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, 2019

 

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

000-55326

 

IMAGE CHAIN GROUP LIMITED, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		46-4333787
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

 

Room 501, 5F, Bonham Centre, No. 79-85, BonhamStrand, Sheung Wan, Hong Kong, S.A.R., People’s Republic of China		N/A
(Address of principal executive offices)		(Zip Code)

 

(852) 3188-2700

(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 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	[  ]		Accelerated filer	[  ]
Non-accelerated filer	[  ]		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

[X]

NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

 

[  ]

YES

[  ]

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.

 

508,539,882 common shares issued and outstanding as of May 13, 2019.

 

 

 

 

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	10
Item 4.	Controls and Procedures	10
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	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
SIGNATURES		12

 

2

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

INDEX TO FINANCIAL STATEMENTS

 

CONTENTS		PAGES
CONSOLIDATED BALANCE SHEETS		F-1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS		F-2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)		F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS		F-4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		F-5 - F-10

 

3

 

IMAGE CHAIN GROUP LIMITED, INC.

Consolidated Balance Sheets

(Unaudited)

 

		March 31,				December 31,
		2019				2018
Assets
Current assets
Cash and cash equivalents		$	-			$	-
Total Current assets			-				-
Total Assets		$	-			$	-
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accrued liabilities and other payables		$	367			$	367
Due to related party			695,842				642,063
Total Current Liabilities			696,209				642,430
Total Liabilities			696,209				642,430
Stockholders’ Deficit
Preferred Stock, $0.001 par value, 50,000 shares authorized, issued and outstanding			50				50
Common stock, $0.001 par value, 2,000,000,000 shares authorized, 508,539,882 and 507,070,882 issued as of March 31, 2019 and December 31, 2018, respectively			508,540				507,271
Additional paid in capital			8,124,365				5,333,834
Accumulated deficit			(9,329,164	)			(6,483,585	)
Treasury stock, at cost, 200,000 as of March 31, 2019 and December 31, 2018, respectively			-				-
Total Stockholders’ Deficit			(696,209	)			(642,430	)
Total Liabilities and Stockholders’ Deficit		$	-			$	-

 

See accompanying notes to Unaudited Consolidated Financial Statements

 

F- 1

 

IMAGE CHAIN GROUP LIMITED, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

		For the three months ended
		March 31,
		2019				2018
Revenue		$	-			$	-
Operating Expenses
General and administrative expenses			2,845,579				70,847
Total Operating Expenses			2,845,579				70,847
Loss Before Income Taxes			(2,845,579	)			(70,847	)
Provision for income taxes			-				-
Net Loss from continuing operations		$	(2,845,579	)		$	(70,847	)
Loss from discontinued operations
Loss from discontinued operations, net of tax			-				(175,819	)
Net Loss from discontinued operations			-				(175,819	)
Net Loss			(2,845,579	)			(246,666	)
Other Comprehensive Income
Foreign currency translation gain from discontinued operations			-				112,149
Total Comprehensive Loss		$	(2,845,579	)		$	(134,517	)
Basic and Diluted Loss per Common Share		$	(0.01	)		$	(0.00	)
Basic and Diluted Weighted Average Common Shares Outstanding		$	507,341,382			$	507,270,882

 

See accompanying notes to Unaudited Consolidated Financial Statements

 

F- 2

 

IMAGE CHAIN GROUP LIMITED, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

 

																										Accumulated
		Preferred Stock								Common Stock								Additional Paid in				Accumulated				other comprehensive				Treasury Stock
		Shares				Amount				Shares				Amount				Capital				Deficit				loss				Shares				Amount				Total
Balance, December 31, 2017			50,000			$	50				507,270,882			$	507,271			$	5,333,834			$	(4,646,033	)		$	(390,246	)			-			$	-			$	804,876
Foreign currency translation gain			-				-				-				-				-				-				112,149				-				-				112,149
Net loss			-				-				-				-				-				(246,666	)			-				-				-				(246,666	)
Balance, March 31, 2018			50,000			$	50				507,270,882			$	507,271			$	5,333,834			$	(4,892,699	)		$	(278,097	)			-			$	-			$	670,359
Balance, December 31, 2018			50,000			$	50				507,270,882			$	507,271			$	5,333,834			$	(6,483,585	)		$	-				200,000			$	-			$	(642,430	)
Common stocks issued for services			-				-				1,269,000				1,269				2,790,531				-				-				-				-				2,791,800
Net loss			-				-				-				-				-				(2,845,579	)			-				-				-				(2,845,579	)
Balance, March 31, 2019			50,000			$	50				508,539,882			$	508,540			$	8,124,365			$	(9,329,164	)		$	-				200,000			$	-			$	(696,209	)

