equivalents		$	4,539			$	299
Accounts receivable, net			12,821				-
Total Current Assets			17,360				299
TOTAL ASSETS		$	17,360			$	299
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities		$	15,260			$	7,820
Due to related parties			199,658				177,844
Total Current Liabilities			214,918				185,664
TOTAL LIABILITIES			214,918				185,664
Commitments and contingencies
Stockholders' Deficit: Preferred stock: 10,000,000 authorized; $0.0001 par value. No shares issued and outstanding			-				-
Common stock: 3,000,000,000 shares authorized; $0.0001 par value 5,533,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively			553				553
Additional paid in capital			159,437				159,437
Accumulated deficit			(357,548	)			(345,355	)
Total Stockholders' Deficit			(197,558	)			(185,365	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	17,360			$	299

 

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

 

F-1

Table of Contents

 

ABV CONSULTING, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

		Three Months Ended
		March 31,
		2018				2017
Revenue		$	12,821			$	-
Operating Expenses
General and administrative			11,444				15,099
Professional fees			13,570				46,967
Total Operating Expenses			25,014				62,066
Operating loss			(12,193	)			(62,066	)
Provision for income taxes			-				-
Net loss from continuing operations			(12,193	)			(62,066	)
Discontinued operations
Loss from discontinued operation			-				(32,873	)
Loss from discontinued operations, net of tax benefits			-				(32,873	)
Net loss		$	(12,193	)		$	(94,939	)
Basic and dilutive loss per common share
Continuing operations		$	(0.00	)		$	(0.00	)
Discontinued operations		$	-			$	(0.00	)
Net loss		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding			5,533,000				1,981,945,670

 

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

 

F-2

Table of Contents

 

ABV CONSULTING, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Three Months Ended
		March 31,
		2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(12,193	)		$	(94,939	)
Changes in operating assets and liabilities:
Accounts receivable			(12,821	)			-
Accounts payable and accrued liabilities			7,440				41,777
Net Cash Used in Operating Activities			(17,574	)			(53,162	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash from acquisition of subsidiary			-				1,636
Net Cash Provided by Investing Activities			-				1,636
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties			21,814				20,000
Net Cash Provided by Financing Activities			21,814				20,000
Net increase (decrease) in cash and cash equivalents for the period			4,240				(31,526	)
Cash and cash equivalents at beginning of the period			299				42,000
Cash and cash equivalents at end of the period		$	4,539			$	10,474
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes		$	-			$	-
Cash paid for interest		$	-			$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for acquisition		$	-			$	198,000

 

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

 

F-3

Table of Contents

 

ABV CONSULTING, INC.

Notes to the Condensed Consolidated Financial Statements

For the three months ended March 31, 2018

(Unaudited)

 

NOTE 1 – BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

 

In the opinion of management, the consolidated balance sheet as of December 31, 2017 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended March 31, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2018 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2017.

 

NOTE 2 – ORGANIZATION AND BUSINESS BACKGROUND

 

ABV Consulting, Inc. (“we,” “us,” “our,” “ABVN” or the “Company”) was incorporated in the state of Nevada on October 15, 2013, for the purpose of providing merchandising and consulting services to craft beer brewers and distributors. On August 22, 2016, the Company’s founder and prior manager sold all of his shares in the Company, constituting approximately 90.4% of the issued and outstanding shares of the Company, and retired from his positions as executive officer and sole director of the Company (the “Change of Control Event”).

 

Subsequent to the Change of Control Event, our current management pursued a strategic acquisition strategy focused on acquisition target companies with operations located primarily in Southeast Asia, the Pacific Islands, the People’s Republic of China (including Hong Kong and Macau) (the “PRC”), Taiwan and other jurisdictions within Asia, and with operations complimentary to the PRC’s broad “One Belt, One Road” (“OBOR”) regional investment and cooperation initiative. In connection with this strategy, we moved our corporate headquarters from Pennsylvania to Hong Kong.

 

On June 19, 2017, APSL acquired 100% issued and outstanding equity of ABV Consulting Limited (“ABV HK”) incorporated in Hong Kong, China and ABV HK became our wholly owned subsidiary.

 

On December 19, 2017, the Company entered into a Rescission Agreement. The Rescission Agreement rescinded the share exchange agreement dated February 24, 2017 (the “Share Exchange Agreement”), between the equity interest owners of APSL.

