As
filed with the Securities and Exchange Commission on July 14, 2016
Registration
Statement No. 333-211360
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment
No. 1
to
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
GLOBALINK,
LTD.
(Exact
name of registrant as specified in its charter)
Nevada
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7389
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06-1812762
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
No.)
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365
Boundary Road
Vancouver,
BC V5K 4S1
(604)
828-8822
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Ms.
Andrea Yuan
365
Boundary Road
Vancouver,
BC V5K 4S1
(604)
828-8822
Email:
andrea@blackdragonfinancial.com
(Name,
address and telephone number of agent for service)
Copies
to: Ruffa & Ruffa, P.C.
110
East 59
th
Street
New
York, NY 10022
Phone:
(212) 355-0606
Email:
bruffa@lawruffa.com
Approximate
date of proposed sale to public: As soon as practicable after this registration statement becomes effective.
If
any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box: ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering: ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier registration statement for the same offering: ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier registration statement for the same offering: [ ]
Indicate
by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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(Do not check if a smaller reporting company)
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Smaller reporting company
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☒
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CALCULATION
OF REGISTRATION FEE
Title
of Each
Class of Securities to be Registered
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Amount
to be
Registered
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Proposed
Maximum
Offering Price
per Share (2)
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Proposed
Maximum
Aggregate
Offering Price (1)
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Amount
of
Registration Fee (3)
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Common
Stock, par value $0.0002
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20,000,000
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$
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0.25
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$
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5,000,000
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$
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503.50
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(1)
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Estimated
solely for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933, as amended.
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(2)
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Pursuant
to Rule 416 under the Securities Act, the number of shares of common stock registered hereby shall also include an indeterminate
number of additional shares of common stock issuable as a result of stock splits, stock dividends, recapitalizations, reorganizations
or similar transactions.
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(3)
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Previously
paid.
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The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Commission, acting pursuant to Section 8(a) may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
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SUBJECT
TO COMPLETION, DATED
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July
14, 2016
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GLOBALINK,
LTD.
20,000,000
Shares of Common Stock
$0.25
per Share
Globalink,
Ltd. (the “Company,” “we,” “our” and “us”) is offering directly 20,000,000 shares
of our common stock (the “Shares”), at a fixed price of $0.25 per share for a total amount of $5,000,000 on a best
efforts basis.
Although
the gross proceeds of this offering may be up to $5,000,000, this offering is being conducted on a “no minimum” basis,
meaning that no aggregate minimum offering amount is required to be raised by us in this offering. As such, the actual public
offering amount and proceeds to us, if any, are not presently determinable and net proceeds may be substantially less than the
total maximum offering set forth above.
This
offering will terminate 270 days after the effective date of this registration statement unless the offering is fully subscribed
before that date or we decide to terminate the offering prior to that date. We may conduct multiple closings of the offering until
the offering is fully subscribed or terminated. In either event, the offering may be closed without further notice to you. All
costs associated with the registration will be borne by us. All net proceeds will be available to us for use as set forth in “Use
of Proceeds” herein. Offering proceeds will not be held in escrow and may be utilized by us immediately on a subscription-by-subscription
basis upon satisfaction of the closing conditions set forth in the subscription agreement to be entered into between us and the
investors in this offering.
This
prospectus will permit our officers and directors to offer and sell our securities directly to the public, with no commission
or other remuneration payable to them for any Shares sold. In offering the securities on our behalf, our officers and directors
will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934,
as amended (which we refer to herein as the Exchange Act). Notwithstanding the foregoing, we reserve the right to engage FINRA
member broker-dealers as finders in connection with this offering.
Our
common stock is currently traded on the OTCQB Marketplace under the symbol “GOBK.” On June 29 , 2016, the last
reported sales price for our common stock was $ 0.0373 per share. Quotes on an over-the-counter marketplace may not be indicative
of the market price on a national securities exchange.
We
are an “emerging growth company” as defined in the SEC rules and we will be subject to reduced public reporting requirements.
See “Emerging Growth Company and Smaller Reporting Company Status.”
INVESTING
IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A
DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
You
should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different
information from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date
of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. This prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the
offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with
this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus.
The
date of this prospectus is _____________, 2016.
TABLE
OF CONTENTS
PROSPECTUS
SUMMARY
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1
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RISK
FACTORS
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6
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
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29
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OUR
HISTORY AND CORPORATE STRUCTURE
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31
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ENFORCEABILITY
OF CIVIL LIABILITIES
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32
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USE
OF PROCEEDS
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33
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DILUTION
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34
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MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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36
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MANAGEMENT’S
DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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38
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DESCRIPTION
OF OUR BUSINESS
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51
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LEGAL
PROCEEDINGS
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74
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EXECUTIVE
COMPENSATION AND CORPORATE GOVERNANCE
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76
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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83
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PLAN
OF DISTRIBUTION
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83
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DESCRIPTION
OF SECURITIES
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85
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DIVIDEND
POLICY
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86
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CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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86
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LEGAL
MATTERS
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86
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EXPERTS
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86
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DISCLOSURE
OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
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86
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WHERE
YOU CAN FIND MORE INFORMATION
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87
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CONVENTIONS
THAT APPLY TO THIS PROSPECTUS
Except
where the context otherwise indicates and for the purpose of this prospectus only:
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“China”
or “PRC” refers to the People’s Republic of China;
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“RMB”
or “Renminbi” refers to the legal currency of China. “$,” “U.S. dollars,” or “dollars”
refers to the legal currency of the United States; “CAD$” or “Canadian dollars” refers to the legal
currency of Canada;
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“we,”
“us,” “our Company,” and “our” refer to Globalink Ltd., a Nevada corporation, and its
subsidiaries.
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Renminbi
amounts shown in this prospectus are accompanied by translations into U.S. dollars solely for the convenience of the reader. In
addition, certain PRC economic and market data shown in U.S. dollars in this prospectus have been translated from Renminbi amounts.
Unless otherwise noted, all such translations from Renminbi to U.S. dollars in this prospectus were made at RMB6.48 to US$1.00,
the noon buying rate for December 31, 2015 set forth in the H.10 statistical release of the Federal Reserve Board. We make no
representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into
U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. The PRC government restricts the conversion of
Renminbi into foreign currency and foreign currency into Renminbi for certain types of transactions. On July 8 , 2016, the
noon buying rate set forth in the H.10 statistical release of the Federal Reserve Board was RMB 6. 6878 to US$1.00. On July
8 , 2016, the noon buying rate set forth in the H.10 statistical release of the Federal Reserve Board was CAD1. 3072
to US$1.00.
PROSPECTUS
SUMMARY
This
summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of
the information that you should consider before investing in our common stock. You should read the entire prospectus carefully
and you should carefully consider, among other things, our financial statements and the related notes and the sections entitled
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.
Our
Company
We
operate in the hotel booking industry through our wholly owned subsidiary OneWorld Hotel Destination Service Inc. (“OneWorld”)
and in the agricultural industry through our wholly owned subsidiaries Globalink (Xuzhou) Bio-Technology Co., Ltd. (“Globalink
Xuzhou”) and Globalink (Zhejiang) Bio-Technology Co. Ltd. (“Globalink Zhejiang” and, together with Globalink
Xuzhou, our “PRC Subsidiaries”), which are incorporated in the PRC. Globalink Xuzhou was organized as a Sino-foreign
equity joint venture company with an unrelated party; however our joint venture partner has not invested any funds in that company;
consequently, we own all of its registered capital as of the date of this prospectus and exercise control over the company.
Hotel
Booking Business
We
operate a hotel booking service for travel agents located in Canada. We enter into agreements with hotel chains and individual
hotels in Canada and the United States that agree to make rooms available to us at discounted prices. We currently have relationships
with five hotel chains and over two hundred individual hotels. We also enter into agreements with travel agents throughout Canada
who view room selection on our web site and contact us directly to book rooms. Travel agents typically book blocks of rooms for
leisure and business travelers. Currently, all room booking is completed manually and no credit card or other personal data is
transmitted electronically or retained by us. We generate revenue for our services based on the difference between the total amount
the travel agent pays for the room and the negotiated net rate plus estimated taxes that the hotel charges for the room. We recognize
revenue when customers check into their rooms.
We
believe that we have the opportunity to expand our booking business by (i) offering our products directly to consumers, and (ii)
targeting travelers from China to North America.
Official China tourism statistics indicate
that the number of outbound tourists was 107 million in 2014, an increase of almost 20% over the previous year. International
travel from China has grown as a result of increased disposable income, relaxed restrictions within China with respect to travel
and a concurrent
easing of visa arrangements for visitors from China by many countries, including the U.S. and Canada,
where our hotels rooms are located. In order to take advantage of these trends, we would need to both rebuild our booking platform
making it more robust and accessible to businesses and consumers and commence marketing initiatives directly to Chinese travel
agencies and consumers. We are in the process of evaluating the costs and other resources required to take advantage of this potentially
significant opportunity.
Gingko
Biloba Plantation
We
intend to allocate all of the proceeds from this offering, if any, to the development of a ginkgo biloba, or ginkgo, tree farm
that we launched in 2015 in Pizhou City, People’s Republic of China with our joint venture partner Shizhen Biotech Co.,
Ltd. (“Shizhen Biotech”) pursuant to the terms of a joint venture agreement we signed in April 2014 (the “JV
Agreement”). Our strategy is to develop a vertically integrated ginkgo tree plantation, which we refer to as our Plantation,
at which we will cultivate ginkgo trees and harvest and process ginkgo leaves. We will dry and sell gingko leaves to manufacturers
of ginkgo biloba extract, or GBE, for use in herbal remedies and other healthcare supplements and products. We also will sell
gingko trees which are prized in China and used extensively throughout the world for ornamental purposes. Assuming we sell all
of the Shares, over the next five years we expect to develop a gingko plantation that comprises approximately 1,553 acres, that
will be capable of producing up to 5,600 tons of dried gingko leaves per year. At this size, we believe that our farm will be
among the largest independent producers of dried ginkgo leaves in China.
Under the JV Agreement with Shizhen
Biotech, the parties agreed to organize and operate Globalink Xuzhou as a PRC Sino-foreign joint venture company to engage in
(i) the cultivation and sale of ginkgo leaves, (ii) research and development with respect to the cultivation of ginkgo, and (iii)
the development of products manufactured from ginkgo. Globalink Xuzhou was organized with total registered capital of RMB 60 million
(approximately $10 million), of which, pursuant to the JV Agreement, we have the right to own 80% upon a total investment of $8
million and Shizhen Biotech has the right to own 20% upon a total investment of $2 million. As of the date of this prospectus,
we have invested $800,000 in Globalink Xuzhou and Shizhen Biotech has not invested any funds into Globalink Xuzhou, accordingly,
we own all of the outstanding capital of Globalink Xuzhou as of the date of this prospectus.
Ginkgo
is a fundamental ingredient in traditional Chinese medicine, or TCM, and is administered both as a tea and by way of tablets comprised
of the active chemical constituents that have been extracted from dried leaves and concentrated. TCM posits that Ginkgo is imbued
with healing qualities and is prescribed by TCM healers to address a wide range of ailments. Over the last several decades, tablets
or pills manufactured from the extract of ginkgo leaves have proliferated across Europe and North America where ginkgo is becoming
widely accepted as an herbal remedy for a variety of health conditions, principally memory loss and dementia.
During
the fall of 2015, we entered into leases with local residents comprising 100 acres of prime ginkgo farmland and immediately began
preparing the land for planting, as well as acquiring equipment and hiring and training laborers. We completed planting ginkgo
seeds during March 2016. We selected our land and seeds in consultation with professors at the Nanjing Forestry University with
which we work closely in all aspects of our agricultural operations. We are purchasing equipment, constructing necessary buildings
and taking all of the steps necessary for a fall 2016 harvest of leaves.
Our
Plantation will deploy the latest scientific and technical practices available to us throughout the growth and processing
cycle to maximize output of high quality dried ginkgo leaves. We will incorporate European style good agricultural practices throughout
all phases of the growth , processing and distribution process and will seek to integrate our customer’s good manufacturing
practices, or GMPs, into our processes and procedures so that buyers will have confidence that the product they purchase from
us satisfies their standards. For example, we will provide to our clients reference data that we gather from the soil in which
we grow the trees and the leaves we harvest, including information relating to the content of the active ingredients in ginkgo
and the indicators of heavy metal, pesticide residues, moisture and microbes on the leaves in that batch, among other information.
We believe that we will be among the only independent ginkgo growers in China to employ these practices in our operations.
Initially,
we will sell dried leaves to Chinese companies that manufacture GBE utilized in TCM and that primarily sell their products in
China. We expect to quickly expand sales of dried leaves to European manufacturers of GBE tablets, where we believe that there
is demand for high quality ginkgo leaves with a demonstrable lineage. In addition, when our gingko trees reach six years of age
and the chemical content of the active beneficial ingredients in the ginkgo leaves declines, we will sell trees to local consumers.
Assuming
that we have the capital necessary to develop our Plantation as described in this prospectus , we expect sales of
ginkgo products to be our principal source of revenues within the next three years.
Ginkgo
Industry
We
believe that ginkgo cultivation represents a favorable opportunity for our Company because (i) ginkgo is a key ingredient in TCM
and is widely used in the PRC, (ii) the ginkgo growing industry is fragmented among large number of small producers who continue
to utilize archaic farming techniques and a small number of agribusinesses that are subsidiaries of or otherwise connected with
ginkgo extract manufacturers and (iii) ginkgo and other TCM ingredients enjoy increasing usage among consumers worldwide and are
currently accepted under U.S. and EU regulations with only minimal government intervention.
TCM
is widely practiced among PRC residents and is considered to be an integral part of the health care system. China’s National
Bureau of Statistics estimates that the TCM market in China totaled more than RMB5 15 billion in 2012, accounting for 31.24% of
China’s total medicine industry
. We believe that ginkgo will continue to be a staple
of TCM and that there will be an active market for our output.
In
China, TCM products are regulated by the China FDA and typically are produced by pharmaceutical companies. In many instances,
these companies grow the preponderance of the raw materials, such as ginkgo, that they use in their products at company-operated
farms. Those PRC companies that do not control their own production, as well as international manufacturers of herbal supplements
and other related products, must purchase TCM raw materials from independent farmers. Our internal investigation and research
demonstrates that ginkgo continues to be grown by a diverse group of small farmers that rely on antiquated agricultural practices.
Our Plantation will incorporate modern GAP practices to maximize output and ensure the highest content of the active ingredients
in our leaves. Leaves will be packaged in parcels to which we will affix pertinent information, such as the growth records of
the specific product and the flavone and lactone content of the leaves, as a means of exhibiting our transparency and to assure
customers that our product meets their quality specifications. We believe these features will distinguish us from other independent
growers of ginkgo and attract domestic and international customers.
China’s
National Bureau of Statistics estimates that the worldwide TCM market is increasing by between 10% to 20% each year. Over the
last several decades, the usage of ginkgo-based products has proliferated across Europe and North America where ginkgo is becoming
widely accepted as an herbal remedy for a variety of health conditions, principally memory loss and dementia.
Sales
of ginkgo-based products are difficult to estimate but in 2012 worldwide sales were believed to be worth approximately $500 million.
In Europe and the United States, products incorporating ginkgo are among the five top-selling herbal supplements. In 2002, ginkgo
was the number one selling herbal supplement in the United States. We believe that the market for TCM products will continue to
grow as Western consumers, particularly an aging population, look for products that they believe to be safe and inexpensive alternatives
to modern pharmaceutical preparations, as a treatment to mitigate the effects of cognitive decline, such as dementia, which is
one of the principal uses for ginkgo.
Risks
and Uncertainties
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties summarized below,
the risks described under “Risk Factors” beginning on page 7 of, and the other information contained in, this prospectus
before you decide whether to purchase our common stock:
With
respect to our hotel booking business:
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Our
ability to maintain and expand our relationships with hotels and travel agents;
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Global economic
conditions that impact the travel industry;
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Declines or disruptions
in the travel industry; and
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Our ability to expand
our business, implement our strategy and effectively manage our growth.
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With
respect to our Plantation:
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Our
Plantation represents a new business that is subject to all of the risks and uncertainties of start-up entities;
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If
we fail to manage our growth and our growth strategies effectively, our business, financial condition, results of operations
and prospects may suffer;
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Industry-wide market
factors and regulatory and other developments affecting our operations;
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The continued preferential
tax treatment for the sale of ginkgo leaves ;
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Our
Plantation will operate in a competitive environment and competing producers could harm our business, financial condition,
results of operations and prospects;
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Any
changes in government policies or the failure to comply with applicable regulations that result in penalties, additional compliance
costs or other adverse consequences;
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Changes
in the rate of exchange of the Chinese Renminbi, or RMB, to the U.S. dollar, which could affect currency translations of our
results of operations, which are earned in RMB but reported in dollars;
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•
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Changes
in PRC laws and regulations that adversely impact our business; and
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•
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Our
holding company structure may restrict our ability to receive dividends or other payments from our PRC subsidiaries, which
could restrict our ability to act in response to changing market conditions and to satisfy our liquidity requirements.
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History
We
were incorporated in the State of Nevada in February 2006. In February 2007, our registration statement on Form SB-2 was declared
effective by the U.S. Securities and Exchange Commission in which we registered 10 million shares of common stock for sale by
the Company and 1,250,000 shares on behalf of selling shareholders, each share was offered at a price of $0.50. We terminated
this offering prior to selling any shares as a result of the ongoing global recession.
On
October 31, 2008, we entered into a Share Exchange Agreement under which we acquired all of the outstanding shares of capital
stock of OneWorld Hotel Destination Service, Inc. in consideration of the issuance of 2,000,000 shares of common stock and the
payment of $150,000. OneWorld continues to be the subsidiary through which we operate our hotel booking business.
Since
our inception, we have been funding our operations from a combination of shareholder advances as needed and, commencing in 2008,
revenues from operations generated by our hotel booking business.
In
August and October, 2015, we organized two wholly owned PRC subsidiaries, Globalink Xuzhou Bio-technology Co., Ltd. (“Globalink
Xuzhou”) and Globalink Zhejiang Bio-technology Co., Ltd. (“Globalink Zhejiang”) to engage in the development
of a ginkgo plantation and the research and development of cultivation, extraction, and application of gingko trees and other
economic plants, respectively.
During
2014 and 2015, we raised $1,170,000 from our PRC directors to fund the development of our ginkgo plantation, including preparing
a detailed plan of development and operation over the next five years.
To
date, we have expended approximately $800,000 toward the development of our Plantation. During the fall of 2015, we took the first
steps toward developing our Plantation.
We
maintain our corporate offices at 385 Boundary Road, Vancouver, BC, V5K 4S1, where our telephone number is (604) 828-8822. We
maintain a corporate website at http://globalinkworld.com/.
The information contained on
our website does not constitute a part of this prospectus.
Emerging
Growth Company and Smaller Reporting Company Status
Emerging
Growth Company
We
are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. We intend to take advantage of all of these exemptions.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards,
and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have
elected to take advantage of the benefits of this extended transition period.
We
could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common
equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion,
if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated
filer” as defined in Rule 12b-2 under the Exchange Act.
Smaller
Reporting Company
We
also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company
with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as
we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of
which are similar to those of an emerging growth company, including having to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements.
Summary
of the Offering
Common
stock outstanding before the Offering:
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45,585,000
shares
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Common
stock offered by the Company:
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20,000,000
Shares
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Common
stock to be outstanding after the Offering:
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65,585,000
shares
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OTCQB Marketplace
Symbol:
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Our common stock currently
trades on the OTCQB Marketplace under the symbol “GOBK.”
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Offering price per
Share:
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We
will sell the Shares at a price of $0.25 per share upon effectiveness of the registration statement of which this prospectus
is a part on a direct primary “self-underwritten” basis. There is no minimum number of Shares required to be purchased,
and subscriptions, once received and accepted, are irrevocable. Our transfer agent, Island Stock Transfer, will issue common
stock subscribed for in this offering promptly after we accept subscriptions from investors. Shares purchased by investors
in this offering will remain outstanding upon its termination regardless of the number of Shares subscribed for.
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No Minimum Offering:
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There
is no minimum amount required for us to close the offering and we may raise substantially less than the $5,000,000 in Shares
offered hereby. Because there is no minimum offering amount required as a condition to closing in the offering, the actual
public offering amount and proceeds to us, if any, are not presently determinable and may be substantially less than all of
the Shares offered hereby.
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Duration of Offering
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The
offering will close on [________], 20[__], 270 days after the effectiveness of the registration statement of which this prospectus
is a part, unless all the securities are sold before that date or we otherwise decide to close the offering early or cancel
it, in each case in our sole discretion.
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Use of proceeds
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We
intend to use the proceeds of this offering to (i) continue developing and expanding our Plantation in China, (ii) marketing,
(iii) for general working capital. See “Use of Proceeds.”
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Risk factors
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Investment
in the Shares involves substantial risk.
You should read the “Risk Factors” section of this prospectus for
a discussion of factors that you should consider carefully before deciding to invest in the Shares.
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Termination of the
Offering
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The
offering will conclude upon the earlier of (i) the date on which all of the Shares have been sold, (ii) 270 days after the
date on which the registration statement of which this prospectus forms a part is declared effective by the SEC or (iii) at
such time as management deems appropriate, which will not be more than 270 days after date on which the registration statement
of which this prospectus is a part is declared effective by the SEC
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RISK
FACTORS
Investing
in the Shares involves a high degree of risk. You should carefully consider the risks described below, as well as other information
provided to you in this prospectus, including information in the section of this prospectus entitled “Forward Looking Statements.”
The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently
known to the Company or that the Company currently believes are immaterial may also impair the Company’s business operations.
If any of the following risks actually occur, the Company’s business, financial condition or results of operations could
be materially adversely affected, the value of the Shares could decline, and you may lose all or part of your investment.
Risks
Related to Our Operating History and Financial Condition
Though
we have been generating revenues from our hotel booking business over the last several years, we currently are developing a ginkgo
plantation in China from which expect to generate the preponderance of our revenues over the next few years. Our plantation operations
represent a new business for us subject to all of the risks encountered by early stage companies.
Between
2012 and 2015, we have generated all of our revenues from our hotel booking business. In 2014, we accepted investments from Chinese
nationals and commenced the planning of a ginkgo plantation in China. Over the last year, we developed and began implementing
our Plantation business plan. We expect that over the next few years, a majority of our expenses will be incurred in connection
with and a preponderance of our revenue will be generated from our ginkgo plantation. Our ginkgo plantation will be subject to
all of the risks and uncertainties frequently encountered by early stage companies in competitive and evolving markets, including:
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risks
that we may not have sufficient capital to complete the development of our ginkgo plantation;
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risks
of doing business in the PRC, including political; regulatory, financial, currency and tax risks;
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natural
and commercial risks associated with the agriculture and forestry industries, including natural disasters, climate change
and the impact of market forces;
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risks
related to the herbal supplement industry;
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risks
that our growth strategy might not be successful;
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the
effects of competition on our business; and
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global
and PRC economic cycles and their impact on credit and equity markets
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These
risks are described in more detail below. Our future growth will depend substantially on our ability to address these and the
other risks described in this section. If we do not successfully address these risks, our business would be significantly harmed.
We
require substantial additional capital to fund the development of our ginkgo plantation and if we are unable to obtain required
additional financing when needed, we may grow our business more slowly than we have planned.
We
will need to obtain additional debt or equity financing to fund future capital expenditures associated with the development and
expansion of our Plantation . Any additional equity financing may result in dilution to the holders of our outstanding shares
of capital stock. Additional debt financing may put us in situations that would restrict our freedom to operate our business,
such as situations that:
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limit
our ability to pay dividends or require us to seek consent for the payment of dividends;
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increase
our vulnerability to general adverse economic and industry conditions;
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require
us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our
cash flow to fund capital expenditures, working capital and other general corporate purposes; and
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limit
our flexibility in planning for, or reacting to, changes in our business and our industry.
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If
we are unable to obtain additional financing to further develop and expand our operations, we may be required to grow our business
more slowly than we have planned.
We
cannot guaranty that we will be able to obtain additional financing on terms that are acceptable to us, or that we will obtain
any financing at all.
If
we are unable to successfully develop and execute our strategic growth initiatives, or if we do not adequately address the challenges
or opportunities we face, our business, financial condition and prospects may be adversely affected.
Our
success is dependent in part on our ability to execute our strategic development plan to develop a ginkgo plantation that will
enable us to achieve sustainable growth. The implementation of our strategic initiatives is subject to both the risks affecting
our business generally and the inherent risks associated with implementing new strategies. These strategic initiatives may not
be successful in generating revenues or improving operating profit and, if they are, it may take longer than anticipated. As a
result, and depending on evolving conditions and opportunities, we may need to adjust our strategic initiatives and such changes
could be substantial, including modifying or terminating one or more of such initiatives. Termination of such initiatives may
require us to write down or write off the value of our investments in them. Transition and changes in our strategic initiatives
may also create uncertainty in our employees, customers and partners that could adversely affect our business and revenues. In
addition, we may incur higher than expected or unanticipated costs in implementing our strategic initiatives, attempting to attract
revenue opportunities or changing our strategies. There is no assurance that the implementation of any strategic growth initiative
will be successful, and we may not realize anticipated benefits at levels we project or at all, which would adversely affect our
business, financial condition and prospects.
Our
growth could strain our personnel and infrastructure resources, and if we are unable to implement appropriate controls and procedures
to manage our growth, we may not be able to successfully implement our business plan.
We
expect our operations to grow rapidly in the near future as we expand our ginkgo plantation. Our success will depend in part upon
management’s ability to manage growth. To do so, we must continue to hire, train and manage new employees as needed. If
our new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or
if we are not successful in retaining our existing employees, our business may be harmed. To manage the expected growth of our
operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting
systems and procedures. The additional headcount and capital investments we are adding will increase our cost base, which will
make it more difficult for us to offset any future revenue shortfalls by offsetting expense reductions in the short term. If we
fail to successfully manage our growth, we will be unable to execute our business plan.
Our
management will also be required to maintain and expand our relationships with customers, suppliers and third parties as well
as attract new customers and suppliers. We expect that our sales and marketing costs will increase as we grow our product lines
and as we increase our sales efforts in new and existing markets. Our current and planned operations, personnel, systems and internal
procedures and controls may not be adequate to support our future growth.
Our
minimal annual revenues and ongoing expenses raise substantial doubt about our ability to continue as a going concern.
The
report of our independent auditor and Note 2 to the financial statements filed with this registration statement indicate that
as of December 31, 2015, the Company has an accumulated deficit of $567,356 since inception and its minimal annual revenues and
ongoing expenses raise substantial doubt about the Company’s ability to continue as a going concern. For these reasons,
our financial statements have been prepared assuming the Company will continue as a going concern, which assumes we will develop
profitable operations and raise adequate financing. If we are unable to achieve these ends, we cannot assure you that we will
be able to generate revenue to support our operations and continue operations.
Risks
Related to our Hotel Booking Business and Industry
Our
booking business depends on our relationships with hotels and travel agents. Adverse changes in these relationships or our inability
to enter into new relationships could negatively affect our access to travel offerings and reduce our revenue.
We
rely significantly on our relationships with hotels and travel agents. We enter into agreements with these hotels and travel agents
at varying times and of varying duration. As a result, at any given point in time, one or more of these agreements may be approaching
expiration or renewal. Moreover, in order to enhance the competitiveness of our offerings, we are constantly seeking to add new
hotels and travel agents. Adverse changes in any of these relationships (whether upon expiration of an agreement or otherwise)
or the inability to enter into new relationships could negatively impact the availability and competitiveness of the rooms we
offer on our website and therefore could adversely affect our revenue. If any of our major hotels or travel agents significantly
reduces their business with us for a sustained period of time or completely withdraws from doing business with us, in favor of
one of our competitors or to require consumers to purchase services directly from them, it could have a material adverse effect
on our business and ability to retain customers.
The
hotels with which we partner continue to look for ways to decrease their overall distribution costs, which could significantly
reduce the net revenue we earn from booking their rooms. As a result, the revenue we earn in the form of mark-ups from our hotel
partners may be negatively impacted over the long term as contracts with the hotels with which we partner are extended or renegotiated
or as we add new suppliers.
Declines
or disruptions in the travel industry could adversely affect our business and financial performance.
Our
business and financial performance are affected by the health of the Canadian as well as the worldwide travel industry, including
changes in the supply and pricing of hotel rooms. Events specific to the travel industry that could negatively affect our business
include continued fare increases, travel-related strikes or labor unrest, fuel price volatility and bankruptcies or liquidations
of our suppliers.
Additionally,
our business is sensitive to safety concerns, and our business may decline after incidents of actual or threatened terrorism,
during periods of political instability or conflict or during other periods in which travelers become concerned about safety issues,
including as a result of natural disasters or when travel might involve health-related risks. Such concerns are outside our control
and could result in a significant decrease in demand for our booking services. Any such decrease in demand, depending on its scope
and duration, together with any other issues affecting travel safety, could significantly and adversely affect our business and
financial performance over the short and long term. If there is a prolonged substantial decrease in travel volumes, particularly
air travel and hotel stays, for these or any other reasons, our business, financial condition and results of operations would
be adversely affected.
Our
business and results of operations could be adversely affected by global economic conditions.
Consumer
purchases of discretionary items generally decline during recessionary periods and other periods in which disposable income is
adversely affected. As a substantial portion of travel expenditure, for both business and leisure, is discretionary, the travel
industry tends to experience weak or reduced demand during economic downturns.
Unfavorable
changes in the above factors or in other business and economic conditions affecting our customers could result in fewer reservations
made through our websites and/or lower our net revenue margins, and have a material adverse effect on our financial condition
and results of operations.
As
an intermediary in the travel industry, a significant portion of our revenue is affected by fares and tariffs charged by our suppliers
as well as volumes of sales made by us. During periods of poor economic conditions, hotels tend to reduce rates or offer discounted
sales to stimulate demand, thereby reducing our commission-based income. A slowdown in economic conditions may also result in
a decrease in transaction volumes and adversely affect our revenue. It is difficult to predict the effects of the uncertainty
in global economic conditions. If economic conditions worsen globally or in India, our growth plans, business, financial condition
and results of operations could be adversely impacted.
Our
business experiences seasonal fluctuations and quarter-to-quarter comparisons of our results may not be meaningful.
Our
business experiences seasonal fluctuations. We tend to experience higher revenue from our hotel booking business in the third
calendar quarters of each year, which coincide with the summer holiday travel season. As a result, quarter-to-quarter comparisons
of our results may not be meaningful.
The
travel industry is highly competitive, and we may not be able to effectively compete in the future.
We
operate in the highly competitive travel industry. Our success depends upon our ability to compete effectively against numerous
established and emerging competitors, including other online travel companies, or OTCs, traditional offline travel companies,
suppliers, travel research companies, search engines and meta-search companies, which may have significantly greater financial,
marketing, personnel and other resources than we have. Factors affecting our competitive success include price, availability of
hotel rooms, brand recognition, customer service and customer care, fees charged to customers, ease of use, accessibility, reliability
and innovation. If we are not able to compete effectively against our competitors, our business and results of operations may
be adversely affected.
There
can be no assurance that we will be able to compete successfully against any current and future competitors or on emerging platforms,
or provide differentiated products and services to our customer base. Increasing competition from current and emerging competitors,
the introduction of new technologies and the continued expansion of existing technologies, such as meta-search and other search
engine technologies, may force us to make changes to our business models, which could affect our financial performance and liquidity.
Increased competition has resulted in and may continue to result in reduced margins, as well as loss of customer, transactions
and brand recognition.
Our
business and financial performance could be negatively impacted by adverse tax events.
New
sales, use, occupancy or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Such enactments
could adversely affect our domestic and international business operations and our business and financial performance. Further,
existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to
us. These events could require us to pay additional tax amounts on a prospective or retroactive basis, as well as require us to
pay fees, penalties and/or interest for past amounts deemed to be due. In addition, our revenue may decline because we may have
to charge more for our services.
New,
changed, modified or newly interpreted or applied tax laws could also increase our compliance, operating and other costs, as well
as the costs of our products or services. Further, these events could decrease the capital we have available to operate our business.
Any or all of these events could adversely impact our business and financial performance.
Our
businesses are regulated and any failure to comply with applicable regulations or any changes in those regulations could adversely
affect us.
We
operate in a regulated industry both in Canada and internationally. Our business, financial condition and results of operations
could be adversely affected by unfavorable changes in or the enactment of new laws, rules and regulations applicable to us, which
could decrease demand for our products and services, increase costs or subject us to additional liabilities. Moreover, regulatory
authorities have relatively broad discretion to grant, renew and revoke licenses, including our travel agency license, and to
implement regulations. Accordingly, these regulatory authorities could prevent or temporarily suspend us from carrying on some
or all of our activities or otherwise penalize us if our practices were found not to comply with the then current regulatory or
licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any
of these requirements or interpretations could have a material adverse effect on our operations. In addition, the various regulatory
regimes to which we are subject may conflict so that compliance with the regulatory requirements in one jurisdiction may create
regulatory issues in another.
Risks
Related to our Ginkgo Growing Operations and the Ginkgo Industry.
Because
growing cycles are highly seasonal, our revenue, cash flows from our ginkgo plantation operations and operating results are likely
to fluctuate on a seasonal and quarterly basis.
Our
ginkgo plantation business will be highly seasonal. We expect that the seasonal nature of our plantation operations will result
in significant fluctuations in our working capital during the growing and selling cycles. As a result, operating activities during
the second and third quarters use significant amounts of cash. In contrast, operating activities for the fourth quarter typically
generate cash as we harvest and sell ginkgo leaves during that part of the year. We expect to experience significant variability
in net sales, operating cash flows and net income on a quarterly basis.
Our
earnings may be sensitive to fluctuations in market prices.
Market
prices for our ginkgo leaves can be impacted by factors such as the quality of the leaves and the available supply, including
whether lower quality leaves are available. Growing conditions, particularly weather conditions such as windstorms, floods, droughts
and freezing conditinos, as well as diseases and pests, are primary factors influencing the quality and quantity of ginkgo leaves
and, therefore, the market price at which we can sell our ginkgo leaves to our customers. A decrease in the prices received for
our products could have a material adverse effect on our business, results of operations and financial condition.
Our
financial and operating performance may be negatively affected by adverse weather conditions, diseases, insect infestation, epidemics,
natural and man-made disasters and other catastrophes.
Our
business may be adversely affected by factors beyond our control, such as
water shortages,
floods, typhoons,
fires,
earthquakes, power shortages, medical epidemics, acts of
terrorism, acts of war and other natural or man-made disasters or events that result in business interruptions, for which we are
self-insured.
Though ginkgos are known as hearty trees, disease, insect infestation, severe weather conditions and other
adverse environmental conditions and natural disasters may adversely affect our output or the quality of leaves, reduce our sales
volumes, increase our production costs and the price that we may obtain for our ginkgo leaves, or prevent or impair our ability
to ship products as planned. Because a portion of our costs are fixed and contracted in advance of each operating year (land leases),
volume declines due to production interruptions or other factors could result in increases in production costs, which, if not
offset by higher prices for our ginkgo leaves, which we cannot assure that we could obtain, could result in substantial losses
and weaken our financial condition. Severe weather conditions may occur with higher frequency or may be less predictable in the
future due to the effects of climate change. An occurrence of such an event might result in material disruptions to our operations
or to the operations of our suppliers resulting in a decline in the agriculture industry and
seriously
harm our operations and financial condition and increase our costs and expenses.
There can be no assurance that our plantation
or our ability to cultivate and sell ginkgo leaves will not be affected by any such occurrence in the future, which occurrence
may lead to adverse conditions to our operations and financial results. Our operations at a single location in Jiangsu Province
further concentrate this risk.
A significant reduction in the quantity or quality
of ginkgo leaves harvested resulting from adverse weather conditions, diseases to the trees or other factors could result in increased
processing costs and decreased production, with adverse financial consequences to us.
Epidemics,
such as avian influenza, severe acute respiratory syndrome and swine flu, which have occurred in China over the last few decades,
or other adverse public health developments in the PRC could materially and adversely affect our operations. These health epidemics
could result in severe travel restrictions and closures that would restrict our ability to ship our products or receive materials
from suppliers. Potential outbreaks could also lead to temporary closure of our production facilities and those of our suppliers
and customers, leading to reduced production, delayed or cancelled orders, and decrease in demand for our products, any of which
could have a material adverse effect on our business and results of operations. In addition, China has experienced earthquakes
and typhoons over the last several decades, which could have a negative impact on our business.
Losses
caused by adverse weather conditions, natural disasters, epidemics and other catastrophes could adversely affect our financial
and operating performance.
Concerns
regarding the herbal supplements industry generally or ginkgo specifically could adversely affect our reputation and reduce demand
for our products.
Our
success depends on our ability to maintain the safety, purity and quality of our products. Events that adversely affect consumers’
confidence in the safety, purity or quality of herbal supplements generally or ginkgo-based products specifically could negatively
impact our business, even if our practices and procedures are not implicated. As a result we may elect or be required to incur
additional costs aimed at increasing consumer confidence in the safety, purity and quality of our products. Product safety, purity
or quality issues, real or imagined, or allegations of product contamination, even if false or unfounded, could tarnish our image
and may cause consumers to choose other products or turn away from ginkgo-based products all together.
Over
the last several decades, the herbal supplement industry has been impacted negatively by a number of events that called into question
the purity of these products generally, including instances where herbal supplements have been adulterated with other ingredients
or where they have been contaminated with inorganic or foreign substances. As demand for herbal supplements rose in the early
part of this century and prices for the botanicals from which herbal supplements are produced increased, some manufacturers of
herbal supplements substituted less expensive ingredients in place of the herbal ingredient identified on the label. Products
marketed and labeled to contain one supplement may have contained only a limited amount of the herbal ingredient or none at all.
For example, products that were labeled to contain ginkgo extract have been adulterated with other ingredients in part or entirely,
such as powdered rice, beans, wheat, citrus and other materials. Some of these products were sold to Western companies, such as
General Nutrition Corporation, or GNC, and Bayer AG, and marketed as containing the formulation of ginkgo extract standardized
in the industry. Other herbal products, such as ginseng, saw palmetto and St. John’s wort, have experienced similar ingredient
substitution issues. In response to these events, regulatory and other government agencies took various actions against the industry.
For example, China Food and Drug Administration, or CFDA, has taken action against major producers of ginkgo extract requiring
that they recall approximately 220 million tablets made from adulterated ginkgo extract that were sold throughout the PRC. In
2014, New York Attorney General Eric Schneiderman completed an investigation which concluded that up to 80% of the herbal products
his office obtained from GNC, Target, Walgreens and Walmart did not contain any of the herbs listed on their labels.
In
February 2015, Mr. Schneiderman ordered these retailers to discontinue selling certain store-brand herbal supplements. Mr. Schneiderman
was joined by the attorneys general of thirteen other states in his actions against these retailers. In addition, l
itigation
has been commenced in a number of courts across the United States against a wide array of national retailers and brands with respect
to a variety of herbal remedies alleging that the products were mislabeled in that they did not contain the identified ingredients.
Since
the 1990’s, reports have circulated which demonstrate that botanicals grown in China and the herbal supplements made from
them contain unsafe levels of heavy metals such as
arsenic, cadmium, chromium, lead and
mercury.
In addition, a high percentage of botanicals grown in China that are used in herbal supplements were found to
contain high levels of pesticide residues. Though a 2010 report prepared by the United States Government Accountability Office
indicated that the levels of heavy metals in the herbal supplements manufactured in China that it tested did not exceed thresholds
considered dangerous in the United States, the findings were widely available and could reflect negatively on the industry.
Adulterated
or mislabeled herbal supplements, reports regarding herbal supplements contaminated with inorganic materials such heavy metals
and pesticides and negative legal decisions against the industry generally or ginkgo specifically could cause a loss of consumer
confidence in herbal supplements or our product which could result in declining sales and prices which could have a material adverse
effect on the herbal supplement industry and on our sales and results of operations.
Findings
regarding the safety or purity of herbal supplements could result in changes in laws that may adversely affect the herbal industry
and our business.