 

See accompanying notes to Unaudited Consolidated Financial Statements

 

F- 3

 

IMAGE CHAIN GROUP LIMITED, INC.

Unaudited Consolidated Statements of Cash Flows

 

		For the three months ended
		March 31,
		2019				2018
Cash flows from operating activities
Net loss		$	(2,845,579	)		$	(246,666	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of intangible assets			-				14,175
Depreciation of fixed assets			-				59,099
Salaries paid by shares			2,791,800				-
Expenses paid by related party			53,779				70,667
Changes in operating assets and liabilities:
Accounts receivables			-				(18,289	)
Other receivables			-				25,205
Inventories			-				(32,405	)
Advances and prepayments to suppliers			-				(57,696	)
Accounts payables			-				(64,673	)
Accrued liabilities and other payables			-				676,244
Net cash provided by operating activities			-				425,661
Cash flows from investing activities
Purchase of plant and equipment			-				(143,560	)
Net cash used in investing activities			-				(143,560	)
Cash flows from financing activities
Repayment of bank borrowings			-				(334,109	)
Net cash used in financing activities			-				(334,109	)
Effect of foreign currency translation on cash and cash equivalents			-				1,686
Net decrease of cash and cash equivalents			-				(50,322	)
Cash and cash equivalents–beginning of period			-				64,848
Cash and cash equivalents–end of period		$	-			$	14,526
Cash and cash equivalents - continuing operations		$	-			$	-
Cash and cash equivalents - discontinued operations		$	-			$	14,526
Supplementary cash flow information:
Interest paid		$	-			$	17,243
Income taxes paid		$	-			$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for services		$	2,791,800			$	-

 

See accompanying notes to Unaudited Consolidated Financial Statements

 

F- 4

 

IMAGE CHAIN GROUP LIMITED, INC.

Notes to Unaudited Consolidated Financial Statements

 

1. THE COMPANY AND PRINCIPAL BUSINESS ACTIVITIES

 

Business

 

Image Chain Group Limited, Inc. (formerly Have Gun Will Travel Entertainment, Inc.) (“ICGL” or the “Company”) was incorporated under the laws of Nevada on December 18, 2013. From inception through the date of the Share Exchange as defined below, the Company was an emerging forward-thinking full-service television pre-production company dedicated to the creation of original concepts and programming with a bold and innovative edge in the reality television space for sale, option and licensure to independent producers, cable television networks, syndication companies, and other entities. On June 11, 2015, the Company amended its Articles of Incorporation with the State of Nevada in order to change its name to Image Chain Group Limited, Inc. and to increase the authorized shares of common stock from 70,000,000 to 400,000,000 (the “Amendments”). The name change was undertaken in order to more closely align with the operations of the Company’s wholly-owned subsidiary, Fortune Delight Holdings Group Ltd (“FDHG”). The increase in authorized shares was undertaken to allow the Company to utilize the newly available shares to raise capital. The board of directors and the stockholders of the Company approved the Amendments on May 8, 2015.

 

On February 13, 2017, the Company filed with the Secretary of State of the State of Nevada a Certificate of Correction (the “Certificate of Correction”) to correct a mistake made in the Company’s original Articles of Incorporation with regard to the preferred stock issued in connection with the FDHG Exchange Agreement. As a result, ICGL had 395,000,000 shares of common stock and 5,000,000 shares of preferred stock issued and outstanding. The Company subsequently entered into an agreement pursuant to which the holder of the preferred stock agreed to retire the preferred stock in exchange for receiving an equal number of shares of common stock of the Company . As of the date of this Report, that exchange of preferred stock for common stock has not yet occurred.

