Longduoduo Co Ltd S-1, filed Nov 10, 2021
Longduoduo Co Ltd (LDDD)
As filed with the Securities and Exchange Commission on November 10, 2021
Registration No. XXX-XXXXXX
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LONGDUODUO COMPANY LIMITED
(Exact name of Registrant as specified in its charter)
| Nevada | 8000 | 37-2018431 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
LONGDUODUO COMPANY LIMITED
419, Floor 4, Comprehensive Building,
Second Light Hospital, Ordos Street,
Yuquan District, Hohhot,
Inner Mongolia, China
Office: +86 (0472) 510 4980
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
Incorp Services, Inc.
3773 Howard Hughes PKWY Ste 500S
Las Vegas, NV 89169-6014, USA
Office: (800) 246 2677
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
with a copy to:
Chen-Drake Law
8491 Sunset Boulevard, Suite 368
West Hollywood, CA 90069
310-358-0104 (o) | 888-896-7763
E-mail: chendrakelaw@gmail.com
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please 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, 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(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |
| Emerging Growth Company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Calculation of Registration Fee
| Title of Each Class of Securities to be Registered | Amount to be Registered |
Proposed Maximum Offering Price Per Share |
Proposed Maximum Aggregate Offering Price (1) |
Amount of Registration Fee (2) |
||||||||||||
| Shares of common stock, par value $0.001 | 146,079,853 | $ | 1.00 | $ | 146,079,853 | $ | 13,541.60 | |||||||||
| (1) | The offering price has been arbitrarily determined by the Company and bears no relationship to assets, earnings, or any other valuation criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this, or at any price. |
| (2) | The proposed maximum offering price per share and the proposed maximum aggregate offering price have been estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. |
| (3) | The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457, the offering price was determined by the price of the shares that were sold to our shareholders in a private placement pursuant to an exemption from registration under the Securities Act. |
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 said Section 8(a), may determine.
| The information in this prospectus is not complete and may be amended. The Issuer 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 it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
SUBJECT TO COMPLETION DATED NOVEMBER 10, 2021
PRELIMINARY PROSPECTUS
LONGDUODUO COMPANY LIMITED
146,079,853 SHARES OF COMMON STOCK
OFFERING PRICE $1.00 PER SHARE
This prospectus relates to the resale and other disposition from time to time of up to 146,079,853 shares of our common stock by the selling shareholders identified in the section entitled “Selling Shareholders” on page 33. We issued all of the 146,079,853 shares in private placement transactions completed prior to the filing of the registration statement containing this prospectus.
The shares included in this prospectus may be re-offered and sold directly by the selling shareholders in accordance with one or more of the methods described in the plan of distribution, which begins on page 31 of this prospectus. Longduoduo Company Limited is not selling any shares of our common stock in this offering and therefore, we will not receive any proceeds from the sales by the selling shareholders. The selling shareholders will offer and sell common stock at a fixed price of $1.00 per share until our common stock is quoted on the OTCQB, at which time the selling shareholders may sell the common stock at prevailing market prices or in privately negotiated transactions.
This is an initial public offering of our common stock. There is not currently, and there has never been, any public market for our common stock. Our common stock is not currently eligible for trading on any national securities exchange, NASDAQ or any over-the-counter market, including an OTC Market Group quotation system such as the OTCQB, and we cannot assure you that our common stock will become eligible for trading. We intend to arrange for a registered broker-dealer to apply for permission to post a quotation for our stock, and we intend to then apply to have our common stock quoted on the OTCQB system of the OTC Market Group. However, no assurance can be given that our common stock will be quoted on the OTCQB or any other quotation service.
We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act. As such, we will be subject to reduced public company reporting requirements.
OUR BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON STOCK WILL ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING “RISK FACTORS” BEGINNING ON PAGE 6 BEFORE INVESTING IN OUR COMMON STOCK.
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.
The date of this prospectus is ____, 2021
TABLE OF CONTENTS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information or to make any representation on behalf of Longduoduo Company Limited that is different from that contained in this prospectus. You should not rely on any unauthorized information or representation.
This prospectus is an offer to sell only the securities offered by this prospectus under circumstances and in jurisdictions where it is lawful to do so. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the date of delivery of this prospectus or of any sales of these securities. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus. This prospectus may be used only in jurisdictions where it is legal to sell these securities.
i
This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the “Risk Factors” beginning on page 6. All references to “we,” “us,” “our,” “Company” or similar terms used in this prospectus refer to Longduoduo Company Limited. Unless otherwise indicated, the term “fiscal year” refers to our fiscal year ending June 30. Unless otherwise indicated, the term “common stock” refers to shares of the Company’s common stock.
Our Corporate Structure
LONGDUODUO COMPANY LIMITED (“The Company” or “Longduoduo”) was incorporated in the State of Nevada on October 25, 2021. The Company’s principal corporate address is 419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China, 010000. Our telephone number is +86 (0472) 510 4980. Our registered agent for service of process is Incorp Services, Inc., 3773 Howard Hughes Pkwy, Suite 500S, Las Vegas Nevada 89169-6014. Our website address is www.longduoduo.net. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. You should not rely on any such information in making your decision whether to purchase our common stock.
The Company through its operating subsidiaries, which are headquartered in Hohhot, Ordos, Baotou and Ulanqab of China, is engaged in the business of providing comprehensive and high-quality preventive healthcare solutions. Through third-party healthcare service providers, we provide a wide range of comprehensive preventive healthcare services including disease screening, healthcare treatments, healthcare products and other services. The Company mainly focus on prevention to myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases. Our customers are primarily individual customers who introduced by our customers and sales agents. Longduoduo currently has 62 full-time employees.
The following chart describes our current corporate structure:
| 1 |
| Longduoduo Company Limited (Hong Kong) (“Longduoduo HK”), was established on July 26, 2021 under the laws of Hong Kong. On October 26, 2021, Longduoduo issued 300,000,000 shares of its common stock to the original shareholders of Longduoduo HK, in exchange for 100% of the outstanding shares of Longduoduo HK (the “Share Exchange”). | |
| Longduoduo Health Technology Company Limited (“Longduoduo Health Technology”), a privately held Limited Company, registered in Inner Mongolia, China on August 20, 2020. On August 16, 2021, Longduoduo HK acquired 100% of Longduoduo Health Technology from the original shareholders of Longduoduo Health Technology. | |
Inner Mongolia Qingguo Health Consulting Company Limited (“Qingguo”), a privately held Limited Company, registered in Inner Mongolia, China on June 18, 2020. On September 8, 2020, Longduoduo Health Technology acquired 90% of Qingguo from the original shareholders of Qingguo.
Inner Mongolia Rongbin Health Consulting Company Limited (“Rongbin”), a privately held Limited Company, registered in Inner Mongolia, China on March 18, 2021. Longduoduo Health Technology has controlled 80% of Rongbin since inception.
Inner Mongolia Chengheng Health Consulting Company Limited (“Chengheng”), a privately held Limited Company, registered in Inner Mongolia, China on April 9, 2021. Longduoduo Health Technology has controlled 80% of Chengheng since inception.
Inner Mongolia Tianju Health Consulting Company Limited (“Tianju”), a privately held Limited Company registered in Inner Mongolia, China on July 5, 2021. Longduoduo Health Technology has controlled 51% of Tianju since inception. |
The transactions summarized above are treated in our financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the seven entities have at all times been under the control of Mr. Zhang Liang. Therefore, in accordance with ASC 805-50-45-5, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and the entities under common control are presented on a combined basis for all periods. Since all of the subsidiaries were under common control for all periods presented, the results of these subsidiaries are included in the Company’s financial statements for all periods.
| 2 |
Our Business
Our subsidiaries, through third-party healthcare service providers, provide comprehensive and high-quality preventive healthcare solutions including a wide range of comprehensive preventive healthcare services, including disease screening, healthcare treatments, healthcare products and other services. The Company mainly focus on prevention to myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases.
Our subsidiaries cooperate with our third-party healthcare service providers to serve customers located in Hohhot, Ordos, Baotou and Ulanqab of China. In order to better serve our customers, we are parties to agreements with 5 third-party healthcare service providers. We pay service fees to these third-party healthcare service providers based on the number of health products, medical examinations and the services they provide for our customers. We carefully select our third-party healthcare service provider based on reputation, recommendations from customers and our own assessment of the quality of the institution and staff. Minimum selection criteria include the appropriate licenses and agreement to follow our pricing policy.
In the long run, by leveraging our growing network of medical centers, large and loyal customer base, established demographic and disease information database, we plan to expand the scope of our service offerings to include other healthcare services and ultimately establish our company as a leading health management service provider in China. We intend to achieve our goal by implementing the following strategies:
| ● | further expanding our product offerings; and |
| ● | continue to expand our network coverage nationwide; and |
| ● | further upgrade our service standards to enhance the customer experience. |
| 3 |
Summary of the Offering
| Shares of common stock offered by us: | None | |
| Shares of common stock offered by Selling Shareholders pursuant to this prospectus | 146,079,853 shares of our common stock. | |
| Common stock currently outstanding | 300,000,000 shares | |
| Use of Proceeds: | The Company will not receive any proceeds from the resale or other disposition of common stock offering by the selling shareholders covered by this prospectus. | |
| Risk Factors: | An investment in the Company’s common stock is speculative and involves substantial risks. You should read the “Risk Factors” section of this prospectus for a discussion of certain factors to consider carefully before deciding to invest in shares of our common stock. |
Summary of consolidated financial information
The following summary consolidated statement of operations data for the years ended June 30, 2021 and 2020, and the summary consolidated balance sheet data as of June 30, 2021 and 2020 have been derived from the Company’s audited consolidated financial statements included elsewhere in this prospectus.
The summary consolidated financial data should be read in conjunction with the Company’s consolidated financial statements for the years ended June 30, 2021 and 2020, and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. The Company historical results are not necessarily predictive of the Company’s results for any future periods.
| 4 |
LONGDUODUO COMPANY LIMITED
SUMMARY CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Total current assets | $ | 355,477 | $ | 706 | ||||
| Property and equipment, net | 67,125 | - | ||||||
| Right-of-use asset | 91,198 | - | ||||||
| Total assets | $ | 513,800 | $ | 706 | ||||
| Total current liabilities | $ | 858,834 | - | |||||
| Operating lease liabilities, less current portion | 40,013 | - | ||||||
| Total liabilities | $ | 898,847 | - | |||||
| Total deficit | $ | (385,047 | ) | 706 | ||||
| Total liabilities and deficit | $ | 513,800 | 706 | |||||
LONGDUODUO COMPANY LIMITED
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN US DOLLARS)
| For the Year Ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Total revenue | $ | 413,861 | $ | - | ||||
| Cost of Sales | 94,234 | - | ||||||
| Gross Profit | 319,627 | - | ||||||
| Total operating expenses | 698,041 | - | ||||||
| Loss from operations before other income and income taxes | (378,414 | ) | - | |||||
| Other income | 210 | - | ||||||
| Loss from operations before income taxes | (378,204 | ) | - | |||||
| Provision for income taxes | - | - | ||||||
| Net loss | $ | (378,204 | ) | $ | - | |||
| 5 |
An investment in the Company common stock involves a high degree of risk. You should carefully consider the following risk factors and other information in this prospectus before deciding to invest in the Company common stock. If any of the following risks actually occur, the Company business, financial condition, results of operations and prospects for growth could be seriously harmed. As a result, the trading price of the Company common stock could decline and you could lose all or part of your investment.
Risks Related to Our Business
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
The Company currently has losses and has not completed its efforts to establish a stabilized source of revenue sufficient to cover operating costs over an extended period of time. These factors, among others, caused our independent auditor, in its audit opinion for the fiscal year ended June 30, 2021, to express substantial doubt about the Company’s ability to continue as a going concern.
The Company’s operations have been financed primarily by advances and loans from related parties and proceeds from sales of shares. Zhang Liang was the primary sources of financing for the early operations of the entity. Nevertheless, there can be no assurance that we would be able to raise the additional funding needed to implement our business plans or cover unanticipated costs.
Since we are an early stage company, have not generated significant revenues and have experienced recurring losses, an investment in the shares offered herein is highly risky and could result in a complete loss of your investment if we are unsuccessful in implementing our business plans.