Herbal
supplements have enjoyed favorable treatment by the governing and regulatory bodies of many countries. For example, in China,
herbal supplements and remedies are regulated as drugs by the China Food and Drug Administration, or CFDA, and are required to
be evaluated for safety and efficacy and to be produced according to good manufacturing practices standards. In Europe, under
the Traditional Herbal Medicines Product Directive (2004),
“traditional
herbal medicinal products” which meet certain criteria, including ginkgo-based products, may be manufactured and sold within
European Union, or EU, member states without authorization or registration. (However, finished herbal supplement products of any
kind may not be imported into EU member states unless such products have been registered and approved for sale.) In the United
States, herbal supplements are not regulated as drugs, which, if they were, would subject them to the rigorous safety and efficacy
standards mandated by the United States Food and Drug Administration, or FDA. Rather, herbal supplements are regulated as a category
of food known as “dietary supplements” under the Dietary Supplement Health and Education Act of 1994, or DSHEA, along
with vitamins, minerals and other nutritional products and homeopathic remedies, and are considered safe until proven otherwise.
Moreover, there are no regulations specific to the manufacturing of individual dietary supplements, though there are general safety
rules on manufacturing, packaging, labeling, and storage. Herbal and dietary supplements may be sold without regulation, provided
that they do not make health claims on their labels or in advertising.
If
one or more herbal supplements is found to pose a health risk to consumers, regulatory bodies around the world could enact more
stringent laws and regulations governing the testing, manufacture, sale or labeling of herbal supplements, including ginkgo-based
products, which could have an adverse effect on the herbal supplements industry generally and on our business and results of operations.
For example, the adoption of regulations that require that existing or future ginkgo-based supplements be subjected to rigorous
clinical testing, manufacturing and labeling standards in order to permit their public sale, could significantly reduce or eliminate
the production, sale and use of such products because, among other things:
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the
manufacturers of these products may not possess or otherwise wish to expend the financial and other resources required to
obtain the necessary regulatory approvals;
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regulatory
approvals would likely take many years to receive, if such approvals ever were granted; and
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the
biological properties and mechanisms of action of the botanicals are not well understood and may not satisfy the regulatory
requirements for approval as to efficacy.
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The
adoption of regulations that establish higher standards for the sale of herbal supplements generally or ginkgo-based products
specifically or that otherwise restrict or curtail their use could reduce or even eliminate the demand for ginkgo leaves, which
would materially and adversely affect our business, financial condition and results of operations.
If
we are unable to lease additional lands to bring under cultivation from the government or farmers, we may not be able to expand
our operations as widely or as quickly as our business model anticipates, which would adversely affect our growth and results
of operations.
Our
business model contemplates that we will expand our operations by leasing land from the local government and, eventually, from
individual farmers. If we are unable to acquire additional lands to bring into production or the price at which we can lease additional
land is materially higher than we have anticipated, we may not be able to grow our operations as quickly as we had hoped or our
costs could be increased significantly. In all events, if these conditions exist, our business and results of operations would
be adversely affected.
If
we cannot cultivate ginkgo leaves efficiently and economically and sell them at prices that are competitive with other growers,
our commercial opportunities will be reduced or eliminated.
We
are seeking to develop a gingko plantation that comprises 9,300 mu, or approximately 1,553 acres, that will be capable of producing
up to 5,600 tons of dried gingko leaves per year. However, our management has never been involved in the cultivation and sale
of ginkgo leaves on such a wide scale or utilizing the modern agricultural practices we are employing. Our farming methods may
prove to be ineffective, too expensive or we may not cultivate sufficient quantities of ginkgo leaves to be competitive with other
growers or support our operations. Other producers may develop techniques to cultivate and harvest larger quantities of ginkgo
leaves at lower prices than we can. If we cannot compete effectively and generate a sufficient return on our investment and operations,
we may be forced to curtail our operations, resulting in a loss to investors.
We
face intense competition, and our inability to compete effectively for any reason could adversely affect our business.
The
market for ginkgo leaves is highly fragmented and includes numerous individual farmers and small leaf growing companies. In addition,
many PRC based ginkgo extract manufacturers and pharmaceutical companies that incorporate ginkgo extract into their products operate
their own ginkgo plantations. We expect to compete primarily on the basis of consistency of product quality and traits, product
availability and customer service. Many of our competitors are, or are affiliated with, large diversified companies that have
substantially greater marketing and financial resources than we have. These resources give our competitors greater operating flexibility
that, in certain cases, may permit them to respond better or more quickly to changes in the industry with greater marketing support.
Increased competition could result in lower profit margins, substantial pricing pressure, reduced market share and lower operating
cash flows. Price competition, together with other forms of competition, could have a material adverse effect on our business,
financial position, results of operations and operating cash flows.
We
may fail to maintain the permits we currently hold or to obtain those we require for our future operations, which could subject
us to fines and other penalties or prevent us from conducting all of the operations we propose, which could materially and adversely
affect our business and results of operations.
We
are required to hold and will be required to obtain numerous permits and licenses to conduct and expand our business in the PRC.
The approvals, permits or licenses required by governmental agencies may change without substantial advance notice, and we could
fail to obtain or maintain the approvals, permits or licenses required to expand our business. If we do not possess a permit or
license required, we fail to obtain or to maintain such permits or licenses, or if renewals are granted with onerous conditions,
we could be subject to fines and other penalties and our production could be limited or curtailed. As a result, our business,
results of operations and financial condition could be materially and adversely affected.
Governmental
regulation may adversely impact our ability to execute our growth plan or otherwise adversely affect our business, financial condition
and results of operations.
Our
ginkgo plantation business is subject to a wide range of national, provincial and local regulations, including regulations relating
to land use, the environment, agriculture, labor and other regulations. For example, we face a potential for environmental liability
by virtue of our operation of real property. If hazardous substances (including herbicides and pesticides used by us or by any
persons who may grow for us in the future) are discovered to be emanating from any of our lands and the release of such substances
presents a threat of harm to the public health or the environment, we may be held strictly liable for the cost of remediation
of these hazardous substances. Further, our ginkgo plantation and the leaves we will sell are also subject to regulation by health,
sanitation, food and occupational safety and other agencies. We may encounter material difficulties or fail to obtain necessary
licenses, approvals or permits for our operations, which could impact the cost of doing business and our sales.
The
impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements
or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other
costs of doing business and, therefore, have an adverse effect on our results of operations. Failure to comply with the laws and
regulatory requirements of national, provincial and local authorities could result in, among other things, revocation of required
licenses, fines and civil and criminal liability. Compliance with applicable laws and regulations can be costly and can increase
our exposure to litigation or governmental investigations or proceedings, which could have a material adverse effect on our business,
financial condition and results of operation.
Climate
change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations.
There
is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures,
weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that such climate change
has a negative effect on the productivity of our ginkgo plantation, it could have an adverse impact on our business and results
of operations. The increasing concern over climate change also may result in more national, regional and/or global legal and regulatory
requirements to reduce or mitigate the effects of greenhouse gases. In the event that such regulation is enacted, we may experience
significant increases in our costs of operations. As a result, climate change could negatively affect our business and operations.
We
may experience major accidents in the course of our operations, which may cause significant property damage and personal injury.
We
may experience major accidents in the course of our operations, which may cause significant property damage and personal injuries.
Significant industry-related accidents and natural disasters may cause interruptions to various parts of our operations, or could
result in property or environmental damage, an increase in operating expenses or a loss of revenue. We do not currently maintain
insurance policies to cover the occurrence of such accidents. Losses or payments incurred may have a material adverse effect on
our operating performance because such losses are not insured.
Risks
Related to Doing Business in the PRC
Adverse
changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall
economic growth of China, which could materially and adversely affect the growth of our business and our competitive position.
Whether
or not we receive any proceeds from the offering being made by this prospectus, we expect that by the end of 2016, a majority
of our operations will be conducted in and revenues will be generated from sales of ginkgo leaves by our PRC subsidiaries. Accordingly,
our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal
developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:
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the
degree of government involvement;
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the
level of development;
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the
growth rate;
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the
control of foreign exchange;
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the
allocation of resources;
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an
evolving regulatory system; and
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a
lack of sufficient transparency in the regulatory process.
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While
the Chinese economy has experienced significant growth over the past 30 years, growth has been uneven, both geographically and
among various sectors of the economy. The Chinese economy has also experienced certain adverse effects due to the recent global
financial crisis. The Chinese government has implemented various measures to encourage economic growth and guide the allocation
of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example,
our financial condition and results of operations may be adversely affected by government control over capital investments that
are applicable to us.
The
Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the
Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of
state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial
portion of the productive assets in China is still owned by the Chinese government. The continued control of these assets and
other aspects of the national economy by the Chinese government could materially and adversely affect our business. The Chinese
government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment
of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries
or companies.
Any
adverse change in the economic conditions or government policies in China could have a material adverse effect on overall economic
growth, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on
our businesses.
National,
provincial and local governments have established many regulations governing our business operations.
Our
operations in China will be subject to numerous national, provincial and local governmental regulations, including corporate,
banking, financial, environmental, labor, waste management, health and safety matters and product specifications, many of which
are changing rapidly. These laws and regulations may require substantial resources for compliance. These regulations can limit
our ability to react to market pressures in a timely or effective way, thus causing us to lose business or miss opportunities
to expand our business. Our failure to abide by these laws and regulations could result in a temporary or permanent restriction
by the PRC of our operations. Further, if we do not effectively and efficiently manage and respond to rapidly changing laws and
policies, our business could be materially and adversely impacted.
If
the PRC government were to change its presently favorable policy toward TCM and the agriculture industry, we would no longer enjoy
our present tax exempt status, which would materially and adversely impact our sales performance, margins and net profit, and
our cost structure.
In
an effort to support rural development and encourage agribusiness, including forestry and growing Chinese medicinal herbs, the
PRC Ministry of Commerce has adopted regulations entitling agricultural producers to certain tax and other benefits. In view of
our involvement in these activities, our PRC Subsidiary that manages our plantation is presently exempt from income tax on revenues
it may generate from the sale of ginkgo leaves or trees. If the PRC government were to change its presently favorable policy toward
the agriculture industry, we may no longer enjoy our present tax-exempt status, which would materially and adversely impact our
sales performance, margins, and net profit and our costs structure.
We
lease all of the land that we cultivate. If laws change with respect to land leases that affect our right to cultivate this land
or we otherwise lose the right to lease our land, we would have no operational capabilities or ability to conduct our Plantation
business.
We
lease all of the land that currently comprises our Plantation and land we expect to add to cultivation in the future from individuals
who are granted the right to use the land by local authorities, including the local collective. Laws governing the usage of land,
including leasing are promulgated by the central government and local government. If any laws that currently permit the individuals
to lease their land are changed in ways that restrict such ability or otherwise impair our ability to use the land for our Plantation,
our business would be materially and adversely affected.
PRC
economic cycles may negatively impact our operating results.
China
experienced a long period of economic growth that peaked in 2007 when the economy began to decelerate. We believe that a number
of factors have contributed to this deceleration, including appreciation of the RMB, which has adversely affected China’s
exports, and excess production capacity. In addition, we believe the deceleration has been exacerbated by the global crisis in
the financial services and credit markets, which has resulted in significant volatility and dislocation in the global capital
markets, as well as a general economic slowdown in the countries that purchase Chinese exports. It is uncertain how long the global
crisis in the financial services and credit markets will continue and the significance of the adverse impact it may have on the
global economy in general or the PRC economy in particular. Slowing economic growth in the PRC could result in weakening growth
and demand for our products which could reduce our revenues and income. In the event of a recovery in the PRC, renewed high growth
levels may lead to inflation. The government’s attempts to control inflation may adversely affect the business climate and
growth of private enterprise. In addition, our profitability may be adversely affected if prices for our products rise at a rate
that is insufficient to compensate for the rise in inflation.
Fluctuations
in the value of the Renminbi could result in foreign currency exchange losses.
The
value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s
political and economic conditions and China’s foreign exchange policies. The conversion of Renminbi into foreign currencies,
including U.S. dollars, has been based on exchange rates set by the People’s Bank of China, or PBOC. In July 2005, the PRC
government changed its long-standing policy of pegging the value of the Renminbi solely to the U.S. dollar. Under this revised
policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies.
Following the removal of the U.S. dollar peg, the Renminbi appreciated more than 20% against the U.S. dollar over the following
three years. Since July 2008, however, the Renminbi has traded within a narrow range against the U.S. dollar. As a consequence,
the Renminbi has fluctuated significantly since July 2008 against other freely traded currencies, in tandem with the U.S. dollar.
In June 2010, the PBOC announced that the PRC government would further reform the Renminbi exchange rate regime and increase the
flexibility of the exchange rate. It is difficult to predict how this new policy may impact the Renminbi exchange rate.
We
expect that over the next few years, a substantial portion of our revenues and operating expenses will be denominated in Renminbi
and that all of the proceeds from this offering will be allocated to continue developing our ginkgo plantation in China, while
the net proceeds from this offering will be denominated in U.S. dollars. Consequently, fluctuations in exchange rates, primarily
those involving the U.S. dollar, may affect the relative purchasing power of these proceeds and our balance sheet and earnings
per share in U.S. dollars following this offering. In addition, appreciation or depreciation in the value of the Renminbi relative
to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change
in our business, financial condition or results of operations. The Renminbi may appreciate or depreciate significantly in value
against the U.S. dollar in the long term, depending on the fluctuation of the basket of currencies against which it is currently
valued, or it may be permitted to enter into a full float, which may also result in a significant appreciation or depreciation
of the Renminbi against the U.S. dollar.
Hedging
options available in China to reduce our exposure to exchange rate fluctuations are limited and we have not entered and do not
expect to enter into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we
may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited
and we may not be able to hedge our exposure adequately or at all. In addition, our currency exchange losses may be magnified
by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.
Governmental
control of currency conversion may limit our ability to utilize our revenues and financing proceeds effectively.
The
PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance
of currency out of China. Over the next few years, we expect that a substantial portion of our revenues and operating expenses
will be denominated in Renminbi. The Renminbi is currently convertible under “current account” transactions, which
includes dividend payment, trade and service-related foreign exchange transactions, but not under “capital account”
transactions, which includes capital injection and loans. Our PRC subsidiaries may also retain foreign exchange in its current
accounts, subject to a ceiling approved by the State Administration of Foreign Exchange, or the SAFE, to satisfy foreign exchange
liabilities or to pay dividends. See “Regulation — Regulations Relating to Foreign Currency Exchange.” However,
the relevant PRC regulatory authorities may limit or eliminate our ability to purchase and retain foreign currencies for current
account transactions in the future. Since a significant amount of our future revenues will be denominated in Renminbi, any existing
and future restrictions on currency exchange may limit our ability to utilize revenues generated in Renminbi to fund our business
activities outside of the PRC that are denominated in foreign currencies.
Foreign
exchange transactions under the capital account are still subject to limitations and require approvals from, or registration with,
the SAFE or its local branches and other relevant PRC regulatory authorities. In particular, if we finance our PRC subsidiaries
by foreign currency loans, those loans cannot exceed certain statutory limits and must be registered with the SAFE or its local
branches. If we finance our PRC subsidiaries by capital contributions using, for instance, proceeds from this offering, those
capital contributions must be approved by the Ministry of Commerce, or the MOFCOM, or its local branches. In addition, because
of the regulatory restrictions related to foreign currency loans to, and non-ownership arrangement in, domestic PRC enterprises,
we may not be able to finance our affiliated PRC entities and its subsidiaries’ operations by loans or capital contributions.
We cannot assure you that we can obtain these governmental registrations or approvals on a timely basis, if at all. These limitations
could affect the ability of these entities to obtain foreign exchange through debt or equity financing, and could adversely affect
our business and financial conditions.
Capital
outflow policies in the PRC may restrict our ability to remit income to the United States, which could restrict our ability to
act in response to changing market conditions and to satisfy our liquidity requirements.
Since
we expect to generate a material portion of revenues from the operations of our PRC subsidiaries, we may rely on dividends and
other distributions on equity to be paid to us by our PRC subsidiaries for our cash and financing requirements, including the
funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur outside of
China. Under PRC laws and regulations, our PRC subsidiaries, as foreign-invested enterprises in the PRC, may pay dividends only
out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition,
a foreign-invested enterprise in China is required to set aside at least 10% of its accumulated after-tax profits each year, if
any, to fund certain statutory reserve funds, until the aggregate amount of
such
a fund reaches 50% of its registered capital. At its discretion, it may allocate a portion of its after-tax profits based on PRC
accounting standards to an enterprise expansion fund and a staff welfare and bonus fund. These enterprise expansion reserve and
staff welfare and bonus funds are not distributable as cash dividends. As of April 30, 2016, neither of our PRC subsidiaries had
a statutory reserve fund that reached 50% of their respective registered capital. Therefore, our PRC subsidiaries must allocate
at least 10% of their respective after-tax profits to the statutory reserve fund until the aggregate amount of such a fund reaches
the 50% threshold.
Any
limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely
limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise
fund and conduct our business. See “—
Under the PRC Enterprise Income Tax Law, we may be classified as a “resident
enterprise” of China, and such classification would likely result in unfavorable tax consequences to us and our non-PRC
shareholders.”
Under
the PRC Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China, and such classification
would likely result in unfavorable tax consequences to us and our non-PRC shareholders.
Under
the Enterprise Income Tax Law, or the EIT Law, an enterprise organized outside of the PRC with “de facto management bodies”
within the PRC is considered a “resident enterprise,” meaning that it can be treated in a manner similar to PRC enterprises
for enterprise income tax purposes. The EIT Law Implementation Regulations define the term “de facto management body”
as a management body that exercises full or substantial control and management authority over the production, operation, personnel,
accounts and assets of an enterprise. However, it is unclear how tax authorities will determine tax residency based on the facts
of each case. If the PRC tax authorities determine that our U.S. parent is a “resident enterprise” for PRC enterprise
income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to enterprise income
tax at the rate of 25% on our worldwide taxable income (which would not include income we generate from sales of ginkgo leaves
or trees, given that agricultural products are exempt from taxation) as well as PRC enterprise income tax reporting obligations.
Second, under the EIT Law and its implementing rules dividends paid to holding companies outside of China which are “resident
enterprises” will be subject to a 10% withholding tax. Any such tax may reduce the returns on your investment in the Shares.
If
we are treated as a PRC “resident enterprise,” we may be required to withhold PRC income tax on the dividends we pay
you (if any), and any gain you realize on the transfer of shares of our common stock may be subject to PRC tax.
Pursuant
to the EIT Law, we may be treated as a PRC resident enterprise for PRC tax purposes. See the previous risk factor. If we are so
treated by the PRC tax authorities, we may be obligated to withhold PRC income tax on payments of dividends on shares of our common
stock, if any, to investors that are non-resident enterprises of the PRC because the dividends payable on shares of our common
stock may be regarded as being derived from sources within the PRC. The withholding tax rate would generally be 10% on dividends
paid to non-resident enterprises unless such non-resident enterprise is entitled to a lower rate under a tax treaty if such non-resident
enterprise is considered a beneficial owner as defined under the Circular on How to Interpret and Recognize the “Beneficial
Owner” in Tax Treaties issued by the SAT in October 2009. In addition, if we are treated as a PRC tax resident enterprise,
any gain realized by investors who are non-resident enterprises of the PRC from the transfer of shares of our common stock may
be regarded as being derived from sources within the PRC and be subject to a 10% tax. See “PRC Government Regulation –
Regulations Relating to Taxation – Enterprise Income Tax.”
Moreover,
if we are treated as a PRC resident enterprise, it is possible that a non-resident individual investor would be subject to PRC
individual income tax at a rate of 20% (unless such investor is entitled to a lower rate under a tax treaty) under the PRC Individual
Income Tax Law, or IITL, on dividends paid to such investor and any capital gains realized from the transfer of shares of our
common stock if such dividends and gains are deemed income derived from sources within the PRC. Under the PRC-U.S. tax treaty,
a 10% rate will apply to dividends, provided certain conditions are met. A non-resident individual is an individual who is not
domiciled in the PRC and does not reside within the PRC or has resided within the PRC for less than one year. Pursuant to the
IITL and its implementation rules, for purposes of the PRC capital gains tax, the taxable income will be based on the total income
obtained from the transfer of shares of our common stock minus all the costs and expenses that are permitted under PRC tax laws
to be deducted from the income. The foregoing PRC tax may reduce your investment return on shares of our common stock and may
also affect the price of shares of our common stock.
Failure
to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans
may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
In
February 2012, the SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals
Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or the Stock Option Rules. Under the Stock Option
Rules and other relevant rules and regulations, PRC residents who participate in stock incentive plans in an overseas publicly-listed
company are required to register with the SAFE or its local branches and complete certain other procedures. Participants of a
stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas
publicly listed company or another qualified institution selected by such PRC subsidiary, to conduct the SAFE registration and
other procedures with respect to the stock incentive plan on behalf of its participants. Such participants must also retain an
overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of
corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with
respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas
entrusted institution or other material changes. We and our PRC employees who have been granted stock options will be subject
to these regulations upon the completion of this offering. Failure of our PRC stock option holders to complete their SAFE registrations
may subject these PRC residents to fines and legal sanctions and may also limit our ability to contribute additional capital into
our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to us, or otherwise materially adversely
affect our business.
Uncertainties
presented by the PRC legal system could limit the legal protections available to us and subject us to legal risks, which could
have a material adverse effect on our business, financial condition and results of operations.
Our
operations in China are subject to applicable PRC laws, rules and regulations. The PRC legal system is largely a civil law legal
system based on written statutes. Unlike the common law system, court decisions in China may be cited for reference but have limited
precedential value. Although the overall effect of legislation over the past 30 years has significantly enhanced the protections
afforded to various forms of foreign investment in China, the PRC has not developed a fully integrated legal system and recently
enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities. In particular, because these
laws, rules and regulations are relatively new, and because of the limited volume of published judicial decisions and their non-binding
nature, the interpretation and enforcement of these laws, rules and regulations involve substantial uncertainties. Such uncertainties
may limit the legal protections available to us.
In
addition, the PRC legal system is based in part on government policies and certain internal rules, some of which are not published
on a timely basis or at all and which may have a retroactive effect. As a result, we may not be aware of a violation of these
policies and internal rules until sometime after the violation. Also, any administrative or court proceedings may be protracted,
resulting in substantial costs and diversion of resources and management attention if we seek to enforce our legal rights through
administrative or judicial proceedings. Moreover, compared to more developed legal systems, the PRC administrative and judicial
authorities have significantly wider discretion in interpreting and implementing statutory and contractual provisions. As a result,
it may be more difficult to evaluate the outcomes of the administrative and judicial proceedings as well as the level of available
legal protection to which we are entitled. These uncertainties may impede our ability to enforce our contracts, which could in
turn materially and adversely affect our business and operations.
Because
PRC law governs almost all of our material agreements, we may not be able to enforce our legal rights within the PRC or elsewhere,
which could result in a significant loss of business, business opportunities, or capital.
PRC
law governs almost all of our material agreements. We cannot assure you that we will be able to enforce any of our material agreements
or that remedies will be available outside of the PRC. The system of laws and the enforcement of existing laws in the PRC may
not be as certain in implementation and interpretation as in the United States. Our inability to enforce or obtain a remedy under
any of our current or future agreements could result in a significant loss of business, business opportunities or capital. It
will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets based in
the PRC.
Substantially
all of our assets are and will be located in the PRC and a majority of our directors and officers reside in the PRC. As a result,
as to those directors and officers who reside in the PRC, it may not be possible for United States investors to enforce their
legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and officers under federal securities laws. Moreover, we have been
advised that the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with
the United States. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit
effective enforcement of criminal penalties of the federal securities laws. See “
ENFORCEABILITY OF CIVIL LIABILITIES.”
Your
ability to bring an action against us or against our directors and officer, or to enforce a judgment against us or them, will
be limited because we conduct all of our operations in the PRC and because all of our directors and the majority of our officers
reside outside of the United States.
Though
we are a Nevada company, all of our assets are located outside of the United States. A significant portion of our current operations
are conducted in the PRC. In addition, a majority of our directors and officers are nationals and residents of the PRC and a substantial
portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect
service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts’
judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. In
addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts. Courts
in the PRC may recognize and enforce foreign judgments in accordance with the requirements of the
PRC Civil Procedures
Law
based on treaties between the PRC and the country where the judgment is made or on reciprocity between jurisdictions.
The PRC does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign
judgments with the United States. In addition, according to the
PRC Civil Procedures Law
, courts in the PRC will not
enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles
of PRC law or national sovereignty, security or the public interest. Therefore, it is uncertain whether a PRC court would enforce
a judgment rendered by a court in the United States.
Because
we expect that a significant portion of our cash and cash equivalents will be held in banks which do not provide capital guarantee
insurance, the failure of any PRC bank in which we deposit our funds could affect our ability to continue in business.
Banks
and other financial institutions in the PRC do not provide insurance for funds held on deposit. We expect that a significant portion
of our assets will be in the form of cash deposited with banks in the PRC, and in the event of bank failure, we may not have access
to, or may lose entirely, our funds on deposit. Depending upon the amount of cash we maintain in a bank that fails, our inability
to have access to such cash deposits could impair our operations, and, if we are not able to access funds to pay our suppliers,
employees and other creditors, we may be unable to continue in business.
We
must comply with the Foreign Corrupt Practices Act and Chinese anticorruption laws.
We
are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery
or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including
some of our competitors, are not subject to these prohibitions. The PRC also strictly prohibits bribery of government officials.
Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. If our
competitors engage in these practices, they may receive preferential treatment, giving our competitors an advantage in securing
business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage.
Although we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will
not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged
in such practices, we could suffer severe penalties.
We
may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anticorruption laws, and any determination that
we violated these laws could have a material adverse effect on our business.
We
are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments
to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the
purpose of obtaining or retaining business. We have operations, agreements with third parties and we expect to make a majority
of our sales in China. The PRC also strictly prohibits bribery of government officials. Our activities in China create the risk
of unauthorized payments or offers of payments by our employees, consultants, sales agents or distributors and their affiliate,
even though they may not always be subject to our control. Although we inform our personnel that such practices are illegal, we
cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. Violations
of the FCPA or Chinese anticorruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities,
which could negatively affect our business, operating results and financial condition.
We
may have difficulty establishing adequate management, legal and financial controls in the PRC.
The
PRC historically has been deficient in Western-style management and financial reporting concepts and practices, as well as in
modern banking and other control systems. We may have difficulty in hiring and retaining a sufficient number of locally-qualified
employees to work in the PRC who are capable of satisfying the obligations of a U.S. public reporting company. As a result of
these factors, we may experience difficulty in establishing adequate management, legal and financial controls (including internal
controls over financial reporting), collecting financial data and preparing financial statements, books of account and corporate
records and instituting business practices in the PRC that meet U.S. standards as in effect from time to time.
Labor
laws in the PRC may adversely affect our results of operations.
The
New Labor Contract Law, effective on January 1, 2008 and subsequently amended in December 2012, imposes greater liabilities on
employers and significantly affects the cost of an employer’s decision to reduce its workforce. Further, it requires that
certain terminations be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce,
the New Labor Contract Law could adversely affect our ability to effect such changes in a manner that is most advantageous to
our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results
of operations.
Our
failure to fully comply with the requirement of making employee housing fund contribution may be subject us to fines and other
costs.
The
“Housing Fund Management Regulation” issued by the State Council of the PRC in April 1999 and subsequently amended
in March 2002, and other relevant regulations, for corporate employers in the PRC, requires that both the employers and their
employees make contributions to a government administered housing fund. Currently we have not fully paid the employee housing
funds and hence may be required to make up the unpaid amount and be subject to administrative penalties up to RMB 50,000 in addition
to the unpaid contribution of approximately RMB 50,000.
Risks
Relating to our Organization, this Offering and our Common Stock
We
have established a subsidiary that operates our Plantation in a joint venture with a Chinese company that has the right to acquire
up to 20% of the registered capital of that entity. To the extent that our joint venture partner contributes capital to the JV
Company, our percentage of the profits generated by that company will be reduced by a corresponding amount up to 20%.
As
of the date of this prospectus, we own all of the outstanding capital of Globalink Xuzhou, our PRC joint venture subsidiary that
is developing our Plantation, equal to RMB 5,099,000 ($800,000) of Globalink Xuzhou’s total registered capital of RMB 60
million. We are party to a joint venture agreement (the “JV Agreement”) with Shizhen Biotech which provides that we
have the right to own 80% of Globalink Xuzhou’s registered capital for a total investment of RMB 48 million ($8 million)
and Shizhen Biotech has the right to own 20% of Globalink Xuzhou’s registered capital for a total investment of RMB 12 million
($2 million). As of the date of this prospectus, Shizhen Biotech has not invested any funds into Globalink Xuzhou and does not
own any of that company’s registered capital. To date, we have taken all responsibility for establishing, funding and operating
Globalink Xuzhou. To the extent that Shizhen Biotech makes its investment in Globalink Xuzhou, our percentage of the profits of
that company will be reduced by a corresponding amount up to 20%, which would negatively and materially affect our revenues and
financial condition.
Our
officers and directors apportion their time to other businesses which may cause conflicts of interest in their determination as
to how much time to devote to our affairs. These conflicts of interest could have a negative impact on our ability to achieve
our business goals and operate successfully.
Our
officers and directors engage in other businesses and are not required to devote their full time or any specific number of hours
to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments.
Since the date of our organization, Hin Kwok Sheung, our Chief Executive Officer, President and a member of our board of directors,
has been devoting approximately 40% of his business time per week to our operations, Andrea Yuan, our CFO and a member of our
board of directors, has been devoting approximately 30% of her business time per week to our operations and Robin Young, our Secretary
and a member of our board of directors, has been devoting approximately 30% of his business time per week to our operations. While
we expect that our officers and directors will devote the time necessary to effectively manage our business, if our officers’
other business affairs require them to devote more substantial additional time to such affairs, it could limit their ability to
devote time to our affairs and could have a negative impact on our ability to achieve our business goals and operate successfully.
Our
management and four significant stockholders collectively own a substantial majority of our common stock.
Collectively,
our officers, our directors and five significant stockholders will own or exercise voting and investment control of approximately
68% of our outstanding common stock immediately after this offering, assuming all of the Shares offered are sold. These stockholders,
if they act together, will continue, following this offering, to be able to exert significant influence on our management and
affairs and all matters requiring stockholder approval, including:
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the
composition of our Board of Directors and, through it, any determination with respect to our business direction and policies,
including the appointment and removal of officers;
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any
determinations with respect to mergers or other business combinations;
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our
acquisition or disposition of assets; and
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our
corporate financing activities.
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Furthermore,
this concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business
combination that might otherwise be beneficial to our stockholders. This significant concentration of share ownership may also
adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in a company
that is controlled by a small number of stockholders.
We
are conducting a direct primary offering with no minimum amount required to be raised and as a result we can accept your investment
funds at any time without any other investment funds being raised and may not raise sufficient funds which would negatively impact
our ability to grow our business as planned.
There
is no minimum offering amount that must be raised and as result we may close on significantly less than the maximum offering amount.
Investment funds will not be placed in an escrow account pending the attainment of a minimum amount of proceeds and will be transmitted
directly to the Company for its immediate use. Thus, you may be one of only a few investors in this offering. In the event that
we close on less than the maximum offering amount, we may not have sufficient capital to execute on our business strategy the
way we have intended. Our ability to obtain additional financing thereafter may have a materially adverse effect on our ability
to execute our overall plan and your investment may be lost.
If
you purchase the Shares, you will experience immediate dilution.
If
you purchase the Shares sold in this offering, you will experience immediate dilution because the price that you pay for our common
stock will be greater than the net tangible book value per share of our shares of common stock.
The
price of the Shares offered has been arbitrarily established by us.
The
price of the Shares was arbitrarily established considering such matters as the state of our business development and the general
condition of the industry in which we operate. The offering price bears little relationship to the assets, net worth, or any other
objective criteria of value applicable to us.
We
do not expect to pay dividends in the future; any return on investment may be limited to the value of our common stock.
We
do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will
depend on earnings, financial condition and other business and economic factors affecting it at such time as our Board of Directors
may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to the development of
our business and to increase our working capital. There can be no assurance that we will ever have sufficient earnings to declare
and pay cash dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the
sole discretion of our Board. If we do not pay dividends, our common stock may be less valuable because a return on your investment
will only occur if its stock price appreciates.
Shares
eligible for future sale under Rule 144 may adversely affect the market value of our common stock.
From
time to time, certain of our stockholders who hold restricted securities may be eligible to sell all or some of their shares of
common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities
Act, subject to certain limitations. Any substantial sales by holders of our common stock in the future pursuant to Rule 144 may
have a material adverse effect on the market price of our securities.
Issuance
of stock to fund our operations may dilute your investment and reduce your equity interest.
We
may need to raise capital in the future to fund the growth of our Company. Any equity financing may have significant dilutive
effect to stockholders and a material decrease in our stockholders’ equity interest in us. Equity financing, if obtained,
could result in substantial dilution to our existing stockholders. At its sole discretion, our board of directors may issue additional
securities without seeking stockholder approval, and we do not know when we will need additional capital or, if we do, whether
it will be available to us.
If
we lose key personnel or are unable to attract and retain additional qualified personnel we may not be able to successfully manage
our business and achieve our objectives.
We
believe our future success will depend upon our ability to retain our management, including Hin Kwok Sheung, our President, Andrea
Yuan, our CFO, Robin Young, our Secretary and Yan Zhuang, the general manager of our PRC Subsidiaries, are integral to the implementation
of our business plan. Should any of these individuals leave our Company, it may be difficult to replace them. We may not be successful
in attracting, assimilating and retaining our employees in the future.
Our
future success and our ability to expand our operations will also depend in large part on our ability to attract and retain additional
qualified agricultural, sales and marketing and senior management personnel. Competition for these types of employees is intense
due to the high demand for them. Failure to attract, assimilate and retain personnel, particularly tech and sales and marketing
personnel, would have a material adverse effect on our business and potential growth.
We
have no independent audit committee. Our full board of directors functions as our audit committee and none of our directors is
considered independent. This may hinder our board of directors’ effectiveness in fulfilling the functions of the audit committee.
We
are not required to have an audit committee and have not established one. Our full board of directors functions as our audit committee
and is comprised of our directors, neither of whom is considered to be “independent” in accordance with the requirements
of Rule 10A-3 under the Exchange Act. An independent audit committee plays a crucial role in the corporate governance process,
assessing a company’s processes relating to its risks and control environment, overseeing financial reporting and evaluating
internal and independent audit processes. The lack of an independent audit committee may prevent our board of directors from being
independent from management in its judgments and decisions and its ability to pursue the committee’s responsibilities without
undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable
to attract and retain qualified, independent directors, the management of our business could be compromised.
We
cannot assure you that our common stock will become liquid or that it will be listed on a national securities exchange. In addition,
there may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.
Currently,
our common stock trades on the OTCQB venture stage marketplace for early stage and developing U.S. and international companies.
Investors may find it difficult to obtain accurate quotations as to the market value of our common stock. In addition, there is
currently only a limited public market for our common stock and there can be no assurance that a trading market will develop further
or be maintained in the future.
We
have incurred and will continue to incur significant increased costs as a result of operating as a public company, and our management
will be required to devote substantial time to new compliance initiatives.
As
a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Dodd-Frank
Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of the OTCQB venture stage marketplace
and other applicable securities rules and regulations. Compliance with these rules and regulations has increased and will continue
to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase
demand on our systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure
controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure
controls and procedures and internal control over financial reporting to meet this standard, significant resources and management
oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could
harm our business and operating results. Further, there are significant corporate governance and executive compensation related
provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, that require the SEC to adopt additional
rules and regulations in these areas such as “say on pay” and proxy access. Recent legislation permits smaller “emerging
growth companies” to implement many of these requirements over a longer period. We intend to take advantage of this new
legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned
and thereby incur unexpected expenses. Stockholder activism, the current political environment and the current high level of government
intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional
compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
In
addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result,
their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure
and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment
may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating
activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities
intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings
against us and our business may be harmed.
If
we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could
be impaired, which could harm our operating results, our ability to operate our business and investors’ views of us.
We
will be required to comply with Section 404 of the Sarbanes-Oxley Act which requires public companies to conduct an annual review
and evaluation of their internal controls and attestations of the effectiveness of internal controls by independent auditors.
Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate
financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Our failure
to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have
a material adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial
reports, which could have an adverse effect on the price of our common stock. In addition, if our efforts to comply with new or
changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities
related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
Our
common stock is considered “penny stock”.
The
SEC has adopted regulations, which generally define “penny stock” to be an equity security that has a market price
of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is currently less than $5.00
per share and therefore may be a “penny stock.” Brokers and dealers effecting transactions in “penny stock”
must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that
the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to
sell the common stock and may affect your ability to sell shares.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that
there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock stocks in any market
that develops for our common stock in the future, which may limit the ability to buy and sell our stock and which will have an
adverse effect on any market that develops for our shares.
The
price of the Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of
its common stock.
The
market price of the Company’s common stock may fluctuate significantly from time to time as a result of many factors, including:
•
|
fluctuations
in quarterly operating results associated with the seasonality of our business lines;
|
•
|
the
progress we make with respect to developing our ginkgo plantation;
|
•
|
investors’
perceptions of the Company’s and its prospects;
|
•
|
investors’
perceptions of the Company’s and/or the industry’s risk and return characteristics relative to other investment
alternatives;
|
•
|
differences
between actual financial and operating results and those expected by investors and analysts;
|
•
|
our
inability to commence production, obtain permits or otherwise fail to reach Company objectives;
|
•
|
volatility
in the equity securities market; and
|
•
|
sales,
or anticipated sales, of large blocks of the Company’s common stock.
|
Limitations
on liability and indemnification matters.
As
permitted by the corporate laws of the State of Nevada, we have included in our articles of incorporation a provision to eliminate
the personal liability of our directors for monetary damages for breach or alleged breach of their fiduciary duties as directors,
subject to certain exceptions. In addition, our bylaws provide that we are required to indemnify our officers and directors under
certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we will be
required to advance expenses to our officers and directors as incurred in connection with proceedings against them for which they
may be indemnified. If we are required to indemnify, both for the costs of their defense in any action or to pay monetary damages
upon a finding of a court or in any settlement, our business and financial condition could be materially and adversely affected.
As
an “emerging growth company” under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.
We
qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely
on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required
to:
•
|
have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
|
•
|
comply
with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(i.e., an auditor discussion and analysis);
|
•
|
submit
certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency”;
and
|
•
|
disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
of the chief executive officer’s compensation to median employee compensation.
|
In
addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We
will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first
fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated
filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our shares of common stock
that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter
or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Until
such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
We
are a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting
companies will make our common stock less attractive to investors.
We
are currently a “smaller reporting company,” meaning that we are not an investment company, an asset- backed issuer,
or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than
$75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we
are still considered a “smaller reporting company” at such time we cease being an “emerging growth company,”
we will be required to provide additional disclosure in our SEC filings. However, similar to “emerging growth companies,”
“smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings;
are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting
firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other
decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years
of audited financial statements in annual reports and in a registration statement under the Exchange Act on Form 10. Decreased
disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors
to analyze our results of operations and financial prospects.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All
statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial
condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,”
“believe,” “contemplate,” “continue,” “could,” “design,” “due,”
“estimate,” “expect,” “goal,” “intend,” “may,” “objective,”
“plan,” “predict,” “positioned,” “potential,” “seek,” “should,”
“target,” “will,” “would” and other similar expressions that are predictions of or indicate
future events and future trends, or the negative of these terms or other comparable terminology.