 

Effective May 1, 2017, the Company increased the authorized shares of Common Stock from 3,950,000 to 2,000,000,000 shares with a par value of $0.001 per share, and to decrease the authorized shares of Preferred Stock from 50,000 to zero (0). As of the date of this Report, the decrease in shares of Preferred Stock is still in process.

 

FDHG, previously, through its wholly-owned operating subsidiaries, was in the business of promoting and distributing its own branded teas that are grown, harvested, cured, and packaged in the People’s Republic of China (“PRC”). The Company’s headquarters was previously located in Guangzhou, Guangdong Province, PRC.

 

Share Exchange and Reorganization

 

On November 14, 2017, the Company entered into a share exchange agreement (the “SEA”) with Image P2P Trading Group Limited (“Image P2P”) and Image P2P’s shareholders whereby the Company issued 500,000,000 new common shares in exchange for all of the issued and outstanding ordinary shares of Image P2P, which totaled 50,000. Image P2P is an investment holding company incorporated and domiciled in the British Virgin Islands.

 

Share Exchange and disposal of subsidiaries

 

On November 28, 2018, the Company has entered into a Business Transfer Agreement and Share Exchange Agreement (the “Agreements”) with a group of the original shareholders of Image P2P (the “Image P2P Shareholding Group”), Image P2P and its subsidiaries. Pursuant to the Agreements, the Image P2P Shareholding Group will exchange 200,000 common shares of the Company for the one common share of Asia Grand Will Limited held by Image P2P. Asia Grand Will Limited is the holding company for the Company’s operations in the PRC. Also pursuant to the Agreements, the Image P2P Shareholding Group, Image P2P and Image P2P’s subsidiaries will transfer to the Company (i) all of its right, title and interest to the intellectual property, including copyrights, patents, trademarks, process technology and production know-how, of Image P2P and its subsidiaries, (ii) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries, (iii) the exclusive right to all intellectual property developed by Image P2P and its subsidiaries in the future and (iv) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries developed in the future.

 

F- 5

 

The 200,000 common shares of the Company returned to Image P2P are recognized as common stock in treasury since Image P2P is a wholly owned subsidiary of the Company, and measured at cost which is the fair value of the common stocks as of the date of the disposal of subsidiaries.

 

The subsidiaries disposed are presented as discontinued operations in this report. Comparatives are reclassified to conform with the presentation.

 

The Company is currently reviewing and revising its future business plans. To date, the Company has not yet identified its future business plans.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Notes to the unaudited interim condensed consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements for fiscal year 2018 have been omitted. This report should be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2018 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 26, 2019.

 

Principles of consolidation

 

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

 

The Company’s subsidiaries are listed as follows:

 

Name of Company		Place of incorporation		Attributable equity interest %				Authorized capital
Image P2P Trading Group Limited (“BVI”)		British Virgin Islands			100			USD 50,000

 

Use of estimates

 

In preparing these 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.

 

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 accompanying financial statements are presented in United States dollars (“USD”). The functional currency of the Company and BVI is the USD. The functional currency of AGWL is the Hong Kong dollar (“HKD”). The functional currency of FZHL and FZY is the Renminbi (“RMB”). AGWL, FZHL and FZY have been classified as discontinued operations and have been disposed in the year 2018.

 

F- 6

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries 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 (loss) within the statement of stockholders’ equity.

 

Exchange Rates		3/31/2019				12/31/2018				3/31/2018
Spot rate RMB : US$ exchange rate			N/A				0.1454				0.159
Average year RMB : US$ exchange rate			N/A				0.1514				0.1572
Year end HKD : US$ exchange rate			0.129				0.129				0.129
Average year HKD : US$ exchange rate			0.129				0.129				0.129

 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollars at the rates used in translation.

 

Reclassifications

 

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

 

Recently Adopted Accounting Standards

 

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 adoption of ASC 842, 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.

 

3. GOING CONCERN

 

The accompanying 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.

 

As of March 31, 2019, the Company had an accumulated deficit of $9,329,164 and net loss of $2,845,579 and net cash used in operations of $0 for the three months ended March 31, 2019. 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, 2020 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 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.