Based upon current plans, we expect to incur operating losses in future periods as we incur significant expenses associated with the effort of expanding our business. Further, we cannot guarantee that we will be successful in realizing sufficient revenues or in achieving or sustaining positive cash flows at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional financing through loans or additional sales of our equity securities to continue business operations, which could dilute the value of any shares you purchase in this offering.
Changes in United States and China relations, as well as relations with other countries, and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.
The U.S. government, including the SEC, has made statements and taken certain actions that led to changes to United States and international relations, and will impact companies with connections to the United States or China, including imposing several rounds of tariffs affecting certain products manufactured in China, imposing certain sanctions and restrictions in relation to China and issuing statements indicating enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on companies with significant connections to the U.S. or to China, our industry or on us. Any unfavorable government policies on cross-border relations and/or international trade, including increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise capital, the market price of our shares.
Furthermore, the SEC has issued statements primarily focused on companies with significant China-based operations, such as us. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in China, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based operations. The statement also addressed risks inherent in companies with a Variable Interest Entity, or a VIE structure. We do not have a VIE structure and are not in an industry that is subject to foreign ownership limitations by China. Further, we believe that we have robust disclosures relating to our operations in China, including the relevant risks noted in Chairman Gensler’s statement. However, it is possible that the Company’s periodic reports and other filings with the SEC may be subject to enhanced review by the SEC and this additional scrutiny could affect our ability to effectively raise capital in the United States.
| 6 |
In response to the SEC’s July 30 statement, the China Securities Regulatory Commission (CSRC) announced on August 1, 2021, that “it is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” While the CSRC will continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” it emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.”
If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our shares.
COVID-19 has adversely impacted our business and may further impact our business, financial results and liquidity for an unknown period of time.
The COVID-19 pandemic has led government and other authorities to impose measures intended to control its spread, including restrictions on freedom of movement, gatherings of large numbers of people, and temporary closure of business operations. With respect to the Longduoduo business, the primary adverse result of the COVID-19 pandemic has been a serious interruption from time to time of temporary closure of business operations, especially the third-party healthcare service providers were required to temporarily close it. In particular, as our third-party healthcare service provider are the key to patients’ treatment, our inability to supply third-party healthcare services due to COVID-19 restrictions seriously delayed the growth of our business.
In response to COVID-19, we took steps to reduce operating costs and improve efficiency, including slowing down our business plan. The interruption of our third-party healthcare services supply and the steps we took to reduce the risk to our employees from COVID-19 both negatively impacted our schedule for achieving development of our business.
We are unable to predict the extent to which the pandemic and related impacts may adversely impact our business operations, financial performance, consolidated results of operations and consolidated financial position in the future or interfere with the achievement of our strategic objectives.
We rely on third party providers to provide our offered services and could be liable and suffer reputational harm if a third-party service provider provides inferior service or harms a customer, which may have a material adverse effect on our business, financial condition, results of operations and prospects.
We rely on our third-party healthcare service providers to provide services to our customers under cooperative arrangements with us. We require and expect these third-party healthcare service providers to possess the licenses and qualifications that are required for their operations and to adhere to certain performance standards both in terms of customer service and the quality of the medical care that they provide. We generally do not have control over the quality of service or medical care that these third-parties provide. They may not at all times possess the permits or qualifications required by laws and regulations or may fail to meet other regulatory requirements for their operations. In addition, they may engage in conduct which our customers find unacceptable, including providing poor service, mishandling sensitive personal healthcare information and committing medical malpractice. We could be exposed to reputational harm and possible liability as a result of our having serviced a customer through a third-party service provider that performs unsatisfactorily, which may result in a materially adverse effect on our business, financial condition, results of operations and prospects.
We operate in a competitive environment and competing facilities and services could harm our business, financial condition, results of operations and prospects.
There are numerous hospitals and private clinics providing medical examination services and, at the high end of the market, many Chinese hospitals have VIP wards that cater to affluent customers. We face significant competition from two main types of competitors: the medical examination departments of major public hospitals and private medical examination companies. The private preventive healthcare market is further segmented into large franchise companies, regional providers and numerous local independent medical examination centers located in nearly every city in China. We compete primarily on the basis of price, quality of service, convenience, location, brand recognition and reputation. We do not have the same level of brand recognition as some of the medical examination centers of large public hospitals, and in some regional markets our brand is not as established and our geographical coverage is not as extensive as that of our private competitors. Furthermore, we lack the equipment necessary for certain highly technical medical tests. Many competing hospitals that are government-owned are exempt from income taxes on their medical income, which provides them with a significant competitive advantage over us. Competing hospitals, clinics or other facilities may commence new operations or expand existing operations, which would increase their competitive position and potentially erode our business, financial condition, results of operations and prospects.
We have incurred significant net losses and we may continue to experience significant losses in the future.
We have incurred significant net losses since our inception. We had net losses of $378,204 and $0 in the 2021 and 2020 fiscal years, respectively. We had an accumulated deficit of $328,625 as of June 30, 2021. We cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future. The deficit occurred because the company paid a lot of marketing expense to exploit market and expand the scale. Accordingly, we intend to continue to exploit market and expand our nationwide network coverage. As a result of these planned expenditures, we believe that we may incur net losses for some time in the future.
| 7 |
We may not be able to effectively control and manage our planned growth.
We have limited operational, administrative and financial resources, which may be inadequate to sustain the growth we want to achieve. If our business and markets grow and develop, it will be necessary for us to finance and manage expansion accordingly. In addition, we may face challenges in managing our expanding service offerings. Such growth would place increased demands on our existing management, employees and facilities. Our failure to meet these demands could interrupt or adversely affect our operations and cause administrative inefficiencies. Additionally, failure to execute our planned growth strategy could have a material adverse effect on our financial condition and results of operation.
Expansion of our healthcare services could be affected by the expansion of government-sponsored social medical insurance available to the Chinese population that is not available now.
Most government-sponsored social medical insurance in China does not cover medical examinations. In certain locations where government-sponsored social medical insurance covers medical examinations, we have cooperated hospitals are qualified institution under such insurance coverage. Currently, most of our individual customers pay directly for medical examinations. If government-sponsored social medical insurance is further expanded to cover medical examinations in more geographical locations, and Longduoduo does not become a qualified institution for such coverage, certain of our customers may discontinue or terminate their relationship with us, and certain individual customers may opt to use other medical institutions covered by such medical insurance rather than pay for our services. As a result, the expansion of government-sponsored social medical insurance could materially and adversely affect our business, financial condition and results of operations.
Additional capital, if needed, may not be available on acceptable terms, if at all, and any additional financing may be on terms adverse to your interests.
We may need additional cash to fund our operations. Our capital needs will depend on numerous factors, including market conditions and our profitability. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If additional financing is not available when required or is not available on acceptable terms, we may be unable to fund expansion, successfully promote our brand name, develop or enhance our services, take advantage of business opportunities, or respond to competitive pressures or unanticipated requirements, any of which could seriously harm our business and reduce the value of your investment.
If we are able to raise additional funds if and when needed by issuing additional equity securities, you may experience significant dilution of your ownership interest and holders of these new securities may have rights senior to yours as a holder of our common stock. If we obtain additional financing by issuing debt securities, the terms of those securities could restrict or prevent us from declaring dividends and could limit our flexibility in making business decisions. In this case, the value of your investment could be reduced.
There is no assurance that we will be able to obtain additional funding if it is needed, or that such funding, if available, will be obtainable on terms and conditions favorable to or affordable by us. If we cannot obtain needed funds, we may be forced to curtail our activities.
| 8 |
Risks Relating to our Management
The loss of the services of any of our officers or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our products and sales.
The development of our business will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers, Zhang Liang, our President and Chairman of the Board of Director, Zhou Hongxiao, Chief Executive Officer (CEO), Secretary and director, and our Chief Financial Officer, Kang Liping. They are developing our business, which will depend on our ability to identify and retain competent employees with the skills required to execute our business objectives. The loss of the services of any of our officers or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our products and services, which could adversely affect our financial results and impair our growth.
If we are unable to hire, retain or motivate qualified personnel, consultants, independent contractors, and advisors, we may not be able to grow effectively.
Our performance will be largely dependent on the talents and efforts of highly skilled individuals. Future success depends on our continuing ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization. Competition for such qualified employees is intense. If we do not succeed in attracting excellent personnel or in retaining or motivating them, we may be unable to grow effectively. In addition, all future success depends largely on our ability to retain key consultants and advisors. We cannot assure that any skilled individual will agree to become an employee, consultant, or independent contractor of Longduoduo Company Limited. Our inability to retain their services could negatively impact our business and our ability to execute our business strategy.
Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.
As a new public reporting company, we will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Although our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date we are no longer an emerging growth company, our management will be required to report on our internal controls over financial reporting under Section 404. If we fail to achieve and maintain the adequacy of our internal controls, we would not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, that must be performed may reveal other material weaknesses or that the material weaknesses described above have not been fully remediated. If we do not remediate the material weaknesses described above, or if other material weaknesses are identified or we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated or could subsequently require restatement, we could receive an adverse opinion regarding our internal controls over financial reporting from our independent registered public accounting firm and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources, and the market price of our stock could decline.
Our lack of an independent audit committee and audit committee financial expert at this time may hinder our board of directors’ effectiveness in monitoring the Company’s compliance with its disclosure and accounting obligations. Until we establish such a committee, we will be unable to obtain a listing on a national securities exchange.
Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by NASDAQ. Currently, we have no independent audit committee. Our full board of directors function as our audit committee and is comprised of two directors. An independent audit committee would play a crucial role in the corporate governance process, assessing our Company’s processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal and independent audit processes. The lack of an independent audit committee may deprive the Company of management’s independent judgment. We may, however, have difficulty attracting and retaining independent directors with the requisite qualifications. If we are unable to attract and retain qualified, independent directors, the management of our business could be compromised. An independent audit committee is required for listing on any national securities exchange. Therefore, until such time as we meet the audit committee independence requirements of a national securities exchange, we will be ineligible for listing on any national securities exchange.
| 9 |
Our board of directors acts as our compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board members and other officers may not be commensurate with our financial performance.
A compensation committee consisting of independent directors is a safeguard against self-dealing by company executives. Our board of directors, which has no independent members, acts as the compensation committee for the Company and determines the compensation and benefits of our executive officers, will administer our employee stock and benefit plans, and reviews policies relating to the compensation and benefits of our employees. Our lack of an independent compensation committee presents the risk that an executive officer on the board may have influence over his or her personal compensation and may obtain benefits levels that may not be commensurate with our financial performance.
Limitations on director and officer liability and indemnification of our Company’s officers and directors by us may discourage shareholders from bringing a lawsuit against an officer or director.
Our Company’s certificate of incorporation and bylaws provide, with certain exceptions as required by governing state law, that a director or officer shall not be personally liable to us or our shareholders for breach of fiduciary duty as a director or officer, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage shareholders from bringing a lawsuit against a director or officer for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by shareholders on the Company’s behalf against a director or officer.
Our management has no experience managing a public company.
At the present time, none of our management has experience in managing a public company. This may hinder our ability to establish effective controls and systems and comply with all applicable requirements associated with being a public company. If compliance problems result, these problems could have a material adverse effect on our business, financial condition or results of operations. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, and the Dodd-Frank Act of 2010, as well as rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to our new compliance requirements. Moreover, these requirements will increase our legal, accounting and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect it will be difficult and expensive for us to obtain director and officer liability insurance. These requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
We may have difficulty establishing adequate management, legal and financial controls in the PRC.
We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as will be required under Section 404 of the Sarbanes Oxley Act of 2002.
| 10 |
Risks Related to Doing Business in the PRC
Failure to comply with any PRC laws and regulations may adversely affect our business, investments and results of operations.
Our China operations are subject to PRC laws and regulations including but not limited to the laws and regulations on taxation, employment and social welfare, product quality and consumers protection, foreign investment, foreign exchange, online trading and E-commerce, food business and so on. The regulation is disclosed in the section entitled “Regulation” beginning on page 23 of this prospectus. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. A failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Changes in the policies of the PRC government could have an adverse effect on our business.