We
have based these forward-looking statements largely on our current expectations and projections about future events and financial
trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These
forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks
described in the section titled “Risk Factors” and elsewhere in this prospectus, regarding, among other things:
With
respect to our hotel booking business:
•
|
our
ability to maintain and expand our relationships with hotels and travel agents;
|
•
|
global economic
conditions that impact the travel industry;
|
•
|
declines or disruptions
in the travel industry; and
|
•
|
our
ability to expand our business, implement our strategy and effectively manage our growth.
|
With
respect to our Plantation:
•
|
our
anticipated growth strategies, including our plan to develop a ginkgo tree plantation;
|
•
|
our
future business development, results of operations and financial condition;
|
•
|
our
ability to become one of the largest independent growers and suppliers of ginkgo leaves in China;
|
•
|
expected
changes in our revenues and certain cost or expense items;
|
•
|
competition
from agribusinesses, pharmaceutical company and others;
|
•
|
our
ability to manage our growth;
|
•
|
trends
and competition in the market for ginkgo leaves, ginkgo biloba extract and traditional Chinese medicine;
|
•
|
the
PRC government policies relating to traditional Chinese medicines and agricultural industry;
|
•
|
policies
of Western countries with respect to traditional Chinese medicines and other products, such as herbal supplements, that contain
herbal ingredients;
|
•
|
general
economic and business conditions in China and other countries or regions in which we operate.
|
These
risks are not exhaustive. Other sections of this prospectus may include additional factors that could harm our business and financial
performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to
time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our
business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those
contained in, or implied by, any forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances
reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the
date of this prospectus or to conform these statements to actual results or to changes in our expectations.
You
should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration
statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance
and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary
statements.
OUR
HISTORY AND CORPORATE STRUCTURE
History
We
were incorporated in the State of Nevada in February 2006. In February 2007, our registration statement on Form SB-2 was declared
effective by the U.S. Securities and Exchange Commission in which we registered 10 million of shares of common stock for sale
by the Company and 1,250,000 shares on behalf of selling shareholders, each share was offered at a price of $0.50. We terminated
this offering prior to selling any shares as a result of the ongoing global recession.
In
June 2008, we affected a 1:5 forward stock split on the outstanding shares of common stock and amended our articles of incorporation
to increase the number of shares of common stock we are authorized to issue from 100 million shares to 500 million shares
On
October 31, 2008, we entered into a Share Exchange Agreement under which we acquired all of the outstanding shares of capital
stock of OneWorld Hotel Destination Service, Inc. in consideration of the issuance of 2,000,000 shares of common stock and the
payment of $150,000. OneWorld continues to be the subsidiary through which we operate our hotel booking business.
Since
our inception, we have been funding our operations from a combination of shareholder advances as needed and, commencing in 2008,
revenues from operations generated by our hotel booking business.
In
February 2014, we added two new directors to our board in anticipation of developing our ginkgo plantation and ginkgo products
business.
In
April, 2014, we entered into a joint venture agreement (the “JV Agreement”) with Shizhen Biotech Co., Ltd. (“Shizhen
Biotech”) relating to the organization and operation of Globalink Xuzhou as a Sino-foreign joint venture company to engage
in (i) the cultivation and sale of ginkgo leaves, (ii) research and development with respect to the cultivation of ginkgo, and
(iii) the development of products manufactured from ginkgo. Globalink Xuzhou was organized with total registered capital of RMB
60 million, of which, pursuant to the JV Agreement, we have the right to own 80% upon a total investment of $8 million and Shizhen
Biotech has the right to own 20% upon a total investment of $2 million. We have the right to appoint a majority of the directors
of the company, as well as the chairman of the board and general manager. As of the date of this prospectus, we have invested
$800,000 in Globalink Xuzhou and Shizhen Biotech has not invested any funds into the company, accordingly, we own all of the outstanding
capital of Globalink Xuzhou as of the date of this prospectus. A more detailed discussion of the JV Agreement is provided under
the heading “BUSINESS-Ginkgo Biloba Plantation.”
In
October, 2015, we organized Globalink Zhejiang Bio-technology Co., Ltd. to engage in the research and development of cultivation,
extraction, and application of gingko trees and other economic plants. We own all of the registered capital of Globalink Zhejiang.
In
September 2015, we expanded our board of directors to five members and appointed Mr. Yan Zhuang, who is the General Manger of
Chinese subsidiaries, to fill the vacancies created by the expansion, and integrally engaged in the development of our PRC Subsidiaries.
During 2014 and 2015, we raised $ 1,170,000 from our PRC directors to fund the development of our ginkgo plantation, including
preparing a detailed plan of development and operation over the next five years.
To
date, we have expended approximately $800,000 toward the development of our Plantation. During the fall of 2015, we took the first
steps toward developing our Plantation.
Corporate
Structure
We
operate through our three wholly owned subsidiaries, OneWorld Hotel Destination Service Inc., a Canadian corporation (“OneWorld”),
Globalink (Xuzhou) Bio-Technology Co., Ltd. (“Globalink Xuzhou”) and Globalink (Zhejiang) Bio-Technology Co. Ltd.
(“Globalink Zhejiang” and, together with Globalink Xuzhou, our “PRC Subsidiaries”), which are incorporated
in the PRC. As PRC entities, our PRC Subsidiaries are subject to all of the laws and regulations of the PRC.
The
broad rules governing the nature of foreign investment in the PRC are set forth in the Foreign Investment Guidance Catalogue,
or Catalogue, promulgated by the Ministry of Commerce (“MOFCOM”). The Catalogue is the central policy of the Chinese
government that regulates the inflow of foreign investments in various Chinese industries. It classifies foreign direct investments
as “encouraged,” “restricted,” “permitted,” or “prohibited” and imposes restrictions
on foreign investment forms and shareholdings on certain key industrial sectors. Under the Catalogue in effect as of April 2015,
farming is deemed to be an “encouraged” foreign investment industry, within which specific reference is made to planting
and cultivating traditional Chinese medicines. As an encouraged industry, we are subject to more relaxed administrative requirements
and our income derived from our Plantation is exempt from both income taxation and the Value Added Tax, or VAT.
Currently,
our board of directors comprises five members, of whom three are PRC residents.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
expect that over the next five years, the majority of our operations will be conducted and substantially all of our assets will
be located in China. A majority of our directors and officers are nationals or residents of jurisdictions other than the United
States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a
shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments
obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the United
States or any state in the United States.
There
is uncertainty as to whether the courts of China would:
•
|
recognize
or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions
of the federal securities laws of the United States or any state in the United States; or
|
•
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entertain
original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities
laws of the United States or any state in the United States.
|
The
recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize
and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between
China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or
other agreements with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition,
according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and
officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public
interest. As a result, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States.
In addition, although U.S. shareholders may be able to originate actions against us in China in accordance with PRC laws, it may
be difficult for U.S. shareholders to do so because since we a re U.S. corporation it will difficult for U.S. shareholders, by
virtue only of holding our common stock to establish a connection to the PRC for a PRC court to have subject matter jurisdiction
as required by the PRC Civil Procedures Law.
USE
OF PROCEEDS
We
estimate that our proceeds from this offering, assuming all of the Shares we are offering by this prospectus are sold, will be
$5,000,000 (based on an assumed offering price of $0.25 per share). The following table sets forth the uses of proceeds assuming
the sale of 25%, 50%, 75%, and 100%, respectively, of the securities offered for sale by us.
|
|
If
25% of
Shares Sold
|
|
If
50% of
Shares Sold
|
|
If
75% of
Shares Sold
|
|
If
100% of
Shares Sold
|
Net
Proceeds
|
|
$
|
1,250,000
|
|
|
$
|
2,500,000
|
|
|
$
|
3,750,000
|
|
|
$
|
5,000,000
|
|
Development of Ginkgo
Plantation
|
|
$
|
1,000,000
|
|
|
$
|
2,150,000
|
|
|
$
|
3,150,000
|
|
|
$
|
4,200,000
|
|
Advertising and Marketing
|
|
$
|
0
|
|
|
$
|
100,000
|
|
|
$
|
250,000
|
|
|
$
|
350,000
|
|
General
Working Capital
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
$
|
350,000
|
|
|
$
|
450,000
|
|
TOTAL
|
|
$
|
1,250,000
|
|
|
$
|
2,500,000
|
|
|
$
|
3,750,000
|
|
|
$
|
5,000,000
|
|
In
using the proceeds of this offering, as an offshore holding company, under PRC laws and regulations, we are permitted to provide
funding to our PRC Subsidiaries only through loans or capital contributions. Subject to satisfaction of applicable government
registration and approval requirements, we may extend inter-company loans to our PRC subsidiaries or make additional capital contributions
to our PRC Subsidiaries to fund their capital expenditures or working capital. We intend to invest the proceeds of this offering
into our PRC subsidiaries and thereafter convert such proceeds into Renminbi promptly upon completion of relevant PRC government
registration or receipt of the relevant approval. If we provide funding to our PRC subsidiaries through capital contributions
or loans, we will need to increase our PRC subsidiaries’ approved registered capital and total investment amount, which
requires approval from the Ministry of Commerce, or MOFCOM, or its local branches. This approval process typically takes 30 to
90 days, and sometimes longer, from the time the MOFCOM or its local branches receive all the required application documents.
If we provide funding to a PRC subsidiary through loans, we will also need to register such loans with the State Administration
of Foreign Exchange or its local branches, which usually requires no more than 20 working days from the date of receipt of all
the required application documents by the SAFE or its local branches. We cannot assure you that we will be able to complete these
government registrations or obtain the relevant approvals on a timely basis, if at all. See “Risk Factors — Risks
Related to Doing Business in China — PRC regulation of loans and direct investment by offshore holding companies to PRC
entities may delay or prevent us from using our net proceeds from this offering to make loans or additional capital contributions
to our PRC operating subsidiaries.”
Pending
use of the net proceeds, we intend to invest our net proceeds in short-term, interest-bearing debt instruments or bank deposits.
The
foregoing represents our current intentions with respect of the use and allocation of the net proceeds to us from this offering
based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying
the net proceeds of this offering. The occurrence of unforeseen events or changed business conditions may result in application
of our proceeds from this offering in a manner other than as described in this prospectus.
DETERMINATION
OF OFFERING PRICE
The
offering price for the Shares in this offering was arbitrarily determined. In determining the initial public offering price of
the Shares, we considered several factors including the following:
•
|
our
business structure and operations;
|
•
|
prevailing
market conditions, including the history and prospects for our industry;
|
•
|
our
future prospects and the experience of our management; and
|
•
|
our
capital structure.
|
Therefore,
the public offering price of the Shares does not necessarily bear any relationship to established valuation criteria and may not
be indicative of prices that may prevail at any time or from time to time in the public market for the common stock. You cannot
be sure that a public market for any of our securities will develop and continue or that the securities will ever trade at a price
at or higher than the offering price in this offering.
DILUTION
If
you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering
price per share and the pro forma net tangible book value per share after the offering. Dilution results from the fact that the
per share offering price is substantially in excess of the book value per share attributable to the existing shareholders for
our presently outstanding shares of common stock. Dilution arises mainly as a result of our arbitrary determination of the offering
price of the Shares being offered. Dilution of the value of the Shares you purchase is also a result of the lower book value of
the Shares held by our existing stockholders.
Our
historical net tangible book value (deficit) at December 31, 2015 was $1,081,763, or $0.02 per share of common stock. Net tangible
book value is the amount that results from subtracting total liabilities and intangible assets from total assets.
The
following tables compare the differences of your investment in our Shares with the investment of our existing stockholders based
on the percentage of Shares sold of the 20,000,000 Shares available to be purchased:
Dilution
to New Stockholders
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Per share offering price
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
Net tangible book value
per share before Offering (1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Net tangible book value
per share after Offering (2)
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
Decrease in investment
to new stockholders
|
|
$
|
1,250,000
|
|
|
$
|
2,500,000
|
|
|
$
|
3,750,000
|
|
|
$
|
5,000,000
|
|
Dilution to new stockholders
|
|
|
9.88
|
%
|
|
|
17.99
|
%
|
|
|
24.76
|
%
|
|
|
30.49
|
%
|
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Pro Forma Stockholders’
Equity
|
|
$
|
1,081,763
|
|
|
$
|
1,081,763
|
|
|
$
|
1,081,763
|
|
|
$
|
1,081,763
|
|
Divided by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding before Offering
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
Equals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
tangible book value per share
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Pro Forma Stockholders’
Equity
|
|
$
|
2,331,763
|
|
|
$
|
3,581,763
|
|
|
$
|
4,831,763
|
|
|
$
|
6,081,763
|
|
Divided by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding before Offering
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
|
|
45,585,000
|
|
Shares
issued in Offering
|
|
|
5,000,000
|
|
|
|
10,000,000
|
|
|
|
15,000,000
|
|
|
|
20,000,000
|
|
Total
shares outstanding after Offering
|
|
|
50,585,000
|
|
|
|
55,585,000
|
|
|
|
60,585,000
|
|
|
|
65,585,000
|
|
Equals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
tangible book value per share
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
The
following tables show a comparison between the cash contributions of common stockholders and the public contribution under this
Offering:
|
Shares
Purchased – 25%
|
Total
Consideration
|
Average
Price Per Share
|
|
Number
|
Percent
|
Amount
|
Percent
|
Existing
Stockholders
|
45,585,000
|
90.12
|
%
|
$
|
1,081,763
|
46.39
|
%
|
$
|
0.02
|
New
Investors
|
5,000,000
|
9.88
|
%
|
$
|
1,250,000
|
53.61
|
%
|
$
|
0.25
|
Total:
|
50,585,000
|
100
|
%
|
$
|
2,331,763
|
100
|
%
|
|
|
|
Shares
Purchased – 50%
|
Total
Consideration
|
|
|
Existing
Stockholders
|
45,585,000
|
82.01
|
%
|
$
|
1,081,763
|
30.20
|
%
|
$
|
0.02
|
New
Investors
|
10,000,000
|
17.99
|
%
|
$
|
2,500,000
|
69.80
|
%
|
$
|
0.25
|
Total:
|
55,585,000
|
100
|
%
|
$
|
3,581,763
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Purchased – 75%
|
Total
Consideration
|
|
|
Existing
Stockholders
|
45,585,000
|
75.24
|
%
|
$
|
1,081,763
|
22.39
|
%
|
$
|
0.02
|
New
Investors
|
15,000,000
|
24.76
|
%
|
$
|
3,750,000
|
77.61
|
%
|
$
|
0.25
|
Total:
|
60,585,000
|
100
|
%
|
$
|
4,831,763
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Purchased – 100%
|
Total
Consideration
|
|
|
Existing
Stockholders
|
45,585,000
|
69.51
|
%
|
$
|
1,081,763
|
17.79
|
%
|
$
|
0.02
|
New
Investors
|
20,000,000
|
30.49
|
%
|
$
|
5,000,000
|
82.21
|
%
|
$
|
0.25
|
Total:
|
65,585,000
|
100
|
%
|
$
|
6,081,763
|
100
|
%
|
|
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Information
Our
common stock is quoted on the OTCQB venture stage marketplace under the symbol “GOBK.” Historically, trading in our
stock has been very limited and the trades that have occurred cannot be characterized as amounting to an established public trading
market. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to
many factors that may be unrelated to a company’s operations or business prospects. As a result, the trading prices of our
common stock may not reflect the price that would result if our stock was actively traded. There is no assurance that a regular
trading market in our common stock will develop, or if developed, that it will be sustained. Therefore, stockholders may be unable
to resell their shares of our common stock.
The
following are high and low bid prices quoted on the OTCQB during the periods indicated. The quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual transactions:
|
|
|
|
|
|
|
High
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year Ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
First
quarter ended March 31, 2014
|
|
|
$
|
0.032
|
|
|
$
|
0.025
|
|
|
Second
quarter ended June 30, 2014
|
|
|
$
|
0.032
|
|
|
$
|
0.032
|
|
|
Third
quarter ended September 30, 2014
|
|
|
$
|
0.0999
|
|
|
$
|
0.032
|
|
|
Fourth
quarter Ended December 31, 2014
|
|
|
$
|
0.0365
|
|
|
$
|
0.035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year Ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
First
quarter ended March 31, 2015
|
|
|
$
|
0.035
|
|
|
$
|
0.035
|
|
|
Second
quarter ended June 30, 2015
|
|
|
$
|
0.04
|
|
|
$
|
0.035
|
|
|
Third
quarter ended September 30, 2015
|
|
|
$
|
0.05
|
|
|
$
|
0.035
|
|
|
Fourth
quarter Ended December 31, 2015
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent
Interim Period:
|
|
|
|
|
|
|
|
|
|
|
May
11, 2016
|
|
|
$
|
0.035
|
|
|
$
|
0.035
|
|
On
June 29 , 2016, the last reported sales price for our common stock was $ 0.0373 per share.
Holders
of Our Common Stock
As
of July 12 , 2016, 45,585,000 shares of our common stock were outstanding, held by 53 stockholders of record at our
transfer agent, with others holding our shares in street name.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Island Stock Transfer, Suite 301, Clearwater, FL 33760, where its telephone
number is (727) 289-0010
Financial
Statements
Our
financial statements are included in this prospectus, beginning on page F-1.
Securities
Authorized for Issuance under Equity Compensation Plans
The
following table indicates shares of common stock authorized for issuance under our
2015
Stock Awards Plan (the “Plan”)
as of December 31, 2015:
Plan
category
|
|
|
Number
of securities to
be
issued upon exercise
of
outstanding options
|
|
|
|
Weighted-average
exercise
price of
outstanding
options
|
|
|
|
Number
of securities
remaining
available
for
future issuance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
6,000,000
|
|
|
$
|
0.075
|
|
|
|
-0-
|
|
SHARES
ELIGIBLE FOR FUTURE SALE
We
cannot predict what effect, if any, market sales of shares of our common stock or the availability of shares of our common stock
for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts
of common stock, including shares issued upon the exercise of outstanding options, in the public market, or the perception that
such sales could occur, could materially and adversely affect the market price of our common stock and could impair our future
ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate.
Assuming
that all 20,000,000 Shares are sold, we will have 65,585,000 shares of common stock outstanding. Of the outstanding shares, the
Shares sold in this offering as well as any shares of common stock previously sold pursuant to Rule 144 (described below) will
be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our “affiliates”,
as that term is defined under Rule 144, may be sold only in compliance with the limitations described below. In addition, as of
July 12 , 2016 there were 6,000,000 shares issuable upon the exercise of stock options with a weighted average exercise
price of $0.075 per share. The resale of such shares, following the exercise of such options by the holders thereof, will be registered
under the Securities Act, as described below. The remaining outstanding shares of common stock will be deemed “restricted
securities” as that term is defined under Rule 144. Restricted securities may be sold in the public market only if they
are registered or if they qualify for an exemption from registration, including the exemptions under Rule 144, which we summarize
below. The restricted shares held by our affiliates will be available for sale in the public market at various times after the
date of this prospectus pursuant to Rule 144.
Rules
144
In
general, under Rule 144, as currently in effect, persons who are not one of our affiliates at any time during the three months
preceding a sale may sell shares of our common stock beneficially held upon the earlier of (1) the expiration of a six-month holding
period, if we have been subject to the reporting requirements of the Exchange Act and have filed all required reports for at least
90 days prior to the date of the sale, or (2) a one-year holding period.
At
the expiration of the six-month holding period, a person who was not one of our affiliates at any time during the three months
preceding a sale would be entitled to sell an unlimited number of shares of our common stock provided current public information
about us is available, and a person who was one of our affiliates at any time during the three months preceding a sale would be
entitled to sell within any three-month period a number of shares of common stock that does not exceed the greater of either of
the following:
•
|
1%
of the number of shares of common stock then outstanding which will equal to approximately shares immediately after this offering;
and
|
•
|
the
average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale.
|
Sales
under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current
public information about us. Under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the three
months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year including the holding
period of any prior owner except an affiliate of The Joint, is entitled to sell such shares without complying with the manner
of sale, public information, volume limitation or notice provisions of Rule 144.
Form
S-8 Registration Statement
Following
the closing of this offering, we will file a registration statement on Form S-8 registering the 6,000,000 shares of our common
stock issuable pursuant to stock options granted under our 2015 Stock Awards Plan. Shares registered under such registration statement
will be available for sale in the open market upon the effectiveness of the registration, subject to Rule 144 volume limitations
applicable to affiliates.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The
following discussion and analysis should be read in conjunction with our audited consolidated financial statements and accompanying
notes thereto, for the fiscal years ended December 31, 2015 and 2014 included elsewhere herein.
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements.
See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties,
risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking
statements.
Our
financial statements are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United
States. See “Critical Accounting Policies and Estimates — Foreign currency translation” below for information
concerning the exchanges rates at which Renminbi were translated into U.S. Dollars at various pertinent dates and for pertinent
periods.
Business
Overview
Globalink,
Ltd. conducts business through its three wholly owned subsidiaries OneWorld Hotel Destination Service Inc., a Canadian corporation
(“OneWorld”), Globalink (Xuzhou) Bio-Technology Co., Ltd. (“Globalink Xuzhou”) and Globalink (Zhejiang)
Bio-Technology Co. Ltd. (“Globalink Zhejiang” and, together with Globalink Xuzhou, our “PRC Subsidiaries”),
which are incorporated in the PRC. Our business is divided into two segments:
•
|
online
business to business hotel booking; and
|
•
|
agriculture,
which includes (i) the development and operation of a ginkgo tree plantation in the PRC, the business of which is the cultivation
and sale of dried ginkgo leaves to manufacturers of ginkgo extract, the principal ingredient of ginkgo-based herbal supplement
products that have gained popularity around the world, and (ii) research and development, cultivation, extraction, and application
of gingko trees and other economic plants.
|
As
of the date of this prospectus, we own all of the outstanding capital of Globalink Xuzhou, our PRC subsidiary that is developing
our Plantation, equal to RMB 5,099,00 ($800,000) of Globalink Xuzhou’s total registered capital of RMB 60 million. Globalink
Xuzhou was organized pursuant to a joint venture agreement (the “JV Agreement”) with Shizhen Bio-Technology Co., Ltd.
(“Shizhen Biotech”) which provides, among other things, that we have the right to own 80% of Globalink Xuzhou’s
registered capital for a total investment of RMB 48 million ($8 million) and Shizhen Biotech has the right to own 20% of Globalink
Xuzhou’s registered capital for a total investment of RMB 12 million ($2 million). As of the date of this prospectus, Shizhen
Biotech has not invested any funds into Globalink Xuzhou and does not own any of that company’s registered capital. To the
extent that Shizhen Biotech makes its investment in Globalink Xuzhou, our percentage of the profits of that company will be reduced
by a corresponding amount up to 20%.
We
operate a hotel booking service for travel agents located in Canada. We enter into agreements with hotel chains and individual
hotels in Canada that agree to make rooms available to us at discounted prices. We currently have relationships with five hotel
chains and over two hundred individual hotels. We also enter into agreements with travel agents throughout Canada who view room
selection on our web site and contact us directly to book rooms. Travel agents typically book blocks of rooms for their leisure
and business traveler clients. Currently, all room booking is completed manually and no credit card or other personal data is
transmitted electronically or retained by us. We generate revenue for our services based on the difference between the total amount
the customer pays for the room and the negotiated net rate plus estimated taxes that the hotel charges for the room. We recognize
revenue when rooms are booked and remit payment to the hotel promptly.
We
are developing a ginkgo tree plantation (“Plantation”) through our Globalink Xuzhou subsidiary that will comprise
approximately 1,553 acres over the next five years. As of April 30, 2016, our Plantation had 100 acres of land under cultivation
that it leased from local farmers pursuant to land leases that extend through 2027. Since we proposed the project in 2015, we
have developed a comprehensive business plan that projects approximate costs, output and revenues over the next five years. As
of the date of this prospectus, we have invested a total of $800,000 in Globalink Xuzhou, comprising $500,000 invested in August
2015, and $300,000 invested in October 2015. During January 2016, Hin Kwok Sheung, our principal stockholder and the president
and chief executive officer and a director of the Company, loaned the sum of $250,000 (RMB1,500,000) to Globalink Xuzhou. The
loan bears no interest and has no fixed term of repayment.
During
the winter of 2015, we began purchasing equipment and other materials required to commence agricultural operations. We are planting
our first crop of seeds this spring and, assuming typical growing conditions, we expect to harvest approximately 60 tons of dried
ginkgo leaves for sale during the fall of 2016. Our Plantation brings modern scientific and technical practices to China’s
archaic agricultural industry and we expect to become one of the largest independent producers of ginkgo leaves in the PRC.
We
expect to sell our output of ginkgo leaves to ginkgo extract manufacturers that will use the finished product in a variety of
health and herbal supplement products. Initially, we expect to sell our entire output in China and eventually expand our marketing
efforts to Europe and North America. Sales are recorded on a per kilo or per ton of dried leaf basis. In addition, as our trees
reach six years of age and the content of the active beneficial ingredients in the ginkgo leaves declines, rendering the leaves
of no value to extract manufacturers, we will seek to sell trees to local consumers who use them for ornamental or landscaping
purposes. To the extent we are able to sell trees, the price typically is based upon the circumference of the trunk.
Globalink
Zhejiang engages in research and development, cultivation, extraction, and application of gingko trees and other economic plants.
In January 2016, Globalink Zhejiang entered into a Technology Development Service Agreement with Zhejiang Pharmaceutical College,
or the College, under which the College has agreed to perform research with respect to accelerating the development of the active
ingredients within the ginkgo tree and optimizing the processes of extracting flavone and lactone in order to enhance yield. We
expect to receive a summary of the research project by the end of 2016, which may lead to a conclusion as to whether we can apply
the technology to commercial production of gingko trees in a controlled laboratory environment.
We
currently derive all of our revenues from our online hotel booking business; however, we expect that over the next three years,
sales of ginkgo leaves by our Plantation operations will become our principal source of revenue. For the foreseeable future, we
expect to reinvest any net profits into the development of our Plantation.
Growth
Strategies and Outlook
Though
we expect to focus our immediate efforts of the development of our Plantation, we have identified several growth strategies for
our online hotel booking business.
We
believe that we have the opportunity to expand our booking business by (i) offering our products directly to consumers, and (ii)
targeting travelers from China to North America.
Official China tourism statistics indicate
that the number of outbound tourists was 107 million in 2014, an increase of almost 20% over the previous year. International
travel from China has grown as a result of increased disposable income, relaxed restrictions within China with respect to travel
and a concurrent
easing of visa arrangements for visitors from China by many countries, including the U.S. and Canada,
where our hotels rooms are located. In order to take advantage of these trends, we would need to both build a more robust booking
platform that is accessible to businesses and consumers and commence marketing initiatives directly to Chinese travel agencies
and consumers. We are in the process of evaluating the costs and other resources required to take advantage of this potentially
significant opportunity.
The
business plan we have prepared for our Plantation contemplates that we will have over 1,500 acres under cultivation over the next
five years. After the first year, we expect to increase our land under cultivation by leasing additional lands from individual
farmers on terms that we believe will be comparable to those currently in place. In our second, third, fourth and fifth years
of operations, we expect to have approximately 600 acres, 750 acres, and 800 acres, respectively, of land under cultivation and
that by the fifth year of operations we could be producing up to 5,500 metric tons of dried ginkgo leaves that conform to GAP
standards and that contain the optimum levels of the active ingredients. We believe that from a cost and operations perspective,
as we add lands and the labor, equipment, management, utilities and other input required to produce the output of leaves we project,
our project scales up proportionately. We expect to harvest ginkgo leaves at the end of our first season, the fall of 2016, and
that output production will increase in each of our first five years as we add additional lands under cultivation and our trees
continue to grow to maturity. We currently are marketing our anticipated product to ginkgo extract manufacturers and expect to
have the entire output pre-sold prior to the harvest. As of the fall of 2015, high quality dried ginkgo leaves were being sold
to pharmaceutical companies at prices ranging from RMB 18 – RMB 22 ($3 - $3.60) per kilogram. We believe that we have an
experienced and deep team to execute our business plan, however, agricultural operations are subject to significant risks beyond
our control. Moreover, our Plantation will be subject to all of the risks of doing business in the PRC.
We
believe that ginkgo cultivation represents a favorable opportunity for our Company both because (i) ginkgo is a key ingredient
in TCM and is widely used in the PRC, (ii) the ginkgo growing industry is fragmented among large number of small producers who
continue to utilize archaic farming techniques and a small number of agribusinesses that are subsidiaries of or otherwise connected
with ginkgo extract manufacturers and (iii) ginkgo and other TCM ingredients enjoy increasing usage among consumers worldwide
and are currently accepted under U.S. and EU regulations with only minimal government intervention.
TCM
is widely practiced among PRC residents and is considered to be an integral part of the health care system. Ginkgo is a fundamental
ingredient in TCM which posits that ginkgo is imbued with healing qualities and is prescribed by TCM practitioners to address
a wide range of ailments. China’s National Bureau of Statistics estimates that the TCM market in China totaled more than
RMB515 billion in 2012, accounting for 31.24% of China’s total medicine industry
.
We believe that ginkgo will continue to be a staple of TCM and that there will be an active market for our output.
In
China, TCM products are regulated by the China FDA and typically are produced by pharmaceutical companies. In many instances,
these companies grow the preponderance of the raw materials, such as ginkgo, that they use in their products at company-operated
farms. Those PRC companies that do not control their own production, as well as international manufacturers of herbal supplements
and other related products, must purchase TCM raw materials from independent farmers. Our internal investigation and research
demonstrates that ginkgo continues to be grown by a diverse group of small farmers that rely on antiquated agricultural practices.
Our Plantation will incorporate modern GAP practices to maximize output and ensure the highest content of the active ingredients
in our leaves. Leaves will be packaged in parcels to which we will affix pertinent information, such as the growth records of
the specific product and the flavone and lactone content of the leaves, as a means of exhibiting our transparency and to assure
customers that our product meets their quality specifications. We believe these features will distinguish us from other independent
growers of ginkgo and attract domestic and international customers.
China’s
National Bureau of Statistics estimates that the worldwide TCM market is increasing by between 10% to 20% each year. Over the
last several decades, the usage of ginkgo-based products have proliferated across Europe and North America where ginkgo is becoming
widely accepted as an herbal remedy for a variety of health conditions, principally memory loss and dementia.
Sales
of ginkgo-based products are difficult to estimate but in 2012 worldwide sales were believed to be worth approximately $500 million.
In Europe and the United States, products incorporating ginkgo are among the five top-selling herbal supplements. In 2002, ginkgo
was the number one selling herbal supplement in the United States. We believe that the market for TCM products will continue to
grow as Western consumers, particularly an aging population, look for products that they believe to be safe and inexpensive alternatives
to modern pharmaceutical preparations, as a treatment to mitigate the effects of cognitive decline, such as dementia, which is
one of the principal uses for ginkgo.
Government
regulation of ginkgo-based products in North America and the EU has been relatively benign. In the U.S. gingko is
regulated
as a category of food known as “dietary supplements” under the Dietary Supplement Health and Education Act of 1994
and not as a drug. Ginkgo and other herbal supplements may be sold in the U.S. without regulation, provided that manufacturers
do not make health claims on the labels or in advertising. Moreover, there are no regulations specific to the manufacturing of
individual dietary supplements, though there are general safety rules on manufacturing, packaging, labeling, and storage. In the
EU, “traditional herbal medicinal products” which meet certain criteria, including ginkgo-based products, may be manufactured
and sold within European Union, or EU, member states without authorization or registration. In view of these conditions, we believe
that Western markets represent a receptive and growing market for our
product.
We
believe that we have developed a business plan that presents a reasonable and rational path to success and that our current management
possesses the skills and experience to achieve all of the goals we have set over the next five years and beyond.
Critical
Accounting Policies and Use of Estimates
Accounting
policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential
when reviewing our reported results of operations and our financial position. Management believes that the critical accounting
policies and estimates discussed below involve the most difficult management judgments, due to the sensitivity of the methods
and assumptions used. Our significant accounting policies are described in Note 1 to our consolidated financial statements included
elsewhere in this report.
While
our significant accounting policies are fully described in Note 2 to our audited consolidated financial statements for the year
ended December 31, 2015, we believe the following accounting policies and estimates are the most critical to aid you in fully
understanding and evaluating this management’s discussion and analysis. Some of them involve significant judgments and uncertainties
and could potentially result in materially different results under different assumptions and conditions.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States,
or GAAP, requires management to make judgments, estimates and assumptions that affect the application of accounting policies and
the reported amount of assets, liabilities and provisions, income and expenses and the disclosure of contingent assets and liabilities
at the date of these financial statements. Estimates are used for, but not limited to, the selection of the useful lives of fixed
assets, allowance for doubtful debt associated with accounts receivable, fair values, revenue recognition, and taxes. Management
believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results
may differ from these estimates.
Growing
crops
Gingko
trees are valued at historical cost, which include all cultivation costs incurred for planting, growing and maintaining the gingko
trees during a year other than the harvest season that lasts about two months. The cultivation costs include costs of land lease,
equipment lease, equipment amortization, labor, consulting, fertilizer, materials and supplies, and other direct growing costs.
At
the end of each reporting period, the Company reviews the carrying amounts of the growing crops to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). A reliable market price is usually available
for mature gingko trees in China. Under certain circumstances, when a reliable market price is not available, the fair value of
the growing crops is measured using the discounted expected future cash flow method. Under this method, expected future revenues
less costs to complete and harvest is discounted to present value.
The
growing crops will be amortized using the straight-line method over an estimated useful life of 5 years. The Company intends to
sell all of the gingko trees after 5 years and replant seedlings in order to optimize the effective ingredients in leaves harvested
from younger trees.
Inventories
Inventory
is valued at the lower of cost (determined on a weighted average basis) and market value. Inventories as of December 31, 2015
mainly consist of gingko seeds to be planted during the first quarter of 2016. The Company reviews its inventories regularly for
possible obsolete goods and establishes reserves when determined necessary.
Revenue
recognition
The
Company recognizes revenue from its hotel booking services once the service is rendered and all the significant risks and rewards
of the service have been transferred to the customer. As a result, revenue from hotel booking services are recognized when customers
check in to the hotels. Amounts received from customers for services not yet rendered are included in other current liabilities
as unearned revenue.
In
accordance with the ASC 605 “Revenue Recognition”, the Company reports its revenue as an agent, on the net amount
retained, which is the amount billed to a customer less the amount paid to a hotel.
Stock-based
compensation
The
Company accounts for stock compensation with employees in accordance with ASC 718 “Compensation – Stock Compensation”,
which recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards
expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model.
The
Company accounts for stock compensation arrangements with non-employees in accordance with ASC 505-50 “Stock-Based Transactions
with Nonemployees””, which requires that such equity instruments are recorded at their fair value on the measurement
date. The measurement of share-based compensation is subject to periodic adjustment as the underlying instruments vest. The fair
value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges are amortized over
the vesting period.
Accounts
receivable
Trade
receivables are carried at original invoice amount. Accounts receivable are written off to bad debt expense using the direct write-off
method. Receivables past due for more than 120 days are considered delinquent. Management determines uncollectible accounts by
regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and
current economic conditions and by using historical experience applied to an aging of accounts. Recoveries of trade receivables
previously written off are recorded when received.
Foreign
currency translation
Functional
and presentation currency
Items
included in the financial statements of the Company’s PRC Subsidiaries are measured using the currency of the primary economic
environment in which the subsidiary operates (“the functional currency”), which is the Chinese Renminbi for Globalink
Xuzhou and Globalink Zhejiang, and the Canadian dollar for OneWorld. The consolidated financial statements are presented in United
States dollar, which is the functional currency of the parent company. The operating subsidiaries’ financial statements
are prepared in its respective functional currencies before translating to the presentation currency which is the USD. The Company
translates items in the statement of loss and comprehensive loss using the average exchange rate for the year. Assets and liabilities
are translated at the year-end rate. All resulting exchange differences are reported as a separate component of other comprehensive
income (loss).
Transactions
and balances
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuations where items are re-measured. Foreign exchange gains and losses resulting from settlement of such transactions and
from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized
in the profit or loss in “foreign exchange (gain) loss”.
Impairment
reviews for long-lived assets
Long-lived
assets such as property, equipment and goodwill are reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the
fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets,
if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its
undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the
asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at
a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses
for any periods presented.
Results
of Operations
Comparison
of Operating Results for the Three Months Ended March 31, 2016 and March 31, 2015
Our
operating results for the three months ended March 31, 2016 and 2015 are compared below:
|
|
For
the Three Months Ended March 31,
|
|
|
|
|
2016
|
|
2015
|
|
Increase
/ (Decrease)
|
|
|
($)
|
|
($)
|
|
($)
|
Statement
of Operations Data:
|
|
|
|
|
|
|
Revenue
|
|
$
|
33,096
|
|
|
$
|
71,921
|
|
|
$
|
(39,825
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
|
87,026
|
|
|
|
52,342
|
|
|
|
34,684
|
|
Directors
and management fees
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
—
|
|
Research
and development
|
|
|
8,796
|
|
|
|
—
|
|
|
|
8,796
|
|
Stock
based compensation
|
|
|
51,873
|
|
|
|
—
|
|
|
|
51,873
|
|
Foreign
exchange loss (gain)
|
|
|
(7,136
|
)
|
|
|
(594
|
)
|
|
|
(6,542
|
)
|
Professional
fees
|
|
|
800
|
|
|
|
574
|
|
|
|
(226
|
)
|
Rent
|
|
|
9,093
|
|
|
|
5,209
|
|
|
|
3,884
|
|
Travel
|
|
|
10,747
|
|
|
|
7,140
|
|
|
|
3,607
|
|
Investor
Relations
|
|
|
12,000
|
|
|
|
—
|
|
|
|
12,000
|
|
Miscellaneous
operating expenses
|
|
|
15,263
|
|
|
|
4,198
|
|
|
|
10,892
|
|
Total
|
|
|
(218,928
|
)
|
|
|
(99,754
|
)
|
|
|
119,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(185,832
|
)
|
|
|
(27,833
|
)
|
|
|
157,999
|
|
Revenues
For
the three months ended March 31, 2016 and March 31, 2015, all of our revenues were generated from our hotel booking operations.
Revenues for the three months ended March 31, 2016 revenues decreased by $39,825, or 53.98%, compared to the three months ended
March 31, 2015. The primary reasons for the decrease in revenues were reduced profit margin due to fierce completion and a weaker
Canadian dollar against US dollars, as revenue earned in OneWorld is in Canadian dollars and translated and presented in US dollars
in the financial statements.
General
and administrative expenses
Total
general and administrative expenses for the three months ended March 31, 2016 increased by $119,174, or 119.46%, over the three
months ended March 31, 2015. The primary reason for the increase was the incurrence of additional expenses in connection with
the commencement of our Plantation in the PRC, while in the three months ended March 31, 2015, the business in China was not started.
Set
forth below is a discussion of the individual components of general administrative expenses:
Salaries
and Benefits
increased by $34,684, or 66.26%, in 2016 compared to 2015. The increase is attributable to hiring new employees
by our PRC subsidiaries.
Directors
and Management Fees
are paid to directors in Canada, and remained the same through both periods.
Research
and Development
increased by $8,796, or 100%, in 2016 compared to 2015. The increase is attributable to the payment for research
and development services conducted by Zhejiang Pharmaceutical College pursuant to the agreement between the parties.
Stock
Based Compensation
increased by $51,873, or 100%, in 2016 compared to 2015. The increase is attributable to 2,000,000 shares
of common stock issued to a public relations firm during the period for services rendered and to be rendered and to the vesting
of 900,000 options previously granted by our board of directors under the 2015 Stock Awards Plan.
Foreign
Exchange Gain
increased by $6,542, considering a gain of $7,136 in 2016 compared to a gain of $594 in 2015. The increase is
attributable to fluctuations in foreign exchange rates between US dollars, Canadian dollars and Chinese RMB.
Professional
Fees
increased by $226, from $574 for the three month period ended March 31, 2015 compared to $800 for the 2016 period. The
decrease is attributable to the foreign exchange fluctuation when audit fees paid in Canadian dollars are converted into US dollars
due to the increase of US dollars against Canadian dollars
Rent
increased by $3,884, or 74.56%, in 2016 compared to 2015. The increase is attributable to a new office leases in China.
Travel
increased by $3,607, or 50.51%, in 2016 compared to 2015. The increase is attributable to additional travel to and from the
PRC as we commenced Plantation operations.
Miscellaneous
Operating Expenses
comprises telephone, office supplies, meals and entertainment, insurance, repairs, leasehold improvements,
among other things. These expenses increased by $10,892, from $2,328 for the three month period ended March 31, 2015 to $13,220
for the same period in 2016. The increase is attributable to expenses incurred in connection with the commencement of our Plantation
in China.
Net
Loss
Net
loss for the three months ended March 31, 2016 increased by $158,407, or 606%, compared to the three months ended March 31, 2015.
The principal reason for the increase was the commencement of our Plantation business in China and the allocation of resources
to that project.