 

F- 7

 

4. DISPOSAL OF SUBSIDIARIES

 

On November 28, 2018, the Company has entered into a Business Transfer Agreement and Share Exchange Agreement (the “Agreements”) with a group of the original shareholders of Image P2P (the “Image P2P Shareholding Group”), Image P2P and its subsidiaries. Pursuant to the Agreements, the Image P2P Shareholding Group will exchange 200,000 common shares of the Company for the one common share of Asia Grand Will Limited held by Image P2P. Asia Grand Will Limited is the holding company for the Company’s operations in the PRC. Also pursuant to the Agreements, the Image P2P Shareholding Group, Image P2P and Image P2P’s subsidiaries will transfer to the Company (i) all of its right, title and interest to the intellectual property, including copyrights, patents, trademarks, process technology and production know-how, of Image P2P and its subsidiaries, (ii) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries, (iii) the exclusive right to all intellectual property developed by Image P2P and its subsidiaries in the future and (iv) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries developed in the future.

 

Pursuant to the share exchange agreement, the Company transferred all of the subsidiary shares to the Image P2P Shareholding Group and received 200,000 common shares of the Company in return.

 

The Company has no continuing involvement in the operations of Asia Grand Will Limited. The disposal of Asia Grand Will Limited qualified as a discontinued operation of the Company and accordingly, the Company has excluded results of Asia Grand Will Limited’s operations from its Consolidated Statements of Operations and Comprehensive Loss to present this business in discontinued operations.

 

The following table shows the results of operations of Asia Grand Will Limited for the three months ended March 31, 2019 and 2018 which are included in the loss from discontinued operations:

 

		For the three months ended March 31,
		2019				2018
Sales		$	-			$	195,731
Cost of sales			-				201,277
Gross loss			-				(5,546	)
Selling and marketing expenses			-				22,512
General and administrative expenses			-				90,603
Operating loss			-				(118,661	)
Government subsidy			-				-
Interest income			-				-
Other expenses			-				(52	)
Interest expense			-				(56,561	)
Loss before taxes			-				(175,273	)
Income tax expense			-				(546	)
Net loss		$	-			$	(175,819	)

 

F- 8

 

The following table shows the carrying amounts of the major classes of assets and liabilities associated with Asia Grand Will Limited as of November 28, 2018:

 

		November 28, 2018
Cash and cash equivalents		$	16,332
Accounts receivable, net			26,411
Inventories			26,416
Advances and prepayment to suppliers			64,599
Prepaid taxes and taxes recoverable			93,489
Total Current assets		$	227,247
Plant and equipment, net			10,328,609
Construction in progress and prepayment for equipment			472,261
Intangible assets, net			443,520
Other assets			132,967
Total Non-current Assets		$	11,377,356
Short-term bank loans			2,138,455
Long-term bank loans – current portion			431,430
Accounts payable			1,009,386
Accrued liabilities and other payables			1,490,365
Customers advances and deposits			55,165
Due to related parties			4,231,072
Total Current Liabilities		$	9,355,873
Loans payable			1,658,896
Total Non-current Liabilities		$	1,658,896
Net assets and liabilities		$	589,835
Consideration received on disposal			-
Recycling of accumulated other comprehensive income			368,397
Loss on disposal		$	958,231

 

5. RELATED PARTY TRANSACTIONS

 

During the three months ended March 31, 2019, $1,029,600 services fee was paid to David Po (the Secretary and Chairman of the Board of Director) with 468,000 shares of common stock and $52,800 services fee was paid to Jonathan Ka Kit Tam (former Chief Financial Officer and Director, resigned on Mar 30, 2019) with 24,000 shares of common stock at $2.2 per share for their services provided and to be provided for the year ended December 31, 2019.

 

During the three months ended March 31, 2019, David Po advanced $53,779 for operating expenses. Amounts due to Mr. Po as of March 31, 2019 and December 31, 2018, were $695,842 and $642,062, respectively.

 

The owing to Mr. Po consists of working capital advances and borrowings. These amounts are due on demand and are non-interest bearing.

 

6. STOCKHOLDERS’ EQUITY (DEFICIT)

 

Preferred Stock

 

The Company is authorized to issue 50,000 shares, with a stated par value of $0.001 per share with such powers, preferences, rights and restrictions which shall be determined by the Corporation’s Board of Directors in its sole discretion, and which designations and issuances shall not require the approval of the shareholders of the Corporation.