 

NOTE 3 – GOING CONCERN UNCERTAINTIES

 

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

F-4

Table of Contents

  

As of March 31, 2018, the Company had an accumulated deficit of $357,548 and net loss of $12,193 and net cash used in operations of $17,574 for the three months ended March 31, 2018. Losses have principally occurred as a result of the substantial resources required for professional fees and general and administrative expenses associated with our operations. The continuation of the Company as a going concern through March 31, 2019 is dependent upon the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.

 

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of estimates

 

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.

 

Basis of consolidation

 

The condensed consolidated financial statements include the financial statements of ABVN and its subsidiary. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

 

Foreign Currency 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 transaction. 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 statement of operations.

 

The reporting currency of the Company is the United States Dollar (“USD”). The Company's subsidiary in Hong Kong maintain their books and records in their local currency, the Hong Kong Dollar (“HKD”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

 

In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the USD are translated into USD, in accordance with ASC 830, “Translation of Financial Statements”, 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 translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

 

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. As of March 31, 2018 and December 31, 2017, the Company had $4,539 and $299 in cash and cash equivalents, respectively.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts receivable, accounts payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

●	Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

 

●

Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

 

●

Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

 

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

 

F-5

Table of Contents

 

Commitments and contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

Revenue recognition

 

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company derives its revenues from the rendering of business advisory services, such as training, implementation, consulting, and other customer-specific services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

	·	identify the contract with a customer;
	·	identify the performance obligations in the contract;
	·	determine the transaction price;
	·	allocate the transaction price to performance obligations in the contract; and
	·	recognize revenue as the performance obligation is satisfied.

  

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC 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 years 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.

 

For the three months ended March 31, 2018 and 2017, the Company did not have any interest and penalties associated with tax positions. As of March 31, 2018, the Company did not have any significant unrecognized uncertain tax positions.

 

The Company conducts major businesses in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.

 

Net loss per share

 

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. As of March 31, 2018, the company has no dilutive securities. 

 

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Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Reclassification

 

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2014-09, “Revenue from Contracts with Customers (Topic 606).” The FASB also issued a series of other ASUs, which update ASU 2014-09 (collectively, the “new revenue recognition standard”). This new standard replaces all previous U.S. GAAP guidance on this topic and eliminates all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The impact of the adoption of the new standard was not material to the Company’s condensed consolidated financial statements for the quarter ended March 31, 2018. The Company expects the impact to be immaterial on an ongoing basis.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods, and requires a retrospective approach. The Company adopted this standard effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements.

 

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The standard requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents (collectively, "restricted cash"). Therefore, restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017. The Company adopted this standard retrospectively effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements.

 

Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. 

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

During the three months ended March 31, 2018, the Company received advances from a shareholder in the amount of $21,814 to pay for operating expenses.

 

As of March 31, 2018, and December 31, 2017, the Company owed to related parties $199,658 and $177,844, respectively. The amounts due to the related parties are unsecured, non-interest bearing and have no fixed terms of repayment.

 

NOTE 6 – INCOME TAXES

 

The Company generated an operating loss for the three months ended March 31, 2018 and 2017 and did not record income tax expense. The Company has operations in various countries and is subject to tax in the jurisdictions in which they operate, as follows:

 

United States of America

 

ABV Consulting, Inc. is registered in the State of Nevada and is subject to the tax laws of United States of America

 

As of March 31, 2018, the operation in the United States of America incurred approximately $260,000 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2038, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $54,600 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

 

The Company’s subsidiary, ABV Consulting Limited, is incorporated in Hong Kong and is subject to the Inland Revenue Ordinance of Hong Kong. Hong Kong currently maintains a uniform tax rate of 16.5% for all enterprises.

 

As of March 31, 2018, the operation in Hong Kong incurred $90,768 of cumulative net operating losses which can be carried forward to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $14,976 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.