Liquidity
and Capital Resources
At
March 31, 2016 we had working capital of $335,634 compared with working capital of $582,647 at December 31, 2015. Our working
capital has decreased primarily due net cash expenses attributable to our Plantation without corresponding increases in revenue
or cash investment in the Company. At March 31, 2016, we had approximately $677,221 in cash and $157,926 of accounts receivable,
$466,220 of accounts payable and accrued liabilities, $237,530 in amounts due to related parties (including $232,530 in a non-interest
bearing loan with no fixed repayment terms).
Cash
Flows Used in Operating Activities
Cash
flows used in operating activities for the quarter ended March 31, 2016, during which we incurred a net loss of $185,832, totaled
approximately $129,161. This amount comprises an increase in amortization of $734, an increase in stock-based compensation of
$51,873, and an increase in shares issued for investor relations fees of $12,000. In addition, the Company recorded the following
changes in non-cash working capital items: we had an increase in accounts receivable of $55,790, an increase in other current
assets of $74,006, an increase in accounts payable and accrued liabilities of $108,015 and amounts due to related parties of $5,000,
and an increase in other current liabilities of $8,845.
Cash
flows used in operating activities for the quarter ended March 31, 2015, during which we incurred a net loss of $27,833, totaled
$127,542. This amount comprises changes in the following non-cash working capital items: a decrease in accounts receivable of
$193,595, a decrease in other current assets of $4,003, an increase in accounts payable and accrued liabilities of $81,555, and
an increase in other current liabilities of $8,328.
Cash
Flows from Investing Activities
For
the quarter ended March 31, 2016, we used total cash in investing activities of $198,593, comprising $2,961 for the acquisition
of fixed assets, $996 for inventories, $69,495 for construction in progress, and $125,411 in connection with growing crops, all
allocated to the development of our business in China. For the quarter ended March 31, 2015, there were no significant cash sources
or uses from investing activities.
Cash
Flow from Financing Activities
For
the quarter ended March 31, 2016, the Company received a loan in the principal amount of $232,530 from a related party. The loan
is non-interest bearing and has no fixed repayment terms. For the quarter ended March 31, 2015, there were no significant cash
sources or uses from financing activities.
Off
Balance Sheet Arrangements
As
of March 31, 2016 and December 31, 2015, the Company has no off balance sheet financing arrangements.
Comparison
of Operating Results for the
years ended December 31, 2015 and 2014
Our
operating results for the years ended December 31, 2015 and 2014 are compared below:
|
|
Fiscal
Year ended December 31,
|
|
|
|
|
2015
|
|
2014
|
|
Increase
/ (Decrease)
|
|
|
($)
|
|
($)
|
|
($)
|
Statement of Operations
Data:
|
|
|
|
|
|
|
Revenue
|
|
$
|
305,651
|
|
|
$
|
346,784
|
|
|
$
|
(41,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
|
249,384
|
|
|
|
243,299
|
|
|
|
6,085
|
|
Directors
and management fees
|
|
|
60,000
|
|
|
|
43,974
|
|
|
|
16,026
|
|
Research
and development
|
|
|
2,885
|
|
|
|
—
|
|
|
|
2,885
|
|
Stock
based compensation
|
|
|
90,932
|
|
|
|
—
|
|
|
|
90,932
|
|
Foreign
exchange loss (gain)
|
|
|
(9,357
|
)
|
|
|
17,226
|
|
|
|
26,583
|
|
Professional fees
|
|
|
51,442
|
|
|
|
55,467
|
|
|
|
(4,025
|
)
|
Rent
|
|
|
26,106
|
|
|
|
19,340
|
|
|
|
6,766
|
|
Travel
|
|
|
33,346
|
|
|
|
10,671
|
|
|
|
22,675
|
|
Miscellaneous
operating expenses
|
|
|
79,203
|
|
|
|
71,049
|
|
|
|
8,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(278,290
|
)
|
|
$
|
(114,242
|
)
|
|
|
|
|
*
Less than 1%.
Revenues
Revenues
for the year ended December 31, 2015 decreased by $41,133, or 11.86%, compared to the year ended December 31, 2014. The primary
reasons for the decrease in revenues were fluctuation of exchange between US dollars and Canadian dollars, as revenue earned in
OneWorld is in Canadian dollars and translated and presented in US dollars in the financial statements.
General
and administrative expenses
Total
general and administrative expenses for the year ended December 31, 2015 increased by $122,915, or 26.66%, over the year ended
December 31, 2014. The primary reason for the increase was the commencement of our Plantation in PRC.
Set
forth below is a discussion of the individual components of general administrative expenses:
Salaries
and Benefits
increased by $6,085, or 2.50%, in 2015 compared to 2014. The increase is attributable to hiring new employees
by our PRC subsidiaries.
Directors
and Management Fees
increased by $16,026, or 36.44%, in 2015 compared to 2014. The increase is attributable to net effect
of appointment of new CFO in January 2015 and resignation of two former directors and officers in December 2014.
Research
and Development
increased by $2,885, or 100%, in 2015 compared to 2014. The increase is attributable to the payment for research
and development services conducted pursuant to the Company’s contract with Zhejiang Pharmaceutical College.
Stock
Based Compensation
increased by $90,932, or 100%, in 2015 compared to 2014. The increase is attributable to our board of director’s
adoption of the 2015 Stock Awards Plan and the grant of options thereunder.
Foreign
Exchange Loss
decreased by $26,583, considering a gain of $9,357 in 2015 compared to a loss of $17,226 in 2014. The decrease
is attributable to fluctuations in foreign exchange rates between US dollars, Canadian dollars and Chinese RMB.
Professional
Fees
decreased by $4,025, or 7.26%, in 2015 compared to 2014. The decrease is attributable to the foreign exchange fluctuation
when audit fees paid in Canadian dollars are converted into US dollars due to the increase of US dollars against Canadian dollars
Rent
increased by $6,766, or 34.98%, in 2015 compared to 2014. The increase is attributable to a new office lease in China.
Travel
increased by $22,675, or 212.49%, in 2015 compared to 2014. The increase is attributable to additional travel to and from
the PRC as we commenced Plantation operations.
Miscellaneous
Operating Expenses
comprises telephone, office supplies, meals and entertainment, insurance, repairs, leasehold improvements,
among other things. These expenses increased by $8,154, or 11.48%, in 2015 compared to 2014. The increase is attributable to expenses
incurred in connection with the commencement of our Plantation in China.
Net
Loss
Net
loss for the year ended December 31, 2015 increased by $164,048, or 143.60%, over the year ended December 31, 2014. The primary
reason for the increase was the commencement of our Plantation business in China and the allocation of resources to that project.
Liquidity
and Capital Resources
Liquidity
is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise
operate on an ongoing basis. Significant factors in the management of liquidity include funds generated by operations, the availability
of credit facilities, levels of accounts receivable and accounts payable, and capital expenditures.
As
of December 31, 2015, we had working capital of $582,647, compared with working capital of $893,463 as of December 31, 2014. The
decrease in our working capital is attributable to:
•
|
increased
expenses incurred in connection with the commencement of the development of our Plantation;
|
•
|
lower
revenue which we attribute to a weak Canadian dollar compared to the US dollar; and
|
•
|
a
reduction in sales of equity to investors.
|
Since
our inception, we have financed our operations through the sale of equity securities, by short term loans from stockholders and
from internally generated revenue from operations.
Since
2008, we have been operating our online hotel booking business with profits generated from sales and we expect to continue to
generate sufficient revenue from sales to support such operations for the foreseeable future. At such time as we seek to implement
our expansion plans, we will require additional capital to build a more robust booking platform to accommodate individual consumers
and to initiate wider scale marketing efforts.
We
believe that we will require significant additional capital to achieve our short and medium-term objectives of developing our
Plantation. We have developed a detailed business plan for our Plantation covering the period 2016 through 2020 that sets forth
expected costs, expenses and sales under normal growing conditions and in the current business and regulatory climate. The table
below provides information with respect to our annual capital requirements:
|
Year
|
|
|
|
Plantation
Capital Requirements
1
|
|
|
2016
|
|
|
$
|
1,800,000
|
|
|
2017
|
|
|
$
|
1,800,000
|
|
|
2018
|
|
|
$
|
1,400,000
|
|
|
2019
|
|
|
$
|
0
|
|
|
2020
|
|
|
$
|
0
|
|
|
Total:
|
|
|
$
|
5,000,000
|
|
|
1.
After giving effect to the reinvestment of profits from the sale of ginkgo leaves into
the business.
|
|
We
intend to allocate all of the net proceeds from the offering of the Shares made by this prospectus, if any, to the development
of our Plantation. If we sell less than all of the Shares and receive less than all of the proceeds from the offering of the Shares,
we will not be able to develop our Plantation as quickly as our business plan anticipates, in which case, we will not meet the
production and sale expectations set out in our business plan. Under such circumstances, we may seek to obtain loans in China,
though we expect that any such loans would be at a high cost to us. To date, our PRC stockholders have funded the development
of our Plantation through loans to the Company and may continue to loan money to the Company in the future, though they are under
no obligation to do so.
During
our first five years of operation we expect that our principal costs and expenses will include rent, costs in connection with
the acquisition of new leasehold interests in land, labor for agricultural and packaging processes, agricultural supplies (seeds,
fertilizer and pesticides), farming and laboratory equipment, facilities construction, utilities, fees for technical consulting
services and general administrative expenses, including rent, management salaries, implementation and maintenance of agricultural
GAP infrastructure and attestation, marketing and internal controls monitoring.
We
expect to generate revenues after our first harvest during the fall of 2016. We expect that all net revenue generated from the
sale of ginkgo leaves will be reinvested into the Plantation for the foreseeable future.
The
proceeds we may receive from the sale of all Shares offered by this prospectus will allow us to complete the development of our
Plantation over five years and expand to 1,553 acres of land under cultivation. If we do not sell all of the Shares offered hereby,
we may seek to raise the additional required funds by way of equity or debt financings. Any debt financing secured by us in the
future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters,
which might make it more difficult for us to obtain additional capital and to pursue business opportunities. We might not be able
to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing
on terms satisfactory to us when we require it, our ability to develop our Plantation as quickly as anticipated, or at all, and
to respond to business challenges could be significantly limited.
Our
business segments, encompassing online hotel booking and the development and operation of a ginkgo tree Plantation, entail numerous
risks, many of which are beyond our control. Please see the section titled “
Risk Factors
” for a discussion
of the risks we may encounter in connection with these operations.
Cash
Flows:
The
following table presents summary cash flow information for the periods indicated.
|
|
|
Year
|
|
|
|
|
2015
|
|
|
|
2014
|
|
Net
cash provided by (used in)
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
$
|
(293,791
|
)
|
|
$
|
(159,752
|
)
|
Investing
activities
|
|
|
(235,503
|
)
|
|
|
(145
|
)
|
Financing
activities
|
|
|
110,000
|
|
|
|
987,703
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash
|
|
$
|
(419,294
|
)
|
|
$
|
827,806
|
|
Operating
Activities
In
2015, net cash used in operating activities increased by $134,039 compared to 2014. This was due primarily to commencement of
our Plantation business in China.
Investing
Activities
In
2015, net cash used in investing activities increased by $235,358 compared to 2014. The increase is attributable to additional
expenses incurred in connection with the acquisition of fixed assets ($58,273), inventories ($26,244), construction in progress
related to our Plantation ($13,411), and agricultural activities ($137,575), all incurred in connection with our Plantation operations;
whereas, during 2014, we expended $145 for the acquisition of fixed assets.
Financing
Activities
In
2015, net cash provided by financing activities decreased by $877,703 compared to 2014. The decrease was due principally to reduced
stock sales to investors during 2015 compared to 2014 and the repayment of loans to shareholders during 2014 in the amount of
$62,297.
Contractual
Commitments
The
Company has contractual obligations and commercial commitments including long-term debt and lease obligations. The table below
presents our future contractual obligations:
|
Total
|
Less
than 1 Year
|
1–3
Years
|
3–5
Years
|
More
than 5 Years
|
Long-term
debt
|
$.
|
0
|
|
0
|
|
0
|
|
0
|
0
|
Interest
payments
|
|
0
|
|
0
|
|
0
|
|
0
|
0
|
Land
lease
|
|
1,482,000
|
|
114,000
|
|
228,000
|
|
228,000
|
912,000
|
Operating
leases
|
|
0
|
|
0
|
|
0
|
|
0
|
0
|
Research
and development contract
|
|
46,200
|
|
15,400
|
|
30,800
|
|
0
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
contractual obligations
|
$
|
1,528,400
|
|
129,400
|
|
258,800
|
|
228,00
|
912,000
|
Off-Balance
Sheet and Other Arrangements.
At December 31, 2015 and 2014, we did not have any off-balance sheet or similar arrangements.
Seasonality
and Inflation
Seasonal
nature of operations
Both
of the sectors in which we operate are seasonal in nature. Our online hotel booking business parallels the travel industry generally
in that more people travel in the summer months and our results of operations reflect a slight increase in revenue from this segment
of our business during the third quarter which gives effect to increased hotel bookings during the summer. Our agricultural operations
are seasonal and we expect that the majority of our sales and will be concentrated during the months from November through March,
corresponding to the harvest of ginkgo leaves, which begins in October when the leaves mature.
Inflation
Management
does not believe that inflation has had a material effect on income during the years ended December 31, 2014 and 2015.
Known
Trends and Uncertainties
We
believe that the outlook for the travel industry generally and in China specifically is favorable; however, there remain uncertainties
that make it difficult to predict the future of our industry and business. The travel industry is subject to a number of economic
factors beyond our control that could result in a decline in the frequency of travel and have a negative adverse effect on our
business, including:
•
|
increases
in the cost of travel for any reason, such as an increase in the price of jet fuel, which have been volatile over the last
year, or reductions of disposable income;
|
•
|
safety
concerns surrounding terrorism or the threat of terrorism;
|
•
|
natural
disasters such as earthquakes or health concerns, such as the avian flu; and
|
•
|
governmental
regulations that restrict or make it more expensive to travel could also impact the number of rooms we book; specifically,
our proposed future marketing efforts to attract Chinese travelers could be hindered by the adoption of regulations by the
PRC that restrict travel.
|
Our
agricultural operations also are subject to a number of risk and uncertainties that are beyond our control that could adversely
affect our business, including:
•
|
our
failure to raise sufficient funds in this offering to fully develop our Plantation;
|
•
|
a
downturn in the PRC economy or general economic conditions in the countries in which we expect to sell our output;
|
•
|
fluctuations
in the market prices of ginkgo based on the quality of the leaves and the available supply, which can be affected by growing
conditions, particularly weather conditions and diseases and pests;
|
•
|
changes
in government regulations, including changes in business, currency control, land use or tax regulations in the PRC;
|
•
|
the
adoption of regulation that restricts the usage of herbal remedies and supplements;
|
•
|
changes
in consumer preferences away from ginkgo-based products that reduce the demand for ginkgo extract and the supply of ginkgo
leaves from which it manufactured; and
|
•
|
currency
fluctuations.
|
The
foregoing are representative of the risks and uncertainties that could affect our business and qualified in their entirety by
the more detailed and comprehensive risk factors relating to the Company’s business set forth under the heading “
RISK
FACTORS
.”
Recent
Accounting Pronouncements
Emerging
Growth Company Critical Accounting Policy Disclosure: We qualify as an "emerging growth company" under the 2012 JOBS
Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth
company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period.
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard
for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance.
The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and
how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring
the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized
before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature,
amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is prohibited.
The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable
to the Company at the beginning of its first quarter of fiscal year 2017. The adoption of this guidance is not expected to have
a material impact on the Company’s consolidated financial statements.
In
August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability
to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern
uncertainties in their financial statements. The new standard requires management to perform interim and annual assessment of
an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial
statements (or within one year after the date on which the financial statements are available to be issued, when applicable).
Further, an entity must provide certain disclosures if there is substantial doubt about the entity’s ability to continue
as a going concern. The requirement is effective for annual periods ending after December 15, 2016, and interim periods thereafter.
Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated
financial statements.
DESCRIPTION
OF OUR BUSINESS
Hotel
Booking Business
Operations
We
operate a hotel booking service for travel agents located in Canada. We enter into agreements with hotel chains and individual
hotels in Canada and the United States that agree to make rooms available to us at discounted prices. We currently have relationships
with five hotel chains and over two hundred individual hotels, including Pan Pacific Vancouver, Fairmont Pacific Rim, Westin Bayshore
Vancouver and Marriott Vancouver. We also enter into agreements with travel agents throughout Canada who view room selection on
our web site and contact us directly to book rooms. As of April 30, 2016, approximately 500 travel agents were party to agreements
with us. Our agreements with hotels and travel agents typically extend for one year, after which the agreements automatically
renew.
Travel
agents typically book blocks of rooms for their business and leisure traveler clients. Currently, all room booking is completed
manually and no credit card or other personal data is transmitted electronically or retained by us. We generate revenue for our
services based on the difference between the total amount the travel agent pays for the room and the negotiated net rate plus
estimated taxes that the hotel charges for the room. We recognize revenue when rooms are booked and remit payment to the hotel
promptly.
We
believe that we have the opportunity to expand our booking business by (i) offering our products directly to consumers, and (ii)
targeting travelers from China to North America.
Official China tourism statistics indicate
that the number of outbound tourists was 107 million in 2014, an increase of almost 20% over the previous year. International
travel from China has grown as a result of increased disposable income, relaxed restrictions within China with respect to travel
and a concurrent
easing of visa arrangements for visitors from China by many countries, including the U.S. and Canada,
where our hotels rooms are located. In order to take advantage of these trends, we would need to both rebuild our booking platform
making it more robust and accessible to businesses and consumers and commence marketing initiatives directly to Chinese travel
agencies and consumers. We are in the process of evaluating the costs and other resources required to take advantage of this potentially
significant opportunity.
Regulation
Our
business is subject to laws and regulations relating to our revenue generating and marketing activities, including those prohibiting
unfair and deceptive advertising or practices, consumer protection and data privacy. Our travel services are subject to regulation
and laws governing the offer of travel products and services, including laws requiring us to register as a “seller of travel”
in Canada and to comply with certain disclosure requirements. See RISK FACTORS - Our businesses are regulated and any failure
to comply with applicable regulations or any changes in those regulations could adversely affect us.”
Competition
The
general market for travel products and services is highly competitive, and the competitive intensity is increasing as the market
rapidly evolves. The online travel industry generally has low barriers to entry and competitors can launch new websites at a relatively
low cost. Our competition includes: online and offline travel companies; travel suppliers, such as airline, hotel and rental car
companies, many of which have their own branded websites and call centers and bundle travel services; travel research companies;
search engines; and meta-search websites.
The
travel agents that utilize our service are constantly seeking the best rates and may search a multitude of suppliers. Our competition
may offer more favorable terms and/or improved interfaces to suppliers and travelers. Travel suppliers have increasingly focused
on distributing their products through their own websites, or through joint efforts, in lieu of using third parties such as OTCs.
Suppliers who sell their products on their own websites often offer advantages such as their own bonus miles or loyalty points
not available on our sites, which may make their offerings more attractive than our offerings to some consumers. Travel research
companies, search engines and meta-search websites are capable of sending customers to the websites of suppliers and other competitors.
Factors
affecting our competitive success include price, availability of travel products, ability to package travel products across multiple
suppliers, brand recognition, customer service and customer care, fees charged to customers, ease of use, accessibility, reliability
and innovation such as offering our own custom loyalty programs.
Seasonality
Our
booking business experiences slight seasonal fluctuations in the demand for the products and services we offer. Bookings are generally
highest in the third quarter as customers plan and book their summer vacations. Our seasonality may also be affected by fluctuations
in the travel products our suppliers make available to us for booking, the growth of our international operations or a change
in our product mix.
Gingko
Biloba Plantation
Our
PRC joint venture subsidiary, Globalink Xuzhou, is developing a vertically integrated ginkgo biloba, or ginkgo, tree plantation,
which we refer to as our Plantation, at which we cultivate ginkgo trees for their leaves which we will harvest, dry and sell.
We intend to allocate all of the proceeds from this offering, if any, to the development of the Plantation that we launched in
late 2015 in Pizhou City, People’s Republic of China. We will sell dried gingko leaves to companies that manufacture ginkgo
extract which is used in herbal remedies and supplements. Once our ginkgo trees reach six or seven years of age, we will sell
them to public institutions and private individuals for ornamental purposes. Assuming we sell all of the Shares, over the next
five years we expect that our Plantation will comprise 9,300 mu (a mu is a measurement of land that equals approximately 0.167
acres), or approximately 1,553 acres, that will be capable of producing up to 5,600 tons of dried gingko leaves per year. At this
size, we believe that our Plantation will be among the largest independent producers of dried ginkgo leaves in China.
Ginkgo
is a fundamental ingredient in traditional Chinese medicine, or TCM, and is administered both as a tea and by way of tablets comprised
of the active chemical constituents that have been extracted from dried leaves and concentrated. TCM posits that ginkgo is imbued
with healing qualities and is prescribed by physicians and TCM healers to address a wide range of ailments. Over the last several
decades, tablets or pills manufactured from the extract of ginkgo leaves have proliferated across Europe and North America where
ginkgo is becoming widely accepted as an herbal remedy for a variety of health conditions, including memory loss and dementia.
Our
ginkgo tree plantation will deploy the latest scientific and technical practices available to us throughout the growth cycle and
the processing and distribution processes to maximize our output of high- quality dried ginkgo leaves. We will incorporate European-style
good agricultural practices, or GAP, into our operations and will seek to integrate our customer’s agricultural and other
practices into our processes and procedures so that buyers will have confidence that the product they purchase from us satisfies
their standards. For example, we will provide to our clients reference data that we gather from the soil in which we grow the
trees and the leaves we harvest, including information relating to the content of the active ingredients in ginkgo and the indicators
of heavy metal, pesticide residues, moisture and microbes on the leaves in that batch, among other information. We believe that
we will be among the only independent ginkgo growers in China to employ these practices in our operations and that customers will
value our transparency as they seek to satisfy stringent requirements with respect to the quality of the products they sell in
their home countries.
We
currently lease approximately 100 acres of land from the local landholders. We commence preparing these lands for cultivation
last fall and planted our first seeds this spring. We expect to harvest ginkgo leaves from this grove in October for sale in November.
Over
the next fiver years, we will seek to lease additional lands by entering into land use agreements with local landholders. We will
train our work force to farm under GAP and to integrate the other practices we implement. We believe that this model will provide
us with flexibility to secure significant additional parcels of quality acreage as our Plantation grows.
Initially,
we will sell dried leaves to Chinese companies that manufacture ginkgo biloba extract, or GBE, utilized in TCM and that primarily
sell their products in China. We expect to quickly expand sales of dried leaves to European manufacturers of GBE tablets and other
herbal supplements, where we believe that there is demand for high quality ginkgo leaves with a demonstrable lineage.
In
furtherance of our efforts to maximize growth of the highest quality ginkgo, our Globalink Zhejiang subsidiary has entered into
in an agreement with Zhejiang Pharmaceutical College to undertake research and development with respect to accelerating the development
of the active ingredients within the ginkgo tree and optimizing the processes of extracting flavone and lactone in order to enhance
yield. We expect to receive a summary of the research project by the end of 2016, which may lead to a conclusion as to whether
we can apply the technology to commercial production of gingko trees in a controlled laboratory environment.
Market
Overview
Ginkgo
leaves and seeds have been used medicinally in TCM for over three millennia. Ginkgo has received prominent treatment in the Chinese
materia medica (the body of collected knowledge about the therapeutic properties of any substance used for healing) since it was
first compiled by Li Shizhen in 1578 which notes uses dating back to 2800 B.C. Over the last thirty five years, ginkgo and a plethora
of other herbs used in TCM and traditional medicines from other cultures have proliferated throughout the West.
People
in China and throughout the developing world rely on traditional medicines for a number of reasons. Foremost, traditional medicines
are less expensive and more readily available than Western pharmaceutical preparations; people trust the long tradition of their
local herbal remedies and the practitioners that dispense them; they are typically non-toxic with fewer side effects, and their
cultural traditions take a holistic approach to healing and curing the human body. Many of these same forces are driving increased
usage of traditional medicines in developed countries
In
China, herbal remedies incorporating ginkgo leaf are available by prescription at over the counter at pharmacies and other dispensaries
and from local practitioners of TCM. In China, these medicines and remedies are regulated as “drugs” and subject to
regulation by China’s Food and Drug Administration. Ginkgo leaf preparations are taken orally by tablet or in liquid form
and can be found in combination with other herbal substances. Ginkgo extract is also used as a component of a wide range of natural
cosmetic and beauty products.
Sales
of ginkgo-based products are difficult to estimate but in 2012 worldwide sales were believed to be worth approximately $500 million.
Large-scale cultivation of ginkgo leaf to produce ginkgo extract has been in existence in the United States and France since 1982.
Across the globe, it is estimated that 25 million ginkgo trees are pruned and mechanically harvested each year.
Ginkgo
leaf production in the United States is second only to China.
In Europe and the United States,
products incorporating ginkgo are among the five top-selling herbal supplements. In 2002, ginkgo was the number one selling herbal
supplement in the United States.
According
to the Chinese Medicine Journal, nearly all Chinese medical schools teach both TCM and Western medicine. This integrated training
carries through to patient treatment. At a Chinese hospital, a patient may receive a diagnostic X-ray and then be treated with
a combination of acupuncture and anti-inflammatory drugs.
According
to China’s National Bureau of Statistics:
•
|
the
TCM market in China totaled more than 515 billion yuan in 2012, accounting for 31.24% of China’s total medicine industry;
and
|
•
|
the
worldwide TCM market is increasing between 10% to 20% each year.
|
Over
the last few decades, the usage of TCM remedies and other forms of traditional medicines has experienced significant growth in
Western countries. As of 2015, about 70 countries had enacted laws directly related to traditional medicines and nearly 120 countries
have registered TCM institutions. Popular recognition in Europe of the benefits of TCM preparations and the usage of TCM, which,
in some instances, such as ginkgo, dates back over thirty years, appears to exceed that in the United States.
In
recognition of the growing popular acceptance and usage of herbal remedies in Europe, in 2004, the European Union Medical Agency
adopted the Traditional Herbal Medicines Product Directive which provides a pathway for
herbal medicinal
products to obtain regulatory authorization to market within the European Union, or EU.
This directive allows medicinal
claims to be made on the label of the final product, although restrictions do apply on the final wording.
As
of December 2014, over 1,300 traditionally used herbal medicines had been registered in the EU, and more than 600 herbal medicines
have been granted a marketing authorization based on their well-established use in the EU Member States. These medicines are accompanied
by clear and harmonized product information across the EU, enabling citizens to make an informed choice when using herbal medicines
for self-medication and healthcare professionals to base their prescription on comprehensive information on the medicines. In
a study published in 2014 by PlantLibra funded by the EU, researchers found that one in five individuals use herbal supplements.
Germany
has the most advanced herbal medicine processing technology and the most developed herbal market in Europe. In fact, sales of
TCM medicines have achieved sufficient mainstream status that in November 2014, Bayer AG (Germany) completed the acquisition of
Dihon Pharmaceutical Group Co., Ltd. (Kunming, Yunnan, China) for a price of 3.6 billion yuan (approximately 460 million Euros
as of the date of the transaction). Dihon is among China’s top over-the-counter consumer healthcare product companies and
specializes in the manufacturing and marketing of herbal TCM products.
Herbal
supplements are big business in the in the United States, as well. A report published by Herbalgram, a
peer-reviewed quarterly journal of the American Botanical Council, estimated that in 2014 sales of herbal dietary supplements
in the United States were $6.4 billion, representing an increase of 6.8% over the prior year’s sales and the eleventh consecutive
year in which sales of herbal supplements
have increased in the United States.
Sales
of ginkgo herbal supplements in the United States totaled more than US$25.8 million during 2012, making ginkgo the fifth best-selling
herbal supplement. In 2014, the United States Pharmacopeial Convention published a monograph relating to powdered ginkgo extract
as a dietary supplement, tantamount to an acknowledgement of its place in mainstream American health.
Current
State of Ginkgo Cultivation in China
A
number of factors have influenced the growth and current state of the ginkgo industry in China since the turn of the century.
As the use of ginkgo experienced dramatic growth over the last several decades, so too did the demand for dried ginkgo leaves
from which ginkgo extract, the concentrated form of ginkgo that contains the standardized quantities of the active ingredients
in ginkgo, is manufactured. Our internal research shows that in China during the first decade of the 21
st
century,
demand for leaves from which to manufacture ginkgo extract outpaced the ability of farmers to supply raw materials (dried leaves).
Initially, this economic condition had a positive effect on farmers as the price for dried ginkgo leaves rose. More extract manufacturers
seeking to purchase a relatively static supply of ginkgo and a corresponding increase in prices of ginkgo leaves squeezed ginkgo
extract manufacturers which very quickly started to manufacture extract using other less expensive ingredients that did not contain
the active constituents of ginkgo. Two high profile cases in which ginkgo extract purchased by foreign entities was adulterated
with other ingredients, one involving General Nutrition Corporation in the United States and one involving Bayer AG in Germany,
brought to light what had become a pervasive practice among Chinese ginkgo extract manufacturers and tainted the entire industry.
The
ripple effects of these incidents were felt across the ginkgo farming and ginkgo extract manufacturing industries. As related
to ginkgo farming, as extract manufacturers substituted other ingredients in place of ginkgo, prices for ginkgo leaves declined.
Farmers migrated to other more lucrative crops and ginkgo leaf production declined. Prices remain depressed from levels enjoyed
early in this century and there has been a slow return by local farms and individual farmers to the crop. In addition, Chinese
manufacturers of ginkgo-based products (mostly pharmaceutical companies) began to develop their own growing operations to better
control costs and ensure the quality of the leaves and content of the active ingredients. Further, Western purchasers of ginkgo
extracts adopted rigorous new testing and authentication standards to ensure that they were purchasing genuine ginkgo extract
and ginkgo leaves with the highest content of active ingredients.
We
believe that the fallout from the extract adulteration scandal continues to directly impact the ginkgo farming and extract production
industries. It is our opinion, based on our internal research (derived from the China Chamber of Commerce of Medicines & Health
Products Importers & Exporters, Nanjing Forestry University and other commercial and academic organizations), that, while
ginkgo leaves continue to remain in great demand domestically in China and internationally, there remains a less than optimal
supply of raw materials. We believe that, for the most part, other than the manufacturers that farm ginkgo internally, existing
demand is met by small farmers who rely on antiquated farming techniques, and in many instances are selling ginkgo leaves harvested
from older trees that have less than the optimal levels of the active constituents of ginkgo, thus requiring manufacturers to
purchase more leaves from which to manufacture the standardized extract sought by Chinese and Western consumers. Since many of
the large Chinese pharmaceutical companies that manufacture ginkgo extract own and operate their own plantations, their output
is not generally available to independent ginkgo extract producers.
We
believe that these conditions are favorable for developing an independent ginkgo plantation that grows and harvests high quality
product for sale to domestic and international manufacturers of ginkgo extract. We will incorporate processes, standards and techniques
into our operations that will distinguish us from the small farms and individual farmers that we believe are the current largest
sources of ginkgo leaves to independent domestic and foreign entities that manufacture ginkgo extract. We believe that the good
agricultural practices and informative batch labeling we will employ will render our operations transparent to customers at a
time when ginkgo farming is under tremendous scrutiny.
The
JV Agreement
During
April 2014, we entered into a joint venture agreement with Shizhen Biotech Co., Ltd. relating to the organization and operation
of Globalink Xuzhou, a Sino-foreign equity joint venture company to engage in (i) the cultivation and sale of ginkgo leaves, (ii)
research and development with respect to the cultivation of ginkgo, and (iii) the development of products manufactured from ginkgo.
Globalink Xuzhou was organized with total registered capital of RMB 60 million, of which, pursuant to the JV Agreement, we have
the right to own 80% upon a total investment of RMB 48 million ($8 million) and Shizhen Biotech has the right to own 20% upon
a total investment of RMB 12 million ($2 million). All payments into Globalink Xuzhou were to have been completed within one year
after the execution of the JV Agreement. As of the date of this prospectus, we have invested $800,000 in Globalink Xuzhou and
Shizhen Biotech has not invested any funds into the company, accordingly, we own all of the outstanding capital of Globalink Xuzhou
as of the date of this prospectus. Currently, we control the management and operation of Globalink Xuzhou.
Under
the JV Agreement, we are responsible for, among other things, providing cash, machinery and equipment: industrial property: selecting,
purchasing and shipping capital goods, machinery and equipment outside China; providing and training technical personnel and labor;
and for production of qualified products. Under the JV Agreement, Shizhen Biotech is responsible for, among other things, obtaining
and maintaining applications for approval, registrations, business licensees and other matters relating to the establishment of
the company; processing the application for the land; organizing the design and construction of the premises and other engineering
facilities; providing cash, machinery, equipment and premises; assisting us with processing import customs declarations; assisting
the company with purchasing or leasing equipment, materials, raw materials and other items; assisting with the recruitment of
management, technical personnel and other personnel.
Under
the JV Agreement, the board of directors of Globalink Xuzhou is comprised of five directors, of whom three are appointed by us,
including the chairman and general manager, and two are appointed by Shizhen Biotech. The term of office for the directors, chairman
and vice-chairman is four years.
Globalink
Xuzhou is required to enter into a labor contract with the trade union that represents the company’s workers covering the
recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalties and other matters concerning
the staff and workers.
Globalink
Xuzhou is required to allocate and set aside reserve funds, expansion funds, welfare funds and bonuses for staff and workers in
accordance with the provisions of the Law on Sino-Foreign Equity Joint Venture. The annual proportion of allocations shall be
decided by the board of directors according to the business situation of the joint venture company.
The
duration of Globalink Xuzhou is twenty years from the date on which the business license was issued. Upon the expiration of the
duration, or termination before the date of expiration of the joint venture, the liquidated assets are to be distributed in proportion
to the investment contributed by the parties.
In
the event that either party fail to pay scheduled contributions to the capital of Globalink Xuzhou, the defaulting party shall
pay to the other party 5% of the contribution starting from the first month after exceeding the time limit. Should the party in
breach fail to pay after three months, 5% of the contribution shall be paid to the other party, who shall have the right to terminate
the contract and to claim damages from the party in breach.
Any
disputes arising from the execution of, or in connection with, the JV Agreement shall be settled amicably between both parties.
In the event the parties are unable to reach a settlement, the dispute shall be submitted to the Foreign Economic and Trade Arbitration
Commission of the China Council for the Promotion of International Trade for arbitration in accordance with its rules of procedure.
As
of the date this prospectus, we have been responsible for all aspects of managing and operating Globalink Xuzhou in view of Shizhen
Biotech’s failure to make an investment in Globalink Xuzhou.
Our
Plantation
We
intend to allocate all of the proceeds from the offering being made by this prospectus, if any, to the continued development of
a vertically integrated tree plantation at which we will cultivate ginkgo trees and harvest and process dried ginkgo leaves. Assuming
we sell all of the Shares offered by this prospectus, over the next five years we expect to develop a gingko tree plantation that
will comprise a land planting area of approximately 1,553 acres (that will have the capacity to produce up to 5,600 tons of dried
gingko leaves each year. If we achieve this size, we believe that our operation would be among the largest independent producers
of dried ginkgo leaves in China. Our tree plantation will incorporate Western-style good agricultural practices, or GAP, and utilize
modern scientific and technical procedures throughout the growing cycle. After our trees reach six or seven years of age, when
the active constituents of the ginkgo leaves begins to decline, we will rotate these trees out of cultivation and we will seek
to sell them for ornamental and landscaping purposes.
We
have developed a comprehensive business model that addresses what we believe to be the critical aspects of our Plantation over
the next five years. We have assembled an experienced management team comprising complimentary members with significant experience
across the agricultural sector, general business operations and management, and the herbal medicinal industry. We have been working
in cooperation with the local government and agricultural experts at Nanjing Forestry University to ensure the greatest chance
for success.
The
Ginkgo Biloba Tree
Ginkgo
biloba is the botanical name for the ginkgo tree, which also is known as the maidenhair tree, and by its Chinese name as the yinxing
(yin-hsing), where gingko leaves are known as baiguoye. The gingko tree is the oldest living tree species in the botanical world
and has been given the name “living fossil,” because in many ways it remains unchanged over more than 200 million
years. Although, ginkgo biloba and other species of the genus were once widely spread throughout the world, its range shrank until
by two million years ago, it was restricted to a small area of China. Today, ginkgo trees are grown in arboretums and nurseries
around the world and are prized for their natural beauty, particularly in the fall when their leaves turn a bright golden color.
Ginkgos
are large trees, normally reaching a height of 66–115 feet, with some specimens in China reaching over 160 feet. The tree
has an angular crown and long, somewhat erratic branches, and is usually deep rooted and resistant to wind and snow damage. Young
trees are often tall and slender, and sparsely branched; the crown becomes broader as the tree ages. A combination of resistance
to disease, insect-resistant wood and the ability to form aerial roots and sprouts make ginkgos long-lived, with some specimens
claimed to be more than 2,500 years old.
Ginkgos
are dioecious, meaning that there are female and male sexes. Male trees produce small pollen cones. Female plants form two ovules
at the end of a stalk and after pollination, one or both develop into seeds. The seed is 1.5–2 cm long, is light yellow-brown,
soft, and fruit-like. Seeds are attractive in appearance, but contain butyric acid, which emits a noxious odor and explains why
male trees are preferred when used in ornamental settings.
Ginkgo
tree are adaptable to many environments but grow best in part shade/part sun or full sun. Gingko trees allow for wide ranging
soil tolerances, including clay, loam, sand, acidic, but prefer occasionally wet, alkaline and well-drained soil. They are highly
resistant to drought.
Our
Location
Our
plantation is located in Tiefu County, Pizhou City, Jiangsu Province, in the middle eastern region of People’s Republic
of China, just inland of the China Sea approximately 350 miles north and slightly west of Shanghai. Pizhou is situated at an altitude
approximately 80 feet above seal level and, in 2010 had a population of approximately 1,458,000. The climate is subtropical with
warm, humid summers and moderately cold, dry winters. The region is predominantly agricultural and supports several industries
that have their basis in agriculture, such as plywood production. The climate and soil are well suited for growing ginkgo trees,
as measured by temperature, rainfall and the chemical properties of the soil. In 2000, Pizhou was designated the “Hometown
of Gingko Trees in China” by the State Forestry Administration’s first list of “Nationally Renowned/ Special/Excellent
Economic Forests” and has been recognized by a number of national and state agencies as a premier ginkgo growing region.
In fact, records illustrate that ginkgo trees have been harvested in the region since about the year 1400.
Our
Plantation
During
October 2015, we entered into agreements with 349 individuals to lease their land for a period of 12 years at a price of RMB1,000
(approximately $154) per mu (0.167 of an acre). The annual rent for the land will change every three years and is tied to the
floating price of the grain market. Under the leases, we are obligated to use the land for agricultural purposes. The leases were
entered into with the consent of the collective economic organizations of the village and villagers’ group. We selected
the land in consultation with professors at the Nanjing Forestry University to ensure that the land is highly suited for ginkgo
growing. In the aggregate, the leases represent approximately 100 contiguous acres at an annual lease cost of approximately $114,000.
The
leased land represents contiguous lots that are roughly rectangular, with the two longer sides measuring 990 meters and 951 meters
and the shorter sides measuring 425 meters and 388 meters. A water tunnel that connects to a local river runs parallel to the
northern perimeter and will provide irrigation to the parcel at no cost (other than the electrical cost we will incur to pump
the water).
In
anticipation of a fall harvest of ginkgo leaves:
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during
the fall of 2015, we commenced preparing the land for cultivation, including constructing irrigation and drainage canals and
tilling the soil;
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we
are continuing to prepare the necessary utilities’ infrastructure, including water and electric services, which we began
during the fall of 2015;
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we
completed planting seeds in March 2016 at a rate of approximately 20,000 seeds for each mu (0.167 acres) which we selected
in consultation with professors at the Nanjing Forestry University to ensure that we sowed seeds that would produce trees
with the largest canopy and that provide the greatest quantity of leaves,;
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we
are purchasing farming equipment to be used for chemical testing of the soil and leaves;
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We
have commenced building a laboratory in which to conduct testing of the soil, trees and leaves;
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we
have started training a labor force to apply pesticides and fertilizer to the land, all in accordance with GAP protocols,
and to harvest leaves in the fall;
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we
are completing, finalizing and documenting GAP manuals and other scientific procedures and technical standards that we will
incorporate into our operations.