 

F- 9

 

During the three months ended March 31, 2019, there were no issuances of Preferred Stock.

 

As of March 31, 2019 and December 31, 2018, 50,000 shares of preferred stock were issued and outstanding.

 

Common Stock

 

The Company is authorized to issue 2,000,000,000 shares of common stock at a par value of $0.001.

 

During the three months ended March 31, 2019, the Company has issued 1,269,000 shares of common stock to certain related and unrelated parties for their services provided and to be provided for the year ended December 31, 2019 at $2.2 per share, value of total $2,791,800 which was fully expensed in this period.

 

As of March 31, 2019 and December 31, 2018, 508,539,882 and 507,270,882 shares of common stock were issued, respectively.

 

7. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through the date which the financial statements were available to be issued. All subsequent events requiring recognition as of March 31, 2019 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”

 

F- 10

 

Item 2.

Management’s Discussion and Analysis of Financial Condition or Plan of Operation

 

Cautionary Statements

 

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements, including, without limitation, in the sections captioned “Management’s Discussion and Analysis of Financial Condition or Plan of Operation,” and elsewhere. Any and all statements contained in this Quarterly Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms.

 

Forward-looking statements in this Quarterly Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the growth of tea polyphenol sales and development of our tea polyphenol-based products, (ii) the plans or objectives relating to our future business acquisitions, if any, (iii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iv) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, and (v) the assumptions underlying or relating to any statement described in points (i), (ii), (iii) or (iv) above.

 

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:

 

	●	volatility or decline of our stock price;
	●	potential fluctuation of quarterly results;
	●	continued failure to earn revenues or profits;
	●	inadequate capital to continue or expand our business, and inability to raise additional capital or financing to implement our 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 us;
	●	insufficient revenues to cover operating costs; and
	●	estimates of our future revenue, expenses, capital requirements and our need for additional financing;

 

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Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. ICGL cautions you not to place undue reliance on the statements, which speak only as of the date of this Quarterly Report. 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 ICGL or persons acting on its behalf may issue. ICGL does 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, except as required by law.

 

Overview

 

Image Chain Group Limited, Inc. (formerly Have Gun Will Travel Entertainment, Inc.) was incorporated under the laws of Nevada on December 18, 2013, and initially sought to create reality television programming. References in this Quarterly Report to “ICGL”, “Image Chain”, the “Company”, the “Registrant”, “we”, “our” or “us” are to Image Chain Group Limited, Inc.

 

On May 5, 2015, ICGL entered into a share exchange agreement (the “FDHG Exchange Agreement”) with Fortune Delight Holdings Group Ltd (“FDHG”) and Wu Jun Rui, on behalf of himself and certain other individuals who were to receive shares of ICGL pursuant to the FDHG Exchange Agreement (the “FDGH Shareholders”). On the terms and subject to the conditions set forth in the FDHG Exchange Agreement, on May 5, 2015, Wu Jun Rui transferred all 50,000 shares of FDHG common stock, consisting of all of the issued and outstanding shares of FDHG, to ICGL in exchange for the issuance to the stockholders of FDHG of 59,620,000 shares of the Company’s common stock, par value $.001 per share (“Common Stock”) and 5,000,000 shares of the Company’s preferred stock, par value $.001 per share (“Preferred Stock”).

 

As a result of the closing of the FDHG Exchange Agreement, FDHG became the Company’s wholly owned subsidiary. FDHG, through its subsidiaries, manufactured and sold “Image Tea”-branded tea products from its tea garden in Yunnan Province.

 

On June 11, 2015, the Company amended its Articles of Incorporation in order to change its name to Image Chain Group Limited, Inc. and to increase the authorized shares of Common Stock from 70,000,000 to 400,000,000. The name change was undertaken in order to more closely align with the operations of the Company’s wholly-owned subsidiary, The increase in authorized Common Stock was undertaken to allow the Company to utilize the newly available shares to raise capital.

 

On or about November 15, 2016, FDHG disposed of its ownership of all operating assets, and as a result ICGL became a shell company, as defined by Rule 12b-2 under the Exchange Act (the “Disposition Event”). The Disposition Event is evidenced by a bought and sold note stamped by the Inland Revenue Department of Hong Kong, which we believe is a legally binding document.