 

		Three months ended March 31,
		2018				2017
Loss before income taxes from Hong Kong operation		$	(12,193	)		$	-
Statutory income tax rate			16.5	%			16.5	%
Income tax expense at statutory rate			(2,011	)			-
Tax losses carryforwards			2,011				-
Income tax expense			-				-

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of March 31, 2018 and December 31, 2017:

 

		March				December
		31, 2018				31, 2017
		(Unaudited)				(Audited)
Deferred tax assets:
Net operating loss carryforwards
United States		$	54,600			$	54,600
Hong Kong			14,976				12,965
Total			69,576				67,565
Less: valuation allowance			(69,576	)			(67,565	)
Net deferred tax asset		$	-			$	-

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $69,576 as of March 31, 2018. During the three months ended 2018, the valuation allowance increased by $2,011, primarily relating to net operating loss carryforwards from the foreign tax regime.

 

NOTE 7 - DISCONTINUED OPERATIONS

 

On December 19, 2017, the Company entered into a Rescission Agreement. The Rescission Agreement rescinded the share exchange agreement dated February 24, 2017 between the equity interest owners of Allied Plus (Samoa) Limited (“APSL”).

 

On December 19, 2017, the Company recorded $32,873 as a gain on the disposal of a subsidiary. The Company has no continuing involvement in the operations of APSL. The disposal of APSL qualified as a discontinued operation of the Company and accordingly, the Company has presented the results of APSL operations from its statements of operations to present this business in discontinued operations.

 

The following table shows the results of operations of APSL for the three months ended March 31, 2017, which are included in the loss from discontinued operations:

 

		Three Months Ended March 31,
		2017
Revenue, net		$	-
Operating Expenses
General and administrative			32,873
Professional fees			-
Loss from discontinued operations		$	(32,873	)

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

As of March 31, 2018, the Company had no material capital commitments or contingencies involved.

 

NOTE 9 – SUBSEQUENT EVENTS

 

The Company has analyzed its operations subsequent to the date these financial statements were issued, and has determined that it does not have any material events to disclose, except for the below:

 

On July 22, 2017, the Company entered into a Memorandum of Understanding with Zhejiang Zhongmeng United Enterprise Management Shareholdings Co., Ltd (“Zhongmeng UEM”) to undertake an acquisition project with Zhongmeng UEM. On April 6, 2018, the Company received notification that Zhongmeng UEM was postponing its expansion and acquisition project with the Company. On April 17, 2018, the Company approved the postponement.

 

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Table of Contents

 

Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation

 

FORWARD-LOOKING STATEMENTS

  

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “pursue,” “expect,” “anticipate,” “predict,” “project,” “goals,” “strategy,” “future,” “likely,” “forecast,” “potential,” “continue,” negatives thereof or similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

 

	·	Potential acquisition or merger targets;
	·	Business strategies;
	·	Future cash flows;
	·	Financing plans;
	·	Plans and objectives of management;
	·	Any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results; and
	·	Any other statements that are not historical facts.

 

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

 

	·	Volatility or decline of our stock price;
	·	Potential fluctuation of quarterly results;
	·	Failure of the Company to earn revenues or profits;
	·	Inadequate capital to continue or expand our business, and inability to raise additional capital or financing to implement its business plans;
	·	Decline in demand for our products and services;
	·	Rapid adverse changes in markets;
	·	Litigation with or legal claims and allegations by outside parties against the Company;
	·	Insufficient revenues to cover operating costs;
	·	Inability to source attractive investment deal flow on terms favorable to the Company; and
	·	Such other factors as discussed throughout Item 2, Management's Discussion and Analysis of Financial Condition or Plan of Operation, of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

 

There is no assurance that we will be profitable, we may not be able to attract or retain qualified executives and personnel, we may not be able to obtain customers for future products or services, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of outstanding warrants and stock options, and other risks inherent in our businesses.

 

Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report, or to reflect the occurrence of unanticipated events.

 

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Overview of Corporate History

 

ABV Consulting, Inc. (“we,” “us,” “our,” “ABVN” or the “Company”) was incorporated in the state of Nevada on October 15, 2013. At formation, the Company authorized 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. In connection with our formation, the Company’s founder, Andrew Gavrin, received 5,000,000 shares of common stock as founder shares, and Mr. Gavrin served as the Company’s chief executive officer, chief financial officer and sole director from the time of incorporation until August 22, 2016.

 

The Company was originally formed to engage in merchandising and consulting services to craft beer brewers and distributors, as well as providing additional branding and marketing support within the craft beer industry to retailers and other organizations. The Company’s customer base consisted of alcohol beverage manufacturers, distributors, retailers, beer festival operators and other organizations involved in the sale and marketing of craft beer.