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Throughout
the summer, we will carefully monitor, maintain and record growth, care and development rates, and climate, hydrological and related
records, from which we will create a data base for delivery to purchasers of dried leaves.
In
late September or early October, we will harvest the leaves. The timing of harvesting leaves is one of the most important factors
of the ginkgo growth cycle to ensure that the leaves are at the peak of maturity for our purposes, in this case, possessing the
optimal quantities of flavone and lactone, the chemical constituents which are believed to imbue ginkgo with its medicinal properties.
Accordingly, it is essential that we monitor tree growth and conduct ongoing chemical analyses of the leaves so that we are able
to offer to our customers the highest quality finished product and obtain the highest price for our product. A discussion of the
chemical constituents of ginkgo and the ailments for which ginkgo is prescribed or otherwise used to treat appears below under
the heading “
Active Constituents of Ginkgo, Processing and Delivery Method
.”
This
year, harvested leaves will be sent to a third party to be dried and prepped for sale. After the 2016 harvest, we intend to construct
a central facility at which we process and dry leaves on automated machine drying lines and store leaves in the individual batches
in which they were received. We will employ sophisticated equipment to conduct fingerprint analysis of the individual batches
for quality control. Fingerprinting the leaves will provide us information regarding the quality and composition of the chemical
substances in the leaves and any impurities or contaminants imparted through soil, water or pesticides, such as heavy metals and
microbes. We also will maintain information regarding individual batches of leaves, for example, where they were grown, the amount
of sunlight and water they received and the type and quantity of fertilizer and pesticide used. This data will increase in importance
over time as we are apply it to our cultivation and harvesting techniques, which we believe will provide us with competitive advantages
over smaller farms and individual farmers that do not rely on the results of such data in their operations. This information will
be recorded and stored and printed on packaging labels delivered to customers with each batch of leaves.
During
our first year of operation, we hope to yield approximately 100 kilograms of dried, high-quality ginkgo leaves for each 0.0167
of an acre (1 mu) of land under production, assuming normal growing conditions. As of the fall of 2016, high quality dried ginkgo
leaves were being sold to pharmaceutical companies at prices ranging from $3 - $3.6 (RMB 18 – RMB 22) per kilogram.
During
the second, third and fourth years of operations, we intend to increase the size of our land planting area by approximately 500
acres, approximately 150 acres and approximately 800 acres, respectively, so that in the fourth year our aggregate land planting
area will consist of approximately 1,553 acres. Prior to entering into agreements to lease land, we will conduct comprehensive
testing of the soil quality, including for the existence of heavy metals, prior uses of toxic pesticides and other matters that
would be antithetical to GAP standards. We also will test the water availability and supply to ascertain that it meets GAP standards.
As
we increase the size of our land planting area, we will add the personnel, equipment and other materials required to process the
additional expected output of raw and finished goods that we will produce and otherwise manage our operations. We believe that
from a cost and operations perspective, as we add lands and the labor, equipment, management, utilities and other input required
to produce the output of leaves we project, our project scales up proportionately.
We
believe that we will be able to obtain additional leases of land as we desire should we wish to expand operations in the future
beyond the number of acres under cultivation described above.
As
ginkgo trees reach about six or seven years of age, the flavone and lactone content in the leaves begins to diminish and the value
of the leaves decreases. For example, leaves from trees between the ages of three and five, the prime years for flavone production,
possess, on average, a flavone content of about 1.2%, whereas the flavone content in leaves from seven year old trees decreases
to 0.8% and in ten year old trees to 0.3%. Manufacturers of ginkgo extract pay less for older leaves with lower flavone and lactone
content.
As
trees reach six years of age, we will rotate them out of leaf production and seek to sell them as ornamental specimens. We believe
that older trees are desirable for landscaping in public places such as parks or along city streets where the trees’ large,
leafy canopies provide abundant shade. The market price for six or seven year old trees is a function of the trees diameter. Trees
exceeding five centimeters in diameter will secure a higher sale price
As
we rotate older trees out of leaf productions for sale, we will replace them with seedlings that we are growing in other sections
of the plantation.
Good
Agricultural Practices and Other Technical Processes we will Employ at our Plantation.
We
will employ good agricultural practices, or GAP, standards as necessary across all phases of our farming operations. GAP is a
collection of principles to apply for on-farm production and post-farming production processes, resulting in safe and healthy
agricultural products. We work in consultation with botanists and other agricultural specialists who focus on ginkgo farming,
including experts in seed selection, breeding, cultivation of ginkgo trees and processing ginkgo leaves. We expect that these
practices will yield higher quality and more uniform leaves while reducing the possibility of microbial contamination. We intend
to be flexible enough to adopt and incorporate our customers’ agricultural practices and operating standards into our operations
to ensure that we are delivering a product that meets their stringent requirements, a feature that we believe will be of considerable
value to our customers.
The
GAP standards we will implement include the following:
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Seed
Selection – We select and plant ginkgo seeds intended to produce trees that have a proclivity to larger, leafier canopies,
as opposed to seeds that might be more appropriate for growing ornamental specimens.
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Land
Selection – We seek to select contiguous tracts of land that we divide into sections that can be managed consistently
across all of our land under cultivation. Prior to bringing new land under cultivation, we will ensure that the land meets
the criteria required to grow the highest quality ginkgo trees, including with respect to soil quality, the amount of sunlight
it receives and the quality and content of the water supply. We will assay the soil to measure any residue of harmful chemical
fertilizers and heavy metals and to determine which fertilizers and pesticides will be necessary during the growing season.
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Planting
– We plant seeds and replant seedlings utilizing techniques recommended by leading ginkgo botanists in China.
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Cultivation
– We choose pesticides with low-toxicity and low retention; such as bio-manure, which will be distributed in a uniform
manner in conformity with GAP standards.
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Growth
Monitoring – We will track and record growth daily using GAP fingerprinting and other technical and non-technical methods,
which will aid in the selection and timing of the application of fertilizers and pesticides which will assist in the prevention
and treatment of diseases and pests. We believe that these processes will provide information to enhance future yield.
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Leave
Gathering and Harvesting – We will conduct ongoing chemical analyses to monitor the flavone and lactone contents of
the leaves to ensure we are harvesting them at the optimal time.
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Leaf
Drying – We will strictly monitor storage facilities and leaf drying workshops to ensure that leaf moisture is consistently
below 10%, the most favorable condition to store and dry leaves.
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Packaging
Materials – Packaging materials will be consistent and uniform. We will affix a packing label on each bag that includes
a serial number and barcode that will allow us to identify the batch from which the leaves were produced and thus the tree
and field in which it was grown.
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Each
package we deliver to a customer will be tagged with a barcode which provides the following information:
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the
chromatographic fingerprint profile of the leaves (by way of high performance thin layer chromatography, or HPCL, which ha
s
been accepted by the World Health Organization as a methodology for the quality control of herbal samples
), which assays
the phytochemical constituents of the leaves (including the percentage of active constituents) and allows our customers to
compare the leaves it purchased against the known standard for ginkgo;
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the
batch number of each package and the weight;
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information
about heavy metal residue, chemical residue, water residual and microorganism info related to this package; and
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harvesting,
drying and packaging date and time.
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We
believe that incorporating GAP standards into our agricultural practices will provide a distinct competitive advantage because
we will be providing customers with the transparency necessary to be comfortable purchasing from us.
Active
Constituents of Ginkgo, Processing and Delivery Method
Modern
pharmacological research into the active constituents of ginkgo leaves began in Germany the late 1950s, where scientists produced
a standardized, concentrated extract of ginkgo leaves. Standardized leaf extract of ginkgo biloba contains two major pharmacologically
active fractions: flavonoids (primarily composed of glycosides of isorhamnetin, kaempferol, and quercetin) and terpene trilactones
(bilobalide and ginkgolide compounds).
Ginkgo
is delivered in many forms, including steeping the leaves to make tea. Most commonly, dried ginkgo leaf is powdered to create
a dry extract known as gingko biloba extract, or GBE. Today, GBE 761 is the current
standardized
extract of ginkgo leaves and is a well defined product containing approximately 24% flavone glycosides (primarily quercetin, kaempferol
and isorhamnetin) and 6% terpene lactones (2.8-3.4% ginkgolides A, B and C, and 2.6-3.2% bilobalide).
The dry extract is
obtained by using a technique to extract compounds from plant material by dissolving them in acetone which is then evaporated.
Oral ginkgo leaf medicines containing GBE 761 are available in liquid and solid forms. These ginkgo leaf preparations can also
be found in combination with other herbal substances in some herbal medicines. Ginkgo extract is also used as a component of a
wide range of natural cosmetic and beauty products.
TCM
Usage in China and Western Countries
TCM
in China
TCM
is the current name for an ancient system of health care from China. TCM is based on a concept of balanced qi (pronounced “chee”),
or vital energy, that is believed to flow throughout the body. Qi purports to regulate a person’s spiritual, emotional,
mental, and physical balance and to be influenced by the opposing forces of yin (negative energy) and yang (positive energy).
Disease results from the flow of qi being disrupted and yin and yang becoming imbalanced.
TCM
has evolved over several thousand years of history and is based on observation and practice. TCM practitioners use herbal medicines
and various mind and body practices, such as acupuncture and tai chi, to treat or prevent health problems. In the West, where
it is often considered alternative medicine, people use TCM primarily as a complementary health approach. However, in mainland
China and Taiwan, TCM is widely considered to be an integral part of the health care system. Since early times, the Chinese have
used herbs not just for treating disease but also as part of their lifestyle. The words “curing” and “eating”
have the same origin and the phrase “medicine and foods have similar function” are important Chinese notions about
everyday meals and staying healthy. TCM was preserved and promoted by Chairman Mao Zedong after the Chinese revolution of 1949
through his policy of “walking on two legs,” which refers to the simultaneous development of China utilizing foreign
technology and domestic methods, in this case, Western medical techniques and TCM.
Practitioners
of TCM prescribe ginkgo leaves for a wide variety of ailments, typically as a tea or by way of tablets (both over the counter
and handmade by local TCM practitioners), including:
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Promoting
circulation and treating cardiovascular diseases and diseases of the blood vessels of the brain, including high blood pressure,
elevated cholesterol and vein dysfunction;
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neurological
diseases, such as premature senility, dementia, Alzheimer’s disease, memory impairment, aphasia, reading difficulty,
Parkinson’s disease, anxiety, depression, and stress;
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Ear
related conditions, such as tinnitus, optical diseases, such as neuropathy, retinal diseases and macular degeneration; and
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diseases
of the respiratory system, such as chronic bronchitis, tuberculosis, viral pneumonia, and children’s asthmatic diseases.
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Other
applications include treating sexual dysfunction, anti-aging, protection in transplant rejection, acne, anti fungus, burn treatments,
allergies, chronic hepatitis B, and acute pancreatitis.
TCM
in the West
Over
the last few decades, the usage of TCM and other forms of traditional medicines has grown in Western countries; though it remains
an “alternative” form of medicine used typically as an adjunct to Western developed standards. Ginkgo is used in Western
countries to treat a variety of conditions consistent with ginkgo usage in TCM, including most often as a cognitive enhancer.
Ginkgo’s principal quality appears to be its ability to increase and improve blood flow by dilating blood vessels, which
protects the nerves, heart muscle, blood vessels and retina from damage. Specifically, ginkgo is used to improve or reduce the
following symptoms:
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reducing
the effects of dementia by aiding in microcirculation in the brain;
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mental
function, including improving memory, speed of thinking, and attention in healthy adults;
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anxiety;
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vision
problems in people with diabetes;
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vision
loss from glaucoma;
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leg
pain when walking due to poor blood flow (peripheral vascular disease);
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premenstrual
syndrome (relief of breast tenderness and other symptoms associated with PMS);
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Schizophrenia
– when taken in addition to conventional antipsychotic medications can reduce symptoms of schizophrenia and may also
reduce adverse effects associated with the antipsychotic medication, haloperidol; and
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vertigo
and dizziness.
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Ginkgo
has been the subject of extensive rigorous clinical and non-clinical testing over the last twenty years throughout the world.
The testing has yielded inconsistent results and is inconclusive as to ginkgo’s effectiveness. Researchers have attributed
the inability to generate consistent and conclusive results on a number of factors, including the quality and uniformity of the
ginkgo compound used in the test, trial participant selection and the length of the treatment cycle.
Testing
suggests that ginkgo, when ingested as GBE, has been reported to have neuroprotective (brain related), anticancer, cardioprotective
(heart related), stress alleviating, and memory enhancing effects and possible effects on tinnitus, geriatric complaints, and
psychiatric disorders. Though the exact way that ginkgo works is not understood, the therapeutic effects have not been attributed
to a single chemical constituent; rather, the medicinal benefits are due to the synergy between the various chemical constituents.
Biochemical studies suggest that the curative properties of ginkgo are due to the activities of the flavonoids and sesquiterpene
(a derivative of terpenoid), which are antioxidants that provide protection against oxidative cell damage from harmful free radicals.
These studies further suggest that ginkgo’s therapeutic mechanisms of action are in its anti-inflammatory effects by interfering
with the release of inflammatory compounds by inhibiting the platelet-activating factor, or PAF,
which
is involved in the development of many respiratory, cardiovascular, renal and central nervous system disorders.
As a treatment
for dementia and other brain related ailments, ginkgo is thought to protect brain cells from damage either directly or indirectly
by regulating blood flow or by neutralizing toxic forms of oxygen molecules (called oxygen free radicals).
In
the European Medicines Agency summary for the public relating to ginkgo, the Committee on Herbal Medicinal Products concluded
that:
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GBE
can be used to improve age-related cognitive impairment (worsening of mental abilities) and quality of life of adults with
mild dementia;
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on
the basis of their long standing use, ginkgo leaf medicines containing the powdered leaf can be used for the relief of heaviness
in the legs and the sensation of cold hands and feet that may occur with minor circulation problems.
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The
Committee on Herbal Medicinal Products conclusions on the use of ginkgo leaf medicines to improve the age-related cognitive impairment
and quality of life of adults with mild dementia are based on their “well-established use” in this indication. This
means that there are bibliographic data providing scientific evidence of their effectiveness and safety when used in this way,
covering a period of at least 10 years in the EU. In its assessment, the Committee on Herbal Medicinal Products considered a number
of clinical studies with ginkgo leaf looking at its effectiveness in improving memory. The most relevant clinical trials performed
in adults aged 50 years and above indicated that ginkgo leaf medicines containing the dry extract could have beneficial effects
on cognitive function in mild dementia. The Committee on Herbal Medicinal Products conclusions on the use of ginkgo leaf medicines
for minor circulation problems are based on their “traditional use.” This means that, although there is insufficient
evidence from clinical trials, the effectiveness of these herbal medicines is plausible and there is evidence that they have been
used safely in this way for at least 30 years (including at least 15 years within the EU). Moreover, the intended use does not
require medical supervision.
Toxicity
studies show that GBE is relatively safe for consumption, although a few side effects have been reported, that is, intracerbral
hemorrhage, gastrointestinal disturbances, headaches, dizziness, and allergic skin reactions.
Sales
and Marketing
Initially,
we expect to sell our output in China to companies that manufacture ginkgo extract for TCM products sold in the Chinese market.
Prior to harvesting our leaves in the first year of operations we will begin marketing our dried leaves to Chinese companies and
to Western companies that require ginkgo in the manufacture of products they sell.
We
will utilize all available media to market our dried ginkgo leaves, including:
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printed
promotional materials;
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a
comprehensive web site;
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participation
in international medicine and health product conferences;
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contacts
through our directors and executive officers; and
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government
and university contacts, such as the China Chamber of Commerce of Medicines & Health Products Importers & Exporters,
with domestic and overseas ginkgo buyers.
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All
of our promotional materials will include detailed information relating to our GAP based farming operations and make specific
reference to the quality of our product. We will promote our product based upon, what we believe will be, the uniformity and highly
consistent quality of our ginkgo leaves, noting that our product labeling clearly identifies the content of the active ingredients.
We also will provide information as to expected output for a given year. Ideally, we would like to sell our entire output to a
single or a few customers with which we have developed a trustful relationship over time.
Competition
We
believe that ginkgo farming in China is split principally between large corporate entities that utilize their own output in the
manufacture of TCM products they market for sale in China and around the world and small plantations and individual farmers that
sell leaves to local and international manufacturers of ginkgo based products. We do not believe that there are a significant
number of ginkgo plantations within the size range we expect to achieve over the next five years. Accordingly, we believe that
our primary competitors comprise a diverse and fragmented array of small plantations and individual farmers located mostly in
the eastern provinces of China.
We
believe that most of our direct competitors employ traditional farming techniques that produce a low yield of inconsistent products.
Our farming techniques are based in scientifically developed processes, represent the implementation of academic research and
are intended to achieve the highest yields of premier quality ginkgo leaves. The GAP standards and processes we incorporate into
our operations represent a significant advance over the traditional farming methods employed by small plantations and individual
farmers. We expect that the modern agricultural techniques we will utilize with respect to planting, cultivating, tree care and
harvesting will result in a more abundant, higher quality product. We will monitor and maintain records throughout the planting,
cultivating and harvesting phases. We believe the information we acquire from these records will provide us with valuable insight
into areas such as growing patterns, soil quality, rainfall and watering requirements, fertilization and pesticides. Application
of this information to our processes should increase product yield and allow us to maintain a low cost structure, all of which
should provide us with economic advantages when compared to our competitors.
We
intend to affix labels to our product packaging that will provide significant information relating to each batch of product, including
the content of the active ingredients in the batch, pesticide and heavy metals residue content and the planting environment. We
believe that this transparency will be appealing to customers and demonstrate our commitment to providing a high quality product.
We expect that this information will be of considerable importance to foreign customers that must satisfy stringent regulatory
requirements with respect to the origination and content of the products they sell in their domestic markets.
Research
and Development
From
the outset of farming operations, we expect to continuously incorporate newly developed farming techniques into our operations
that will increase product quality and yield and/or lower costs.
Our
research and development subsidiary, Globalink Zhejiang, has entered into in an agreement with Zhejiang Pharmaceutical College
to undertake research and development with respect to accelerating the development of the active ingredients within the ginkgo
tree and optimizing the processes of extracting flavone and lactone in order to enhance yield. We expect to receive a summary
of the research project by the end of 2016, which may lead to a conclusion as to whether we can apply the technology to commercial
production of gingko trees in a controlled laboratory environment. The agreement extends for a period of a period one year for
which we are paying a total cost of $15,400 (RMB100,000).
As
the use of ginkgo has grown in popularity over the last few decades in both China and the West, new research is being undertaken
with respect to all aspects of the ginkgo tree. Significant research is being conducted at several universities in China, including
Nanjing Forestry University, with which we consult regarding our operations. In addition, China, France and Germany are undertaking
initiatives for large-scale propagation, and such initiatives are implemented through plantations both to conserve the species’
population and for herbal medicine. Research is being conducted with respect to growth acceleration techniques,
asexual
propagation and cloning
, genetic modification, and techniques that reduce the amount of water, fertilizer and pesticides
utilized in the cultivation cycle, all of which would increase yield and reduce the amount of farmland required to meet the world’s
needs. Although we view research and development as mid and longer term projects, we will adopt new processes and techniques as
our resources allow.
Insurance
We
do not currently have property insurance covering our facilities and ginkgo planting areas. The insurance industry in China is
still at an early stage of development. Insurance companies in China offer limited insurance products and the cost of such insurance
is high. We have determined that the risks of disruption or liability from our business, the loss or damage to our property, including
our facilities, equipment and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring
such insurance on commercially reasonable terms make it impractical for us purchase. Any uninsured occurrence of loss or damage
to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources,
which could have an adverse effect on our operating results.
PRC
Government Regulation
General
Our
PRC Subsidiaries are organized in the PRC and are governed by PRC laws. These entities are subject to a variety of government
laws and regulations promulgated by national, provincial and local bodies, including laws relating to corporate, banking, financial,
agriculture, environmental, labor, waste management, and health and safety matters.
In
China, the legal regime consists, at the national level, of the State Council, which is the highest authority of the executive
branch of the PRC central government, and several ministries and agencies under its leadership, including:
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Ministry
of Commerce (MOFCOM) and its local authorities;
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Ministry
of Agriculture and its local authorities;
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State
Administration of Foreign Exchange (SAFE) and its local authorities;
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State
Forestry Administration;
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State
Environmental Protection Administration; and
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State
Administration of Taxation, and the Local Taxation Bureau.
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We
believe our conduct of business
is in substantial compliance with all laws and regulations
applicable to our business. We are not currently subject to any pending actions alleging any violations of applicable PRC environmental
laws.
The
following are the principal PRC laws governing our PRC Subsidiaries and their businesses but are not the only laws and regulations
that apply to our operations.
Agriculture
Laws
Our
ginkgo plantation is subject to the Agriculture Law of the PRC which sets forth the principles and measures designed to ensure
the steady development of the agricultural industry. The Agriculture Law regulates the planting, processing, selling, preservation
and transportation of agricultural products. It further stipulates that farmers and organizations for production and operation
of agriculture products maintain their lands in good condition, make a rational use of chemical fertilizers and pesticides, increase
their application of organic fertilizers to improve soil fertility and prevent the land from pollution, destruction and soil fertility
declination.
According
to Law of the People’s Republic of China on Quality and Safety of Agricultural Products, the administrative departments
for agriculture under the governments at or above the county level are responsible for supervision and control of the quality
and safety of agricultural products; and the relevant departments of the people’s governments at or above the county level,
in compliance with the division of their duties, are responsible for the work related to the quality and safety of agricultural
products. Agricultural production enterprises and specialized cooperative economic organizations of farmers are required to test
the quality and safety of their products themselves or entrust the testing to a testing agency. In addition, this law sets forth
packaging and labeling standards to which we are subject.
Forest
Laws
Our
plantation operations also are subject to the PRC Forestry Law, as well as its implementing rules promulgated by State Council
(“Forestry Law”). The Forestry Law was enacted to protect, cultivate and reasonably use forest resources. It governs
the afforestation, cultivation, felling, utilization, management and administration of forests within the PRC territory. The Forestry
Law divides forests into the following categories: (1) protection forests: forests, trees and bushes mainly aimed at protection,
inclusive of water source storage forests, forests for water and soil conservation, wind protection and sand bind forests, forests
for farmland and grassland protection, river bank protective belts and road protection belts; (2) timber stands: forests and trees
mainly at timber production, inclusive of bamboo groves mainly aimed at bamboo production; (3) economic forests, including trees
aimed mainly at the production of fruits; edible oils, soft drinks and ingredients; industrial raw materials; and medicinal materials;
(4) firewood forests: trees mainly aimed at the production of fuels; (5) forests for special uses, including forests and trees
mainly aimed at national defense, environmental protection and scientific experiments, inclusive of national defense forests,
experimental forests, parent stands, environmental protection forests, scenic beauty forests, trees for sites of historical interests
and the forests of natural protection areas. The Forest Law prohibits land reclamation at the expense of deforestation, rock quarrying,
sand quarrying, soil extracting and other activities at the expense of deforestation.
Law
on Sino-Foreign Equity Joint Ventures
As
a joint venture between a PRC registered company and foreign entity, Globalink Xuzhou is subject to the Law on Sino-Foreign Equity
Joint Ventures (adopted September 1983 and last revised in July 2001) and the implementing regulations (the “EJV Law”).
The EJV Law covers a wide range of business, management and labor issues that are applicable to Globalink Xuzhou’s operations.
In many instances, the legal areas covered by the EJV Law revert to the existing laws of the PRC governing business organizations,
with notable differences. Under the EJV Law, capital contributions may take several forms, including cash, buildings, equipment,
technology, materials and the right to use land. If the capital contributions are in a form other than cash, the parties must
agree on the appropriate value of the contributions on the basis of fairness and reasonableness or agree to have a third party
make the evaluation. In addition, the valuation is subject to verification by official appraisers. Limits also apply to the amount
of intangible capital contributions. Under the EJV Law, joint ventures in China are typically limited to a fixed term, which must
be stipulated in the joint venture contract. Upon the expiration of its term, an equity joint venture is to be dissolved, with
the property remaining, after the payment of liabilities to be distributed in accordance with the ratio of the parties’
capital contributions except where the joint venture agreement, contract or articles of association otherwise stipulate. The EJV
Law has introduced a form of current account convertibility for RMB under which joint ventures may purchase foreign exchange for
current account expenditures without the necessity of obtaining government approval. The law also permits the conversion of RMB
into foreign exchange for remittances of after-tax profits or dividends to foreign investors in equity joint ventures. Foreign
exchange remittances and receipts must go through banks that have been designated to handle foreign exchange transactions. Instead
of government approval for foreign exchange remittances and receipts, the designated banks examine the documentation for the underlying
transaction to ensure that the proposed payment or receipt qualifies as a current account item. Joint ventures also have access
to the interbank market for the purchase and sale of foreign exchange through the designated banks. With respect to financial
administration, the EJV Law provides that an annual profit distribution plan has to be prepared and profits must be distributed
among the parties in proportion to their respective contributions to the registered capital of the joint venture. Equity joint
ventures are required to allocate a certain percentage of after-tax profits to a reserve fund, enterprise expansion fund and incentive
and welfare fund for staff and workers.
Regulations
Relating to Labor Laws
The
principal labor laws and regulations in the PRC include the
PRC Labor Law
, the
PRC Labor Contract Law
and the
Implementation
Regulations of the PRC Labor Contract Law
. Pursuant to the
PRC Labor Law
and the
PRC Labor Contract Law
, employers
must enter into written labor contracts with employees. Employers must pay their employees wages equal to or above local minimum
wage standards, establish labor safety and workplace sanitation systems, comply with government labor rules and standards and
provide employees with appropriate training regarding workplace safety. In addition, the
PRC Labor Contract Law
imposes
more stringent requirements on employers with regard to, among others, severance payment and non-fixed-term employment contracts,
time limits for probation periods, as well as the duration and the times that an employee can be placed on a fixed-term employment
contract. Violations of the
PRC Labor Contract Law
and the
PRC Labor Law
may result in liabilities to employees
and subject employer to administrative sanctions including fines or, in the case of serious violations, criminal liability.
The
PRC regulatory authorities have passed a variety of laws and regulations regarding statutory social welfare benefits, including,
among others, the
PRC Social Insurance Law
, the
Regulations of Insurance for Occupational Injury
, the
Regulations
of Insurance for Unemployment
, the
Provisional Insurance Measures for Maternal Employees
, and the
Interim Provisions
on Registration of Social Insurance
. Pursuant to these laws and regulations, companies in China have to make sufficient contributions
of statutory social welfare benefits for their employees, including medical care insurance, occupational injury insurance, unemployment
insurance, maternity insurance, pension benefits and housing funds. Failure to comply with such laws and regulations may result
in supplementary payments, surcharges or fines.
Environmental
Matters
Our
operations and properties are subject to extensive environmental protection laws and regulations, including the PRC Environmental
Protection Law, the Environment Impact Evaluation Law, the PRC Water Pollution Prevention and Control Law, the Implementation
Rules of the PRC Water Pollution Prevention and Control Law, the PRC Air Pollution Prevention and Control Law, the Implementation
Rules of the PRC Air Pollution Prevention and Control Law, the PRC Solid Waste Pollution Prevention and Control Law.
Under
the PRC Environmental Protection Law, we must take measures to protect the ecological environment while natural resources are
being developed or utilized.
The
Environment Impact Evaluation Law requires that upon the commencement of production which may potentially lead to environmental
pollution during the course of production, an environmental impact evaluation report or form should be prepared to provide a complete
and detailed evaluation of the potential pollution as well as the impact on the environment. Such environmental impact appraisal
report or form must be submitted to the environment protection authorities for approval.
In
order to comply with these requirements, we may need to spend expend cash and other resources from time to time to (i) construct
or acquire new equipment, (ii) use pesticides properly and to maintain the ecological environment of our land, and (iii) modify,
upgrade, or replace existing and proposed equipment.
Regulations
Relating to Foreign Currency Exchange
Foreign
Currency Exchange
The
principal regulation governing foreign currency exchange in the PRC is the
Regulations of the PRC on Foreign Exchange Administration
,
or the Foreign Exchange Regulations, as amended in August 2008. Under the Foreign Exchange Regulations and other relevant regulations
and rules, which are administered by the State Administration of Foreign Exchange, or the SAFE, Renminbi are freely convertible
for current account transactions, including the distribution of dividends, interest payments, trade and service-related foreign
exchange transactions. In order to convert Renminbi for capital account transactions, such as capital injections, loans, repatriation
of investments and investments in securities outside the PRC, the prior approval of, or registration with, the SAFE or its competent
local branches is required. See “Risk Factors — Risks Related to Doing Business in China — Governmental control
of currency conversion may limit our ability to utilize our revenues and financing proceeds effectively.”
In
August 2008, the SAFE promulgated Circular 142, the
Circular on Operating Issues Concerning the Improvement of the Administration
of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises
, pursuant to which the registered capital
of a foreign-invested company settled in Renminbi and converted from foreign currencies can only be used for purposes within the
approved business scope and cannot be used for equity investments made by such foreign-invested company within the PRC, unless
otherwise provided. In addition, a foreign-invested company may not change the use of its Renminbi-denominated registered capital
without the SAFE or its competent local branch’s approval, and may not in any case use such capital to repay Renminbi-denominated
loans if the proceeds of such loans have not been used within the permitted scope. Violations of Circular 142 could result in
severe penalties, including significant fines. Moreover, Circular 142 may limit our ability to freely use the proceeds from this
offering. In addition, in November 2010, the SAFE promulgated the
Notice on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses
,
which requires the authenticity of settlement of the funds raised from offshore offerings
to be closely examined and the settlement of funds should conform to their intended use as listed in the offering document. To
the extent offering proceeds are utilized for purposes other than as described in the offering document, the board of directors
must submit an application to the SAFE for approval.
Employee
Stock Option Plan
In
December 2006, the People’s Bank of China issued the
Administration Measures on Individual Foreign Exchange
, and
the SAFE issued implementation rules in January 2007, both of which became effective in February 2007. Under these regulations,
all foreign exchange matters pertaining to employee stock ownership plans, stock option plans or related plans in which onshore
individuals participate require the approval of the SAFE or its authorized branch. In February 2012, the SAFE promulgated Circular
7, which replaced Circular 78.
Under
Circular 7, PRC residents who participate in stock incentive plan in an overseas publicly-listed company are required to register
with the SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC
residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly-listed company or another
qualified institution selected by such PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the
stock incentive plan on behalf of its participants. Such participants must also retain an overseas entrusted institution to handle
matters in connection with their exercise of stock options, the purchase and sale of corresponding securities and fund transfers.
In addition, the PRC agent is required to amend the SAFE registration in the event of any material change to the stock incentive
plan, the PRC argent or the overseas entrusted institution or other material changes. As of the date of this prospectus, we have
granted stock options to purchase common stock to each of our directors who are PRC residents. None of these persons has made
the required filings to register such options and comply with the applicable rules. Accordingly, we or the PRC option holders
may be subject to fines and legal or administrative sanctions, as a result of which our business operations and equity incentive
plans could be materially and adversely affected. We are taking the steps necessary to make the filings required and otherwise
comply with applicable rules.
In
addition, the Ministry of Finance and the State Administration of Taxation have issued circulars concerning individual income
taxes relating to employee share options. Under these circulars, our employees working in the PRC who exercise options to purchase
shares of our common stock will be subject to PRC individual income tax. The tax base for the employment income would be the fair
market value of the received shares at the time of vesting minus the corresponding consideration paid by the employees for the
shares. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities
and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we
fail to withhold their income taxes according to applicable PRC laws and regulations, we may face fines ranging from 50% to 300%
of the overdue taxes.
Regulations
Relating to Dividend Distribution
The
principal regulations governing distributions of dividends by foreign-invested companies include the
PRC Companies Law
(2005), the
Wholly Foreign-invested Enterprise Law
(1986), as amended, and the
Implementation Rules regarding the Wholly
Foreign-invested Enterprise Law
(1990), as amended.
Under
these laws and regulations, foreign-invested enterprises in the PRC may pay dividends only out of their accumulated profits, if
any, determined in accordance with PRC accounting standards and regulations. In addition, foreign-invested enterprises are required
to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain statutory reserve funds until
these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends.
See “Risk Factors — Risks Related to Doing Business in China — Capital outflow policies in the PRC may restrict
our ability to remit income to the United States, which could restrict our ability to act in response to changing market conditions
and to satisfy our liquidity requirements.”
Regulations
Relating to Taxation
Enterprise
Income Tax
Through
2007, foreign invested enterprises (which are described below), such as our PRC Operating Subsidiaries, and domestic enterprises
were subject to different income tax regulations and tax rates in China. With the effectiveness of the Enterprise Income Tax Law
of the PRC (“EIT Law”) and the Implementing Rules of the Enterprise Income Tax Law of the PRC (“Implementing
Rules”) (collectively referred to as the “EIT Law”) as of January 1, 2008, foreign invested enterprises and
domestic enterprises are subject to a uniform income tax rate of 25% for income derived from or accruing both in and outside China,
unless otherwise specified.
Pursuant
to Item 1 of Article 27 of the EIT Law, income derived from projects in the agriculture, forestry, animal husbandry or fishery
industries may be eligible for exemption from or reduction of the uniform EIT tax. Under Item 1 of Article 86, income derived
from agriculture forestry, animal husbandry or fishery is exempt from the EIT tax and defines these categories to include, among
other things, growing Chinese medicinal herbs and the cultivation and growing of forests. Under these rules, income derived from
our plantation is exempt from taxation under the EIT Law.
The
application and interpretation of these rules continues to be unclear. If we are treated as a foreign invested enterprise under
the description set forth below, income we derive from our hotel booking business which operates in Vancouver, British Columbia,
Canada, would be subject to the EIT tax at the rate of 25% of such income.
Under
the EIT Law and the EIT Law Implementation Regulations, dividends paid to foreign enterprise investors, in our case, the Nevada
parent corporation) by PRC tax resident enterprises (our PRC Subsidiaries) are subject to PRC withholding tax at the rate of 10%
unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a
preferential withholding tax rate.
Under
the EIT Law, a FIE is an enterprise organized under the laws of a jurisdiction outside China with “
de facto
management
bodies” that are located within China may be considered PRC tax resident enterprises and are therefore subject to PRC enterprise
income tax at the rate of 25% on their worldwide income. The EIT Law Implementation Regulations define the term “
de facto
management body” as a management body that exercises full or substantial control and management authority over the production,
operation, personnel, accounts and assets of an enterprise. The State Administration of Taxation, or the SAT, issued the
Notice
Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis
of De Facto Management Bodies
, or Circular 82, in April 2009. Circular 82 provides specific criteria for determining whether
the “
de facto
management body” of a Chinese-controlled offshore enterprise is located in China, which include
the presence in the PRC of the following locations: (1) the location where senior management members responsible for an enterprise’s
daily operations discharge their duties; (2) the location where financial and human resource decisions are made or approved by
organizations or persons; (3) the location where the major assets and corporate documents are kept; and (4) the location where
more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. Although Circular
82 applies only to offshore enterprises controlled by PRC enterprises, rather than enterprises controlled by PRC individuals and
non-PRC persons such as our company, the criteria set forth in Circular 82 may reflect the SAT’s general position on how
the “
de facto
management body” test could be applied in determining the tax residency status of offshore enterprises.
On July 27, 2011, the SAT issued
Administrative Measures of Enterprise Income Tax of Chinese-controlled Offshore Incorporated
Resident Enterprises (Trial)
, or Bulletin 45, which became effective on September 1, 2011, to provide further guidance on
the implementation of Circular 82. Bulletin 45 clarifies certain issues related to determining PRC resident enterprise status,
post-determination administration and which competent tax authorities are responsible for determining offshore incorporated PRC
resident enterprise status. Bulletin 45 specifies that when provided with a copy of a Chinese tax resident determination certificate
issued by the competent tax authorities from an offshore incorporated PRC resident enterprise, the payer should not withhold 10%
income tax when paying Chinese-sourced dividends, interest and royalties to the offshore incorporated PRC resident enterprise.
Although Circular 82 applies only to offshore enterprises controlled by PRC enterprises or PRC corporate groups and not those
controlled by PRC individuals or non-PRC persons, the determining criteria set forth in Circular 82 may reflect the SAT’s
general position on how the “
de facto
management body” test should be applied in determining the tax residency
status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or individuals or foreign enterprises.
There are currently no detailed rules or precedents governing the procedures and specific criteria for determining whether a given
entity constitutes a “
de facto
management body,” and a final confirmation by the SAT as to the “residency”
status of offshore enterprises is generally necessary.
There
continues to be a great deal of uncertainty surrounding these laws and regulations resulting from the limited PRC tax guidance
on this issue, and we cannot determine whether our Nevada parent corporation will be treated as PRC resident enterprises for EIT
law purposes. If we are treated as a PRC resident enterprise, although under the EIT Law and the EIT Law Implementing Regulations
dividends paid to us from our PRC subsidiaries should qualify as tax-exempt income, there is no assurance that we would enjoy
such tax-exempt treatment on dividends paid to us from our PRC subsidiaries in the same manner as offshore incorporated PRC resident
enterprises controlled by PRC enterprises or PRC corporate groups enjoy under Bulletin 45. As a result, we cannot be certain that
such dividends will not be subject to PRC withholding tax as the SAT and other PRC authorities have not yet issued guidance with
respect to the processing of outbound remittances to entities that are treated as resident enterprises controlled by PRC individuals
and non-PRC persons, like us, for PRC enterprise income tax purposes. In addition, the EIT Law Implementation Regulations provide
that, (i) if an enterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring
equity interests of enterprises domiciled in the PRC, then such dividends or capital gains are treated as PRC-sourced income.
It is not yet clear how the term “domicile” will be interpreted under the EIT Law, and it may be interpreted as the
jurisdiction where an enterprise is a tax resident. As a result, if we were deemed to be a PRC tax resident enterprise, any dividends
that we pay to our non-PRC shareholders which are non-PRC enterprises, as well as gains realized by such shareholders or ADS holders
from the transfer of our shares may be regarded as PRC-sourced income and become subject to PRC withholding tax of 10%, unless
a reduced rate is provided under applicable tax treaties.
The
PRC withholding tax may be exempted or reduced by the State Council or pursuant to an applicable tax treaty with the PRC that
provides for a different withholding agreement between the PRC and the jurisdictions in which the non-resident enterprise reside.
The PRC has entered into tax treaties with more than 90 countries, including the United States. Under such tax treaties, certain
income, such as dividend, royalties, interest or capital gains derived in China by residents of the contracting country might
be entitled to preferential treaty benefits, i.e., a lower withholding tax rate than the statutory 10%, provided that the overseas
enterprise receiving the income qualifies as a “beneficial owner.” The SAT issued the
Circular on How to Interpret
and Recognize the “Beneficial Owner” in Tax Treaties
in October 2009, or Circular 601. According to Circular 601,
the term “beneficial owner” refers to an individual, company or organization that has both ownership and right of
control over the assets or rights generating a stream of income. An agent or a conduit company is not regarded as a beneficial
owner. Local tax authorities are required to investigate whether an applicant satisfies the requirements to qualify as a beneficial
owner, which is a prerequisite to enjoy the benefit of a reduced withholding tax on dividends, interest, royalties or capital
gains under tax treaty provisions. If such non-resident enterprises cannot provide valid documents supporting their status as
beneficiary owners under Circular 601, they will not be approved to enjoy tax treaty benefits.
In
the event that we are treated as a PRC tax resident, dividends to be distributed by us to our non-PRC shareholders whose jurisdictions
have tax treaties with China providing for preferential withholding arrangements will not be entitled to the benefits under such
withholding arrangements unless such holder is considered a beneficial owner under Circular 601.