 

On February 13, 2017, the Company filed with the Secretary of State of the State of Nevada a Certificate of Correction (the “Certificate of Correction”) to correct a mistake made in the Company’s original Articles of Incorporation with regard to the Preferred Stock issued in connection with the FDHG Exchange Agreement. As a result, ICGL had 395,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock issued and outstanding. The Company subsequently entered into an agreement pursuant to which the holder of the Preferred Stock agreed to retire the Preferred Stock in exchange for receiving an equal number of shares of Common Stock of the Company . As of the date of this Quarterly Report, that exchange of Preferred Stock for Common Stock has not yet occurred.

 

On May 1, 2017, upon recommendation of the Board of Directors, a majority of Image Chain’s common stockholders consented in writing to amendment of Image Chain’s Articles of Incorporation to (i) effect a reverse stock split on a 1 for 100 stock split basis from 400,000,000 authorized shares with a par value of $0.001 per share to 4,000,000 authorized shares with a par value of $0.001, and (ii) after the reverse stock split, to increase the authorized shares of Common Stock from 3,950,000 to 2,000,000,000 shares with a par value of $0.001 per share, and to decrease the authorized shares of Preferred Stock from 50,000 to zero (0). As of the date of this Quarterly Report, the reverse stock split and increase in authorized shares have been completed, and the decrease in shares of Preferred Stock is still in process, as a result 50,000 shares of Preferred Stock are authorized and outstanding.

 

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Image P2P Trading Group Limited (“Image P2P”), a company organized under the laws of the British Virgin Islands, was incorporated on April 21, 2015. Asia Grand Will (“AGW”) was incorporated on March 18, 2017 in the Hong Kong SAR. AGW wholly owns Fuzhi Yuan (Shenzhen) Holdings Limited (“FYSZ”) which was established on June 20, 2017 in the PRC. FYSZ is a wholly owned foreign entity under PRC law. FYSZ wholly owns Jiangxi Fuzhiyuan Biotechnology Limited (“Fuzhiyuan Biotechnology”), which was established on January 5, 2013 in the PRC. FYSZ acquired Fuzhiyuan Biotechnology on July 14, 2017. AGW and FYSZ are intermediary holding companies. Image P2P conducts its operations through Fuzhiyuan Biotechnology. Image P2P acquired AGW on Jul 28, 2017.

 

The reorganization of Image P2P and its subsidiaries via the acquisitions detailed above, by and amongst Image P2P and AGW, FYSZ, and Fuzhiyuan Biotechnology, have been accounted for under US GAAP as business combinations under common control.

 

On November 14, 2017, Image Chain entered into a share exchange agreement (the “Exchange Agreement”) with Image P2P and the shareholders of Image P2P (the “Sellers”). Pursuant to the Exchange Agreement, the Sellers transferred all 50,000 shares of Image P2P outstanding common stock to the Company in exchange for 500,000,000 shares of Common Stock (the “Share Exchange”). As a result of the Share Exchange, Image P2P became the Company’s wholly-owned subsidiary. Image P2P, through its subsidiaries, is engaged in producing, marketing and selling tea polyphenol products, and is developing for production tea polyphenol-based products. Image P2P is located in the PRC.

 

The Share Exchange has been accounted for as a reverse- merger and recapitalization of Image Chain where Image Chain (the legal acquirer) is considered the accounting acquiree and Image P2P (the acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of Image P2P.

 

On November 28, 2018, the Company entered into a Business Transfer Agreement and Share Exchange Agreement (the “Agreements”) with a group of the original shareholders of Image P2P (the “Image P2P Shareholding Group”), Image P2P and its subsidiaries. Pursuant to the Agreements, the Image P2P Shareholding Group exchanged 200,000 common shares of the Company for the one common share of Asia Grand Will Limited held by Image P2P. Asia Grand Will Limited is the holding company for the Company’s operations in the PRC. Also pursuant to the Agreements, the Image P2P Shareholding Group, Image P2P and Image P2P’s subsidiaries transfered to the Company (i) all of its right, title and interest to the intellectual property, including copyrights, patents, trademarks, process technology and production know-how, of Image P2P and its subsidiaries, (ii) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries, (iii) the exclusive right to all intellectual property developed by Image P2P and its subsidiaries in the future and (iv) the exclusive distribution rights in the PRC and worldwide for all products of Image P2P and its subsidiaries developed in the future.