Policies of the PRC government can have significant effects on the economic conditions in the PRC. Although the PRC government has been pursuing economic reform policies and transitioning to a market-oriented economy, there is no assurance that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social conditions. Further, regulatory agencies in China may periodically, and sometimes abruptly with little to no advance notice, change their enforcement practices. Therefore, prior enforcement activity, or lack of enforcement activity, is not necessarily predictive of future actions. Our business could be adversely affected by changes in PRC government policies, including but not limited to changes in policies relating to taxation, currency conversion, imports and exports, and ownership of private enterprises.
PRC laws and regulations governing our current business operations are sometimes vague and subject to interpretation, and any changes in PRC laws and regulations may have a material and adverse effect on our business.
There are substantial uncertainties regarding the interpretation, application and enforcement of PRC laws and regulations, including but not limited to the laws and regulations governing our business. These laws and regulations are sometimes vague and are subject to future changes, and their official interpretation and enforcement by the various branches of the PRC government may involve substantial uncertainty. The PRC legal system is based in part on governmental policies and internal rules some of which are not published on a timely basis or at all. New laws, regulations, rules and policies that affect existing and proposed future businesses may also be applied retroactively. We cannot predict with certainty what effect existing or new PRC laws or regulations may have on our business. In addition, there is less published guidance regarding PRC laws as compared to laws in the United States, and prior rulings and interpretations of PRC laws may not necessarily carry the same precedential value as in the United States.
PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent us from using proceeds from this offering and/or future financing activities to make loans or additional capital contributions to our PRC operating subsidiaries.
As an offshore holding company with PRC subsidiaries, we may transfer funds to our PRC subsidiaries or finance our operating entity by means of loans or capital contributions. Any capital contributions or loans that we, as an offshore entity, make to our Company’s PRC subsidiaries, are subject to PRC regulations. Any loans to our PRC subsidiaries, which are foreign-invested enterprises, cannot exceed statutory limits based on the difference between the amount of our investments and registered capital in such subsidiaries, and shall be registered with SAFE, or its local counterparts. Furthermore, any capital increase contributions we make to our PRC subsidiaries, which are foreign-invested enterprises, are subject to the requirement of making necessary filings in FICMIS, and registration with other government authorities in China. We may not be able to obtain these government registrations or approvals on a timely basis, if at all. If we fail to obtain such approvals or make such registration, our ability to make equity contributions or provide loans to our Company’s PRC subsidiaries or to fund their operations may be negatively affected, which may adversely affect their liquidity and ability to fund their working capital and expansion projects and meet their obligations and commitments. As a result, our liquidity and our ability to fund and expand our business may be negatively affected.
Because our principal assets are located outside of the United States and because almost all of our directors and all our officers reside outside of the United States, it may be difficult for you to use the United States Federal securities laws to enforce your rights against us and our officers or to enforce judgments of United States courts against us or them in the PRC.
All of our present officers and directors reside outside of the United States. In addition, our operating subsidiaries, Longduoduo Health Technology, Qingguo, Rongbin, Chengheng and Tianju are located in the PRC and substantially all of its assets are located outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the United States Federal securities laws against us in the courts of either the United States or the PRC and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States Federal securities laws or otherwise.
| 11 |
Restrictions contained in Chinese law on the ability of overseas securities regulators to collect information in China may deny investors in our Company the benefits of U.S. securities regulation.
China has often restricted U.S. regulators’ access to information and limited regulators’ ability to investigate or pursue remedies with respect to China-based issuers, generally citing to state secrecy and national security laws, blocking statutes, or other laws or regulations. In addition, according to Article 177 of the PRC Securities Law, which effective in March 2020, no overseas securities regulator can directly conduct investigations or evidence collection activities within the PRC and no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators without Chinese government approval. The SEC, U.S. Department of Justice, and other U.S. authorities face substantial challenges in bringing and enforcing actions against China-based issuers and their officers and directors. As a result, investors in our Company may not benefit from a regulatory environment that fosters effective enforcement of U.S. federal securities laws.
According to Article 177, there are uncertainties as to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from OTC Markets or other applicable trading market within the US.
Governmental control of currency conversion may affect the value of your investment.
The People’s Republic of China (PRC) government imposes controls on the convertibility of Renminbi (RMB) into foreign currencies and, in certain cases, the remittance of currency out of the PRC. We receive substantially all of our revenues in RMB, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures in connection with a commercial transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where RMB is to be converted into foreign currency and remitted out of PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.
The PRC government also may at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due.
The fluctuation of RMB may materially and adversely affect your investment.
The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. As we rely entirely on revenues earned in the PRC, any significant revaluation of RMB may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into RMB for our operations, appreciation of the RMB against the U.S. dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making dividend payments on our common stock or for other business purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent of the RMB we convert would be reduced. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of these assets.
Because our principal assets are located outside of the United States and because almost all of our directors and all our officers reside outside of the United States, it may be difficult for you to use the United States Federal securities laws to enforce your rights against us and our officers or to enforce judgments of United States courts against us or them in the PRC.
All of our present officers and directors reside outside of the United States. In addition, our operating subsidiaries, Longduoduo Health Technology, Qingguo, Rongbin, Chengheng and Tianju are located in the PRC and substantially all of its assets are located outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the United States Federal securities laws against us in the courts of either the United States or the PRC and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States Federal securities laws or otherwise.
| 12 |
Risks Relating to Our Common Stock and this Offering
We are an emerging growth company and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. The exemptions available to emerging growth companies include the right to present only two years of audited financial statements in our registration statements and annual reports, an exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act relating to internal controls, reduced disclosure about executive compensation arrangements, and no requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements. Some of these exemptions are also available to us as a smaller reporting company (i.e. a company with less than $250 million of its voting equity held by non-affiliates). We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as a result of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.
Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of The JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates. The decision to opt out is irrevocable.
Because the worldwide market value of our common stock held by non-affiliates, or public float, was below $250 million on the last day of our second fiscal quarter, we are also a “smaller reporting company” as defined under the Exchange Act. Some of the foregoing reduced disclosure and other requirements are also available to us because we are a smaller reporting company and may continue to be available to us even after we are no longer an emerging growth company under the JOBS Act but remain a smaller reporting company under the Exchange Act. As a smaller reporting company, we are not required to:
| ● | have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| ● | present more than two years of audited financial statements in our registration statements and annual reports on Form 10-K; or |
| ● | present any selected financial data in such registration statements and annual reports filings made by the Company. |
Because we will be subject to “penny stock” rules, the level of trading activity in our stock may be reduced.
If we are able to secure a listing for our common stock, it is likely that our common stock will be classified as a “penny stock’ when trading is initiated and for an indeterminate period thereafter. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges). Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules. If a trading market does develop for our common stock, these regulations will likely be applicable, and investors in our common stock may find it difficult to sell their shares.
| 13 |
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
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, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.
Shareholders do not have pre-emptive rights, which will cause them to experience dilution if we issue additional securities.
At any time or times after this offering, we may issue and sell additional shares of our authorized but previously unissued shares of common stock, preferred stock, or common stock warrants on such terms and conditions as our Board of Directors, in its sole discretion, may determine without consent of our shareholders. Our shareholders do not have pre-emptive rights to acquire additional shares should we in the future issue or sell additional securities. Thus, we are not required to offer any existing shareholder the right to purchase his or her pro rata portion of any future issuance of securities and, therefore, upon the issuance of any additional securities by us hereafter, our shareholders will not be able to maintain their then existing pro rata ownership in our outstanding shares of common stock, preferred stock, or common stock warrants without additional purchases of securities at the price then set internally by us.
We are unlikely to pay cash dividends in the foreseeable future.
We currently intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.
Our insiders own the majority of the outstanding shares of our stock, and accordingly, will have control over stockholder matters, the Company’s business and management.
As of the date of this prospectus, one member of our Board of Directors owns, in aggregate, common stock representing 51.31% of the outstanding shares of our common stock. While he continues to hold the majority of the voting power in our Company, this director will have effective control over the Company. In particular, the director will have the ability to:
| ● | Elect or defeat the election of our directors; |
| ● | Amend or prevent amendment of our articles of incorporation or bylaws; |
| ● | Effect or prevent a merger, sale of assets or other corporate transaction; and |
| ● | Affect the outcome of any other matter submitted to the shareholders for vote. |
Moreover, because of the significant ownership position held by our insiders, new investors will not be able to affect a change in the Company’s business or management, and therefore, shareholders would be subject to decisions made by management and the majority shareholders.
In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.
| 14 |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements and information relating to our business that are based on our beliefs as well as assumptions made by us or based upon information currently available to us. These statements reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties. Forward-looking statements are often identified by words like: “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project” and similar expressions or words which, by their nature, refer to future events. In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors beginning on page 6, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In addition, you are directed to factors discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section beginning on page 17, and the section entitled “Business of the Company” beginning on page 20, and as well as those discussed elsewhere in this prospectus. Other factors include, among others: risks associated with our holding company structure, having substantially all of our operations in the PRC, general economic and business conditions; industry capacity; industry trends; competition; changes in business strategy or development plans; availability, terms, and deployment of capital; and availability of qualified personnel.
These forward-looking statements speak only as of the date of this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.
We will not receive any proceeds from the sales of our common stock by the selling shareholders. All of the net proceeds from the sale of the common stock will go to the selling shareholders as described below in the sections entitled “Selling Shareholders” and “Plan of Distribution.” We have agreed to bear the expenses relating to the registration of our common stock for the selling shareholders.
DETERMINATION OF THE OFFERING PRICE
Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of our common stock was arbitrarily determined. The offering price of the shares of our common stock does not bear any rational relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history, and the general condition of the securities market.
An entity’s functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the jurisdiction in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’). The reporting currency of these consolidated financial statements is the United States dollar (“US Dollars” or “$”).
| 15 |
The financial statements of the Company, which are prepared using the RMB, are translated into the Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using weighted average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or expense.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in results of operations.
The exchange rates used for foreign currency translation are as follows:
| For the Years Ended
June 30, | ||||||
| 2021 | 2020 | |||||
| (USD to RMB/USD to HKD) | (USD to RMB) | |||||
| Assets and liabilities | period end exchange rate | 6.4579/7.7652 | 7.0697 | |||
| Revenue and expenses | period weighted average | 6.6228/7.7562 | 7.0319 | |||
There is no established public market for our common stock.
We intend to apply for a listing on the Pink Market maintained by OTC Markets concurrently with the filing of the effective notice of this prospectus, and then apply for a listing on the OTCQB as soon as we meet the standards for such a listing. In order to be quoted on the OTC Markets, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved.
In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the stock’s depth and liquidity.
We have issued 300,000,000 shares of our common stock since our inception on October 25, 2021. There are no outstanding options, warrants, or other securities that are convertible into shares of common stock.
We have not declared or paid any cash dividends on our common stock since our inception, and our Board of Directors currently intends to retain all earnings for use in the business for the foreseeable future. Any future payment of dividends will depend upon our results of operations, financial condition, cash requirements and other factors deemed relevant by our board of directors. There are currently no restrictions that limit our ability to declare cash dividends on our common stock.
| 16 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
The following discussion of our financial condition and results of operation should be read in conjunction with the financial statements and related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties, including the risks in the section entitled Risk Factors beginning on page 6, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Corporate Reorganization: Basis for Accounting
LONGDUODUO COMPANY LIMITED (“The Company” or “Longduoduo”) was incorporated in the State of Nevada on October 25, 2021. The Company’s principal corporate address is 419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China, 010000. Our telephone number is +86 (0472) 510 4980. Our registered agent for service of process is Incorp Services, Inc., 3773 Howard Hughes Pkwy, Suite 500S, Las Vegas Nevada 89169-6014. Our website address is www.longduoduo.net. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. You should not rely on any such information in making your decision whether to purchase our common stock.
The Company through its operating subsidiaries, which have headquarters in Hohhot, Ordos, Baotou and Ulanqab of China, through third-party healthcare service providers, we provide comprehensive and high-quality preventive healthcare solutions including a wide range of comprehensive preventive healthcare services, including disease screening, healthcare treatments, healthcare products and other services. The Company mainly focus on prevention to myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases. Our customers are primarily individual customers who introduced by our customers and sales agents. Longduoduo currently has 62 full-time employees.