Under
the
PRC Individual Income Tax Law
, or IITL, if we are treated as a PRC resident enterprise, it is possible that non-resident
individual investors of our Shares will be subject to PRC individual income tax at a rate of 20% on dividends paid to such investors
and any capital gains realized from the transfer of shares of our common stock if such dividends or capital gains are deemed income
derived from sources within the PRC, except in the case of individuals that qualify for a lower rate under a tax treaty. Under
the PRC-U.S. tax treaty, a 10% preferential tax rate will apply to dividends provided that the recipients are U.S. tax residents
that are eligible for the benefits of the PRC-U.S. tax treaty. A non-resident individual is an individual who has no domicile
in the PRC and does not stay within the PRC or has stayed within the PRC for less than one year. Pursuant to the IITL and its
implementation rules, for purposes of the PRC capital gains tax, the taxable income will be based on the total income obtained
from the transfer of our shares of our common stock minus all the costs and expenses that are permitted under PRC tax laws to
be deducted from the income.
See
“Risk Factors — Under the PRC Enterprise Income Tax Law, we may be classified as a “resident enterprise”
of China, and such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders.”
VAT
Tax
Under
the Provisional Regulation of China on Value Added Tax, or VAT, and their implementing rules, all entities and individuals that
are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are
generally required to pay VAT at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne
by the taxpayer. Pursuant to the Notice of the Ministry of Finance and the State Taxation Administration on Exempting the Value
Added Tax for Agricultural Material, self-produced agricultural products sold by agricultural producers shall be exempt from VAT.
Employees
As
of April 30, 2016, we employed a total of 23 persons, all in our subsidiaries, including two persons who served as part time executive
officers of our parent company, two managerial employees in our subsidiaries and 19 other staff members, including four additional
staff members in OneWorld, our hotel booking subsidiary, twelve additional employees in Globalink Xuzhou, our Plantation subsidiary,
including quality control, procedure control and technical personnel, accountants, and other assistants, and two additional employees
in Globalink Zhejiang, our research subsidiary, including a general manager and accountant. Globalink Xuzhou continues to hire
farm laborers for out Plantation on an ongoing basis.
None
of our employees is represented by a collective bargaining agreement. We consider our relations with our employees to be very
good.
Properties
We
lease approximately 315 square feet of administrative office space at 365 Boundary Road, Vancouver, BC, at a cost for CAD$8,400
(approximately $6,500) per year on a month to month basis.
Our
subsidiary, OneWorld, leases approximately 736 square feet of office space at #210-4751 Garden City Road, Richmond, BC, V6X 3M7
at a cost of CAD$17,182 (approximately $13,300) per year under a lease that expires in July 2016 and provides for a three-year
option.
Globalink
Xuzhou leases approximately 96 square meters of office space at Room 707, Tongcheng Commercial Apartment, Pizhou City, Jiangsu
Province, China at a cost of RMB17,400 (approximately $2,678) per year under a lease that expires in August 2016.
Globalink
Zhejiang leases approximately 47 square meters of office space at Room 712-713, C4 Building, #299 High Technology District, Ningbo
City, Jiangsu Province, China at a cost of RMB66,430 (approximately $10,225) per year under a lease that expires in March 2017.
The
total operating rent expense for the year ended December 31, 2015 was $26,106 and $19,340 for December 31, 2014.
We
are constructing or will construct laboratory and warehouse space to house certain elements of our Plantation operations.
We
believe that our current space is adequate for the for our present purposes and that additional space is readily available on
terms that we would consider reasonable.
LEGAL
PROCEEDINGS
We
are not involved in any legal proceeding nor are we aware of any pending or threatened litigation against us.
MANAGEMENT
Members
of our Board of Directors are elected by the stockholders to a term of one year and serve until their successors are elected and
qualified. Our officers are appointed by our Board to a term of one year and serve until their successors are duly appointed and
qualified, or until the officer is removed from office. Our Board has no nominating, audit or compensation committees.
Name
|
|
Age
|
|
Position
|
Hin
Kwok Sheung
|
|
63
|
|
Chief
Executive Officer, President and Director
|
Ke
Feng (Andrea)Yuan
|
|
42
|
|
Chief
Financial Officer and Director
|
Robin
Young
|
|
71
|
|
Secretary
and Director
|
Yan
Zhuang
|
|
43
|
|
General
Manager of PRC Subsidiaries and Director
|
Jia
Charles Yao
|
|
68
|
|
Director
|
Background
Information about our Officers and Directors
Hin
Kwok Sheung has served as our Chief Executive Officer and President, Director, and Chairman of the Board since February 2014.
From 2012 through the date of this prospectus, Mr. Sheung has served as a director and the chief executive officer of Wanxing
Property Developments Company and of the Golden Imperial Gardens Development Company each located in Pizhou, where he was responsible
for developing commercial and residential properties. From 1995 through 2011, he served as a director of the Xin Tong Tai Storage
and Logistics Company, where he was responsible for coordinating all affairs between the port authorities and strategic partners
and for all marketing activities. During 2009, Mr. Sheung worked with the City of Chengdu, China as a commercial property developer.
Mr. Sheung graduated from the University of Heilongliang with a B.A. in linguistics with a focus in Russian.
Ke
Feng (Andrea) Yuan has served as our Chief Financial Officer and as a Director since February 2014. Ms. Yuan is a Chartered Professional
Accountant (CPA)/Certified General Accountant in British Columbia and a Certified Public Accountant in New Hampshire. Currently,
Ms. Yuan acts as Chief Financial Officer or financial consultant for several public companies listed on the TSX Venture Exchange.
Since 2011, she has been the principal of Black Dragon Financial Consulting Services Inc., financial and management consulting
company. From 2004 through 2011, she was employed in a variety of capacities with Davidson and Company LLP, public accountants,
and was an audit principal upon her departure. In addition to overseeing a variety of Canadian public company audit files, she
was also responsible for conducting the audits of various foreign public companies including Chinese and Korean companies. From
1994 through to 1999, Ms. Yuan was an internal auditor and then a team leader of the internal audit department at the Bank of
China's Shanghai Pudong branch in China. Ms. Yuan obtained her Bachelor of Economics from Shanghai University of Finance and Economics
in 1994. Ms. Yuan is fluent in English and Mandarin.
Robin
Young has served as a director of the Company since its inception in 2006. Previously, from inception through February 2014, he
served as our President and Chief Executive Officer and principal financial officer until February 2014. Since 1975, Mr. Young
has been the principal of Young Engineering Corporation, an engineering consulting firm for the building industry since 1975 in
Vancouver, British Columbia. He has also been the president of Landtek Properties Ltd., a development company since 1994 and Coreng
Construction Corporation, a company providing project and construction management as well as general contracting from 1976 to
1990. Mr. Young was listed in the “Who’s Who in British Columbia” and “International Who’s Who of
Professionals”. Mr. Young received a bachelor of applied science degree in civil engineering from the University of British
Columbia in 1963. He conducted his post-graduate studies both at McGill University and at Concordia University and received his
master’s degree in civil and structural engineering in 1970 from Concordia University.
Jia
Charles Yao has served as a director of the Company since February 2014. From 2001 through 2012, he was the general manager of
TangShan Xintungtai Storage and Transportation Company Ltd. in China, which stores and transports materials and provides logistics
services. While at TangShan, Mr. Yao was general manager and manage daily operation of the company. From 2003 through 2006, Mr.
Yao was a research student in the MBA program in the Faculty of Economic Management at the Capital University of Economics and
International Trades.
Yan
Zhuang has served as the General Manager of our PRC Subsidiaries since August 2015. In this capacity he focuses on gingko plantation
cultivation and gingko product development and sales. During Mr. Zhuang’s career, he has served as a professional manager
in the pharmaceutical and biotechnology industries. From 2013 to 2015, Mr. Zhuang served as a senior consultant to Zhejiang J&S
Biotech Co., Ltd., where he was responsible for general management of the company. From 2000 to 2011, Mr. Zhuang was founder and
General Manager of Zhejiang Newcovery Biotech Co., Ltd., a company focusing on developing TCM/herbal active ingredient and herbal
extraction and purification technologies. It developed about 120 single standard research projects for government institutes and
was also involved in major national science programs. From 2005 to 2007, he served as the Vice President of Hainan Qunli Pharmaceutical
Co., Ltd., in charge of facility construction and equipment selection and installation, and tea polyphenol product research, development
and sales. Mr. Zhuang received his bachelor degree in international trading from Zhejiang University in 1994, and Master in Business
Administration in 2007 from Zhejiang University and University of Management and Technology.
Involvement
in Certain Legal Proceedings
No
director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed
in Item 401(f) of Regulation S-K in the past 10 years.
Corporate
Governance
Our
Board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or
any committee performing a similar function. The functions of those committees are being undertaken by our Board. Because we do
not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any
benefits to our Company and could be considered more form than substance.
We
do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including
the minimum qualifications for director candidates, nor have our officers and directors established a process for identifying
and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director
candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted
any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board
of Directors.
While
there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of
our Board will participate in the consideration of director nominees.
As
with many small companies, until such time as our Company further develops our business, achieves a recurring, sustainable revenue
base and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate
prospects to attract independent directors in North America. When we are able to expand our Board to include one or more independent
directors with public company experience, we intend to establish an audit committee of our Board of Directors. It is our intention
that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not
quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise
subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent”
directors, nor are we required to establish or maintain an audit committee or other committee of our Board.
Code
of Conduct
The
Board has established a corporate Code of Conduct which qualifies as a “code of ethics” as defined by Item 406 of
Regulation S-K of the Exchange Act. Among other matters, the Code of Conduct is designed to deter wrongdoing and to promote:
-
honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
-
full,
fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;
-
compliance
with applicable governmental laws, rules and regulations;
-
prompt
internal reporting of violations of the Code of Conduct to appropriate persons identified in the code; and
-
accountability
for adherence to the Code of Conduct.
Waivers
to the Code of Conduct may be granted only by the Board. In the event that the Board grants any waivers of the elements listed
above to any of our officers, we expect to announce the waiver within four business days on a Current Report on Form 8-K.
The
Code of Conduct applies to all of the Company’s employees, including our principal executive officer, the principal financial
and accounting officer, and all employees who perform these functions. If we amend our Code of Conduct as it applies to the principal
executive officer, principal financial officer, principal accounting officer or controller (or persons performing similar functions),
we shall disclose such amendment through the filing of a Current Report on Form 8-K.
EXECUTIVE
COMPENSATION AND CORPORATE GOVERNANCE
Summary
Compensation Table
The
following Summary Compensation Table sets forth all compensation earned in all capacities during the fiscal years ended December
31, 2015 and 2014 by our principal executive officer and principal financial officer. No other officer or employee of the Company
received total compensation for either 2015 or fiscal year, as determined by Regulation S-K, Item 402, that exceeded $100,000
(the individuals named in the table below are collectively referred to as the Named Executive Officers):
Name
and Principal Position
|
|
|
Year
|
|
|
|
Salary
($)
|
|
|
|
Bonus
($)
|
|
|
|
Stock
Awards
($)
|
|
|
|
Option
Awards
(5)
($)
|
|
|
|
Non-Qualified
Deferred Compensation Earnings
($)
|
|
|
|
All
Other
Compensation ($)
|
|
|
|
Total
($)
|
|
Hin
Kwok Sheung
(1)
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,206
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,206
|
|
|
|
|
2014
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Ke
Feng (Andrea)Yuan
(2)
|
|
|
2015
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
55,808
|
|
|
|
0
|
|
|
|
0
|
|
|
|
79,808
|
|
|
|
|
2014
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,000
|
|
Robin
Young
(3)
|
|
|
2015
|
|
|
|
36,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,206
|
|
|
|
0
|
|
|
|
0
|
|
|
|
73,206
|
|
|
|
|
2014
|
|
|
|
36,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
36,000
|
|
Yan
Zhuang
(4)
|
|
|
2015
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
55,808
|
|
|
|
0
|
|
|
|
0
|
|
|
|
60,808
|
|
|
|
|
2014
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Jia
Yao
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,206
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,206
|
|
|
|
|
2014
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
Mr.
Sheung joined the Company in February 2014.
|
(2)
|
Ms.
Yuan joined the Company in February 2014. Ms. Yuan is paid $2,000 per month. Ms. Yuan’s compensation in 2014
and 2015 comprises management fees paid to an entity wholly owned by her.
|
(3)
|
Mr.
Young served as the Company’s President and Chief Executive Officer and principal financial officer from inception (2006)
until February 2014. Mr. Young is paid $3,000 per month. Mr. Young’s compensation in 2014 comprises management fees
paid to an entity wholly owned by him.
|
(4)
|
Mr.
Yan Zhuang has served as General Manager of the PRC Subsidiaries since September 2015. Mr. Zhuang is paid RMB15,000 from two
PRC subsidiaries since December 2015.
|
(5)
|
The
dollar amounts in this column represent the grant date fair value of each stock option award granted to the named executive
officers in 2015. These amounts have been calculated in accordance with ASC 718, using the Black-Scholes option-pricing model.
Assumptions used in the calculation of these amounts is included in the notes to the Company’s audited financial statements
for the year ended December 31, 2015.
|
2015
Stock Awards Plan
On
September 20, 2015, the board of directors adopted, subject to approval of the stockholders, the 2015 Stock Awards Plan, or 2015
Plan. The principal purpose of the 2015 Plan is to attract, retain and motivate selected employees, consultants and directors
through the granting of stock-based compensation awards and phantom stock awards. The material terms of the 2015 Plan are summarized
below.
Share
Reserve.
Under the 2015 Plan, 6,000,000 shares of our common stock have been reserved for issuance pursuant to a variety
of stock-based compensation award types, including stock options, stock appreciation rights, or SARs, restricted stock awards,
performance awards and other stock-based awards. To the extent that an award terminates, expires or lapses for any reason or an
award is settled in cash without the delivery of shares, any shares subject to the award at such time will be available for future
grants under the 2015 Plan.
Administration.
The Plan is administered by the board of directors or by a committee as authorized by the board of directors (the “Committee”).
Subject to the terms and conditions of the 2015 Plan, the administrator has the authority to select the persons to whom awards
are to be made, to determine the number of shares to be subject to awards and the terms and conditions of awards, and to make
all other determinations and to take all other actions necessary or advisable for the administration of the 2015 Plan.
Eligibility.
Options, SARs, restricted stock and all other stock-based and cash-based awards under the 2015 Plan may be granted to
individuals who are then our employees, members of the Committee or persons affiliated with the Company or any of its affiliates.
Only employees of our Company or any parent or subsidiaries of the Company may be granted incentive stock options, or ISOs.
Awards.
The 2015 Plan provides that the administrator may grant or issue stock options, SARs, restricted stock, phantom stock
awards, or any combination thereof. Each award will be set forth in a separate agreement with the person receiving the award and
will indicate the type, terms and conditions of the award.
Nonstatutory
Stock Options
, or NSOs, will provide for the right to purchase shares of our common stock at a specified price which may not
be less than fair market value on the date of grant, and usually will become exercisable (at the discretion of the administrator)
in one or more installments after the grant date, subject to the participant's continued employment or service with us and/or
subject to the satisfaction of corporate performance targets and individual performance targets established by the administrator.
NSOs may be granted for any term specified by the administrator that does not exceed 10 years.
Incentive
Stock Options
, or ISOs, will be designed in a manner intended to comply with the provisions of Section 422 of the Code and
will be subject to specified restrictions contained in the Code. Among such restrictions, ISOs must have an exercise price of
not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, and must
not be exercisable after a period of 10 years measured from the date of grant. In the case of an ISO granted to an individual
who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the 2015 Plan
provides that the exercise price must be at least 110% of the fair market value of a share of common stock on the date of grant
and the ISO must not be exercisable after a period of five years measured from the date of grant.
Restricted
Stock
may be granted to any eligible individual and made subject to such restrictions as may be determined by the administrator.
Restricted stock, typically, may be forfeited for no consideration or repurchased by us at the original purchase price if the
conditions or restrictions on vesting are not met. In general, restricted stock may not be sold or otherwise transferred until
restrictions are removed or expire. Purchasers of restricted stock, unlike recipients of options, will have voting rights and
will have the right to receive dividends, if any, prior to the time when the restrictions lapse, however, extraordinary dividends
will generally be placed in escrow, and will not be released until restrictions are removed or expire.
Stock
Appreciation Rights
, or SARs, may be granted in connection with stock options or other awards, or separately. SARs granted
in connection with stock options or other awards typically will provide for payments to the holder based upon increases in the
price of our common stock over a set exercise price. The exercise price of any SAR granted under the 2015 Plan must be at least
100% of the fair market value of a share of our common stock on the date of grant. Except as required by Section 162(m) of the
Code with respect to a SAR intended to qualify as performance-based compensation as described in Section 162(m) of the Code, there
are no restrictions specified in the 2015 Plan on the exercise of SARs or the amount of gain realizable therefrom, although restrictions
may be imposed by the administrator in the SAR agreements. SARs under the 2015 Plan will be settled in cash or shares of our common
stock, or in a combination of both, at the election of the administrator.
Phantom
Stock Awards
are rights to receive an amount equal to the fair market value of common stock over a specified period of time,
which vest over a period of time or upon the occurrence of an event as established by the Committee, without payment of any amounts
by the holder (except as otherwise required by law). Each phantom stock award may have a maximum value established by the Committee
at the time of the award. In determining the value of phantom stock awards, the Committee shall take into account a Participant’s
responsibility level, performance, potential, other Awards and such other considerations as it deems appropriate. Following the
end of the vesting period for a phantom stock award, the holder is entitled to receive payment of an amount, not exceeding the
maximum value of the award, based on the then vested value of the award. Payment of a phantom stock award may be made in cash,
common stock or a combination thereof. Any payment made in common stock shall be based on the fair market value of the common
stock on the payment date.
Change
in Control.
In the event of a change in control where the acquiror does not assume or replace awards granted, prior to
the consummation of such transaction, awards issued under the 2015 Plan will be subject to accelerated vesting such that 100%
of such awards will become vested and exercisable or payable, as applicable. Performance awards will vest in accordance with the
terms and conditions of the applicable award agreement. In the event that, within the 12 month period immediately following a
change in control, a participant's services with us are terminated by us other than for cause (as defined in the 2015 Plan) or
by such participant for good reason (as defined in the 2015 Plan), then the vesting and, if applicable, exercisability of 100%
of the then-unvested shares subject to the outstanding equity awards held by such participant under the 2015 Plan will accelerate
effective as of the date of such termination. The administrator may also make appropriate adjustments to awards under the 2015
Plan and is authorized to provide for the acceleration, cash-out, termination, assumption, substitution or conversion of such
awards in the event of a change in control or certain other unusual or nonrecurring events or transactions. Under the 2015 Plan,
a change in control is generally defined as:
•
|
the
Company is not the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary
of an entity other than a previously wholly- owned subsidiary of the Company),
|
•
|
the
Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company),
|
•
|
the
Company is to be dissolved and liquidated,
|
•
|
any
person or entity acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of
the outstanding shares of the Company’s voting stock (based upon voting power), or
|
•
|
as
a result of or in connection with a contested election of directors, the persons who were directors of the Company before
such election shall cease to constitute a majority of the Board.
|
Adjustments
of Awards.
In the event of any subdivision, consolidation, recapitalization or other change in capital structure stock
or any other corporate event affecting the number of outstanding shares of our common stock, the administrator may make appropriate,
proportionate adjustments to reflect the event giving rise to the need for such adjustments, with respect to:
•
|
the
aggregate number and type of shares subject to the 2015 Plan;
|
•
|
the
number and kind of shares subject to outstanding awards and terms and conditions of outstanding awards (including, without
limitation, any applicable performance targets or criteria with respect to such awards); and
|
•
|
the
grant or exercise price per share of any outstanding awards under the 2015 Plan.
|
In
the event of a change in control of the Company, all outstanding Awards shall immediately vest and become exercisable or satisfiable,
as applicable. The Committee may determine that upon the occurrence of a change of control, each outstanding award other than
an option shall terminate within a specified number of days after notice to the holder, and the holder shall receive, with respect
to each share of common stock subject to such award, cash in an amount equal to the excess, if any, of the change of control value
of the securities into which common stock Is convertible over the exercise price, if any, applicable to the Award. Further, in
the event of a change of control, the Committee, in its discretion shall act to effect one or more of the following alternatives
with respect to outstanding options, which may vary among individual holders and which may vary among Options held by any individual
Holder:
•
|
determine
a limited period of time on or before a specified date (before or after such Change of Control) after which specified date
all unexercised options and all rights of Holders thereunder shall terminate,
|
•
|
require
the mandatory surrender to the Company by selected holders of some or all of the outstanding options held by such holders
(irrespective of whether such options are then exercisable under the provisions of the Plan) as of a date, before or after
a change of control, specified by the Committee, in which event the Committee shall thereupon cancel such options and the
Company shall pay to each holder an amount of cash per share equal to the excess, if any, of the change of control value of
the shares subject to such option over the exercise price(s) under such options for such shares,
|
•
|
make
such adjustments to Options then outstanding as the Committee deems appropriate to reflect a change of control; or
|
•
|
provide
that thereafter upon any exercise of an option previously granted, the holder shall be entitled to purchase under such option,
in lieu of the number of common shares then covered by the option the number and class of shares of stock or other securities
or property (including, without limitation, cash) to which the holder would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets and dissolution if, immediately prior to such merger, consolidation or
sale of assets and dissolution the holder has been the holder of record of the number of common shares then covered by such
option.
|
Reload
Options.
The Committee has the authority to specify at or after the time of grant of a Nonqualified Stock Option, that
a holder shall be automatically granted a reload option in the event that the holder exercises all or part of an original option
within five years of the date of grant of the original option, by means of:
•
|
a
cashless exercise,
|
•
|
a
reduction in the number of common shares issuable upon such exercise sufficient to pay the purchase price and the applicable
withholding taxes, based on the Fair Market Value of the common shares on the date the Option is exercised, or
|
•
|
surrendering
to the Company already owned common shares in full or partial payment of the purchase price under the Original Option and
the applicable withholding taxes.
|
The
grant of reload options is subject to the availability of shares of common stock under the 2015 Plan at the time of exercise of
the original option.
Amendment
and Termination.
Our board of directors may terminate, amend or modify the 2015 Plan at any time and from time to time;
provided that no change in any outstanding award may be made which would impair the rights of the holder without the consent of
the holder.
Upon
the effective date of the registration statement of which this prospectus forms a part, we intend to file with the SEC a registration
statement on Form S-8 covering the shares of our common stock issuable under the 2015 Plan.
Grants
of Plan-Based Awards
On
September 16, 2015, the board of directors adopted, subject to stockholder approval, the 2015 Stock Awards Plan (the “Plan”)
and reserved 6,000,000 shares of common stock for issuance under the Plan.
The
following table sets forth certain information regarding grants of common stock options to the Named Executive Officers under
the Plan during the fiscal year ended December 31, 2015.
GRANTS
OF PLAN-BASED AWARDS IN FISCAL 2015
Name
|
|
Award
Type
|
|
Grant
Date
|
|
Approval
Date
|
|
Number of
Securities
Underlying
Options
Granted
|
|
Exercise or
Base Price
of Option
Awards
($/Sh) (1)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($) (2)
|
Hin Kwok Sheung
|
|
Incentive Stock Option
|
|
02/20/15
|
|
02/20/15
|
|
|
750,000
|
|
|
$
|
0.075
|
|
|
$
|
0.0496
|
|
Ke Feng (Andrea)Yuan
|
|
Incentive Stock Option
|
|
02/20/15
|
|
02/20/15
|
|
|
1,125,000
|
|
|
$
|
0.075
|
|
|
$
|
0.0496
|
|
Robin Young
|
|
Incentive Stock Option
|
|
02/20/15
|
|
02/20/15
|
|
|
750,000
|
|
|
$
|
0.075
|
|
|
$
|
0.0496
|
|
Yan Zhuang
|
|
Non-Qualified Stock Option
|
|
02/20/15
|
|
02/20/15
|
|
|
1,125,000
|
|
|
$
|
0.075
|
|
|
$
|
0.0496
|
|
(1)
|
Stock
options were granted with an exercise price equal to in excess of 100% of the fair market value on the date of grant, as determined
by the closing price of the common stock as of the date on which it last traded on the OTCQB.
|
(2)
|
The
dollar amounts in this column represent the grant date fair value of each stock option award granted to the Named Executive
Officers in 2015. These amounts have been calculated in accordance with ASC 718, using the Black-Scholes option-pricing model.
Assumptions used in the calculation of these amounts is included in the notes to the Company’s audited financial statements
for the year ended December 31, 2015.
|
The
options referenced in the table above were granted to the Named Executives as part of wider grant of 6,000,000 options to the
Company’s officers, directors and a consultant. All of the options are exercisable at a price of $0.075 per share. Of the
options granted 10% vested on the grant date; and 15% vested or will vest on each of March 20, 2016, September 20, 2016, March
20, 2017, September 20, 2017, March 20, 2018, and September 20, 2018. The options may be exercised upon the payment of cash or
the cancellation of fees and are subject to a minimum exercise of $2,000. In the event that an optionee's employee or consultant
status with the Company or any of its subsidiaries ceases or terminates for any reason whatsoever, including, but not limited
to, death, disability, or voluntary or involuntary cessation or termination, the option will terminate with respect to any portion
thereof that has not vested prior to the date of cessation or termination of the optionee’s employee or consultant status.
In the event of termination of the optionee’s employee or consultant status for cause, the option will immediately terminate
in full with respect to any un-exercised options, and any vested but un-exercised options shall immediately expire and may not
be exercised. Unless otherwise set forth in a separate employment or consulting agreement, vested options must be exercised within
one year after the date of termination (other than for cause), notwithstanding the expiration date of the option.
Outstanding
Equity Awards at Year End
The
following table sets forth information regarding equity awards that have been previously awarded to each of the Named Executive
Officers and which remain outstanding as of December 31, 2015.
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
Hin Kwok
Sheung
|
|
|
75,000
|
|
|
|
675,000
|
|
|
$
|
0.075
|
|
|
9/20/20
|
Ke Feng (Andrea)Yuan
|
|
|
112,500
|
|
|
|
1,012500
|
|
|
$
|
0.075
|
|
|
9/20/20
|
Robin Young
|
|
|
75,000
|
|
|
|
675,000
|
|
|
$
|
0.075
|
|
|
9/20/20
|
Yan Zhuang
|
|
|
112,500
|
|
|
|
1,012,500
|
|
|
$
|
0.075
|
|
|
9/20/20
|
A
description of the material terms of the options identified in the table is set forth above under the heading “Grants of
Plan-Based Awards.”
Employment
Agreements
We
have not entered into any employment agreements with our executive officers.
In
each of 2014 and 2015, the board of directors approved the payment of management fees of $3,000 per month to a company controlled
by Robin Young, the secretary of the Company.
In
each of 2014 and 2015, the board of directors approved the payment of management fees of $2,000 per month to a company controlled
by Ke Feng (Andrea) Yuan, our chief financial officer.
During
2015, the board of directors approved the payment of $2,500 per month to Mr. Yan Zhuang, the general manager of our PRC Subsidiaries.
Outstanding
Equity Awards at Fiscal Year-End
Except
as otherwise described under the heading “Grants Of Plan-Based Awards In Fiscal 2015” above, no executive officer
has received any equity awards, nor have they been granted any options since our inception.
Long-Term
Incentive Plans
There
are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for directors or executive
officers.
Compensation
Committee
We
currently do not have a compensation committee of our Board of Directors. The Board as a whole determines executive compensation.
Compensation
Committee Interlocks and Insider Participation
Our
Board does not have, and has not had, a compensation committee. Our executive officers do not serve as a member of the board of
directors or compensation committee of any entity which has one or more executive officers serving as a member of our Board.
Compensation
of Directors
Our
current directors do not receive separate compensation for their service on our board of directors. Our board has the authority
to fix the compensation of directors.
Director
Independence
Our
Board of Directors is currently composed of 5 members, one of whom qualifies as an independent director in accordance with the
published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective
tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the
director, nor any of his family members has engaged in various types of business dealings with us. In addition, our Board has
not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board, would
interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective
determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board would have reviewed
and discussed information provided by the directors and us with regard to each director’s business and personal activities
and relationships as they may relate to us and our management.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of our capital stock as of July 12, 2016,
by (i) each person known by us to be the beneficial owner of more than 5% of each class of our outstanding capital stock, (ii)
each director and each of our executive officers and (iii) all executive officers and directors as a group. As of July 12 ,
2016, there were 45,585,000 shares of our common stock outstanding and options to purchase and additional 6,000,000 shares of
common stock outstanding.
The
number of shares of capital stock beneficially owned by each person is determined under the rules of the Commission and the information
is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any
shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has
the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect
to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute
an admission of beneficial ownership of those shares. The address for each of our directors and officers is care of the Company.
Percentages
ownership calculations in the table are based on 45,585,000 shares of common stock outstanding as of the date of this prospectus.
|
|
Shares
Beneficially Owned
Prior
to this Offering
|
|
|
Shares
Beneficially Owned
After
this Offering (1)
|
|
Name
|
|
Number
|
|
|
Percent
|
|
|
Number
|
|
|
Percent
|
|
Hin
Kwok Sheung, President and Director
|
|
|
10,187,500
(2)
|
|
|
|
22.26
|
%
|
|
|
10,187,500
(2)
|
|
|
|
15.49
|
%
|
Ke
Feng (Andrea)Yuan, Chief Financial Officer
|
|
|
281,250
(3)
|
|
|
|
0.61
|
%
|
|
|
281,250
(3)
|
|
|
|
0.43
|
%
|
Robin
Young, Secretary and Director
|
|
|
3,937,500
(4)
|
|
|
|
8.60
|
%
|
|
|
3,825,000
(4)
|
|
|
|
5.99
|
%
|
Jia
Charles Yao, Director
|
|
|
2,187,500
(5)
|
|
|
|
4.78
|
%
|
|
|
2,075,000
(5)
|
|
|
|
3.33
|
%
|
Yan
Zhuang, Director
|
|
|
281,250
(6)
|
|
|
|
0.61
|
%
|
|
|
281,250
(6)
|
|
|
|
0.43
|
%
|
All directors
and executive officers as a group (5 persons)
|
|
|
16,875,000
|
|
|
|
36.86
|
%
|
|
|
16,875,000
|
|
|
|
25.66
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Phillips
7903
- 93a Avenue
Edmonton,
Alberta T6C 1V2
|
|
|
3,750,000
|
|
|
|
8.23
|
%
|
|
|
3,750,000
|
|
|
|
5.72
|
%
|
Petula
Wong
Rm
C 12/F 55 Tong Mi Road
Kowloon,
Hong Kong
|
|
|
3,750,000
|
|
|
|
8.23
|
%
|
|
|
3,750,000
|
|
|
|
5.72
|
%
|
Ben
Choi
426
Main Street
Suite
#202
Vancouver,
B.C. V6A 2T4
|
|
|
3,750,000
|
|
|
|
8.23
|
%
|
|
|
3,750,000
|
|
|
|
5.72
|
%
|
Yun
Fei Liu
6581
Parkdale Drive
Burnaby,
B.C.
Canada
V5B 2X4
|
|
|
4,187,500
(7)
|
|
|
|
9.15
|
%
|
|
|
4,187,500
(7)
|
|
|
|
6.37
|
%
|
Daniel
Lo
333
- 13988 Cambie Road
Richmond,
B.C.
Canada
V6V 2K4
|
|
|
3,750,000
|
|
|
|
8.23
|
%
|
|
|
3,750,000
|
|
|
|
5.72
|
%
|
1.
|
Assuming
the sale of all Shares offered hereby.
|
2
|
Includes
options to purchase 187,500 shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
3.
|
Comprises
options to purchase shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
4.
|
Includes
options to purchase 187,500 shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
5.
|
Includes
options to purchase 187,500 shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
6.
|
Comprises
options to purchase shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
7.
|
Comprises
options to purchase 187,500 shares of common stock that are exercisable within 60 days of the date of this prospectus.
|
Changes
in Control
We
are aware of no arrangements which if consummated may result in a change of control of our Company.
PLAN
OF DISTRIBUTION
The
Offering
We
are offering up to 20,000,000 shares of our common stock at a fixed price of $0.25 per share with aggregate proceeds of up to
$5,000,000. We are offering the Shares through our officers and directors on a “best efforts/no minimum” basis without
a placement agent. Although the gross proceeds of this offering may be up to $5,000,000, this offering is being conducted on a
“no minimum” basis, meaning that no aggregate minimum offering amount is required to be raised by us in this offering.
As such, the actual public offering amount and proceeds to us, if any, are not presently determinable and net proceeds may be
substantially less than the total maximum offering set forth above.
We
cannot assure you that all or any of the Shares offered under this prospectus will be sold. No one has committed to purchase any
of the Shares offered. Therefore, we may sell only a nominal number of Shares, in which case our ability to execute our business
plan might be negatively impacted.
Terms
of the Offering
This
offering will terminate 270 days after the effective date of this registration statement unless the offering is fully subscribed
before that date or we decide to terminate the offering prior to that date. We may conduct multiple closings of the offering until
the offering is fully subscribed or terminated. In either event, the offering may be closed without further notice to you. All
costs associated with the registration will be borne by us. All net proceeds will be available to us for use as set forth in “Use
of Proceeds” herein. Offering proceeds will not be held in escrow and may be utilized by us immediately on a subscription-by-subscription
basis upon our acceptance of a subscriber’s subscription made by way of the subscription agreement to be entered into between
us and the investors in this offering.
In
order to comply with the applicable securities laws of certain states, the securities may not be offered or sold unless they have
been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available
and with which we have complied. The purchasers in this offering and in any subsequent trading market must be residents of such
states where the shares have been registered or qualified for sale or an exemption from such registration or qualification requirement
is available.
The
Offering will be Sold by Our Officers and Directors
This
prospectus will permit our officers and directors to offer and sell our securities directly to the public, with no commission
or other remuneration payable to them for any Shares sold. In offering the securities on our behalf, our officers and directors
will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934,
as amended (which we refer to herein as the Exchange Act). Rule 3(a)4-1 sets forth those conditions under which a person associated
with an issuer may participate in an offering of the issuer’s securities and not be deemed to be a broker-dealer. Our officers
and directors satisfy the requirements of Rule 3(a) 4-1 in that:
•
|
They
are not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Securities Act, at the
time of his or her participation;
|
•
|
They
are not compensated in connection with their participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities;
|
•
|
They
are not, at the time of their participation, an associated person of a broker- dealer; and
|
•
|
They
meet the conditions of Paragraph (a)(4)(ii) of Rule 3(a)4-1 of the Exchange Act, in that they (A) primarily perform, or are
intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than
in connection with transactions in securities; and (B) are not brokers or dealers, or an associated person of a broker or
dealer, within the preceding 12 months; and (C) do not participate in selling and offering of securities for any issuer more
than once every 12 months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
|
As
long as we satisfy all of these conditions, we believe that we satisfy the requirements of Rule 3(a)4-1 of the Exchange Act.
In
view of the fact that our officers and directors will sell the Shares being offered pursuant to this offering, Regulation M prohibits
us and our officers and directors from certain types of trading activities during the time of distribution of our securities.
Specifically, Regulation M prohibits our officers and directors from bidding for or purchasing any common stock or attempting
to induce any other person to purchase any common stock, until the distribution of our securities pursuant to this offering has
ended.
No
Deposit of Offering Proceeds
This
is a direct primary, self-underwritten Offering, so we are not required to sell any specific number or dollar amount of securities,
but will use our best efforts to sell the securities offered. We have made no arrangements to place subscription funds in an escrow,
trust or similar account, which means that all funds collected for accepted subscriptions will be immediately available to us
for use in the implementation of our business plan.
Procedures
and Requirements for Subscription
This
is a direct public offering and, as such, payment for the sale of the Shares in this offering will be payable to Globalink, Ltd.
and we will have immediate access to these funds. Investors can purchase common stock in this offering by completing a subscription
agreement, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part of. All payments
are to be made to Globalink, Ltd. and are required in the form of United States currency either by personal check, bank draft,
or by cashier’s check. All subscription agreements and checks are irrevocable and should be delivered to Globalink, Ltd.,
365 Boundary Road, Vancouver, BC V5K 4S1, Attn: Andrea Yuan, CFO. We reserve the right to either accept or reject any subscription.
Any subscription rejected by us will be returned to the subscriber within five business days of the rejection date. Once a subscription
agreement is accepted, it will be executed without reconfirmation to or from the subscriber. Subscriptions, once received and
accepted by us, are irrevocable.
Our
transfer agent, Island Stock Transfer, LLC, will issue certificates evidencing the common stock subscribed for in this offering
promptly after we accept subscriptions from investors. Securities purchased by investors in this offering will remain outstanding
upon its termination regardless of the number of Shares subscribed for.
DESCRIPTION
OF SECURITIES
General
Pursuant
to our Articles of Incorporation, our authorized capital stock consists of 500,000,000 shares of common stock, $0.0002 par value
per share. As of the date of this prospectus, we had 45,585,000 shares of common stock issued and outstanding.
Common
Stock
Holders
of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders
of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for
the election of directors can elect all of the directors. Holders of the Company’s common stock representing a majority
of the voting power of the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by
proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s
outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment
to the Company’s articles of incorporation.
Subject
to the rights of holders of the preferred stock, holders of the Company’s common stock are entitled to share in all dividends
that our Board of Directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution
or winding up of our Company, each outstanding share entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. The Company’s
common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s
common stock.
DIVIDEND
POLICY
As
of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend
will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial
position, the general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In
January 2016, Hin Kwok Sheung, our chief executive and president and a director of the Company loaned $232,530 (RMB1,500,000)
to Globalink Xuzhou. The loan is non-interest bearing, non-secured, and has no fixed terms of repayment.
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Ruffa & Ruffa, P.C., New York, New York. Legal matters as to PRC
law will be passed upon for the Company by Pizhou City Shuishang Law Firm.
EXPERTS
The
financial statements of Globalink, Ltd. as of and for the years ended December 31, 2014 and 2015 included in this
prospectus, have been included herein in reliance on the report by Davidson & Company LLP, our independent registered
public accounting firm, given on the authority that the firm are experts in accounting and auditing.
DISCLOSURE
OF COMMISSION’S POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our
directors and officers are indemnified as provided by the Nevada Statutes and our bylaws. We have agreed to indemnify each of
our directors and officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant
to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in
the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the common stock offered
hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules
thereto. Some items are omitted in accordance with the rules and regulations of the SEC. For further information with respect
to us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract, agreement or any other document referred to are summaries
of the material terms of the respective contract, agreement or other document. With respect to each of these contracts, agreements
or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description
of the matter involved. A copy of the registration statement, and the exhibits and schedules thereto, may be inspected without
charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of these
materials may be obtained by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. The SEC maintains
a website that contains reports, proxy and information statements and other information regarding registrants that file electronically
with the SEC. The address of the SEC’s website is
http://www.sec.gov
.
We
file periodic reports and other information with the SEC. Such periodic reports and other information are available for inspection
and copying at the public reference room and website of the SEC referred to above.
You may
read and copy any reports, statements, or other information we file at the SEC’s public reference room at the address referenced
above. You can request copies of these documents, upon payment of a duplicating fee by writing to the SEC. Our SEC filings are
also available to the public on the SEC’s Internet site at httpwww.sec.gov.
You may also request a copy of these
filings, at no cost, by contacting us at:
Globalink,
Ltd.
365
Boundary Road
Vancouver,
BC V5K 4S1
(604)
828-8822
Attention:
Secretary
We
maintain a website at
http://www.globalinkworld.com
.
Information contained in or accessible through our website is not and should not be considered a part of this prospectus and you
should not rely on that information in deciding whether to invest in our common stock, unless that information is also in or incorporated
by reference in this prospectus.
INDEX
TO FINANCIAL STATEMENTS
Unaudited
interim condensed consolidated financial statements
|
|
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015
|
89
|
|
|
Condensed
Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015
|
90
|
|
|
Condensed
Consolidated Statements of Changes in Equity
|
91
|
|
|
Condensed Consolidated Statements of
Cash Flows for the three months ended March 31, 2016 and 2015
|
92
|
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements
|
93
- 107
|
Audited
annual consolidated financial statements
|
|
|
|
Reports
of Independent Registered Public Accounting Firm
|
108
|
|
|
Audited
Consolidated Balance Sheets of December 31, 2015 and 2014
|
109
|
|
|
Audited
Consolidated Statements of Loss and Comprehensive
Loss
for the Years ended December 31, 2015 and 2014
|
110
|
|
|
Audited
Consolidated Statement of Changes in Shareholders' Equity
|
111
|
|
|
Audited
Consolidated Statements of Cash Flows for the Years
ended
December 31, 2015 and 2014
|
112
|
|
|
Notes
to Consolidated Financial Statements
|
113
- 126
|
GLOBALINK,
LTD.