 

We focused our early efforts on pro bono engagements and secured one paid engagement for $2,000 by the close of our second quarter in 2016.

 

On August 22, 2016, in connection with the sale of a controlling interest in the Company, Mr. Gavrin sold to Ms. Ping Zhang the entire amount of his 5,000,000 shares of common stock for an aggregate price of $228,400 (the “Change of Control Transaction”). In connection with the Change of Control Transaction, Mr. Gavrin agreed pay $25,186.25 of debts of the Company in addition to the cancellation of $35,000 worth of debt owed to him by the Company. Concurrent with the Change of Control Transaction, Mr. Gavrin resigned from all corporate officer and director roles, and was replaced in all roles by Mr. Wai Lim Wong.

 

On December 19, 2016, the Company amended its articles of incorporation to increase the authorized number of shares of the Company’s common stock from 100,000,000 to 3,000,000,000 shares, par value $0.0001.

 

On February 24, 2017, ABV entered into a Share Exchange Agreement (the “Agreement”) with Allied Plus (Samoa) Limited, an international company incorporated in Samoa with limited liability (“APSL”), and each of APSL’s shareholders (collectively, the “Sellers”), pursuant to which, and subject to the terms and conditions contained therein, the Company would effect an acquisition of APSL by acquiring from the Sellers all outstanding equity interests of APSL (the “Acquisition”).

 

Pursuant to the Agreement, in exchange for all of the outstanding shares of APSL, the Company would issue 1,980,000,000 shares of common stock of the Company (the “Exchange Shares”) to the Sellers. The Exchange Shares to be allocated among the Sellers pro-rata based on each Seller’s ownership of APSL prior to the Acquisition. The Exchange Shares to be subject to a lock-up as set forth in the Agreement.

 

On February 28, 2017, ABV closed the share exchange (the “Exchange”) pursuant to the terms of Agreement. In connection with the closing, on February 28, 2017, the Company filed Articles of Exchange with the Secretary of State for the State of Nevada, which Articles of Exchange became effective upon filing

 

At the closing of the Exchange, the Company acquired 100% of the outstanding equity interests of APSL from the Sellers, and the Company issued to the Sellers, pro-rata based on each Seller’s ownership percentage of APSL prior to the Exchange, 1,980,000,000 shares of the Company’s common stock, par value $0.0001 per share (representing approximately 99.72% of the Company’s outstanding common stock). As a result, the Sellers became stockholders of the Company and APSL became a subsidiary of the Company.

 

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APSL was incorporated in Samoa on January 11, 2016, for the purposes of sourcing and developing tourism and entertainment-related investment projects in Malaysia and Southeast Asia in connection with the People’s Republic of China’s broad “One Belt, One Road” regional investment and development initiative, and for other purposes.

 

On June 19, 2017, APSL acquired 100% issued and outstanding equity of ABV Consulting Limited (“ABV HK”) which was incorporated in Hong Kong, China, and ABV HK became the wholly subsidiary of APSL.

 

On December 19, 2017, the board of directors of ABV and certain shareholders of the Company (“Shareholders”) entered into a Mutual Rescission Agreement (the “Rescission Agreement”). The Rescission Agreement rescinded the share exchange agreement dated February 24, 2017 (the “Share Exchange Agreement”), between the equity interest owners of Allied Plus (Samoa) Limited (“Allied Plus”), who are also the Shareholders, and the Company.

 

The Share Exchange Agreement provided for the acquisition of all of the outstanding equity interests of Allied Plus (“Equity Interests”) by the Company in consideration of the issuance of 1,980,000,000 shares of the Company’s common stock (the “Shares”) to the Shareholders. The Shares were issued to the Shareholders and the Equity Interests were transferred to the Company.

 

The Rescission Agreement provides that the Shareholders will return all of the Shares to the Company in consideration for the return of the Equity Interests to the Shareholders. The Shares will be cancelled and returned to the Company’s treasury. The Shareholders have signed stock powers (“Stock Powers”) in favor of the Company, and the Stock Powers and Shares have been delivered to the Company’s transfer agent for cancellation.

 

With the completion of the Rescission Agreement, APSL is no longer a subsidiary of the Company.