Longduoduo’s subsidiaries are:
| ● | Longduoduo Company Limited (Hong Kong) (“Longduoduo HK”), which was established on July 26, 2021 under the laws of Hong Kong. On October 26, 2021, Longduoduo issued 300,000,000 shares of its common stock to the original shareholders of Longduoduo HK, in exchange for 100% of the outstanding shares of Longduoduo HK (the “Share Exchange”). The terms of the Share Exchange Agreement are set forth in Exhibit 10.1 hereto. |
| ● | Longduoduo Health Technology Company Limited (“Longduoduo Health Technology”), a privately held Limited Company registered in Inner Mongolia, China on August 20, 2020. On August 16, 2021, Longduoduo HK acquired 100% of Longduoduo Health Technology from the original shareholders of Longduoduo Health Technology. |
| ● | Inner Mongolia Qingguo Health Consulting Company Limited (“Qingguo”), a privately held Limited Company registered in Inner Mongolia, China on June 18, 2020. On September 8, 2020, Longduoduo Health Technology acquired 90% of Qingguo from the original shareholders of Qingguo. |
| ● | Inner Mongolia Rongbin Health Consulting Company Limited (“Rongbin”), a privately held Limited Company registered in Inner Mongolia, China on March 18, 2021. Longduoduo Health Technology controlling 80% of Rongbin since established. |
| ● | Inner Mongolia Chengheng Health Consulting Company Limited (“Chengheng”), a privately held Limited Company registered in Inner Mongolia, China on April 9, 2021. Longduoduo Health Technology controlling 80% of Chengheng since established. |
| ● | Inner Mongolia Tianju Health Consulting Company Limited (“Tianju”), a privately held Limited Company registered in Inner Mongolia, China on July 5, 2021. Longduoduo Health Technology controlling 51% of Tianju since established. |
The transactions summarized above are treated in our financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the seven entities have at all times been under the control of Mr. Zhang Liang. Therefore, in accordance with ASC 805-50-45-5, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and the entities under common control are presented on a combined basis for all periods. Since all of the subsidiaries were under common control for all periods presented, the results of these subsidiaries are included in the Company’s financial statements for all periods.
| 17 |
Plan of Operations
Since 2020 our subsidiary, Longduoduo Health Technology, has been involved in developing its business plan and making the arrangements necessary to carry out that plan. The Company through its operating subsidiaries, which are headquartered in Hohhot, Ordos, Baotou and Ulanqab of China, through third-party healthcare service providers, we provide comprehensive and high-quality preventive healthcare solutions including a wide range of comprehensive preventive healthcare services, including disease screening, healthcare treatments, healthcare products and other services. The Company mainly focus on prevention to myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases. The Company mainly focus on prevention to myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases. Our customers are primarily individual customers who introduced by our existing members.
We plan to continue to expand our operations. We will concentrate on the following areas to grow our operations:
| ● | Further expanding our product offerings– We intend to expand our product offerings in order to reach new markets and increase our customers, so as to have a stable base for competition; and |
| ● | Continue to expand our nationwide network coverage - attracting new customers; and |
| ● | Further upgrade our service standards to enhance customer experience –cultivating customer loyalty. |
Results of Operations
Year Ended June 30, 2021 Compared to Year Ended June 30, 2020
The following table summarizes our operating results for the year ended June 30, 2021 as compared to the year ended June 30, 2020.
| For the Year Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2021 | 2020 | $ | % | |||||||||||||
| Total revenue | $ | 413,861 | $ | - | $ | 413,861 | n/a | |||||||||
| Cost of Sales | 94,234 | - | 94,234 | n/a | ||||||||||||
| Gross Profit | 319,627 | - | 319,627 | n/a | ||||||||||||
| Total operating expenses | 698,041 | - | 698,041 | n/a | ||||||||||||
| Loss from operations before other income and income taxes | (378,414 | ) | - | (378,414 | ) | n/a | ||||||||||
| Other income | 210 | - | 210 | n/a | ||||||||||||
| Loss from operations before income taxes | (378,204 | ) | - | (378,204 | ) | n/a | ||||||||||
| Income tax | - | - | - | n/a | ||||||||||||
| Net Loss | $ | (378,204 | ) | $ | - | $ | (378,204 | ) | n/a | |||||||
The company began operations in April of 2021. During the year ended June 30, 2021, our revenue was $413,861, and was attributable to health service sales, primarily derived from sales of Ozone therapy, Refreshing and regulate the meridians, Assay, PRP (platelet-rich plasma) and other Health care service and products. As of June 30, 2021, we operate through three entities: Qingguo, Rongbin and Chengheng, which are established in Huhhot, Baotou and Ordos, respectively, the three of largest cities in Inner Mongolia of China.
Cost of sales mainly consists of our cost for the third-party healthcare service providers perform for our customers. During the year ended June 30, 2021, our cost of sales was $94,234, with the result that our gross profit on sales was $319,627, a gross margin of more than 77%. Gross margin at that level was sufficient to operate profitably and deficit occurred because the company incurred significant marketing expense to in connection with establishing its brand as a new company. The Company to continue to invest heavily in advertising and promotion expenses in the near future as it continues to establish and expand its brand and products and services.
Operating expenses consist primarily of advertising and promotion expenses, salaries and benefits, office expenses, professional fees and depreciation and amortization. Our operating expenses in fiscal year 2021 increased $698,041, primarily attributable to:
| ● | $353,644 in advertising and promotion expenses in the year ended June 30, 2021, compared to $0 recorded in the year ended June 30, 2020. The increase was primarily caused by the marketing activities. |
| ● | $85,000 in professional fees in the year ended June 30, 2021, compared to $0 recorded in the year ended June 30, 2020. The increase was the result of the corporate reorganization, and the expenses of preparing for registration as a reporting company in the United States. |
| ● | $86,712 in salaries and benefits expenses in the year ended June 30, 2021, compared to $0 in the year ended June 30, 2020. The increase in our labor costs was primarily caused by the initiation of operations at our new operational entities described above. |
| ● | $172,685 in office expenses in the year ended June 30, 2021, compared to $0 in the year ended June 30, 2020. The increase was mainly due to the expansion of our business. |
As described above, our net loss for the year ended June 30, 2021 was $378,204, compared to $0 in the year ended June 30, 2020.
| 18 |
Our reporting currency is the U.S. dollar. Our mainly local currency, the Renminbi (RMB), is our functional currency. Results of operations and cash flow are translated at average exchange rates during the period being reported upon, and assets and liabilities are translated at the unified exchange rate as quoted by OANDA on the balance sheet date. Translation adjustments resulting from this process are included in other comprehensive income (loss). For the years ended June 30, 2021 and 2020, foreign currency translation adjustments of $7,549 and $0, respectively, have been reported as other comprehensive income in the consolidated statement of operations and comprehensive income (loss).
Liquidity and Capital Resources
As of June 30, 2021, the Company had $273,116 in cash and cash equivalents. On the same date, we had a working capital deficit of $503,357, of which $441,219 was debt to customer which is the customers’ prepayment for future using on our services and products. The largest component of our current assets was cash and cash equivalent, the company need to pay to the third-party healthcare service providers based on the number of medical examinations and services they perform for our customers in the future.
We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from a public offering and/or debt financing. We expect Zhang Liang, our President, to continue to provide support in the future, if needed. However, we can provide no assurances that we will be able to generate sufficient cash flows from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern.
Cash Flows
Years ended June 30, 2021 and 2020:
| For the Year Ended June 30, |
Change | |||||||||||
| 2021 | 2020 | |||||||||||
| Net cash provided by operating activities | $ | 350,282 | $ | - | $ | 350,282 | ||||||
| Net cash used in investing activities | (69,617 | ) | - | (69,617 | ) | |||||||
| Effect of exchange rate fluctuation on cash and cash equivalents | (7,549 | ) | - | (7,549 | ) | |||||||
| Net increase in cash and cash equivalents | 273,116 | - | 273,116 | |||||||||
| Cash and cash equivalents, beginning of year | - | - | - | |||||||||
| Cash and cash equivalents, ending of year | $ | 273,116 | $ | - | $ | 273,116 | ||||||
Net Cash used in Operating Activities
For the year ended June 30, 2021, we had cash provided by operating activities of $350,282, an increase of $350,282 from the same period of 2020, during which we had no operating activities. Cash provided by operations during fiscal 2021 was primarily generated from an increase in customer deposit of $441,219.
Investing Activities
Net cash used in investing activities for the year ended June 30, 2021 was $69,617, compared to $0 for the year ended June 30, 2020. The cash was used for the purchase of fixed assets and the new offices decoration.
Impact of Recent Accounting Pronouncements
New accounting rules and disclosure requirements can significantly impact the comparability of our financial statements. Please refer to Note 2 of our consolidated financial statements included in this prospectus.
There were no other recent accounting pronouncements that we expect to have a material effect on the Company’s financial position or results of operations.
Off Balance Sheet Transactions
We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
| 19 |
Business Overview
In China, the demand for preventive care services has been rising continuously in recent years. Although medical examinations are not reimbursed by medical insurance in China, as a result of a rising population of middle-class and wealthy individuals who pay more attention to disease prevention and improved employee benefits provided by large corporations, privately owned and operated medical examination centers have been emerging and growing fast in China. Individuals look to these medical centers for comprehensive medical examinations and other targeted disease screenings. With rising health awareness in China, we believe the private preventive healthcare market will continue to grow substantially in the future.
According to China Briefing, the growing healthcare sector is in many aspects a byproduct of China's recent economic rise. Several hundred million people were lifted out of poverty in recent decades, which led to overall higher living standards and affordability of healthcare services. This in turn created the continuously rising life expectancy, with more people reaching retirement age than ever before, which further increases the demand for healthcare services.
We can observe that the government is supporting the growth of the industry by encouraging investment and innovation on the one hand, but also initiating measures to keep a lid on individual healthcare costs. This double approach contributes to ensuring the fulfillment of the sector's future potential: The healthcare market is expected to reach 198 billion yuan ($28.59 billion) in 2026, increasing tenfold from 2016, according to China Briefing.
The private preventive healthcare services market in China is expected to grow in the following years due to the following factors:
| ● | Overall growth of China’s preventive healthcare services market; |
| ● | Rising demand for customer-centric professional services with broader and easily accessible locations, attracting customers from the medical examination departments of public hospitals to private preventive healthcare services providers; |
| ● | Employers’ rising concerns about employees’ health to improve overall productivity and reduce potential future medical expenses. Private preventive healthcare services providers allow employers to monitor the collective health of their workforce in real-time and thus tailor their internal health-related policies and programs accordingly; |
| ● | New service offerings in disease screening including advanced functional tests, cancer screening and certain chronic disease screening offered by private preventive healthcare service providers; |
| ● | Private preventive healthcare services providers’ strong sales and marketing efforts; |
| ● | Favorable government policies also encourage corporations to provide preventive healthcare benefits by explicitly recommending an annual medical examination. |
The Company provides comprehensive and high-quality preventive healthcare solutions including a wide range of preventive healthcare services, including disease screening healthcare treatment, healthcare products and other services through a network of third-party healthcare service providers. The Company mainly focuses on prevention of myocardial infarction, cerebral infarction, hemiplegia, and cardiovascular and cerebrovascular diseases. Our customers are primarily individual customers who are introduced by our customers and sales agents.