Condensed
Consolidated Balance Sheets
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
March
31,
2016
|
|
December
31,
2015
|
|
|
$
|
|
$
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents (note 3)
|
|
|
677,221
|
|
|
|
758,355
|
|
Accounts
receivable (note 6)
|
|
|
157,926
|
|
|
|
92,464
|
|
Other
current assets (note 4)
|
|
|
223,547
|
|
|
|
79,206
|
|
Total
current assets
|
|
|
1,058,694
|
|
|
|
930,025
|
|
|
|
|
|
|
|
|
|
|
Inventories
(note 5)
|
|
|
1,352
|
|
|
|
25,213
|
|
Construction
in progress (note 8)
|
|
|
86,159
|
|
|
|
12,884
|
|
Growing
crops (note 9)
|
|
|
257,579
|
|
|
|
132,168
|
|
Fixed
assets (note 7)
|
|
|
73,919
|
|
|
|
54,402
|
|
Goodwill
|
|
|
274,449
|
|
|
|
274,449
|
|
Total
assets
|
|
|
1,752,152
|
|
|
|
1,429,141
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities (note 10)
|
|
|
466,220
|
|
|
|
338,073
|
|
Amounts
due to related parties (note 12)
|
|
|
5,000
|
|
|
|
—
|
|
Loan
payable to related party (note 12)
|
|
|
232,530
|
|
|
|
—
|
|
Other
current liabilities (note 11)
|
|
|
19,310
|
|
|
|
9,305
|
|
Total
current liabilities
|
|
|
723,060
|
|
|
|
347,378
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
Common
shares, $0.0002 par value; Authorized - 500,000,000 common shares; shares issued and outstanding – 45,585,000 (December
31, 2015 – 43,585,000) (note 13)
|
|
|
9,117
|
|
|
|
8,717
|
|
Additional
paid-in-capital (note 13)
|
|
|
1,791,888
|
|
|
|
1,660,415
|
|
Accumulated
other comprehensive loss
|
|
|
(18,725
|
)
|
|
|
(20,013
|
)
|
Deficit
|
|
|
(753,188
|
)
|
|
|
(567,356
|
)
|
Total
shareholders’ equity
|
|
|
1,029,092
|
|
|
|
1,081,763
|
|
Total
liabilities and shareholders’ equity
|
|
|
1,752,152
|
|
|
|
1,429,141
|
|
The
notes are an integral part of these condensed consolidated interim financial statements.
GLOBALINK,
LTD.
Condensed
Consolidated Statements of Comprehensive Loss
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
2016
|
|
2015
|
|
|
$
|
|
$
|
Revenue
(note 14)
|
|
|
33,096
|
|
|
|
71,921
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
Accounting
and legal
|
|
|
800
|
|
|
|
574
|
|
Amortization
(note 7)
|
|
|
734
|
|
|
|
—
|
|
Director
and management fees (note 12)
|
|
|
15,000
|
|
|
|
15,000
|
|
Foreign
exchange gain
|
|
|
(7,136
|
)
|
|
|
(594
|
)
|
Investor
relations (note 13)
|
|
|
12,000
|
|
|
|
—
|
|
Research
and development
|
|
|
8,796
|
|
|
|
—
|
|
Rent
|
|
|
9,093
|
|
|
|
5,209
|
|
Salaries
and benefits
|
|
|
87,026
|
|
|
|
52,342
|
|
Stock-based
compensation (notes 12 and 13)
|
|
|
51,873
|
|
|
|
—
|
|
Telephone
|
|
|
2,043
|
|
|
|
1,870
|
|
Travel
|
|
|
10,747
|
|
|
|
7,140
|
|
Transfer
agent and filing fees
|
|
|
14,732
|
|
|
|
15,885
|
|
Other
general and administrative expenses
|
|
|
13,220
|
|
|
|
2,328
|
|
Total
general and administrative expenses
|
|
|
(218,928
|
)
|
|
|
(99,754
|
)
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
(185,832
|
)
|
|
|
(27,833
|
)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Exchange
difference on translating foreign operations
|
|
|
1,288
|
|
|
|
1,696
|
|
Comprehensive
loss
|
|
|
(184,544
|
)
|
|
|
(26,137
|
)
|
Basic
and diluted weighted average number of common shares outstanding
|
|
|
44,482,512
|
|
|
|
42,485,000
|
|
Basic
and diluted loss per common share
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
The
notes are an integral part of these condensed consolidated interim financial statements.
GLOBALINK,
LTD.
Condensed
Consolidated Statements of Changes in Equity
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
Common
shares
|
|
Additional
paid-in-capital
|
|
Accumulated
other comprehensive income
(loss)
|
|
Deficit
|
|
Total
|
|
|
|
#
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
December
31, 2014
|
|
|
42,485,000
|
|
|
|
8,497
|
|
|
|
1,459,703
|
|
|
|
(7,691
|
)
|
|
|
(289,066
|
)
|
|
|
1,171,443
|
|
Private
placements
|
|
|
1,100,000
|
|
|
|
220
|
|
|
|
109,780
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110,000
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
90,932
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,932
|
|
Net
loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(278,290
|
)
|
|
|
(278,290
|
)
|
Foreign
currency translation difference
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,322
|
)
|
|
|
—
|
|
|
|
(12,322
|
)
|
December
31, 2015
|
|
|
43,585,000
|
|
|
|
8,717
|
|
|
|
1,660,415
|
|
|
|
(20,013
|
)
|
|
|
(567,356
|
)
|
|
|
1,081,763
|
|
Shares
issued for investor relations fee
|
|
|
2,000,000
|
|
|
|
400
|
|
|
|
79,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
51,873
|
|
|
|
—
|
|
|
|
—
|
|
|
|
51,873
|
|
Net
loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(185,832
|
)
|
|
|
(185,832
|
)
|
Foreign
currency translation difference
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,288
|
|
|
|
—
|
|
|
|
1,288
|
|
March
31, 2016
|
|
|
45,585,000
|
|
|
|
9,117
|
|
|
|
1,791,888
|
|
|
|
(18,725
|
)
|
|
|
(753,188
|
)
|
|
|
1,029,092
|
|
The
notes are an integral part of these condensed consolidated interim financial statements.
GLOBALINK,
LTD.
Condensed
Consolidated Statements of Cash Flows
(Expressed
in U.S. Dollars)
(Unaudited)
For
the three months ended March 31,
|
|
2016
|
|
2015
|
|
|
$
|
|
$
|
Cash
provided by (used in):
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
(185,832
|
)
|
|
|
(27,833
|
)
|
Non-cash
items:
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
734
|
|
|
|
—
|
|
Stock-based
compensation
|
|
|
51,873
|
|
|
|
—
|
|
Shares
issued for investor relations fee
|
|
|
12,000
|
|
|
|
—
|
|
Changes
in non-cash working capital:
|
|
|
|
|
|
|
|
|
Increase
in accounts receivable
|
|
|
(55,790
|
)
|
|
|
(193,595
|
)
|
(Increase)
Decrease in other current assets
|
|
|
(74,006
|
)
|
|
|
4,003
|
|
Increase
in accounts payable and accrued liabilities
|
|
|
108,015
|
|
|
|
81,555
|
|
Increase
in amounts due to related parties
|
|
|
5,000
|
|
|
|
—
|
|
Increase
in other current liabilities
|
|
|
8,845
|
|
|
|
8,328
|
|
Total
cash used in operating activities
|
|
|
(129,161
|
)
|
|
|
(127,542
|
)
|
Investing
activities
|
|
|
|
|
|
|
|
|
Acquisition
of fixed assets
|
|
|
(2,691
|
)
|
|
|
—
|
|
Inventories
|
|
|
(996
|
)
|
|
|
—
|
|
Construction
in progress
|
|
|
(69,495
|
)
|
|
|
—
|
|
Growing
crops
|
|
|
(125,411
|
)
|
|
|
—
|
|
Total
cash used in investing activities
|
|
|
(198,593
|
)
|
|
|
—
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
Loan
proceeds from related party
|
|
|
232,530
|
|
|
|
—
|
|
Total
cash provided by financing activities
|
|
|
232,530
|
|
|
|
—
|
|
Decrease
in cash
|
|
|
(95,224
|
)
|
|
|
(127,542
|
)
|
Effect
of exchange rate changes on balance of cash held in foreign currencies
|
|
|
14,090
|
|
|
|
(13,389
|
)
|
Cash
and cash equivalents, beginning of the period
|
|
|
758,355
|
|
|
|
1,236,137
|
|
Cash
and cash equivalents, end of the period
|
|
|
677,221
|
|
|
|
1,095,206
|
|
Supplemental
information on cash flows
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
|
|
—
|
|
|
|
—
|
|
Interest
paid
|
|
|
—
|
|
|
|
—
|
|
Supplemental
disclosure with respect to cash flows (note 16)
The
notes are an integral part of these condensed consolidated interim financial statements.
GLOBALINK
LTD.
Notes
to Condensed Consolidated Financial Statements
For
the three months ended March 31, 2016
(Expressed
in U.S. Dollars)
(Unaudited)
1. NATURE
OF OPERATIONS
Globalink,
Ltd. (the “Company”) was incorporated in the State of Nevada on February 3, 2006. The Company has focused its efforts
on internet hotel booking services and has developed a proprietary online hotel booking program for connecting users with available
rooms in hotels across the world. In order to gain the access to hotels, the Company acquired OneWorld Hotel Destination Service
Inc. (“OneWorld”) in Vancouver, British Columbia, Canada on October 31, 2008. OneWorld is a hotel booking company
which has established relationships with major hotel chains. As a result of the acquisition, OneWorld became a wholly-owned subsidiary
of the Company and goodwill of $274,449 was recognized on completion of the acquisition.
On
May 4, 2014, the Company entered into a joint venture agreement (the “Agreement”) with Shizhen Bio-Technology Co.,
Ltd. (“Shizhen Biotech”) in Jiangsu Province, China. On May 22, 2014, Globalink (Xuzhou) Bio-Technology Co., Ltd.
(“Globalink Xuzhou”) was incorporated in Pizhou City, Jiangsu Province, China pursuant to the Agreement. Globalink
Xuzhou will have total registered capital of $10,000,000, $8,000,000 of which will be invested by the Company to earn an 80% interest,
with the remaining $2,000,000 being invested by Shizhen Biotech to earn the remaining 20%. Globalink Xuzhou will be involved in
the business of biological sciences and technology research, biological technology popularization services, and fruit and vegetable
distribution. Currently, Globalink Xuzhou will continue to focus on gingko cultivation and extraction. In August 2015, the Company
transferred $500,000 to Globalink Xuzhou to start developing a gingko plantation in Pizhou City, Jiangsu Province. The Company
transferred an additional $300,000 in October 2015. As at March 31, 2016 and December 31, 2015, the Company owns 100% of Globalink
Xuzhou.
On
October 13, 2015, the Company incorporated a wholly-owned subsidiary, Globalink (Zhejiang) Bio-Technology Co. Ltd. (“Globalink
Zhejiang”) in Ningbo City, Jiangsu Province, China. Globalink Zhejiang will be involved in the research and development,
cultivation, extraction, and application of gingko trees and other economic plants. Globalink Xuzhou transferred RMB800,000 ($123,200)
to Globalink Zhejiang in October 2015 to start its operations and additional RMB800,000 ($124,016) in March 2016.
2. SIGNIFICANT
ACCOUNTING POLICIES
Statement
of presentation
These
unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting
principles (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including
Form 10-Q and Regulation S-K. Certain information and footnote disclosures normally present in annual financial statements have
been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the
information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction
with the audited financial statements and explanatory notes for the year ended December 31, 2015 as disclosed in the Company’s
Form 10-K as filed with the Securities and Exchange Commission on April 4, 2016. Operating results for the three month period
ended March 31, 2016 may not necessarily be indicate of the results for the year ending December 31, 2016.
Continuance
of operation
These
consolidated financial statements prepared in conformity with US GAAP contemplate continuation of the Company as a going concern.
As of March 31, 2016, the Company has an accumulated deficit of $753,188 since inception. Its ability to continue as a going concern
depends upon whether it develops profitable operations and continues to raise adequate financing. However, management believes
that the Company has sufficient working capital to meet its projected minimum financial obligations for the next fiscal year.
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
Consolidation
The
consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. Subsidiaries
are the entities controlled by the Company. All inter-company transactions and balances between the Company and its subsidiaries
have been eliminated upon consolidation.
The
subsidiaries are consolidated from the date on which control is transferred to the Company and will cease to be consolidated from
the date on which control is transferred out of the Company.
Details
of the Company’s subsidiaries are as follows:
Name
|
|
Date
of incorporation or acquisition
|
|
Location
|
|
Ownership
|
|
Principal
activities
|
OneWorld
Hotel Destination Service Inc. (“OneWorld”)
|
|
October
31, 2008
|
|
Vancouver,
Canada
|
|
|
100
|
%
|
|
Hotel
booking
|
Globalink
(Xuzhou) Bio-Technology Co., Ltd. (“Globalink Xuzhou”)
|
|
May
22, 2014
|
|
Pizhou
City, Jiangsu Province, China
|
|
|
100
|
%
|
|
Gingko
cultivation
|
Globalink
(Zhejiang) Bio-Technology Co. Ltd. (“Globalink Zhejiang”)
|
|
October
13, 2015
|
|
Ningbo
City, Jiangsu Province, China
|
|
|
100
|
%
|
|
Bio-technology
research and development
|
Use
of estimates
The
preparation of consolidated financial statements in conformity with US GAAP requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and provisions,
income and expenses and the disclosure of contingent assets and liabilities at the date of these financial statements. Estimates
are used for, but not limited to, the selection of the useful lives of fixed assets, allowance for doubtful debt associated with
accounts receivable, fair values, revenue recognition, and taxes. Management believes that the estimates utilized in preparing
its consolidated financial statements are reasonable and prudent. Actual results may differ from these estimates.
Foreign
currency translation
Functional
and presentation currency
Items
included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary
economic environment in which the subsidiary operates (“the functional currency”), which is the Chinese Renminbi (“RMB”)
for Globalink Xuzhou and Globalink Zhejiang, and the Canadian dollar (“CAD”) for Oneworld. The consolidated financial
statements are presented in United States dollar (“USD”), which is the functional currency of the parent company.
The operating subsidiaries’ financial statements are prepared in its respective functional currencies before translating
to the presentation currency which is the USD. The Company translates items in the statement of operations and comprehensive income
(loss) using the average exchange rate for the year. Assets and liabilities are translated at the year-end rate. All resulting
exchange differences are reported as a separate component of other comprehensive income (loss).
Transactions
and balances
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuations where items are re-measured. Foreign exchange gains and losses resulting from settlement of such transactions and
from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized
in profit or loss as a “foreign exchange (gain) loss”.
Growing
crops
Gingko
trees are valued at historical cost, which include all cultivation costs incurred for planting, growing and maintaining the gingko
trees during a year other than the harvest season that lasts about 2 months. The cultivation costs include costs of land lease,
equipment lease, equipment amortization, labour, consulting, fertilizer, materials and supplies, and other direct growing costs.
At
the end of each reporting period, the Company reviews the carrying amounts of the growing crops to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). A reliable market price is usually available
for mature gingko trees in China. Under certain circumstances, when a reliable market price is not available, the fair value of
the growing crops is measured using the discounted expected future cash flow method. Under this method, expected future revenues
less costs to complete and harvest is discounted to present value.
The
growing crops will be amortized using the straight-line method over an estimated useful life of 5 years. The Company intends to
sell all of the gingko trees after 5 years and replant seedlings in order to optimize the effective ingredients in leaves harvested
from younger trees.
Inventories
Inventories
are valued at the lower of cost (determined on a weighted average basis) and market value. Inventories as of March 31, 2016 consist
of fertilizers. Inventories as of December 31, 2015 mainly consisted of gingko seeds which were planted in field in March 2016.
The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.
Accounts
receivable
Trade
receivables are carried at original invoice amount. Accounts receivable are written off to bad debt expense using the direct write-off
method. Receivables past due for more than 120 days are considered delinquent. Management determines uncollectible accounts by
regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and
current economic conditions and by using historical experience applied to an aging of accounts. Recoveries of trade receivables
previously written off are recorded when received.
Fixed
assets
Fixed
assets are recorded at cost less accumulated amortization. Amortization of fixed assets is calculated using the straight-line
method over the estimated useful lives of the assets as follows:
Computer equipment
|
3
years
|
Lab equipment
|
3
years
|
Office furniture and fixtures
|
5
years
|
Storage
|
5
years
|
Agricultural machinery
|
4
years
|
Infrastructure
|
10
years
|
Fair
value
The
Company measures fair value in accordance with accounting guidance that defines fair value, provides guidance for measuring fair
value and requires certain disclosures. The guidance also discusses valuation techniques, such as the market approach (comparable
market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service
capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
|
–
|
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible
at the measurement date for identical, unrestricted assets or liabilities.
|
|
–
|
Level
2: Inputs other than quoted prices that are observable for the asset or liability, either
directly or indirectly. These include quoted prices for similar assets or liabilities
in active markets and quoted prices for identical or similar assets or liabilities in
markets that are not active.
|
|
–
|
Level
3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
The
inputs used in the fair value measurement should be from the highest level available. In instances where the measurement is based
on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input
that is significant to the fair value measurement in its entirety.
As
at March 31, 2016, the Company’s financial instruments are comprised of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities, amounts due to related parties, loan payable to related party and other current liabilities.
Cash and cash equivalents are measured at fair value using Level 1 inputs. With the exception of cash and cash equivalents, all
financial instruments held by the Company are measured at amortized cost. The fair values of these financial instruments approximate
their carrying value due to their short-term maturities.
Goodwill
The
Company recognizes goodwill in accordance with ASC 805 “Business Combinations”. Goodwill represents the excess of
the purchase price over the fair value of assets acquired and liabilities assumed, if any. The goodwill impairment test compares
the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds
its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the
implied fair value of a reporting unit's goodwill is compared to the carrying amount of that goodwill. If the carrying amount
of a reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is indicated. The Company concluded
that there were no indicators of impairment with respect to the Company's goodwill as of March 31, 2016.
Impairment
reviews for long-lived assets
Long-lived
assets such as property, equipment and goodwill are reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the
fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets,
if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its
undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the
asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at
a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses
for any periods presented.
Revenue
recognition
The
Company recognizes revenue from its hotel booking services once the service is rendered and all the significant risks and rewards
of the service have been transferred to the customer. As a result, revenue from hotel booking services are recognized when customers
check in to the hotels. Amounts received from customers for services not yet rendered are included in other current liabilities
as unearned revenue.
In
accordance with the ASC 605 “Revenue Recognition”, the Company reports its revenue as an agent, on the net amount
retained, which is the amount billed to a customer less the amount paid to a hotel.
During
the three months ended March 31, 2016 and 2015, all revenue was derived from hotel booking services.
Research
and development
Research
and development costs are expensed as incurred. The costs primarily consist of consulting fees paid to the technical team for
development and improvement of gingko cultivation methods. Research and development costs for the three months ended March 31,
2016 and 2015 were $8,796 and $Nil, respectively, and are included in general and administrative expenses.
Income
taxes
The
Company accounts for income taxes following the asset and liability method in accordance with ASC 740 “Income Taxes.”
Under such method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
The Company applies the accounting guidance issued to address the accounting for uncertain tax positions. This guidance clarifies
the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being
recognized in the financial statements as well as provides guidance on derecognition, measurement, classification, interest and
penalties, accounting in interim periods, disclosure and transition. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years that the asset is expected to be recovered or the liability settled.
Earnings
(loss) per common share
Basic
earnings (loss) per common share is determined by dividing earnings (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings (loss) per common share is determined by dividing earnings (loss) by the
diluted weighted average number of shares outstanding. Diluted weighted average number of shares reflects the dilutive equity
instruments, if any, of potentially dilutive common shares, such as stock options and warrants calculated using the treasury stock
method. In periods with reported net operating losses, all common stock options and warrants are deemed anti-dilutive such that
basic net loss per share and diluted net loss per share are equal. The 6,000,000 stock options outstanding as of March 31, 2016
were excluded from the calculation of diluted loss per common share for the three months ended March 31, 2016.
Stock-based
compensation
The
Company accounts for stock compensation with employees in accordance with ASC 718 “Compensation – Stock Compensation”,
which recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards
expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model.
The
Company accounts for stock compensation arrangements with non-employees in accordance with ASC 505-50 “Stock-Based Transactions
with Nonemployees””, which requires that such equity instruments are recorded at their fair value on the measurement
date. The measurement of share-based compensation is subject to periodic adjustment as the underlying instruments vest. The fair
value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges are amortized over
the vesting period.
Segment
reporting
ASC
280 “Segment Reporting” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s management organizes segments within the company for making operating decisions
and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure,
or any other manner in which management disaggregates a company.
As
of March 31, 2016, the Company is organized into three main business segments: hotel booking services, gingko plantation cultivation
and bio-technology research and development.
Recent
accounting pronouncements
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard
for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance.
The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and
how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring
the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized
before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature,
amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is prohibited.
The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable
to the Company at the beginning of its first quarter of fiscal year 2017. The adoption of this guidance is not expected to have
a material impact on the Company’s consolidated financial statements.
In
August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability
to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern
uncertainties in their financial statements. The new standard requires management to perform interim and annual assessment of
an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial
statements (or within one year after the date on which the financial statements are available to be issued, when applicable).
Further, an entity must provide certain disclosures if there is substantial doubt about the entity’s ability to continue
as a going concern. The requirement is effective for annual periods ending after December 15, 2016, and interim periods thereafter.
Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated
financial statements.
3. CASH
AND CASH EQUIVALENTS
Cash
of $366,204 (December 31, 2015 - $442,542) is held in China and is subject to local exchange control regulations. Chinese exchange
control regulations provide for restrictions on exporting capital from China, other than through normal dividends. As at March
31, 2016, $15,502 (December 31, 2015 - $Nil) was held in a low-risk bank investment that can be withdrawn at any time.
4.
OTHER CURRENT ASSETS
The
items comprising the Company’s other current assets are summarized below:
|
|
March
31,
2016
|
|
December
31,
2015
|
|
|
$
|
|
$
|
Deposits
to hotels
|
|
|
23,338
|
|
|
|
22,564
|
|
Prepaid
investor relations fees
|
|
|
68,000
|
|
|
|
—
|
|
Deposits
for lab equipment
|
|
|
26,121
|
|
|
|
25,949
|
|
Deposits
for construction work
|
|
|
43,109
|
|
|
|
—
|
|
Other
deposits and receivables
|
|
|
62,979
|
|
|
|
30,693
|
|
Total
other current assets
|
|
|
223,547
|
|
|
|
79,206
|
|
5.
INVENTORIES
The
items comprising the Company’s inventories are summarized below:
|
|
March
31,
2016
|
|
December
31,
2015
|
|
|
$
|
|
$
|
Gingko
seeds
|
|
|
—
|
|
|
|
24,658
|
|
Fertilizer
|
|
|
1,352
|
|
|
|
555
|
|
Total
inventories
|
|
|
1,352
|
|
|
|
25,213
|
|
6.
ACCOUNTS RECEIVABLE
Accounts
receivable consist of trade receivables from travel agents. There are no allowances for doubtful accounts recorded as at March
31, 2016 and December 31, 2015.
7.
FIXED ASSETS
The
item comprising the Company’s fixed assets are summarized below:
|
|
March
31,
2016
|
|
December
31,
2015
|
|
|
$
|
|
$
|
Computer
equipment
|
|
|
7,230
|
|
|
|
26,903
|
|
Office
furniture and fixtures
|
|
|
1,663
|
|
|
|
16,080
|
|
Agricultural
machinery
|
|
|
47,569
|
|
|
|
44,879
|
|
Infrastructure
|
|
|
20,582
|
|
|
|
—
|
|
Lab
equipment
|
|
|
1,109
|
|
|
|
1,109
|
|
Storage
|
|
|
1,102
|
|
|
|
1,102
|
|
|
|
|
79,255
|
|
|
|
90,073
|
|
Less:
accumulated amortization
|
|
|
(5,336
|
)
|
|
|
(35,671
|
)
|
|
|
|
73,919
|
|
|
|
54,402
|
|
8.
CONSTRUCTION IN PROGRESS
Construction
in progress consists of direct costs of infrastructure construction at the Company’s gingko plantation including roads,
fencing, security, electricity and an irrigation system. Capitalization of these costs will cease and the construction in progress
will be transferred to fixed assets when all the activities necessary to prepare the assets for their intended use are substantially
completed. No amortization will be recorded until construction is completed and the facilities are put into use.
9.
GROWING CROPS
Growing
crops consist of direct cultivation costs incurred for planting, growing and maintaining the gingko trees.
|
|
Gingko
trees
|
|
Grape
vines
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
Balance,
December 31, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Acquisition
of seeds or seedlings
|
|
|
—
|
|
|
|
1,078
|
|
|
|
1,078
|
|
Amortization
of agricultural machinery
|
|
|
1,040
|
|
|
|
—
|
|
|
|
1,040
|
|
Land
lease
|
|
|
113,931
|
|
|
|
—
|
|
|
|
113,931
|
|
Labour
|
|
|
804
|
|
|
|
—
|
|
|
|
804
|
|
Materials
|
|
|
2,945
|
|
|
|
—
|
|
|
|
2,945
|
|
Machine
operation
|
|
|
3,879
|
|
|
|
—
|
|
|
|
3,879
|
|
Miscellaneous
|
|
|
3,178
|
|
|
|
—
|
|
|
|
3,178
|
|
Technical
consultants
|
|
|
5,313
|
|
|
|
—
|
|
|
|
5,313
|
|
Balance,
December 31, 2015
|
|
|
131,090
|
|
|
|
1,078
|
|
|
|
132,168
|
|
Acquisition
of seeds or seedlings
|
|
|
24,857
|
|
|
|
—
|
|
|
|
24,857
|
|
Amortization
of agricultural machinery
|
|
|
3,022
|
|
|
|
—
|
|
|
|
3,022
|
|
Fertilizer
|
|
|
69,899
|
|
|
|
—
|
|
|
|
69,899
|
|
Labour
|
|
|
3,645
|
|
|
|
324
|
|
|
|
3,969
|
|
Materials
|
|
|
2,600
|
|
|
|
185
|
|
|
|
2,785
|
|
Machine
operation
|
|
|
9,128
|
|
|
|
—
|
|
|
|
9,128
|
|
Miscellaneous
|
|
|
2,487
|
|
|
|
—
|
|
|
|
2,487
|
|
Technical
consultants
|
|
|
9,111
|
|
|
|
153
|
|
|
|
9,264
|
|
Balance,
March 31, 2016
|
|
|
255,839
|
|
|
|
1,740
|
|
|
|
257,579
|
|
10.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities mainly consist of trade payables to hotels and travel service suppliers.
11.
OTHER CURRENT LIABILITIES
The
items comprising the Company’s other current liabilities are summarized below:
|
|
March
31,
2016
|
|
December
31,
2015
|
|
|
$
|
|
$
|
Unearned
revenue
|
|
|
19,310
|
|
|
|
7,650
|
|
Taxes
payable
|
|
|
—
|
|
|
|
1,655
|
|
Total
other current liabilities
|
|
|
19,310
|
|
|
|
9,305
|
|
12.
TRANSACTIONS WITH RELATED PARTIES
During
the three months ended March 31, 2016, the Company paid or accrued management fees of $9,000 (2015 - $9,000) to a company controlled
by a director and Corporate Secretary and $6,000 (2015 - $6,000) to a company controlled by a director and Chief Financial Officer.
As of March 31, 2016, $5,000 of accrued management fees was owing to them.
In
January 2016, the Chief Executive Officer of the Company loaned an amount of $232,530 to Globalink Xuzhou. The loan is non-interest
bearing, unsecured, and has no fixed terms of repayment.
On
September 16, 2015, 5,250,000 stock options were granted to directors and officers with a total fair value of $260,439 at the
date of grant, $45,389 of which was amortized and recorded in the statement of loss and comprehensive loss during the three months
ended March 31, 2016 (2015 -$Nil).
13.
SHAREHOLDERS’ EQUITY
Share
capital
Authorized
-
500,000,000 common voting shares with a par value of $0.0002 per share.
Issued
and outstanding
As
of March 31, 2016, the Company has 45,585,000 shares (December 31, 2015 – 43,585,000) issued and outstanding.
During
the three months ended March 31, 2016:
In
February 2016, the Company issued 2,000,000 common shares (valued at $80,000) pursuant to an investor relations contract with
a defined term to December 31, 2016.
During
the year ended December 31, 2015:
In
September 2015, the Company issued 1,100,000 common shares to an arm’s length party for total proceeds of $110,000 ($0.10
per share).
Stock
options
The
Company adopted a Stock Awards Plan under which it is authorized to grant options to directors, employees and consultants, to
acquire up to 6,000,000 common shares. The exercise price of each option is based on the market price of the Company's stock for
a period preceding the date of grant. The options can be granted for a maximum term of 5 years and the vesting terms of the options
are determined by the board of directors at the time of grant.
On
September 16, 2015, 6,000,000 stock options were granted to directors, officers and consultants with an exercise price of $0.075
expiring on September 16, 2020, 10% of the options vest as of the grant date, with the remaining 90% vesting at a rate of 15%
every six months thereafter. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of options granted.
The fair value of the stock options granted was $297,645 ($0.0496 per option), of which $51,873 was amortized and recorded and
expensed during the three months ended March 31, 2016.
The
fair value of the stock options granted was determined using the following assumptions:
|
|
Year
ended
December
31, 2015
|
Risk
free interest rate
|
|
|
1.44
|
%
|
Volatility
|
|
|
242.72
|
%
|
Expected life
of options
|
|
|
5
years
|
|
Dividend rate
|
|
|
0
|
%
|
Expected
forfeiture rate
|
|
|
0
|
%
|
Stock
option transactions are summarized as follows:
|
|
Number
of Options
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2014
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
|
|
6,000,000
|
|
|
|
0.075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
at December 31, 2015 and March 31, 2016
|
|
|
|
6,000,000
|
|
|
$
|
0.075
|
|
|
$
|
—
|
|
|
Exercisable,
at December 31, 2015 and March 31, 2016
|
|
|
|
600,000
|
|
|
$
|
0.075
|
|
|
$
|
—
|
|
As
at March 31, 2016, the following incentive stock options are outstanding:
|
Number
of
Options
|
|
|
|
Exercise
Price
|
|
|
Expiry
Date
|
|
6,000,000
|
|
|
$
|
0.075
|
|
|
September
16, 2020
|
14.
REVENUE
The
Company reports its revenue as an agent on a net basis. The following table shows the gross amount the Company received from customers
and the booking costs during the three months ended March 31, 2016 and 2015:
For
the period ended
|
|
March
31,
2016
|
|
March
31,
2015
|
|
|
$
|
|
$
|
Gross
amount received
|
|
|
348,621
|
|
|
|
515,874
|
|
Costs
|
|
|
(315,525
|
)
|
|
|
(443,953
|
)
|
Revenue
|
|
|
33,096
|
|
|
|
71,921
|
|
15.
COMMITMENT
Research
and development agreement
The
Company entered into a Technology Development Service Agreement (the “Technology Agreement”) in January 2016 with
Zhejiang Pharmaceutical College (the “College”) with a term of 3 years. Pursuant to the Technology Agreement, the
College will conduct research and development on induction of callus of gingko leaves and extraction, and identification of flavone
and lactone therefrom on the Company’s behalf. As consideration, the Company shall pay the College an annual research fee
of RMB100,000 ($15,400) (RMB100,000 paid in March 2016) and monthly consulting fees to professors and staff.
Farmland
lease agreements
The
Company leased about 100 acres of farmland in Pizhou City, Jiangsu Province, China from local individual farmers for a period
from October 2015 to August 2027. The lease fees may be renegotiated.
Year
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020-2027
|
|
Amount
|
|
|
|
114,000
|
|
|
|
114,000
|
|
|
|
114,000
|
|
|
|
114,000
|
|
|
|
912,000
|
|
16.
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
During
the three months ended March 31, 2016, the Company had the following non-cash transactions:
a)
transferred $20,582 of completed work from construction in progress to fixed assets;
b)
transferred $24,857 of gingko seeds from inventories to growing crops after completing seeding in March 2016;
c)
included $3,022 of amortization of agricultural machinery into growing crops;
d)
issued 2,000,000 common shares (valued at $80,000) pursuant to an investor relations contract; and
e)
included $24,029 of construction in progress in accounts payable and accrued liabilities at March 31, 2016.
There
were no significant non-cash transactions during the three months ended March 31, 2015.
17.
SEGMENTED INFORMATION
The
Company formerly operated in one business segment: hotel booking services. Accordingly, the Company did not have separately reportable
segments in previous periods. In September 2015, the Company started to develop a gingko plantation cultivation business in China.
In October 2015, the Company incorporated Globalink Zhejiang, whose business is to research and develop technologies in relation
to gingko trees and other economic plants.
As
of March 31, 2016, management of the Company has determined that the Company is organized into three main business segments: hotel
booking services, gingko plantation cultivation and bio-technology research and development.
The
table below provides information regarding the Company’s identified segments for the three months ended March 31, 2016:
|
|
Hotel
booking
|
|
Gingko
plantation
|
|
Research
and development
|
|
Totals
|
Revenue
|
|
$
|
33,096
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,096
|
|
Operating
loss
|
|
$
|
(14,353
|
)
|
|
$
|
(144,574
|
)
|
|
$
|
(26,905
|
)
|
|
$
|
(185,832
|
)
|
Fixed
assets
|
|
$
|
—
|
|
|
$
|
72,037
|
|
|
$
|
1,882
|
|
|
$
|
73,919
|
|
Construction
in progress
|
|
$
|
—
|
|
|
$
|
86,159
|
|
|
$
|
—
|
|
|
$
|
86,159
|
|
Growing
crops
|
|
$
|
—
|
|
|
$
|
257,579
|
|
|
$
|
—
|
|
|
$
|
257,579
|
|
18.
SUBSEQUENT EVENTS
On
May 13, 2016, the Company filed Form S-1 with the Securities and Exchange Committee (“SEC”), pursuant to which the
Company intends to offer a maximum of 20,000,000 common shares at a price of $0.25 per share for a maximum gross proceeds of $5,000,000
on a best efforts basis.
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and Directors of
Globalink,
Ltd.
We
have audited the accompanying consolidated financial statements of Globalink, Ltd. (the “Company”), which comprise
the consolidated balance sheets of Globalink, Ltd. as of December 31, 2015 and 2014, and the related consolidated statements of
loss and comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended December 31, 2015 and 2014.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Globalink, Ltd. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years ended
December 31, 2015 and 2014 in conformity with accounting principles generally accepted in the United States of America.
“DAVIDSON
& COMPANY LLP”
Vancouver,
Canada
|
Chartered
Professional Accountants
|
|
|
March
30, 2016
|
|
GLOBALINK,
LTD. and Subsidiaries
Consolidated
Balance Sheets
December
31, 2015 and 2014
(Expressed
in U.S. Dollars)
|
|
2015
|
|
2014
|
|
|
$
|
|
$
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash (note 3)
|
|
|
758,355
|
|
|
|
1,236,137
|
|
Accounts receivable (note 6)
|
|
|
92,464
|
|
|
|
120,299
|
|
Other current assets (note
4)
|
|
|
79,206
|
|
|
|
28,821
|
|
Total current
assets
|
|
|
930,025
|
|
|
|
1,385,257
|
|
|
|
|
|
|
|
|
|
|
Inventories (note 5)
|
|
|
25,213
|
|
|
|
—
|
|
Construction in progress (note 8)
|
|
|
12,884
|
|
|
|
—
|
|
Growing crops (note 9)
|
|
|
132,168
|
|
|
|
—
|
|
Fixed assets (note 7)
|
|
|
54,402
|
|
|
|
3,531
|
|
Goodwill
|
|
|
274,449
|
|
|
|
274,449
|
|
Total assets
|
|
|
1,429,141
|
|
|
|
1,663,237
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities (note
10)
|
|
|
338,073
|
|
|
|
483,706
|
|
Other current liabilities
(note 11)
|
|
|
9,305
|
|
|
|
8,088
|
|
Total current
liabilities
|
|
|
347,378
|
|
|
|
491,794
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
Common shares, $0.0002 par value;
Authorized - 500,000,000 common
shares; shares issued and outstanding – 43,585,000 (December 31, 2014 – 42,485,000) (note 13)
|
|
|
8,717
|
|
|
|
8,497
|
|
Additional paid-in-capital (note 13)
|
|
|
1,660,415
|
|
|
|
1,459,703
|
|
Accumulated other comprehensive loss
|
|
|
(20,013
|
)
|
|
|
(7,691
|
)
|
Deficit
|
|
|
(567,356
|
)
|
|
|
(289,066
|
)
|
Total shareholders’
equity
|
|
|
1,081,763
|
|
|
|
1,171,443
|
|
Total liabilities
and shareholders’ equity
|
|
|
1,429,141
|
|
|
|
1,663,237
|
|
Nature
of operations (note 1)
Commitment
(note 15)
Subsequent
event (note 18)
The
notes to the consolidated financial statements are an integral part of these statements
GLOBALINK,
LTD. And Subsidiaries
Consolidated
Statements of Operations
For
the year ended December 31, 2015 and 2014
(Expressed
in U.S. Dollars)
|
|
2015
|
|
2014
|
|
|
$
|
|
$
|
|
|
|
|
|
Revenue
(note 14)
|
|
|
305,651
|
|
|
|
346,784
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
Accounting and legal
|
|
|
51,442
|
|
|
|
55,467
|
|
Amortization (note 7)
|
|
|
4,072
|
|
|
|
1,398
|
|
Director and management fees (note 12)
|
|
|
60,000
|
|
|
|
43,974
|
|
Foreign exchange loss (gain)
|
|
|
(9,357
|
)
|
|
|
17,226
|
|
Research and development
|
|
|
2,885
|
|
|
|
—
|
|
Rent
|
|
|
26,106
|
|
|
|
19,340
|
|
Salaries and benefits
|
|
|
249,384
|
|
|
|
243,299
|
|
Stock-based compensation (notes 12 and 13)
|
|
|
90,932
|
|
|
|
—
|
|
Telephone
|
|
|
6,292
|
|
|
|
5,805
|
|
Travel
|
|
|
33,346
|
|
|
|
10,671
|
|
Transfer agent and filing fees
|
|
|
18,688
|
|
|
|
21,610
|
|
Other general and administrative
expenses
|
|
|
50,151
|
|
|
|
42,236
|
|
Total general
and administrative expenses
|
|
|
(583,941
|
)
|
|
|
(461,026
|
)
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(278,290
|
)
|
|
|
(114,242
|
)
|
|
|
|
|
|
|
|
|
|
Income
taxes (note 16)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net loss
for the year
|
|
|
(278,290
|
)
|
|
|
(114,242
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
Exchange difference on translating
foreign operations
|
|
|
(12,322
|
)
|
|
|
1,612
|
|
Comprehensive
loss
|
|
|
(290,612
|
)
|
|
|
(112,630
|
)
|
Basic and diluted weighted average
number of common shares outstanding
|
|
|
42,870,753
|
|
|
|
32,285,274
|
|
Basic and diluted loss per common
share
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
The
notes to the consolidated financial statements are an integral part of these statements
GLOBALINK,
LTD. And Subsidiaries
Consolidated
Statements of Changes in Shareholders' Equity
(Expressed
in U.S. Dollars)
|
|
Common
shares
|
|
Additional
paid-in-capital
|
|
Accumulated
other comprehensive income (loss)
|
|
Deficit
|
|
Total
|
|
|
|
#
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
December 31,2013
|
|
|
24,785,000
|
|
|
|
4,957
|
|
|
|
403,243
|
|
|
|
(9,303
|
)
|
|
|
(174,824
|
)
|
|
|
224,073
|
|
Private placements
|
|
|
17,700,000
|
|
|
|
3,540
|
|
|
|
1,056,460
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,060,000
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(114,242
|
)
|
|
|
(114,242
|
)
|
Foreign currency translation
difference
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,612
|
|
|
|
—
|
|
|
|
1,612
|
|
December 31, 2014
|
|
|
42,485,000
|
|
|
|
8,497
|
|
|
|
1,459,703
|
|
|
|
(7,691
|
)
|
|
|
(289,066
|
)
|
|
|
1,171,443
|
|
Private placements
|
|
|
1,100,000
|
|
|
|
220
|
|
|
|
109,780
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110,000
|
|
Stock-based compensations
|
|
|
—
|
|
|
|
—
|
|
|
|
90,932
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,932
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(278,290
|
)
|
|
|
(278,290
|
)
|
Foreign currency translation
difference
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,322
|
)
|
|
|
—
|
|
|
|
(12,322
|
)
|
December 31, 2015
|
|
|
43,585,000
|
|
|
|
8,717
|
|
|
|
1,660,415
|
|
|
|
(20,013
|
)
|
|
|
(567,356
|
)
|
|
|
1,081,763
|
|
The
notes to the consolidated financial statements are an integral part of these statements
GLOBALINK,
LTD.