 

The 200,000 common shares of the Company returned to Image P2P are recognized as common stock in treasury since Image P2P is a wholly owned subsidiary of the Company and measured at cost which is the fair value of the common stocks as of the date of the disposal of subsidiaries.

 

The subsidiaries disposed are presented as discontinued operations in this report. Comparatives are reclassified to conform with the presentation.

 

Our principal executive offices are located at Room 503, 5/F, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong, S.A.R. Our telephone number is (852) 3188-2700. We do not have a corporate website. Our periodic and current reports with the SEC can be obtained from the SEC website, www.sec.gov.

 

Company Overview

 

On November 28, 2018, the Company disposed of Asia Grand Will Limited and its subsidiaries and hence have terminated the business of tea polyphenol products production and sales.

 

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Currently, since the Sino-US trade war may affected the enterprises operating in China in 2018, the Company has gradually shifted its market target to Malaysia. It is seeking to develop business in healthy Halal food.

 

While we expect to focus on our efforts in the Halal Food License area, we will continue to seek new business opportunities with established business entities for merger with or acquisition of a target business in order to best protect our shareholder interests. In certain instances, a target business may wish to become our subsidiary or may wish to contribute assets to us rather than merge. We have not yet begun negotiations or entered into any definitive agreements in the Halal Food License business, or for any other potential new business opportunities, and there can be no assurance that we will be able to enter into any definitive agreements.

 

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce, or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate compatible business opportunities.

 

Currently, we do not have a source of revenue. We are not able to fund our cash requirements through our current operations. We have been reliant on loans by affiliated and non-affiliated parties to provide financial contributions and services to keep our company operating. Further, we believe that our company may have difficulties raising capital from other sources until we locate a prospective merger candidate through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail. We currently have no written or oral agreement from our majority shareholder to continue to provide financial contributions.

 

Results of Operations

 

Three months ended March 31, 2019 compared to three months ended March 31, 2018.

 

		Three months ended March,
		2019				2018
Revenue			-				-
Operating expenses
General and administrative expenses			2,845,579				70,847
Total operating expenses			2,845,579				70,847
Loss Before Income Taxes			(2,845,579	)			(70,847	)
Provision for Income Taxes			-				-
Net loss from continuing operations			(2,845,579	)			(70,847	)
Loss from discontinued operations
Loss from discontinued operations, net of tax			-				(175,819	)
Net Loss from discontinued operations			-				(175,819	)
Net Loss			(2,845,579	)			(246,666	)
Other Comprehensive Income
Foreign currency translation gain from discontinued operations			-				112,149
Total Comprehensive loss			(2,845,579	)			(134,517	)
Loss per share
Basic and Diluted Loss per Common Share			(0.01	)			(0.00	)
Basic and Diluted Weighted Average Common Shares Outstanding			507,341,382				507,270,882

 

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Operating Expenses

 

Our general and administrative expenses increased from $70,847 for the three months ended March 31, 2018 to $2,845,579 for the three months ended March 31, 2019. The increase was mainly attributed to salaries paid by shares of $2,791,800 in this period, which is absent in the same period in 2018.

 

Loss from discontinued operations

 

Our loss from discontinued operations decreased from $175,819 for the three months ended March 31, 2018 to $0 for the three months ended March 31, 2019. The decrease was due to disposal of subsidiaries before this period on November 28, 2018.

 

Other Comprehensive Income

 

For the three months ended March 31, 2018 we had a foreign currency gain of $112,149, compared to a foreign currency gain of $0 for the three months ended March 31, 2019. The variation in foreign currency gain or loss was tied directly to the fluctuation in value of the Renminbi and Hong Kong dollar, our functional currencies, to the US dollar, the currency used for reporting our US GAAP operating results. The decrease in the gain was due to disposal of subsidiaries before this period on November 28, 2018.

 

Liquidity and Capital Resources

 

Since the inception of the Company, we have incurred significant net losses and negative cash flows from operations. During the three months ended March 31, 2018 and the three months ended March 31, 2019, we had net losses of $246,666 and $2,845,579, respectively. At March 31, 2019, we had an accumulated deficit of $9,329,164. As discussed in our financial statements for the three months ended March 31, 2019, these factors raise substantial doubt about our ability to continue as a going concern.