The Company cooperates with our third-party healthcare service providers to serve customers located in Hohhot, Ordos, Baotou and Ulanqab of China. In order to better serve our customers, we have entered into agreements with 5 third-party healthcare service providers. We pay service fees to such third-party healthcare service providers based on the number of health products, medical examinations and services they perform for our customers. English translations of the service contracts are attached hereto as Exhibits 10.2 through and including 10.6,
Seasonality
Since all of our operational subsidiaries are established and put into operation recently, we have not experienced significant seasonal fluctuations in our revenues and our operating costs yet. We believe that our business is not seasonal in nature.
| 20 |
Operating Licenses
Our products and services are subject to regulation by governmental agencies in the PRC and Inner Mongolia Province. Business and company registrations are certified on a regular basis and must be in compliance with the laws and regulations of the PRC and provincial and local governments and industry agencies, which are controlled and monitored through the issuance of licenses. Our licenses include:
| ● | Longduoduo Health Technology’s operating license enables us to undertake medical information consulting services, corporate management consulting, health management consulting services and so on. The registration number is 91150104MA0QTDXG5T, which is valid from August 20, 2020, and expires on August 19, 2050. |
| ● | Qingguo’s operating license enables us to undertake sales of food, health management consulting services; medical information consulting services and so on. The registration number is 91150104MA13Q5X152, which is valid from June 18, 2020, with no expiration date. |
| ● | Rongbin’s operating license enables us to undertake medical information consulting services, corporate management consulting, health management consulting services and so on. The registration number is 91150207MA13UKC301, which is valid from March 18, 2021, and expires on March 17, 2051. |
| ● | Chengheng’s operating license enables us to undertake medical information consulting services, corporate management consulting, health management consulting services and so on. The registration number is 91150602MA7YN4JE2Q, which is valid from April 09, 2021, and expires on April 08, 2051. |
| ● | Tianju’s operating license enables us to undertake sales of class I medical equipment, pre-packaged food, hygiene products, cosmetics, and disinfection products; health management consulting services; medical information consulting services; software development; biotechnology promotion services; beauty services (excluding medical beauty), technical services, and technology Consultation; leasing of medical equipment. The registration number is 91150902MA7YPWL408, which is valid from July 5, 2021 to July 4, 2051. |
Our Strengths
Management believes the following strengths will contribute to our success:
| ● | our superior customer experience; and |
| ● | Successful track record of opening medical consulting company chain; and |
| ● | Large and loyal customer base and supported by our sales channels. |
Our Strategies
In the long run, by leveraging our growing network of medical centers, large and loyal customer base, established demographic and disease information database, we plan to expand the scope of our service offerings to include other healthcare services and ultimately establish our company as a leading health management service provider in China. We intend to achieve our goal by implementing the following strategies:
| ● | further expanding our product offerings; and |
| ● | continue to expand our nationwide network coverage; and |
| ● | further upgrade our service standards to enhance customer experience. |
| 21 |
Our Challenges
The successful execution of our business plan is subject to risks and uncertainties related to our business and industry, including those relating to our ability to:
| ● | maintain and enhance the recognition and reputation of our Longduoduo brand; |
| ● | compete effectively; |
| ● | manage our growth or execute our strategies effectively; |
| ● | provide superior customer experience and offer services at attractive prices to meet customer needs and preferences; |
| ● | manage and expand our relationships with suppliers and third-party service provider; |
| ● | secure and retain the services of qualified personnel. |
You should refer to “Risk Factors”, beginning on page 6, for a more detailed discussion of the risks involved in investing Longduoduo.
Competition
We face significant competition from two main types of competitors: the medical examination departments of major public hospitals and private medical examination companies. The private medical examination market is further segmented into (i) large national companies; (ii) regional providers; and (iii) numerous local independent medical examination centers located in nearly every city in China.
We believe our primary competitive advantages over our competitors include:
| ● | strong sales and marketing efforts; and |
| ● | the innovation of the market business idea and flexible management mechanism. |
We believe that we are well-positioned to effectively compete on the basis of the factors listed above. However, some of our current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases or greater financial, technical or marketing resources than we do. There is no assurance that we will be able to successfully compete against these larger and better funded competitors.
Employees
The Company has 62 full-time employees, Qingguo has 11 full-time employees, Rongbin has 28 full-time employees, Chengheng has 14 full-time employees and Tianju has 9 full-time employees.
The Company’s employees include 22 with management responsibilities, 19 with administrative and operations responsibilities, and 21 responsible for customer services.
All of our employees are located in the PRC, and none of them are unionized.
Property
The Company does not own any real property.
| 22 |
Office Leases
In April of 2021, Qingguo entered into an operating cooperation agreement with Hohhot Aihua Traditional Chinese Medicine Hospital. Under the terms Qingguo is able to use its office space (approximately 700 square meters) free of charge during the period between April 1, 2021 to March 31, 2026. The English translation of the terms of our Leasing and Cooperation Agreement-Qingguo with Hohhot Aibua Traditional Chinese Medicine Hospital is attached hereto as Exhibit 10.2.
In October of 2021, Longduoduo Health Technology entered into an operating cooperation agreement with Baotou Jin's Traditional Chinese Medicine Nephropathy Hospital Co., Ltd. Under the terms, Longduoduo Health Technology is able to use its office space (approximately 1000 square meters) free of charge during the period between October 15, 2020 to October 15, 2025. On March 18, 2021, Longduoduo Health Technology entered into an assignment agreement with Rongbin, pursuant to which Longduoduo Health Technology transferred all the rights and obligations under the cooperation agreement to Rongbin. The English translation of the terms of our Leasing and Cooperation Agreement-Rongbin with Baotou Jin's Traditional Chinese Medicine Nephropathy Hospital Co., Ltd. is attached hereto as Exhibit 10.3.
In March of 2021, Chenghen leased an office space (approximately 1500 square meters) under an operating lease agreement from Wudun Qiqige. Under the terms of the agreement, Chengheng is committed to make lease payments of approximately RMB700,000 for the period between April 1, 2021 to March 31, 2023. The English translation of the terms of our Leasing and Share Purchase Agreement-Chengheng with Wudun Qiqige is attached hereto as Exhibit 10.4.
Legal Proceedings
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Regulations
This section sets forth a summary of the most significant government rules and regulations that affect our business activities in China. In general, the effect on our business of these regulations is twofold. In the first instance, compliance with the various reporting and record-keeping requirements described below will impose significant administrative costs on Longduoduo. However, it is also the case that any failure by Longduoduo to comply with the regulations, even if inadvertent, could result in significant fines or even, in serious cases, prohibition of all or part of our business operations.
PRC Laws and Regulations on Foreign Exchange
General Administration of Foreign Exchange
The principal regulation governing foreign currency exchange in the PRC is the Administrative Regulations of the PRC on Foreign Exchange (the “Foreign Exchange Regulations”), which were promulgated on January 29, 1996, became effective on April 1, 1996 and were last amended on August 5, 2008. Under these rules, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as capital transfer, direct investment, investment in securities, derivative products or loans unless prior approval by competent authorities for the administration of foreign exchange is obtained. Under the Foreign Exchange Regulations, foreign-invested enterprises in the PRC may purchase foreign exchange without the approval of the State Administration of Foreign Exchange (“SAFE”) to pay dividends by providing certain evidentiary documents, including board resolutions, tax certificates, or for trade and services-related foreign exchange transactions, by providing commercial documents evidencing such transactions.
| 23 |
Registration of Foreign Investment Enterprises
Pursuant to the Notice of State Administration of Foreign Exchange on Promulgation of the Provisions on Foreign Exchange Control on Direct Investments in China by Foreign Investors promulgated by the SAFE, or the Notice, upon establishment of a foreign investment enterprise pursuant to the law, registration formalities shall be completed with the foreign exchange bureau. Upon completion of registration formalities by the entities involved in direct investments in China, the entities may open accounts for direct investments in China such as preliminary expense account, capital fund account and asset realization account, etc. with the bank based on the actual needs. Upon completion of such registration formalities, foreign investment enterprises could also conduct settlement when contributing foreign exchange funds, and remit funds overseas in the event of capital reduction, liquidation, advance recovery of investment, profit distribution, etc.
The Foreign Exchange Regulations will present a barrier to currency transactions between our U.S. parent company and our Chinese operating subsidiary. If we raise funds in the U.S. dollars for the purpose of funding our operations in China, we will be required to obtain SAFE approval of the conversion of the dollars into Renminbi, which could be denied.
PRC Laws and Regulations on Foreign Investment
Investment in the PRC by foreign investors and foreign-invested enterprises shall comply with the Catalogue for the Guidance of Foreign Investment Industries (2017 Revision) (the “Catalogue”), which was last amended and issued by The Ministry of Commerce of the People's Republic of China (“MOFCOM”) and the National Development and Reform Commission (“NDRC”) on June 28, 2017 and became effective since July 28, 2017, and the Special Management Measures for Foreign Investment Access (2019 version), or the Negative List, which came into effect on July 30, 2019. The Catalogue and the Negative List contains specific provisions guiding market access for foreign capital and stipulates in detail the industry sectors grouped under the categories of encouraged industries, restricted industries and prohibited industries. Any industry not listed on the Negative List is a permitted industry unless otherwise prohibited or restricted by other PRC laws or regulations. The Company sales and distribution of fresh produce and fast-moving consumer goods products online and offline are not among the Negative List.
On March 15, 2019, the National People’s Congress (“NPC”) approved the Foreign Investment Law of the PRC, or the Foreign Investment Law, which will come into effect on January 1, 2020, repealing simultaneously the Law of the PRC on Sino-foreign Equity Joint Ventures, the Law of the PRC on Wholly Foreign-owned Enterprises and the Law of the PRC on Sino-foreign Cooperative Joint Ventures. The Foreign Investment Law adopts the management system of pre-establishment national treatment and negative list for foreign investment. Policies in support of enterprises shall apply equally to foreign-funded enterprises according to laws and regulations. Foreign investment enterprises shall be guaranteed that they could equally participate in the setting of standards, and the compulsory standards formulated by the State shall be equally applied. Fair competition for foreign investment enterprises to participate in government procurement activities shall be protected. The Foreign Investment Law also stipulates the protection on intellectual property rights and trade secrets. The State also establishes information reporting system and national security review system according to the Foreign Investment Law. According to the above regulations, a Foreign-invested Enterprise should get approval by MOFCOM before its establishment and operation.
Longduoduo and its subsidiaries is a Foreign-invested Enterprise, and has obtained the approval of the local administration of MOFCOM. Its establishment and operation are in compliance with the above-mentioned laws. Each of Longduoduo and its subsidiaries is a PRC domestic company.
| 24 |
PRC Laws and Regulations on Employment and Social Welfare
Labor Law of the PRC
Pursuant to the Labor Law of the PRC, which was promulgated by the SCNPC on July 5, 1994 with an effective date of January 1, 1995 and was last amended on August 27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became effective on January 1, 2008 and was last amended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises and institutions shall ensure the safety and hygiene of a workplace, strictly comply with applicable rules and standards on workplace safety and hygiene in China, and educate employees on such rules and standards. Furthermore, employers and employees shall enter into written employment contracts to establish their employment relationships. Employers are required to inform their employees about their job responsibilities, working conditions, occupational hazards, remuneration and other matters with which the employees may be concerned. Employers shall pay remuneration to employees on time and in full accordance with the commitments set forth in their employment contracts and with the relevant PRC laws and regulations.
We have entered into written employment contracts with all the employees and performed their obligations under the relevant PRC laws and regulations.
PRC Laws and Regulations on Taxation
Enterprise Income Tax
The Enterprise Income Tax Law of the People’s Republic of China (the “EIT Law”) was promulgated by the Standing Committee of the National People’s Congress on March 16, 2007 and became effective on January 1, 2008, and was later amended on February 24, 2017. The Implementation Rules of the EIT Law (the “Implementation Rules”) were promulgated by the State Council on December 6, 2007 and became effective on January 1, 2008. According to the EIT Law and the Implementation Rules, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises shall pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC shall pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises whose incomes having no substantial connection with their institutions in the PRC, shall pay enterprise income tax on their incomes obtained in the PRC at a reduced rate of 10%.
The Arrangement between the PRC and Hong Kong Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Arrangement”) was promulgated by the State Administration of Taxation (“SAT”) on August 21, 2006 and came into effect on December 8, 2006. According to the Arrangement, a company incorporated in Hong Kong will be subject to withholding tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25% interest or more in the PRC company. The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the “Notice”) was promulgated by SAT and became effective on October 27, 2009. According to the Notice, a beneficial ownership analysis will be used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.
Longduoduo Health Technology and its subsidiaries are resident enterprises and pay EIT tax at the rate of 25% in the PRC. It is more likely than not that the Company and its offshore subsidiary would be treated as a non-resident enterprise for PRC tax purposes.
| 25 |
Due to the expense, we do not expect to deliver annual or quarterly reports to our shareholders unless and until we decide to seek a listing on a national securities exchange.