 

Accordingly, APSL sold the 100% issued and outstanding equity of ABV Consulting Limited (“ABV HK”) to the Company, and ABV HK became our wholly owned subsidiary.

 

Overview of Current Business

 

Following the Change of Control Transaction, our new management decided to pursue a strategic acquisition strategy focused on acquisition target companies with operations located primarily in Southeast Asia, the Pacific Islands, the People’s Republic of China (including Hong Kong and Macau) (the “PRC”), Taiwan and other jurisdictions within Asia. In connection with this new strategy, we moved our corporate headquarters from Pennsylvania to Hong Kong. We believe that the PRC’s “One Belt, One Road” (“OBOR”) regional cooperation initiative will be a significant driver for strategic investment opportunities throughout Asia.

 

Results of Operations

 

The following summary of our results of operations should be read in conjunction with our financial statements included elsewhere in this quarterly report.

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

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Comparison of the three months ended March 31, 2018 and March 31, 2017

 

		Three Months Ended
		March 31,
		2018				2017				Change				%
Revenue		$	12,821			$	-			$	12,821				-
General and administrative expenses			11,444				15,099				(3,655	)			(24	%)
Professional fees			13,570				46,967				(33,397	)			(71	%)
Loss from continuing operations			(12,193	)			(62,066	)			49,873				(80	%)
Loss from discontinued operations			-				(32,873	)			32,873				(100	%)
Net loss		$	(12,193	)		$	(94,939	)		$	82,746				(87	%)

 

Our revenue was $12,821 for the three months ended March 31, 2018, as compared to $0 for the same period in 2017. The increase in revenue was primarily due to the Company’s subsidiary in Hong Kong engaging in a consulting project. 

 

Our general and administrative expenses were $11,444 for the three months ended March 31, 2018, as compared to $15,099 for the same period 2017. The decrease in general and administrative expenses was primarily due to an establishment of the operation of its Company’s subsidiary in Hong Kong and a disposal of Allied Plus (Samoa) Limited (“APSL”) on December 19, 2017.

 

Expenses for professional fees were $13,570 for the three months ended March 31, 2018, as compared to $46,967 for the period 2017. The decrease in professional fees was primarily due to the APSL acquisition in 2017.

 

Loss from discontinued operations for the three months ended March 31, 2018 and 2017 was $0 and $32,873, respectively. All expenses are related to the APSL which was disposed of on December 19, 2017.

 

Liquidity and Capital Resources

 

Working Capital

 

		March 31,				December 31,
		2018				2017				Change
Current assets		$	17,360			$	299			$	17,061
Current liabilities		$	214,918			$	185,664			$	29,254
Working capital deficiency		$	(197,558	)		$	(185,365	)		$	(12,193	)

 

The Company’s current assets consists of cash and cash equivalents of $4,539 and accounts receivable of $12,821 at March 31, 2018, as compared to cash and cash equivalents of $299 at December 31, 2017. The increase in cash was primarily due to proceeds from related parties.

 

As at March 31, 2018, current liabilities consisted of accounts payable of $15,260 and $199,658 owed to related parties, as compared to December 31, 2017, current liabilities consisted of accounts payable of $7,820 and $177,844 owed to related parties. The increase in current liabilities is primarily due to an increase in due to related parties.

 

Cash Flows

 

		Three Months Ended
		March 31,
		2018				2017				Change
Cash used in operating activities		$	(17,574	)		$	(53,162	)		$	35,588
Cash provided by investing activities			-				1,636				(1,636	)
Cash provided by financing activities			21,814				20,000				1,814
Net increase (decrease) in cash and cash equivalents for the period		$	4,240			$	(31,526	)		$	35,766

 

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Cash Flow from Operating Activities

 

Cash flows used in operations decreased $35,588 to $17,574 during the three months ended March 31, 2018, mainly due to a decrease of net loss.

 

Cash Flow from Investing Activities

 

During the three months ended March 31, 2018, the Company did not have any investing activities.

 

During the three months ended March 31, 2017, the Company received cash of $1,636 resulting from the acquisition of APSL.

 

Cash Flow from Financing Activities

 

During the three months ended March 31, 2018 and 2017, the Company received $21,814 and $20,000 from related parties, respectively.