Consolidated
Statements of Cash Flows
For
the year ended December 31, 2015 and 2014
(Expressed
in U.S. Dollars)
|
|
2015
|
|
2014
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
(278,290
|
)
|
|
|
(114,242
|
)
|
Non-cash items:
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
4,072
|
|
|
|
1,398
|
|
Stock-based compensation
|
|
|
90,932
|
|
|
|
—
|
|
Changes in non-cash working capital:
|
|
|
|
|
|
|
|
|
Decrease in accounts receivable
|
|
|
9,116
|
|
|
|
57,058
|
|
(Increase) Decrease in other current assets
|
|
|
(54,563
|
)
|
|
|
4,475
|
|
Decrease in accounts payable and accrued liabilities
|
|
|
(67,800
|
)
|
|
|
(96,083
|
)
|
Increase (Decrease) in other
current liabilities
|
|
|
2,742
|
|
|
|
(12,358
|
)
|
Total cash used in operating
activities
|
|
|
(293,791
|
)
|
|
|
(159,752
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
Acquisition of fixed assets
|
|
|
(58,273
|
)
|
|
|
(145
|
)
|
Inventories
|
|
|
(26,244
|
)
|
|
|
—
|
|
Construction in progress
|
|
|
(13,411
|
)
|
|
|
—
|
|
Growing crops
|
|
|
(137,575
|
)
|
|
|
—
|
|
Total cash used in investing
activities
|
|
|
(235,503
|
)
|
|
|
(145
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
Repayment to shareholders
|
|
|
—
|
|
|
|
(62,297
|
)
|
Proceeds from share issuance
|
|
|
110,000
|
|
|
|
1,050,000
|
|
Total cash provided by financing
activities
|
|
|
110,000
|
|
|
|
987,703
|
|
Increase (decrease) in cash
|
|
|
(419,294
|
)
|
|
|
827,806
|
|
Effect of exchange rate changes on balance of cash held in foreign currencies
|
|
|
(58,488
|
)
|
|
|
(17,757
|
)
|
Cash, beginning of the year
|
|
|
1,236,137
|
|
|
|
426,088
|
|
Cash, end of the year
|
|
|
758,355
|
|
|
|
1,236,137
|
|
Supplemental
information on cash flows
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
—
|
|
|
|
—
|
|
Interest paid
|
|
|
—
|
|
|
|
—
|
|
There
were no non-cash investing or financing activities during the years ended December 31, 2015 and 2014.
The
notes to the consolidated financial statements are an integral part of these statements
GLOBALINK
LTD. And Subsidiaries
Notes
to the Consolidated Financial Statements
December
31, 2015
(Expressed
in U.S. Dollars)
1. NATURE
OF OPERATIONS
Globalink,
Ltd. (the “Company”) was incorporated in the State of Nevada on February 3, 2006. The Company has focused its efforts
on internet hotel booking services and has developed a proprietary online hotel booking program for connecting users with available
rooms in hotels across the world. In order to gain the access to hotels, the Company acquired OneWorld Hotel Destination Service
Inc. (“OneWorld”) in Vancouver, British Columbia, Canada on October 31, 2008. OneWorld is a hotel booking company
which has established relationships with major hotel chains. As a result of the acquisition, OneWorld became a wholly-owned subsidiary
of the Company and goodwill of $274,449 was recognized on completion of the acquisition.
On
May 4, 2014, the Company entered into a joint venture agreement (the “Agreement”) with Shizhen Bio-Technology Co.,
Ltd. (“Shizhen Biotech”) in Jiangsu Province, China. On May 22, 2014, Globalink (Xuzhou) Bio-Technology Co., Ltd.
(“Globalink Xuzhou”) was incorporated in Pizhou City, Jiangsu Province, China pursuant to the Agreement. Globalink
Xuzhou will have total registered capital of $10,000,000, $8,000,000 of which will be invested by the Company to earn an 80% interest,
with the remaining $2,000,000 being invested by Shizhen Biotech to earn the remaining 20%. Globalink Xuzhou will be involved in
the business of biological sciences and technology research, biological technology popularization services, and fruit and vegetable
distribution. Currently, Globalink Xuzhou will continue to focus on gingko cultivation and extraction. In August 2015, the Company
transferred $500,000 to Globalink Xuzhou to start developing a gingko plantation in Pizhou City, Jiangsu Province. The Company
transferred an additional $300,000 in October 2015. As at December 31, 2015, the Company owns 100% of Globalink Xuzhou.
On
October 13, 2015, the Company incorporated a wholly-owned subsidiary, Globalink (Zhejiang) Bio-Technology Co. Ltd. (“Globalink
Zhejiang”) in Ningbo City, Jiangsu Province, China. Globalink Zhejiang will be involved in the research and development,
cultivation, extraction, and application of gingko trees and other economic plants. Globalink Xuzhou transferred RMB800,000 ($123,200)
to Globalink Zhejiang in October 2015 to start its operations.
2. SIGNIFICANT
ACCOUNTING POLICIES
Statement
of presentation
These
consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles
(“US GAAP”).
Continuance
of operation
These
consolidated financial statements prepared in conformity with US GAAP contemplate continuation of the Company as a going concern.
As of December 31, 2015, the Company has an accumulated deficit of $567,356 since inception. Its ability to continue as a going
concern depends upon whether it develops profitable operations and continues to raise adequate financing. However, management
believes that the Company has sufficient working capital to meet its projected minimum financial obligations for the next fiscal
year. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
Consolidation
The
consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. Subsidiaries
are the entities controlled by the Company. All inter-company transactions and balances between the Company and its subsidiaries
have been eliminated upon consolidation.
The
subsidiaries are consolidated from the date on which control is transferred to the Company and will cease to be consolidated from
the date on which control is transferred out of the Company.
Details
of the Company’s subsidiaries are as follows:
Name
|
|
Date of incorporation or acquisition
|
|
Location
|
|
Ownership
|
|
Principal
activities
|
OneWorld Hotel Destination Service Inc. (“OneWorld”)
|
|
October 31, 2008
|
|
Vancouver, Canada
|
|
|
100
|
%
|
|
Hotel booking
|
Globalink (Xuzhou) Bio-Technology Co., Ltd. (“Globalink Xuzhou”)
|
|
May 22, 2014
|
|
Pizhou city, Jiangsu Province, China
|
|
|
100
|
%
|
|
Gingko cultivation
|
Globalink (Zhejiang) Bio-Technology Co. Ltd. (“Globalink Zhejiang”)
|
|
October 13, 2015
|
|
Ningbo city, Jiangsu Province, China
|
|
|
100
|
%
|
|
Bio-technology research and development
|
Use
of estimates
The
preparation of consolidated financial statements in conformity with US GAAP requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and provisions,
income and expenses and the disclosure of contingent assets and liabilities at the date of these financial statements. Estimates
are used for, but not limited to, the selection of the useful lives of fixed assets, allowance for doubtful debt associated with
accounts receivable, fair values, revenue recognition, and taxes. Management believes that the estimates utilized in preparing
its consolidated financial statements are reasonable and prudent. Actual results may differ from these estimates.
Foreign
currency translation
Functional
and presentation currency
Items
included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary
economic environment in which the subsidiary operates (“the functional currency”), which is the Chinese Renminbi (“RMB”)
for Globalink Xuzhou and Globalink Zhejiang, and the Canadian dollar (“CAD”) for Oneworld. The consolidated financial
statements are presented in United States dollar (“USD”), which is the functional currency of the parent company.
The operating subsidiaries’ financial statements are prepared in its respective functional currencies before translating
to the presentation currency which is the USD. The Company translates items in the statement of loss and comprehensive loss using
the average exchange rate for the year. Assets and liabilities are translated at the year-end rate. All resulting exchange differences
are reported as a separate component of other comprehensive income (loss).
Transactions
and balances
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuations where items are re-measured. Foreign exchange gains and losses resulting from settlement of such transactions and
from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized
in the profit or loss in “foreign exchange (gain) loss”.
Growing
crops
Gingko
trees are valued at historical cost, which include all cultivation costs incurred for planting, growing and maintaining the gingko
trees during a year other than the harvest season that lasts about two months. The cultivation costs include costs of land lease,
equipment lease, equipment amortization, labour, consulting, fertilizer, materials and supplies, and other direct growing costs.
At
the end of each reporting period, the Company reviews the carrying amounts of the growing crops to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). A reliable market price is usually available
for mature gingko trees in China. Under certain circumstances, when a reliable market price is not available, the fair value of
the growing crops is measured using the discounted expected future cash flow method. Under this method, expected future revenues
less costs to complete and harvest is discounted to present value.
The
growing crops will be amortized using the straight-line method over an estimated useful life of 5 years. The Company intends to
sell all of the gingko trees after 5 years and replant seedlings in order to optimize the effective ingredients in leaves harvested
from younger trees.
Inventories
Inventory
is valued at the lower of cost (determined on a weighted average basis) and market value. Inventories as of December 31, 2015
mainly consist of gingko seeds to be planted during the first quarter of 2016. The Company reviews its inventories regularly for
possible obsolete goods and establishes reserves when determined necessary.
Accounts
receivable
Trade
receivables are carried at original invoice amount. Accounts receivable are written off to bad debt expense using the direct write-off
method. Receivables past due for more than 120 days are considered delinquent. Management determines uncollectible accounts by
regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and
current economic conditions and by using historical experience applied to an aging of accounts. Recoveries of trade receivables
previously written off are recorded when received.
Fixed
assets
Fixed
assets are recorded at cost less accumulated amortization. Amortization of fixed assets is calculated using the straight-line
method over the estimated useful lives of the assets as follows:
|
Computer equipment
|
3 years
|
|
|
|
Lab equipment
|
3 years
|
|
|
|
Office furniture and fixtures
|
5 years
|
|
|
|
Storage
|
5 years
|
|
|
|
Agricultural machinery
|
4 years
|
|
|
Fair
value
The
Company measures fair value in accordance with accounting guidance that defines fair value, provides guidance for measuring fair
value and requires certain disclosures. The guidance also discusses valuation techniques, such as the market approach (comparable
market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service
capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
-
|
|
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible
at the measurement date for identical, unrestricted assets or liabilities.
|
-
|
|
Level
2: Inputs other than quoted prices that are observable for the asset or liability, either
directly or indirectly. These include quoted prices for similar assets or liabilities
in active markets and quoted prices for identical or similar assets or liabilities in
markets that are not active.
|
-
|
|
Level
3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
The
inputs used in the fair value measurement should be from the highest level available. In instances where the measurement is based
on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input
that is significant to the fair value measurement in its entirety.
As
at December 31, 2015, the Company’s financial instruments are comprised of cash, accounts receivable, accounts payable and
accrued liabilities and other current liabilities. Cash is measured at fair value using Level 1 inputs. With the exception of
cash, all financial instruments held by the Company are measured at amortized cost. The fair values of these financial instruments
approximate their carrying value due to their short-term maturities.
Goodwill
The
Company recognizes goodwill in accordance with ASC 805 “Business Combination”. Goodwill represents the excess of the
purchase price over the fair value of assets acquired and liabilities assumed, if any. The goodwill impairment test compares the
fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds
its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the
implied fair value of a reporting unit's goodwill is compared to the carrying amount of that goodwill. If the carrying amount
of a reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is indicated. The Company concluded
that there were no indicators of impairment with respect to the Company's goodwill as of December 31, 2014 and 2015.
Impairment
reviews for long-lived assets
Long-lived
assets such as property, equipment and goodwill are reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the
fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets,
if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its
undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the
asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at
a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses
for any periods presented.
Revenue
recognition
The
Company recognizes revenue from its hotel booking services once the service is rendered and all the significant risks and rewards
of the service have been transferred to the customer. As a result, revenue from hotel booking services are recognized when customers
check in to the hotels. Amounts received from customers for services not yet rendered are included in other current liabilities
as unearned revenue.
In
accordance with the ASC 605 “Revenue Recognition”, the Company reports its revenue as an agent, on the net amount
retained, which is the amount billed to a customer less the amount paid to a hotel.
During
the years ended December 31, 2015 and 2014, all revenue was derived from hotel booking services.
Research
and development
Research
and development costs are expensed as incurred. The costs primarily consist of consulting fees paid to the technical team for
development and improvement of gingko cultivation methods. Research and development costs for the years ended December 31, 2015
and 2014 were $2,885 and $Nil, respectively, and are included in general and administrative expenses.
Income
taxes
The
Company accounts for income taxes following the asset and liability method in accordance with ASC 740 “Income Taxes.”
Under such method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
The Company applies the accounting guidance issued to address the accounting for uncertain tax positions. This guidance clarifies
the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being
recognized in the financial statements as well as provides guidance on derecognition, measurement, classification, interest and
penalties, accounting in interim periods, disclosure and transition. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years that the asset is expected to be recovered or the liability settled.
Earnings
(loss) per common share
Basic
earnings (loss) per common share is determined by dividing earnings (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings (loss) per common share is determined by dividing earnings (loss) by the
diluted weighted average number of shares outstanding. Diluted weighted average number of shares reflects the dilutive equity
instruments, if any, of potentially dilutive common shares, such as stock options and warrants calculated using the treasury stock
method. In periods with reported net operating losses, all common stock options and warrants are deemed anti-dilutive such that
basic net loss per share and diluted net loss per share are equal. The 6,000,000 stock options outstanding as of December 31,
2015 were excluded from the calculation of diluted loss per common share for the year ended December 31, 2015.
Stock-based
compensation
The
Company accounts for stock compensation with employees in accordance with ASC 718 “Compensation – Stock Compensation”,
which recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards
expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model.
The
Company accounts for stock compensation arrangements with non-employees in accordance with ASC 505-50 “Stock-Based Transactions
with Nonemployees””, which requires that such equity instruments are recorded at their fair value on the measurement
date. The measurement of share-based compensation is subject to periodic adjustment as the underlying instruments vest. The fair
value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges are amortized over
the vesting period
Segment
reporting
ASC
280 “Segment Reporting” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s management organizes segments within the company for making operating decisions
and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure,
or any other manner in which management disaggregates a company.
As
of December 31, 2015, the Company is organized into three main business segments: hotel booking services, gingko plantation cultivation
and bio-technology research and development.
Recent
accounting pronouncements
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard
for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance.
The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and
how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring
the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized
before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature,
amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is prohibited.
The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable
to the Company at the beginning of its first quarter of fiscal year 2017. The adoption of this guidance is not expected to have
a material impact on the Company’s consolidated financial statements.
In
August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability
to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern
uncertainties in their financial statements. The new standard requires management to perform interim and annual assessment of
an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial
statements (or within one year after the date on which the financial statements are available to be issued, when applicable).
Further, an entity must provide certain disclosures if there is substantial doubt about the entity’s ability to continue
as a going concern. The requirement is effective for annual periods ending after December 15, 2016, and interim periods thereafter.
Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated
financial statements.
3. CASH
Cash
of $442,542 is held in China and is subject to local exchange control regulations. Chinese exchange control regulations provide
for restriction on exporting capital from China, other than through normal dividends.
4.
OTHER CURRENT ASSETS
The
items comprising the Company’s other current assets are summarized below:
|
|
December
31,
2015
|
|
December 31,
2014
|
|
|
$
|
|
$
|
Deposits to hotels
|
|
|
22,564
|
|
|
|
23,021
|
|
Deposits for lab equipment
|
|
|
25,949
|
|
|
|
—
|
|
Other deposits and receivables
|
|
|
30,693
|
|
|
|
5,800
|
|
Total other current assets
|
|
|
79,206
|
|
|
|
28,821
|
|
5. INVENTORIES
As
of December 31, 2015 and 2014, inventories consisted of the following:
|
|
December
31,
2015
|
|
December 31,
2014
|
|
|
$
|
|
$
|
Gingko seeds
|
|
|
24,658
|
|
|
|
—
|
|
Fertilizer
|
|
|
555
|
|
|
|
—
|
|
Total inventories
|
|
|
25,213
|
|
|
|
—
|
|
6. ACCOUNTS
RECEIVABLE
Accounts
receivables consist of trade receivables from travel agents. There are no allowances for doubtful accounts recorded as at December
31, 2014 and 2015.
7.
FIXED ASSETS
Fixed
assets consisted of the following as of December 2015 and 2014:
|
|
December
31,
2015
|
|
December 31,
2014
|
|
|
$
|
|
$
|
Computer equipment
|
|
|
26,903
|
|
|
|
19,673
|
|
Office furniture and fixtures
|
|
|
16,080
|
|
|
|
14,417
|
|
Agricultural machinery
|
|
|
44,879
|
|
|
|
—
|
|
Lab equipment
|
|
|
1,109
|
|
|
|
—
|
|
Storage
|
|
|
1,102
|
|
|
|
—
|
|
|
|
|
90,073
|
|
|
|
34,090
|
|
Less: accumulated amortization
|
|
|
(35,671
|
)
|
|
|
(30,559
|
)
|
|
|
|
54,402
|
|
|
|
3,531
|
|
For
the year ended December 31, 2015, an amortization expense of $1,040 (2014 - $Nil) was recognized and capitalized as costs associated
with the Company’s growing crops and $4,072 (2014 - $1,398) was recorded to the statement of loss and comprehensive loss.
8. CONSTRUCTION
IN PROGRESS
Construction
in progress consists of direct costs of infrastructure construction at the Company’s gingko plantation including roads,
fencing, security, electricity and an irrigation system. Capitalization of these costs will cease and the construction in progress
will be transferred to fixed assets when all the activities necessary to prepare the assets for their intended use are substantially
completed. No amortization will be recorded until construction is completed and the facilities are put into use.
8. GROWING
CROPS
Growing
crops consisted of direct cultivation costs incurred for planting, growing and maintaining the gingko trees.
|
|
Gingko trees
|
|
Grape vine
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
Balance, December 31, 2013 and 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Acquisition of seeds or seedlings
|
|
|
—
|
|
|
|
1,078
|
|
|
|
1,078
|
|
Amortization of agricultural machine
|
|
|
1,040
|
|
|
|
—
|
|
|
|
1,040
|
|
Land lease
|
|
|
113,931
|
|
|
|
—
|
|
|
|
113,931
|
|
Labour
|
|
|
804
|
|
|
|
—
|
|
|
|
804
|
|
Materials
|
|
|
2,945
|
|
|
|
—
|
|
|
|
2,945
|
|
Machine operation
|
|
|
3,879
|
|
|
|
—
|
|
|
|
3,879
|
|
Miscellaneous
|
|
|
3,178
|
|
|
|
—
|
|
|
|
3,178
|
|
Technical consultants
|
|
|
5,313
|
|
|
|
—
|
|
|
|
5,313
|
|
Balance, December 31, 2015
|
|
|
131,090
|
|
|
|
1,078
|
|
|
|
132,168
|
|
10. ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities mainly consist of trade payables to hotels and travel service suppliers.
11.
OTHER CURRENT LIABILITIES
The
items comprising the Company’s other current liabilities are summarized below:
|
|
December
31,
2015
|
|
December 31,
2014
|
|
|
$
|
|
$
|
Unearned revenue
|
|
|
7,650
|
|
|
|
7,881
|
|
Taxes payable
|
|
|
1,655
|
|
|
|
207
|
|
Total other current liabilities
|
|
|
9,305
|
|
|
|
8,088
|
|
12. TRANSACTIONS
WITH RELATED PARTIES
During
the year ended December 31, 2015, the Company paid or accrued management fees of $36,000 (2014 - $20,658) to a company controlled
by a director and Corporate Secretary and $24,000 (2014 - $Nil) to a company controlled by a director and Chief Financial Officer.
As of December 31, 2015, $5,000 (December 31, 2014 - $Nil) of accrued management fees were included in accounts payable and accrued
liabilities.
During
the year ended December 31, 2015, the Company paid or accrued director and management fees of $Nil (2014 - $23,316) to two former
directors of the Company.
On
September 16, 2015, 5,250,000 stock options were granted to directors and officers with a total fair value of $260,439 at the
date of grant, $79,566 of which was amortized and recorded in the statement of loss and comprehensive loss during the year ended
December 31, 2015.
13.
SHAREHOLDERS’ EQUITY
Share
capital
Authorized
-
|
|
500,000,000
common voting shares with a par value of $0.0002 per share.
|
Issued
and outstanding
As
of December 31, 2015, the Company has 43,585,000 shares (2014 – 42,485,000) issued and outstanding.
During
the year ended December 31, 2015:
In
September 2015, the Company issued 1,100,000 common shares to an arm’s length party for total proceeds of $110,000 ($0.10
per share).
During
the year ended December 31, 2014:
In
June 2014, the Company issued 12,000,000 common shares to two new directors for proceeds of $700,000. The Company also issued
200,000 common shares to an arm’s length party for $10,000 of share subscriptions received during the year ended December
31, 2012.
In
August 2014, the Company issued 1,500,000 common shares to an arm’s length party for total proceeds of $150,000 ($0.15 per
share).
In
December 2014, the Company issued 4,000,000 common shares to an arm’s length party for total proceeds of $200,000 ($0.05
per share).
Stock
options
The
Company adopted a Stock Awards Plan under which it is authorized to grant options to directors, employees and consultants, to
acquire up to 6,000,000 common shares. The exercise price of each option is based on the market price of the Company's stock for
a period preceding the date of grant. The options can be granted for a maximum term of 5 years and the vesting terms of the options
are determined by the board of directors at the time of grant.
On
September 16, 2015, 6,000,000 stock options were granted to directors, officers and consultants with an exercise price of $0.075
expiring on September 16, 2020, 10% of the options vest as of the grant date, with the remaining 90% vesting at a rate of 15%
every six months thereafter. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of options granted.
The fair value of the stock options granted was $297,645 ($0.0496 per option), of which $90,932 was amortized and recorded and
expensed during the year ended December 31, 2015.
The
fair value of the stock options granted was determined using the following assumptions:
|
|
Year
ended
December
31, 2015
|
Risk free interest rate
|
|
|
1.44
|
%
|
Volatility
|
|
|
242.72
|
%
|
Expected life of options
|
|
|
5
years
|
|
Dividend rate
|
|
|
0
|
%
|
Expected forfeiture rate
|
|
|
0
|
%
|
Stock
option transactions are summarized as follows:
|
|
Number
of Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Aggregate Intrinsic
Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2013 and 2014
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
|
6,000,000
|
|
|
|
0.075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
at December 31, 2015
|
|
|
|
6,000,000
|
|
|
$
|
0.075
|
|
|
$
|
—
|
|
Exercisable,
at December 31, 2015
|
|
|
|
600,000
|
|
|
$
|
0.075
|
|
|
$
|
—
|
|
As
at December 31, 2015, the following incentive stock options are outstanding:
Number
of Options
|
|
Exercise
Price
|
|
Expiry Date
|
|
6,000,000
|
|
|
$
|
0.075
|
|
|
September 16, 2020
|
14.
REVENUE
The
Company reports its revenue as an agent on a net basis. The following table shows the gross amount the Company received from customers
and the booking costs during the years ended December 31, 2014 and 2015:
For the year ended
|
|
December
31,
2015
|
|
December 31,
2014
|
|
|
$
|
|
$
|
Gross amount received
|
|
|
2,716,035
|
|
|
|
3,148,970
|
|
Costs
|
|
|
(2,410,384
|
)
|
|
|
(2,802,186
|
)
|
Revenue
|
|
|
305,651
|
|
|
|
346,784
|
|
15. COMMITMENT
The
Company entered into a Technology Development Service Agreement (the “Technology Agreement”) in January 2016 with
Zhejiang Pharmaceutical College (the “College”) with a term of three years. Pursuant to the Technology Agreement,
the College will conduct research and development on induction of callus of gingko leaves and extraction, and identification of
flavone and lactone therefrom on the Company’s behalf. As consideration, the Company will pay the College an annual research
fee of RMB100,000 ($15,400) and monthly consulting fees.
16.
SEGMENTED INFORMATION
The
Company formerly operated in one business segment: hotel booking services. Accordingly, the Company did not have separately reportable
segments in previous periods. In September 2015, the Company started to develop a gingko plantation cultivation business in China.
In October 2015, the Company incorporated Globalink Zhejiang, whose business is to research and develop technologies in relation
to gingko trees and other economic plants.
As
of December 31, 2015, management of the Company has determined that the Company is organized into three main business segments:
hotel booking services, gingko plantation cultivation and bio-technology research and development.
The
table below provides information regarding the Company’s identified segments for the year ended December 31, 2015:
|
|
Hotel
booking
|
|
Gingko
plantation
|
|
Research
and development
|
|
Totals
|
Revenue
|
|
$
|
305,651
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
305,651
|
|
Operating loss
|
|
$
|
(119,069
|
)
|
|
$
|
(143,529
|
)
|
|
$
|
(15,692
|
)
|
|
$
|
(278,290
|
)
|
Fixed assets
|
|
$
|
—
|
|
|
$
|
52,355
|
|
|
$
|
2,047
|
|
|
$
|
54,402
|
|
Construction in progress
|
|
$
|
—
|
|
|
$
|
12,884
|
|
|
$
|
—
|
|
|
$
|
12,884
|
|
Growing crops
|
|
$
|
—
|
|
|
$
|
132,168
|
|
|
$
|
—
|
|
|
$
|
132,168
|
|
17.
INCOME TAXES
A
reconciliation of income taxes at statutory rates with the reported taxes is as follows:
For the years ended December 31,
|
|
2015
|
|
2014
|
|
|
|
$
|
|
|
|
$
|
|
Loss before taxes
|
|
|
(278,290
|
)
|
|
|
(114,242
|
)
|
Expected income tax expenses
|
|
|
(72,000
|
)
|
|
|
(30,000
|
)
|
Adjustment of prior year income tax expense
|
|
|
-
|
|
|
|
(2,000
|
)
|
|
|
|
29,000
|
|
|
|
4,000
|
|
Carry back of current year expense income tax expense
|
|
|
80,000
|
|
|
|
41,000
|
|
Change in statutory, foreign exchange rates and other
|
|
|
-
|
|
|
|
(4,000
|
)
|
Change in unrecognized deductible temporary differences
|
|
|
(37,000
|
)
|
|
|
(9,000
|
)
|
Total income tax expense
|
|
|
—
|
|
|
|
—
|
|
The
significant components of the Company’s unrecorded deferred tax assets and liabilities are as follows:
|
|
December
31,
2015
|
|
December
31,
2014
|
Deferred tax assets
|
|
|
$
|
|
|
|
$
|
|
Property and equipment
|
|
|
—
|
|
|
|
1,000
|
|
Goodwill
|
|
|
(50,000
|
)
|
|
|
(44,000
|
)
|
Non-capital losses available for future periods
|
|
|
159,000
|
|
|
|
72,000
|
|
Unused deferred tax assets
|
|
|
109,000
|
|
|
|
29,000
|
|
The
significant components of the Company’s temporary differences and unused tax losses are as follows:
|
|
December
31, 2015
|
|
Expiry
date
range
|
|
December
31, 2014
|
|
Expiry
date
range
|
Temporary Differences
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
$
|
1,000
|
|
|
No expiry date
|
|
$
|
2,000
|
|
|
No expiry date
|
Non-capital losses available for future periods
– United States, Canada, China
|
|
$
|
343,000
|
|
|
2028-2035
|
|
$
|
212,000
|
|
|
. 2028-2034
|
As
at December 31, 2015, the Company has non-capital losses from its United States operations of $270,000 (2014 - $84,000) expiring
between 2028 and 2035, non-capital losses from its Canadian operations of $Nil (2014 - $Nil), and non-capital losses from its
Chinese operations of $73,000 (2014- $Nil) expiring in 2020.
Tax
attributes are subject to review, and potential adjustment, by tax authorities.
Taxes
of the Chinese subsidiaries
Under
Article 27 of the Law of China on Enterprises Income Tax and Article 15 of the provisional regulations of China on Value Added
Tax (“VAT”), Globalink Xuzhou does not pay income tax or VAT, in its business of gingko tree cultivation and sales
of gingko leaves as a traditional Chinese medicine.
Globalink
Zhejiang is involved in bio-technology research and development. The Company will apply for certain tax benefits or government
grants on project by a project base. The amount cannot be determined until the application is approved and benefit is granted.
18.
SUBSEQUENT EVENT
In
February 2016, the Company issued 2,000,000 common shares to an investor relationship company for marketing work.
PART
II - INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses
incurred or expected relating to this prospectus and distribution are as follows:
|
Amount
to be Paid
|
Securities
and Exchange Commission registration fee
|
$
|
503.50
|
|
Transfer agent fees
|
|
2,000.00
|
*
|
Accounting fees
and expenses
|
|
3,000.00
|
*
|
Legal fees and expenses
|
|
20,000.00
|
|
Printing Expenses
|
|
1,000.00
|
*
|
Miscellaneous
|
|
1,000.00
|
*
|
Total
|
$
|
28,503.50
|
*
|
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our
articles of incorporation provide for the indemnification of our directors, officers, employees and agents to the fullest extent
permitted by the laws of the State of Nevada. Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify
any of its directors, officers, employees or agents against expenses actually and reasonably incurred by such person in connection
with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(except for an action by or in right of the corporation), by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, provided that it is determined that such person acted in good faith and in a manner which
he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section
78.751 of the Nevada Revised Statutes requires that the determination that indemnification is proper in a specific case must be
made by (a) the stockholders, (b) the board of directors by majority vote of a quorum consisting of directors who were not parties
to the action, suit or proceeding or (c) independent legal counsel in a written opinion (i) if a majority vote of a quorum consisting
of disinterested directors is not possible or (ii) if such an opinion is requested by a quorum consisting of disinterested directors.
Article
IX of our By-laws provides that:
|
•
|
no
director shall be liable to the Company or any of its stockholders for monetary damages
for breach of fiduciary duty as a director except with respect to (i) a breach of the
director’s loyalty to the Company or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) liability which may be specifically defined by law or (iv) a transaction from the
director derived an improper personal benefit; and
|
|
•
|
the
Company shall indemnify to the fullest extent permitted by law each person that such
law grants to the Company power to indemnify.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
The
following list sets forth information as to all securities we have sold since the preceding three years up to the date of this
prospectus, which were not registered under the Securities Act.
In
June 2014, we sold an aggregate of 12,000,000 shares of common stock to two new directors for an aggregate purchase price of $700,000,
or $.0583 per share.
In
June 2014, we sold 200,000 shares of common stock to a Canadian resident for an aggregate purchase price of $10,000, or $0.20
per share.
In
August 2014, we sold 1,500,000 shares of common stock to a PRC resident for an aggregate purchase price of $150,000, or $0.10
per share.
In
December 2014, we sold 4,000,000 shares of common stock to a former director, a PRC resident, for an aggregate purchase price
of $200,000, or $0.05 per share.
In
September 2015, we sold 1,100,000 shares of common stock to a PRC resident for an aggregate purchase price of $110,000, or $0.10
per share.
On
February 20, 2015, we granted stock options to purchase an aggregate of 6,000,000 shares of our common stock with an exercise
price of $0.075 per share, to certain of our employees and directors pursuant to our 2015 stock awards plan. These are the only
options that we granted in the past three years.
In
February, 2016, we issued 2,000,000 shares of common stock to Benchmark Advisory Partners LLC pursuant to the terms of a
strategic advisory and business development services agreement which we valued at $80,000 in full compensation for the services
to be rendered thereunder.
The
sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2)
of the Securities Act as transactions by an issuer not involving any public offering.
There
were no underwriters employed in connection with any of the transactions set forth in this Item 15.
ITEM
16. EXHIBITS.
|
|
|
Incorporated
by Reference
|
Exhibit
Number
|
|
Description
of Exhibit
|
Form
|
File
No.
|
Filing
Date
|
Exhibit
|
Filed
Herewith
|
To
be Filed by Amendment
|
|
|
|
|
|
|
|
|
|
3.1(a)
|
|
Articles of Incorporation
|
SB-2
|
333-133961
|
5/10/06
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
3.1(a)(i)
|
|
Amendment to Articles
of Incorporation
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
3.1(b)
|
|
Articles of Incorporation
of OneWorld Hotel Destination Service Inc.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
3.1(c)
|
|
Certificate of Approval
and Business License of Globalink (Xuzhou) Bio-Technology Co., Ltd.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
3.1(d)
|
|
Certificate of Approval
and Business License of Globalink (Zhejiang) Bio-Technology Co. Ltd.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws
|
SB-2
|
333-133961
|
5/10/06
|
3.2
|
|
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4.1
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Specimen common
stock certificate
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SB-2
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333-133961
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5/10/06
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4
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4.2
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Form of Private
Placement Agreement relating to the sale of common stock of the Registrant during 2014 and 2015
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S-1
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333-211360
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5/13/16
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4.2
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4.3
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2015 Stock Awards
Plan
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S-1
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333-211360
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5/13/16
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4.3
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5.1
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Opinion of Ruffa
& Ruffa, P.C.
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X
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10.1
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Share Exchange Agreement
dated October 8, 2008 by and among the registrant, OneWorld Hotel Destination Service, Inc. and Vincent Au
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8-K
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333-133961
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3/6/09
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10
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10.2
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Office lease dated
July 1, 2013 for the premises located at 365 Boundary Road, Vancouver, British Columbia, Canada
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X
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10.3
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Office lease dated
May 2, 2013 for the premises located at #210-4751 Garden City Road, Richmond, BC, V6X 3M7.
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X
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10.4
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Office lease for
the premises occupied by Globalink Xuzhou located at Room 707, Tongcheng Commercial Apartment, Pizhou City, Jiangsu Province,
China
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X
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10.5
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Office lease for
the premises occupied by Globalink Zhejiang Room 712-713, C4 Building, #299 High Technology District, Ningbo City, Jiangsu
Province, China
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X
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10.6
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Form of Land Management
Right Circulation Contract between each lessor of land and the registrant
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S-1
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333-211360
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5/13/16
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10.6
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10.7
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Technical Development
(Entrustment) Contract, dated January 8, 2016, between Globalink (Zhejiang) BioSciTec Ltd. and Zhejiang Pharmaceutical College
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S-1
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333-211360
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5/13/16
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10.7
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10.8
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Sino- Foreign Joint
Venture Contract between Globalink (Xuzhou) Bio-Technology Co., Ltd. and Shizhen Bio-Technology Co., Ltd. relating
to the organization, ownership and operation of Globalink (Xuzhou) Bio-Technology Co., Ltd.
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S-1
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333-211360
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5/13/16
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10.8
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10.9
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Terms of loan made
by Hin Kwok Sheung to the Company on January 16, 2016 in the amount of $232,530 (RMB1,500,000) to Globalink Xuzhou
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S-1
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333-211360
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5/13/16
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10.9
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14
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Code of Ethics
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S-1
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333-211360
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5/13/16
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14
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21.1
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Subsidiaries of
the Registrant
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S-1
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333-211360
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5/13/16
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21.1
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23.1
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Consent of Independent
Registered Public Accounting Firm
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X
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23.2
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Consent of Ruffa
& Ruffa, P.C. (included in Exhibit 5.1)
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X
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23.3
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Consent of PRC Counsel
(included in Exhibit 99.1)
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X
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99.1
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Opinion of Pizhou
City Shuishang Law Firm regarding certain matters of PRC law.
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X
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99.2
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Form of Subscription
Agreement
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X
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Exhibit
Number
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Description
of Exhibit
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101
.INS #
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XBRL
Instance Document
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101.SCH #
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XBRL Taxonomy Extension
Schema Document
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101.CAL #
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XBRL Taxonomy Calculation
Linkbase Document
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101.DEF #
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XBRL Taxonomy Extension
Definition Linkbase Document
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101.LAB #
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XBRL Taxonomy Label
Linkbase Document
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101.PRE #
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XBRL Taxonomy Presentation
Linkbase Document
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#
Previously filed.
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(b)
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Financial Statement
Schedules.
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None.
ITEM
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1)
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To file,
during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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(i)
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To include any prospectus
required by section 10(a)(3) of the Securities Act of 1933;
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(ii)
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To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement.
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(iii)
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To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement;
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Provided,
however, that:
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(A)
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Paragraphs (a)(1)(i)
and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 (§ 239.16b of this chapter),
and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed
with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and
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(B)
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Paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 (§ 239.13 of this
chapter) or Form F-3 (§ 239.33 of this chapter) and the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement,
or is contained in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of
the registration statement.
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(C)
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Provided further,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 (§ 239.11 of this chapter) or Form S-3 (§ 239.13 of this chapter), and the information required
to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB (§ 229.1100(c)).
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(2)
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That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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(3)
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To remove
from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
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(4)
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If the
registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial
statements required by “Item 8.A. of Form 20-F (17 CFR 249.220f)” at the start of any delayed offering or throughout
a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus
is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3 (§ 239.33 of this chapter), a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or § 210.3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
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(5)
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That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
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(i)
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If the registrant
is relying on Rule 430B (§ 230.430B of this chapter):
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(A)
|
Each prospectus
filed by the registrant pursuant to Rule 424(b)(3) (§ 230.424(b)(3) of this chapter) shall be deemed to be part of the
registration statement as of the date the filed prospectus was deemed part of and included in the registration statement;
and
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(B)
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Each prospectus
required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter)
as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii),
or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section
10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier
of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities
in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
effective date; or
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|
(ii)
|
If the registrant
is subject to Rule 430C (§ 230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed
in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
date of first use.
|
(6)
|
That, for the purpose
of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of
the securities:
|
The
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
|
(i)
|
Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424
(§ 230.424 of this chapter);
|
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(ii)
|
Any free writing
prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
|
|
|
(iii)
|
The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
|
|
|
|
|
(iv)
|
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
pursuant to the provisions described in Item 14 above, or otherwise, it is the opinion of the Securities and Exchange Commission
that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by
a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
We
hereby undertake that:
|
(1)
|
for purposes of
determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the
time it was declared effective; and
|
|
|
|
|
(2)
|
for purposes of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has caused this registration statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in Beijing, People’s Republic of China and Vancouver, British Columbia,
Canada on July 14 , 2016.
|
Globalink,
Ltd.
|
|
|
|
|
By:
|
/s/
Hin Kwok Sheung
|
|
|
Hin Kwok Sheung
|
|
|
President and Chief
Executive Officer
|
Each
person whose signature appears below on this registration statement hereby constitutes and appoints Hin Kwok Sheungk, and any
successor or successors to such offices held by him, his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this
registration statement (including, without limitation, post-effective amendments), and any registration statement or amendment
under Rule 462(b) under the Securities Act of 1933, as amended, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact
and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the
capacities indicated on July 14 , 2016.
Signature
|
Title
|
By:
/s/
Hin Kwok Sheung
|
Chief Executive Officer, President and Director
|
Hin Kwok Sheung
|
|
|
|
By:
/s/
Ke Feng (Andrea) Yuan
|
Chief Financial Officer, and Director
|
Ke Feng Yuan
|
|
|
|
By:
/s/
Robin Young
|
Director, Secretary
|
Robin Young
|
|
|
|
By:
/s/
Jia Charles Yao
|
Director
|
Jia Charles Yao
|
|
|
|
By:
/s/
Yan Zhuang
|
Director, General Manager of Chinese subsidiaries
|
Yan Zhuang
|
|