We are not currently a reporting company, but upon effectiveness of the registration statement of which this prospectus forms a part, we will be required to file reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended. These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. These reports will be posted on the SEC’s EDGAR website at www.sec.gov. You may also obtain copies of these reports from the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We will also make these reports available on our website: www.longduoduo.net
| 26 |
Directors and Executive Officers
The following table sets forth the name, age and position of each of our directors and executive officers:
| Name and Address* | Age | Position/Title | ||
| Zhang Liang | 39 | President and Chairman of the Board | ||
| Zhou Hongxiao | 46 | Chief Executive Officer and Director | ||
| Kang Liping | 39 | Chief Financial Officer |
| * | The business address for all directors and officers is 419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China 010000. |
Zhang Liang, President and Chairman of the Board
Mr. Zhang is our founder and has served as our president and director since the incorporation of the Company. From 2006 to 2008, Mr. Zhang was employed as Chief Executive Officer of the Digital Technology Company Limited, which is a technology company. Mr. Zhang served as Chief Executive Officer at Oasis Biotechnology Co., Ltd from 2008 to 2012. He served as the Chief Executive Officer at China-Italy FRP Co., Ltd. between 2013 and 2019. From 2020 until now, Mr. Zhang served as the President of Longduoduo Health Technology Co., Ltd. Mr. Zhang brings to the Board his expertise in business operations, company development, analysis and oversight, marketing including volume growth/program development, expense control, policy and procedure development and implementation, and process development to facilitate regulatory compliance. Mr. Zhang graduated from the Sichuan University in 2008, and majored in Business management. He was also obtained Hotel management degree in 2005 from Sichuan University.
Zhou Hongxiao, Chief Executive Officer and Director
Ms. Zhou has served as our Chief Executive Officer (“CEO”) and director since the incorporation of the Company. Ms. Zhou was employed by Tianjin Aike Clothing Co., Ltd. from 2004 to 2016 and served as Marketing Manager. From 2017 to 2019, Ms. Zhou was employed by Tianyan Tea Industry Co., Ltd. and served as Chief Executive Officer. Ms. Zhou was employed by Longduoduo Health Technology Co., Ltd as CEO since 2020. Ms. Zhou is familiar with sales management and sales regulations and related laws. She is responsible for business operations, budget development, analysis and oversight, marketing including volume growth/program development; expense control, policy and procedure development and implementation, and process development to facilitate regulatory compliance. She is responsible for the overall operation of Longduoduo. M. Zhou brings to the Board her experience in business oversight and financial and budgetary matters. Ms. Zhou was awarded a bachelor’s degree by Inner Mongolia Radio and Television University in 2003. She obtained her Fine Chemical Industry College degree from Jilin Province Jilin City Institute of Technology in 1998.
| 27 |
Kang Liping, Chief Financial Officer
Ms. Kang has served as our Chief Financial Officer (“CFO”) since July 2021. Kang Liping was employed by Inner Mongolia Tiantai Technology Co., Ltd from 2020 to 2021 and served as accounting supervisor. From 2006 to 2016, Ms. Kang was employed by Inner Mongolia Guanhong Century Electronic Technology Co., Ltd. and served as accounting supervisor. Between 2017 to 2020, Ms. Kang was served as accounting supervisor at Inner Mongolia Tiantai Technology Co., Ltd. Ms. Kang was awarded a bachelor’s degree with a major in Accounting by Inner Mongolia University of Technology in 2005.
There are no family relationships among any of our directors or executive officers.
Our directors hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until resignation or removal by the board.
Legal Proceedings Involving Officers and Directors
To our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| ● | Been subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Board Independence
We currently have a board of directors consisting of two members, none of whom are “independent” as defined in Nasdaq Rule 5605. We expect that all current directors will continue to serve after this offering. The directors will be re-elected at our annual general meeting of shareholders.
Board Committees
Due to the small size of our Board and the early stage of our operations, we have not yet appointed an audit committee, nor have we appointed an audit committee financial expert to our Board of Directors. We do, however, recognize the importance of good corporate governance and intend to appoint an audit committee comprised entirely of independent directors, including at least one audit committee financial expert, as soon as our resources permit and the complexity of our financial accounting warrants.
We do not presently have a compensation committee or a nominating committee. Our Board of Directors currently performs the functions of those committees.
Code of Ethics
Due to the small number of members of our management, we do not presently have a code of ethics applicable to management.
| 28 |
Summary Compensation Table
The following table sets forth all compensation awarded to, earned by, or paid by Longduoduo or its subsidiaries to its Chairman of the Board, Chief Executive Officer and Chief Financial Officer during the past two fiscal years. There was no officer or employee whose compensation for fiscal year 2021 or 2020 exceeded $100,000.
| Non-Equity | Non-qualified | |||||||||||||||||||||||||||||||||
| Incentive | Deferred | All | ||||||||||||||||||||||||||||||||
| Year | Stock | Option | Plan | Comp. | Other | |||||||||||||||||||||||||||||
| Name and Principal | Ended | Salary | Bonus | Awards | Awards | Comp. | Earnings | Comp. | Total | |||||||||||||||||||||||||
| Position | June 30 | ($)* | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||
| Zhang Liang | 2021 | 6,040 | - | - | - | - | - | - | 6,040 | |||||||||||||||||||||||||
| Chairman of the Board | 2020 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| Zhou Hongxiao | 2021 | 4,367 | - | - | - | - | - | - | 4,367 | |||||||||||||||||||||||||
| CEO | 2020 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| Kang Liping(1) | 2021 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| CFO | 2020 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| (1) | Ms. Kang joined the Company in July 2021. |
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any compensation plan under which equity securities are authorized for issuance.
Outstanding Equity Awards
No individual grants of stock options or other equity incentive awards have been made to any executive officer or any director since our inception.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
We have entered into employment contracts with our executive officers under the term of salary disclosed on the summary compensation table. Each party to the contract may terminate the contract upon thirty days prior written notice. We have not entered into any other arrangements with our executive officers. There are no compensation plans or arrangements, including payments to be made by us, with respect to our officers, directors or consultants that would result from the resignation, retirement or any other termination of such directors, officers or consultants from us. There are no compensation arrangements for directors, officers, employees or consultants that would result from a change-in-control. English translations of our agreements with our President and Chief Executive Officer are attached hereto as Exhibits 10.7 and 10.8.
Compensation of Directors
We have no formal plan for compensating our directors for their services as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of Longduoduo other than services ordinarily required of a director.
| 29 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 26, 2021, the Company acquired One Hundred Percent (100%) of the issued and outstanding capital stock of Longduoduo HK, a privately held limited liability company registered in Hong Kong for three hundred million (300,000,000) shares of our common stock. One of the shareholders of Longduoduo HK is now a director and President of Longduoduo: Zhang Liang, who received 153,920,147 shares of Longduoduo in the Share Exchange. The other 48 shareholders of Longduoduo HK received a total of 146,079,853 shares of Longduoduo in the Share Exchange.
During the years ended June 30, 2021 and 2020, the amounts due to related parties consisted of the following:
| For the Year ended June 30, |
||||||||
| Name of related parties | 2021 | 2020 | ||||||
| Zhang Liang | $ | 4,034 | $ | - | ||||
| Zhou Hongxiao. | 26,549 | - | ||||||
| $ | 30,583 | $ | - | |||||
Zhang Liang is the President, Chairman of the Board, director and a shareholder of the Company, and Zhou Hongxiao is the CEO of the Company. The balance due from them were normal business advances. These advances were paid in full on or before August of 2021.
Except as set forth above, there was no transaction in which a related person had a material interest during the past fiscal year nor any currently proposed transaction, in which the amount involved exceeded the lesser of $120,000 or one percent of our average total assets at the end of the two most recent fiscal years.
| 30 |
We are registering 146,079,853 shares of common stock for resale by the selling shareholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the common stock. We will bear all fees and expenses incident to the registration of the shares of common stock.
The selling shareholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters, broker-dealers or agents, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The selling shareholders will offer and sell our common stock at a fixed price of $1.00 per share until our common stock is quoted on the OTCQB, at which time the selling shareholders may sell the common stock at prevailing market prices or in privately negotiated transactions. These sales may be affected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
| ● | On any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| ● | In the over-the-counter market; |
| ● | In transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| ● | Through the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
| ● | Ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | Block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | Purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | An exchange distribution in accordance with the rules of the applicable exchange; |
| ● | Privately negotiated transactions; |
| ● | Short sales made after the date the Registration Statement is declared effective by the Commission; |
| ● | Broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share; |
| ● | A combination of any such methods of sale; and |
| ● | Any other method permitted pursuant to applicable law. |
If the selling shareholders effect transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling shareholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
| 31 |
The selling shareholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer, donate and pledge the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act, the selling shareholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
The selling security holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. See: “Shares Eligible for Future Resale: Rule 144” later in this prospectus.
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any selling shareholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act, including, without limitation, to the extent applicable, Regulation M under the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling shareholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
We will pay all expenses of the resale registration of the shares of common stock, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any.
| 32 |
This prospectus covers offers and sales of up to 146,079,853 shares of our common stock, which may be offered from time to time by the selling stockholder identified in this prospectus.
The table below identifies each selling shareholder and shows the number of shares of common stock beneficially owned by the selling shareholder before and after this offering, and the numbers of shares offered for resale by the selling shareholder. Our registration of these shares does not necessarily mean that each such selling shareholder will sell all or any of its shares of common stock. We assume that all shares covered by this prospectus will be sold by each such selling shareholder and that no additional shares of common stock will be bought or sold by the selling shareholder.
The following table sets forth the name of each selling shareholder, and, if applicable, the nature of any position, office, or other material relationship which the selling shareholder has had, within the past three years, with us or with any of our predecessors or affiliates, the amount of shares of our common stock beneficially owned by such shareholder before the offering, the amount being offered for the shareholder’s account, and the amount to be owned by such shareholder after completion of the offering.