 

Off-Balance Sheet Arrangements

 

None.

 

Critical Accounting Policies and Estimates

 

Management's discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates.

 

For a complete description of our critical accounting policies and estimates, refer to our 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 19, 2018.

 

Recent accounting pronouncements

 

Management has considered all recent accounting pronouncements issued. Management believes that these recent pronouncements will not have a material effect on our company’s financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

There have been no material changes in the Company’s quantitative and qualitative disclosures about market risk as of March 31, 2018 from those disclosed in Part II, Item 7A. “ Qualitative and Quantitative Disclosures About Market Risk ” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

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An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms as a result of the following material weaknesses:

 

	(1)	lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
	(2)	inadequate segregation of duties consistent with control objectives;
	(3)	insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements; and
	(4)	ineffective controls over period end financial disclosure and reporting processes.

 

The specific material weakness identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements would not be prevented or detected on a timely basis.

 

We expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe mitigates the impact of the material weaknesses discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls and procedures, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.

 

Management’s Remediation Plan

 

While management believes that the Company’s condensed consolidated financial statements previously filed in the Company’s SEC reports have been properly recorded and disclosed in accordance with U.S. GAAP, based on the control deficiencies identified above, we have designed and plan to implement, or in some cases have already implemented, the specific remediation initiatives described below:

 

·	The Company is currently looking for an outside consultant with considerable public company reporting experience and breadth of knowledge of US GAAP to assist it with the preparation and review of its condensed consolidated financial statements. The Company is committed to establishing procedures and utilizing experienced individuals with professional supervision to properly segregate duties, prepare and approve the condensed consolidated financial statements and footnote disclosures in accordance with US GAAP.
·	The Board of Directors will be more actively involved in providing additional oversight of the Company’s internal controls, formal review of our condensed consolidated financial statements, and more detailed review of the periodic reports we anticipate filing with the SEC.
·	The Company has initiated efforts to ensure our employees understand the importance of internal controls and compliance with corporate policies and procedures.
·	The Company may retain third party specialists to assist it in the design, implementation and testing of our internal controls as necessary.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

As of the date of this Quarterly Report on Form 10-Q, we are not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial condition or operating results. Further, to the Company’s knowledge no such proceedings have been threatened against the Company.

 

Item 1A. Risk Factors

 

There have been no material changes in our risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018.

 

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

 

There were no sales of equity securities of the Company which were not previously reported in a Current Report on Form 8-K for the period covered by this Quarterly Report on Form 10-Q.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

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Item 6. Exhibits

 

All other schedules are omitted because they are not required or the required information is included in the financial statements or notes thereto.

 

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the SEC:

 

				Incorporated by Reference
Exhibit No.		Title		Form		Exhibit		Filing Date
3.1		Articles of Incorporation		S-1		3.1		9/3/2014
3.2		Certificate of Correction to Articles of Incorporation		S-1		3.2		9/3/2014
3.3		Bylaws		S-1		3.3		9/3/2014
3.4		Certificate of Amendment to Articles of Incorporation, effective as of December 19, 2016		8-K		3.1		2/24/2017
10.1		Share Exchange Agreement		8-K		10.1		2/24/2017
10.2		Mutual Rescission Agreement and General Release		8-K		16.1		12/22/2017
10.3		Employment Agreement between ABV Consulting and Wai Lim Wong dated as of August 28, 2017.		10-K		10.3		03/19/2018
10.4		Employment Agreement between ABV Consulting and Chi Lin Chow dated as of August 28, 2017.		10-K		10.4		03/19/2018
21.1*		Subsidiaries of the Registrant
31.1*		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+		Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+		XBRL Instance Document
101.SCH+		XBRL Taxonomy Extension Schema Document
101.CAL+		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB+		XBRL Taxonomy Extension Label Linkbase Document
101.PRE+		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF+		XBRL Taxonomy Extension Definition Linkbase Document

_____________ 

*	Filed herewith
+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

		ABV CONSULTING, INC.
		(Registrant)
Dated: May 10, 2018		/s/ Wai Lim Wong
		Wai Lim Wong
		President, Chief Executive Officer and Director
		(Principal Executive Officer)
Dated: May 10, 2018		/s/ Wai Chi Chan
		Wai Chi Chan
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

 

 

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