 

To date, we have financed our operations principally through borrowings from our related parties. Depending on our future operational results, we may need to conduct one or more equity or debt financings within the next 12 months.

 

We could potentially need our available financial resources sooner than we currently expect, and we may incur additional indebtedness to meet future financing needs. Adequate additional funding may not be available to us on acceptable terms or at all. In addition, although we anticipate being able to obtain additional financing through non-dilutive means, we may be unable to do so. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of operations. Our future capital requirements and the adequacy of available funds will depend on many factors, many of which are beyond our control.

 

Related Party Loans

 

See “Related Party Transactions” in Note 5 of Notes to the Financial Statements. These unsecured loans do not bear interest or fixed dates for repayment.

 

Cash flows

 

The following table summarizes our cash flows for the periods presented:

 

		Three months ended March 31
		2019				2018
Cash flows from operating activities		$	-			$	425,661
Cash flows from investing activities		$	-			$	(143,560	)
Cash flows from financing activities		$	-			$	(334,109	)

 

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Operating Activities

 

During the three months ended March 31, 2019, operating activities provided $0 in cash, compared with $425,661 for the three months ended March 31, 2018. The decrease in cash provided was due primarily to disposal of subsidiaries on November 28, 2018.

 

Investing Activities

 

Net cash used in investing activities for the three months ended March 31, 2019 was $0, compared with $143,560 net cash used in investing activities for the three months ended March 31, 2018. The decrease in cash provided was due primarily to disposal of subsidiaries on November 28, 2018.

 

Financing Activities

 

Net cash used in financing activities for the three months ended March 31, 2019 was $0, compared with $334,109 net cash used in financing activities for the three months ended March 31, 2018. The decrease in cash provided was due primarily to disposal of subsidiaries on November 28, 2018.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

 

GOING CONCERN

 

These financial statements have been prepared assuming that Company will continue as a going concern. As of March 31, 2019, the Company had accumulated deficits of $9,329,164 due to substantial losses. There was substantial doubt regarding the Company’s ability to continue as going concern at March 31, 2019. Refer to Note 3. GOING CONCERN UNCERTAINES of the accompanying notes to the condensed financial statements.

 

Recent Accounting Pronouncements

 

See “Recent Accounting Pronouncements” in Note 2 of Notes to the Financial Statements.

 

Critical Accounting Policies

 

We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4.

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2019, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were not effective.

 

Changes in Internal Controls

 

There have been no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

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

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.

Defaults Upon Senior Securities

 

None.

 

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Item 4.

Mine Safety Disclosures

 

Not Applicable.

 

Item 5.

Other Information

 

On March 30, 2019, Mr. David Po resigned as Chief Executive Officer and President of the Company. Mr. Po will remain as the Secretary and Chairman of the Board of Director of the Company.

 

On March 30, 2019, Dr. Jonathan Ka Kit Tam resigned as Chief Financial Officer, Assistant Secretary and Director of the Company and Mr. Kwok Kwong Fu resigned as Chief Operating Officer and Director of the Company.

 

On March 30, 2019, the Company’s Board of Directors appointed Mr. Yong Seng as a Director of the Company and the Company’s Board of Directors appointed Mr. Chiea Kah Szen as President and Chief Executive Officer of the Company.

 

On May 1, 2019, the Company’s Board of Directors appointed Mr. Chean Chee Foong as Chief Operating Officer of the Company.

 

Item 6.

Exhibits

 

Exhibit Number		Description
(31)		Rule 13a-14 (d)/15d-14d) Certifications
31.1*		Section 302 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(32)		Section 1350 Certifications
32.1*		Section 906 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
101 *		Interactive Data File
101.INS** 101.SCH** 101.CAL** 101.DEF** 101.LAB** 101.PRE**		XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document

 

*        Filed herewith.

** XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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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.

 

		IMAGE CHAIN GROUP LIMITED, INC.
		(Registrant)
Dated: May 15, 2019		/s/ Chiea Kah Szen
		Chiea Kah Szen
		President and Chief Executive Officer
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

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