| Name of Selling Shareholder and Position, Office or Material Relationship with Longduoduo Company |
Common Shares owned by the Selling |
Percent beneficially owned before |
Total Shares to be Registered Pursuant to this |
Number of Shares Owned
by Selling Shareholder After Offering and Percent of Total Issued and Outstanding |
||||||||||||||||
| Limited | Shareholder | Offering | Offering | # of Shares | % of Class | |||||||||||||||
| Fan Meiying(1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Kou Yufei (1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Wang Weidong(1)(2) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Guo Rugang(1)(2) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Cui Lixiang(1)(2) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Meng Yuzhen(1)(2) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Yue Xiumei(1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Zhang Hua(1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Zhao Qingguo(1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Wu Yongli(1)(2) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Huo Haiqing(1) | 500,000 | <1 | % | 500,000 | 0 | - | ||||||||||||||
| Xing Yan Hua(1) | 12,000,000 | 4 | % | 12,000,000 | 0 | - | ||||||||||||||
| Chen Wentong(1) | 1,500,000 | <1 | % | 1,500,000 | 0 | - | ||||||||||||||
| Xing Yanhui(1) | 3,000,000 | 1 | % | 3,000,000 | 0 | - | ||||||||||||||
| Xing Yanpeng(1) | 1,500,000 | <1 | % | 1,500,000 | 0 | - | ||||||||||||||
| Wang He(1) | 4,000,000 | 1.33 | % | 4,000,000 | 0 | - | ||||||||||||||
| Wang Yujie(1) | 3,165,000 | 1.06 | % | 3,165,000 | 0 | - | ||||||||||||||
| Li Qiaozhen(1) | 15,955,020 | 5.32 | % | 15,955,020 | 0 | - | ||||||||||||||
| Guo Yanhua(1) | 3,184,144 | 1.06 | % | 3,184,144 | 0 | - | ||||||||||||||
| Liu Jinping(1) | 817,580 | <1 | % | 817,580 | 0 | - | ||||||||||||||
| Wang Weihua(1) | 4,664,097 | 1.55 | % | 4,664,097 | 0 | - | ||||||||||||||
| Dai Ruixiang(1) | 322,144 | <1 | % | 322,144 | 0 | - | ||||||||||||||
| Wang Li(1) | 2,119,750 | <1 | % | 2,119,750 | 0 | - | ||||||||||||||
| Yan Miaoyi(1) | 869,962 | <1 | % | 869,962 | 0 | - | ||||||||||||||
| Zhang Haifeng(1) | 532,000 | <1 | % | 532,000 | 0 | - | ||||||||||||||
| Zhang Suxiang(1) | 3,887,598 | 1.30 | % | 3,887,598 | 0 | - | ||||||||||||||
| Ni Yanhua(1) | 620,000 | <1 | % | 620,000 | 0 | - | ||||||||||||||
| Zhang Xia(1) | 1,039,059 | <1 | % | 1,039,059 | 0 | - | ||||||||||||||
| Wei Wenxing(1) | 637,850 | <1 | % | 637,850 | 0 | - | ||||||||||||||
| Deng Weiping(1) | 378,500 | <1 | % | 378,500 | 0 | - | ||||||||||||||
| Liu Jiazhong(1) | 15,271,905 | 5.09 | % | 15,271,905 | 0 | - | ||||||||||||||
| Niu Shuhong(1) | 687,051 | <1 | % | 687,051 | 0 | - | ||||||||||||||
| Huang Xiao(1) | 390,100 | <1 | % | 390,100 | 0 | - | ||||||||||||||
| Chen Fengguang(1) | 662,776 | <1 | % | 662,776 | 0 | - | ||||||||||||||
| Wang Hua(1) | 1,111,716 | <1 | % | 1,111,716 | 0 | - | ||||||||||||||
| Wu Zhaoyong(1)(2) | 6,465,922 | 2.16 | % | 6,465,922 | 0 | - | ||||||||||||||
| Xu Huibo(1)(2) | 1,060,000 | <1 | % | 1,060,000 | 0 | - | ||||||||||||||
| Lu Yuewei(1) | 3,687,766 | 1.23 | % | 3,687,766 | 0 | - | ||||||||||||||
| Guo Xiaozhen(1)(2) | 16,766,741 | 5.59 | % | 16,766,741 | 0 | - | ||||||||||||||
| Gao Ying(1)(2) | 3,000,000 | 1.0 | % | 3,000,000 | 0 | - | ||||||||||||||
| Li Yuqing(1) | 727,864 | <1 | % | 727,864 | 0 | - | ||||||||||||||
| Duan Erfen(1)(2) | 2,355,308 | <1 | % | 2,355,308 | 0 | - | ||||||||||||||
| Wudun Qiqige(1) | 3,000,000 | 1.0 | % | 3,000,000 | 0 | - | ||||||||||||||
| Yang Gaojun(1) | 5,000,000 | 1.67 | % | 5,000,000 | 0 | - | ||||||||||||||
| Li Zhongfeng(1) | 5,000,000 | 1.67 | % | 5,000,000 | 0 | - | ||||||||||||||
| Wang Junying(1) | 1,000,000 | <1 | % | 1,000,000 | 0 | - | ||||||||||||||
| Zhang Wei(1) | 9,000,000 | 3 | % | 9,000,000 | 0 | - | ||||||||||||||
| Zhang Yong(1)(2) | 200,000 | <1 | % | 200,000 | 0 | - | ||||||||||||||
| Total | 146,079,853 | 146,079,853 | ||||||||||||||||||
| (1) | These 48 shareholders received the shares offered by them in this prospectus on October 26, 2021 as parties to the share exchange between the Company and the shareholders of Longduoduo HK. |
| (2) | These 11 shareholders are the employees of the Company. |
Except as set forth above, none of the selling shareholders has not held any position or office with us or any of our affiliates, nor has had any other material relationship (other than as a purchaser of securities) with us or any of our affiliates or predecessors within the past three years. Furthermore, none of the selling shareholders is a registered broker-dealer or an affiliate of a registered broker-dealer.
| 33 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock for (1) each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; (2) each of our named executive officers; (3) each of our directors; and (4) all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws. The address for each person listed in the table is c/o Longduoduo, 419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia.
The percentage ownership information shown in the table below is calculated based on 300,000,000 shares of our common stock issued and outstanding as of the date of this Prospectus. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.
| Executive Officers and Directors | Amount of Beneficial Ownership of Common Stock (1) | Pre-Offering Percentage Ownership of Common Stock | Post-Offering Percentage Ownership of Common Stock | |||||||||
| Directors and Named Executive Officers: | ||||||||||||
| Zhang Liang | 153,920,147 | 51.31 | % | 51.31 | % | |||||||
| Zhou Hongxiao | - | - | % | - | % | |||||||
| Kang Liping | - | - | % | - | % | |||||||
| - | - | - | ||||||||||
| All executive officers and directors as a group (3 persons) | 153,920,147 | 51.31 | % | 51.31 | % | |||||||
| 5% or Greater Shareholders | ||||||||||||
| Li Qiaochen | 15,955,020 | 5.32 | % | 5.32 | % | |||||||
| Liu Jiazhong | 15,271,905 | 5.09 | % | 5.09 | % | |||||||
| LD Guo Xiaozhen | 16,766,741 | 5.59 | % | 5.59 | % | |||||||
| (1) | Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the common stock. All shares represent only common stock held by shareholders as no options are issued or outstanding. |
We are not aware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our Company.
Other than the shares covered by the registration statement of which this prospectus is a part, we have not registered any shares for sale by security holders under the Securities Act. None of our shareholders are entitled to registration rights.
| 34 |
Our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.001 per share, and 30,000,000 shares of preferred stock, par value $0.001 per share.
Common Stock
The holders of our common stock:
| ● | Have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors; |
| ● | Are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; |
| ● | Do not have pre-emptive, subscription or conversion rights and there is no redemption or sinking fund provisions or rights; and |
| ● | Are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. |
The shares of common stock are not subject to any future call or assessment and all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the common shares and they all rank at equal rate or “pari passu,” each with the other, as to all benefits, which might accrue to the holders of the common shares. All registered shareholders are entitled to receive a notice of any general annual meeting to be convened by our Board of Directors.
At any general meeting, subject to the restrictions on joint registered owners of common shares, on a showing of hands every shareholder who is present in person and entitled to vote has one vote, and on a poll every shareholder has one vote for each share of common stock of which he is the registered owner and may exercise such vote either in person or by proxy. A simple majority vote by our shareholders is required to take action.
As of the date of this prospectus, there were 300,000,000 shares of the Company’s common stock issued and outstanding held by 49 shareholders.
Blank Check Preferred Stock
Our Articles of Incorporation gives the Board of Directors authority to issue 30,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. Among the rights and preferences that the Board may assign to the preferred stock are dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of any series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of the Company. The issuance of shares of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including voting rights, of the holders of our common stock. In some circumstances, this issuance could have the effect of decreasing the market price of our common stock.
Undesignated preferred stock may enable our Board to render more difficult or to discourage an attempt to obtain control of our Company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock may adversely affect the rights of our common shareholders. For example, any shares of preferred stock issued may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. As a result, the issuance of shares of preferred stock, or the issuance of rights to purchase shares of preferred stock, may discourage an unsolicited acquisition proposal or bids for our common stock or may otherwise adversely affect the market price of our common stock or any existing preferred stock.
Options, Warrants and Rights
There are no outstanding options, warrants, or rights to purchase any of our securities.
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.
Cash Dividends
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, our general economic 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, into our business.
| 35 |
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any compensation plan under which equity securities are authorized for issuance.
Transfer Agent
The stock transfer agent for our securities is VStock Transfer, LLC, 77 Spruce Street, Suite 201Cedarhurst, NY 11516. Their telephone number is (212) 828-8436.
Nevada Anti-Takeover Statute
Business Combinations
The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes (the “NRS”), generally prohibit a Nevada corporation with at least 200 shareholders of record from engaging in various “combination” transactions with any interested shareholder for a period of two years after the date of the transaction in which the person became an interested shareholder, unless the transaction is approved by the Board of Directors prior to the date the interested shareholder obtained such status or the combination is approved by the Board of Directors and thereafter is approved at a meeting of the shareholders by the affirmative vote of shareholders representing at least 60% of the outstanding voting power held by disinterested shareholders, unless (a) the combination was approved by the Board of Directors prior to the person becoming an interested shareholder or (b) the transaction by which the person first became an interested shareholder was approved by the Board of Directors before the person became an interested shareholder. After the expiration of two years after the person becomes an interested shareholder, a Nevada corporation subject to the statue may not engage in a combination with an interested shareholder unless:
| ● | either (a) or (b) above are satisfied; |
| ● | the combination is approved after expiration of such two-year period by a majority of the voting power held by disinterred shareholders; or |
| ● | the consideration to be paid in the combination is at least equal to the highest of: (i) the highest price per share paid by the interested shareholder within the two years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested shareholder, whichever is higher, (ii) the market value per share of common stock on the date of announcement of the combination and the date the interested shareholder acquired the shares, whichever is higher or (ii) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. |
A “combination” is generally defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, with an “interested shareholder” having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, (c) 10% or more of the earning power or net income of the corporation and (d) certain other transactions with an interested shareholder or an affiliate or associate of an interested shareholder. In general, an “interested shareholder” is a person who, together with affiliates and associates, owns (or within two years, did own) 10% or more of a corporation’s voting stock.
We have not yet opted out of these provisions. This statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction may offer our shareholders the opportunity to sell their stock at a price above the prevailing market price.
Control Shares.
Nevada law also seeks to impede “unfriendly” corporate takeovers by providing in Sections 78.378 to 78.3793 of the NRS that an “acquiring person” shall only obtain voting rights in the “control shares” purchased by such person to the extent approved by the other stockholders at a meeting. With certain exceptions, an acquiring person is one who acquires or offers to acquire a “controlling interest” in the corporation, defined as one-fifth or more of the voting power. Control shares include not only shares acquired or offered to be acquired in connection with the acquisition of a controlling interest, but also all shares acquired by the acquiring person within the preceding 90 days. The statute covers not only the acquiring person but also any persons acting in association with the acquiring person.
A Nevada corporation may elect to opt out of the provisions of Sections 78.378 to 78.3793 of the NRS. We do not have a provision in our Articles of Incorporation pursuant to which we have elected to opt out of Sections 78.378 to 78.3793; therefore, these sections apply to us.
Removal of Directors
Section 78.335 of the NRS provides that 2/3rds of the voting power of the issued and outstanding shares of the Company are required to remove a Director from office. As such, it may be more difficult for stockholders to remove Directors due to the fact the NRS requires greater than majority approval of the stockholders for such removal.
| 36 |
SHARES ELIGIBLE FOR FUTURE RESALE
As of the date of this prospectus, we have outstanding an aggregate of 300,000,000 shares of our common stock. Of these shares, the 146,079,853 shares covered by this prospectus may be transferred without restriction or further registration under the Securities Act by use of this prospectus.
The remaining 153,920,147 restricted shares of common stock are owned by our executive officers and directors and may not be resold in the public market except in compliance with the registration requirements of the Securities Act or under an exemption under Rule 144 of the Securities Act.
Rule 144
In general, under Rule 144 as currently in effect, a person who is not one of our affiliates and who is not deemed to have been one of our affiliates at any time during the three months preceding a sale and who has beneficially owned shares of our common stock that are deemed restricted securities for at least six months would be entitled after such six-month holding period to sell the common stock held by such person, subject to the continued availability of current public information about us (which current public information requirement is eliminated after a one-year holding period).
A person who is one of our affiliates, or has been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned shares of our common stock that are deemed restricted securities for at least six months would be entitled after such six-month holding period to sell his or her securities, provided that he or she sells an amount that does not exceed 1% of the number of shares of our common stock then outstanding (or, if our common stock is listed on a national securities exchange, the average weekly trading volume of the shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale), subject to the continued availability of current public information about us, compliance with certain manner of sale provisions, and the filing of a Form 144 notice of sale if the sale is for an amount in excess of 5,000 shares or for an aggregate sale price of more than $50,000 in a three-month period.
The consolidated financial statements of our Company for the years ended June 30, 2021 and 2020 that are included in this registration statement have been audited by KCCW Certified Public Accountants, independent registered public accountants, to the extent and for the periods set forth in its report. The financial statements are included in this prospectus in reliance on such report, given the authority of said firm as an expert in auditing and accounting.
The validity of the common stock offered hereby will be opined upon for us by Our counsel, Chen-Drake Law.
WHERE YOU CAN FIND MORE INFORMATION
We filed with the Securities and Exchange Commission a registration statement under the Securities Act for the common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains the registration statement as well as reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors, officers or persons controlling us, we have been advised that it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed in such act and is, therefore, unenforceable.
| 37 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
TABLE OF CONTENTS
| F-1 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Longduoduo Company Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Longduoduo Company Limited and subsidiaries (the “Company”) as of June 30, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has incurred recurring losses from operations and is in need of additional capital to grow its operations so that it can become profitable. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 2. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
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 audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-2 |
Revenue recognition
Critical Audit Matter Description
As described in Note 2 to the consolidated financial statements, the majority of the Company’s revenue is derived from service revenues. The Company provides preventative healthcare consulting services. The sale of such services by the Company is considered complete when the service is provided at that time the sold healthcare product package, ownership and risk of loss have been transferred to the customer.
The Company considers the contracts with healthcare service providers contain one performance obligation, and the Company is entitled to the consideration when performance obligation is satisfied at a point in time. The amount of revenue to be recognized is determined by the service contracts between the Company and the healthcare service providers. The Company recognizes revenue when the service is provided.
The principal considerations for our determination that performing procedures relating to revenue recognition, specifically the identification and evaluation of the timing and amount of revenue recognition, is a critical audit matter, involved judgment exercised by management in identifying and evaluating the performance obligation. Auditor judgement is involved in performing our audit procedures to evaluate whether the timing and amount of revenue recognition was appropriately stated.
How the Critical Audit Matter Will Be Addressed in the Audit
Our audit procedures over determining the timing and amount of revenue recognition involved, among others, evaluation of management’s assessment in regard to the identification of performance obligation of service revenue. We selected customer agreements and performed the following procedures:
| ● | Evaluated the terms and conditions of each selected contract and the appropriateness of the accounting treatment within the context of the five-step model prescribed by ASC 606, Revenue from Contracts with Customers, and evaluated whether management’s conclusions were appropriate. | |
| ● | Tested the accuracy of management’s calculation of revenue for the performance obligation. |
| /s/ KCCW Accountancy Corp. |
We have served as the Company’s auditor since 2021.
Diamond Bar, California
November 10, 2021
| F-3 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of June 30, | ||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 273,116 | $ | - | ||||
| Other receivables | 42,992 | - | ||||||
| Prepayments | 8,786 | - | ||||||
| Due from related parties | 30,583 | 706 | ||||||
| Total current assets | 355,477 | 706 | ||||||
| Property and equipment, net | 67,125 | - | ||||||
| Right-of-use assets | 91,198 | - | ||||||
| Total assets | $ | 513,800 | $ | 706 | ||||
| Liabilities and Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 180,113 | $ | - | ||||
| Deposits received | 441,219 | - | ||||||
| Accrued expenses | 119,406 | - | ||||||
| Other payables | 58,061 | - | ||||||
| Operating lease liabilities, current | 51,185 | - | ||||||
| Other current liabilities | 8,850 | - | ||||||
| Total current liabilities | 858,834 | - | ||||||
| Operating lease liabilities, less current portion | 40,013 | - | ||||||
| Total liabilities | 898,847 | - | ||||||
| Deficit: | ||||||||
| Preferred stock; $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding at June 30, 2021 and 2020 | - | - | ||||||
| Common stock; $0.001 par value, 500,000,000 shares authorized; 164,420,147 and 164,420,147 shares issued and outstanding at June 30, 2021 and 2020, respectively | 164,420 | 164,420 | ||||||
| Additional paid-in capital | (163,714 | ) | (163,714 | ) | ||||
| Accumulated deficit | (328,626 | ) | - | |||||
| Accumulated other comprehensive loss | (6,282 | ) | - | |||||
| Total stockholders’ deficit | (334,202 | ) | 706 | |||||
| Non-controlling interest | (50,845 | ) | - | |||||
| Total deficit | (385,047 | ) | 706 | |||||
| Total liabilities and deficit | $ | 513,800 | $ | 706 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Years Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Revenue | $ | 413,861 | $ | - | ||||
| Cost of sales | 94,234 | - | ||||||
| Gross profit | 319,627 | - | ||||||
| Selling, general and administrative expenses | 698,041 | - | ||||||
| Loss from operations | (378,414 | ) | - | |||||
| Other income | 210 | - | ||||||
| Loss before provision for income taxes | (378,204 | ) | - | |||||
| Provision for income taxes | - | - | ||||||
| Net loss | (378,204 | ) | - | |||||
| Less: net loss attributable to non-controlling interests | (49,578 | ) | - | |||||
| Net loss attributable to common stockholders | $ | (328,626 | ) | $ | - | |||
| Comprehensive loss: | ||||||||
| Net loss | $ | (378,204 | ) | $ | - | |||
| Foreign currency translation adjustment | (7,549 | ) | - | |||||
| Comprehensive loss | (385,753 | ) | - | |||||
| Less: comprehensive loss attributable to non-controlling interests | (50,845 | ) | - | |||||
| Comprehensive loss attributable to the common stockholders | $ | (334,908 | ) | $ | - | |||
| Basic and diluted loss per share | $ | (0.002 | ) | $ | - | |||
| Weighted average number of shares outstanding | 164,420,147 | 164,420,147 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT
| Common stock | Additional | Accumulated Other | Total | Non- | ||||||||||||||||||||||||||||
| Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Comprehensive Loss | Stockholder’ Deficit | controlling Interest | Total Deficit | |||||||||||||||||||||||||
| Balance at July 1, 2019 | 164,420,147 | $ | 164,420 | $ | (163,714 | ) | $ | - | $ | - | $ | 706 | $ | - | $ | 706 | ||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Balance at June 30, 2020 | 164,420,147 | 164,420 | (163,714 | ) | - | - | 706 | - | 706 | |||||||||||||||||||||||
| Net loss | - | - | - | (328,626 | ) | - | (328,626 | ) | (49,578 | ) | (378,204 | ) | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (6,282 | ) | (6,282 | ) | (1,267 | ) | (7,549 | ) | ||||||||||||||||||||
| Balance at June 30, 2021 | 164,420,147 | $ | 164,420 | $ | (163,714 | ) | $ | (328,626 | ) | $ | (6,282 | ) | $ | (334,202 | ) | $ | (50,845 | ) | $ | (385,047 | ) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-6 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (378,204 | ) | $ | - | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 2,492 | - | ||||||
| Operating lease expense | 13,212 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | (42,992 | ) | - | |||||
| Prepayments | (8,786 | ) | - | |||||
| Due from related parties | (29,877 | ) | - | |||||
| Accounts payable | 180,113 | - | ||||||
| Deposits received | 441,219 | - | ||||||
| Accrued expenses | 119,406 | - | ||||||
| Other payables | 44,849 | - | ||||||
| Other current liabilities | 8,850 | - | ||||||
| Net cash provided by operating activities | 350,282 | - | ||||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of property, plant and equipment | (69,617 | ) | - | |||||
| Net cash used in investing activities | (69,617 | ) | - | |||||
| Effect of exchange rate fluctuation on cash and cash equivalents | (7,549 | ) | - | |||||
| Net increase in cash and cash equivalents | 273,116 | - | ||||||
| Cash and cash equivalents, beginning of year | - | - | ||||||
| Cash and cash equivalents, end of year | $ | 273,116 | $ | - | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest expense | $ | - | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-7 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
LONGDUODUO COMPANY LIMITED (the “Company”, “Longduoduo”, or “we”) was incorporated in the State of Nevada on October 25, 2021. The Company provides comprehensive and high-quality preventive healthcare solutions including a wide range of preventive healthcare services, including disease screening healthcare treatment, healthcare products and other services through a network of third-party healthcare service providers.
The Company’s subsidiaries include:
| ● | Longduoduo Company Limited (Hong Kong) (“Longduoduo HK”), which was established on July 26, 2021 under the laws of Hong Kong. On October 26, 2021, Longduoduo issued 300,000,000 shares of its common stock to the original shareholders of Longduoduo HK, in exchange for 100% of the outstanding shares of Longduoduo HK (the “Share Exchange”). |
| ● | Longduoduo Health Technology Company Limited (“Longduoduo Health Technology”), a privately held Limited Company registered in Inner Mongolia, China on August 20, 2020. On August 16, 2021, Longduoduo HK acquired 100% of the ownership of Longduoduo Health Technology from the original shareholders of Longduoduo Health Technology. |
| ● | Inner Mongolia Qingguo Health Consulting Company Limited (“Qingguo”), a privately held Limited Company registered in Inner Mongolia, China on June 18, 2020. On September 8, 2020, Longduoduo Health Technology acquired 90% of the ownership of Qingguo from the original shareholders of Qingguo. |
| ● | Inner Mongolia Rongbin Health Consulting Company Limited (“Rongbin”), a privately held Limited Company registered in Inner Mongolia, China. On March 18, 2021. Longduoduo Health Technology controlled 80% of the ownership of Rongbin since established. |
| ● | Inner Mongolia Chengheng Health Consulting Company Limited (“Chengheng”), a privately held Limited Company registered in Inner Mongolia, China on April 9, 2021. Longduoduo Health Technology controlled 80% of the ownership of Chengheng since established. |
The transactions summarized above are treated in the Company’s financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the seven entities have at all times been under the control of Mr. Zhang Liang. Therefore, in accordance with ASC 805-50-45-5, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time, and the entities under common control are presented on a combined basis for all periods. Since all of the subsidiaries were under common control for all periods presented, the results of these subsidiaries are included in the Company’s financial statements for all periods presented.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| A. | Going concern |
Management has determined there is substantial doubt about the Company’s ability to continue as a going concern as a result of lack of significant revenues and recurring losses. If the Company is unable to generate significant revenue or secure additional financing, it may be required to cease or curtail its operations. The accompanying consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.
The Company’s operations have been financed primarily by advances and loans from related parties. Zhang Liang, the president, chairman of the board, director and a shareholder of the Company, will provide support in the future if needed.
Management intends to expand product offerings and increase the Company’s customers, so as to have a stable base for competition. In this manner, Management hopes to generate sufficient operating cash inflow to support its future operations and development of the Company in addition to capital raised from shareholders’ support.
| F-8 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| B. | Basis of presentation |
The accompanying consolidated financial statements are expressed in U.S. Dollars and have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
| C. | Principles of consolidation |
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of these subsidiaries.
The Company’s subsidiaries as of June 30, 2021 are listed as follows:
| Name | Place of Incorporation | Attributable equity interest % | Authorized capital | |||||
| Longduoduo Company Limited | Hong Kong | 100 | HK$10,000 | |||||
| Longduoduo Health Technology Company Limited | China | 100 | 0 | |||||
| Inner Mongolia Qingguo Health Consulting Company Limited | China | 90 | 0 | |||||
| Inner Mongolia Rongbin Health Consulting Company Limited | China | 80 | 0 | |||||
| Inner Mongolia Chengheng Health Consulting Company Limited | China | 80 | 0 | |||||
| D. | Use of estimates |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from these estimates.
| E. | Functional currency and foreign currency translation |
An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Chinese Renminbi (“RMB’), except the functional currency of Longduoduo HK and Longduoduo is the United States dollar (“US Dollars” or “$”). The reporting currency of these consolidated financial statements is in US Dollars.
The Company’s subsidiaries that are prepared using the RMB, are translated into the Company’s reporting currency, the US Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using weighted average rates prevailing during each reporting period, and stockholders’ equity (deficit) is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or expense.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations.
| F-9 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The exchange rates used for foreign currency translation are as follows:
| For the Years Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| (USD to RMB/USD to HKD) | (USD to RMB) | |||||||
| Assets and liabilities | period end exchange rate | 6.4579/7.7652 | 7.0697 | |||||
| Revenue and expenses | period weighted average | 6.6228/7.7562 | 7.0319 | |||||
| F. | Concentration of credit risk |
The Company maintains cash in state-owned banks in China. In China, the insurance coverage of each bank is RMB500,000 (approximately USD$77,000). As of June 30, 2021, the Company had $74,512 cash in excess of the insured amount.
During the year ended June 30, 2021, and 2020, no customers generated more than 10% of revenue.
| G. | Cash and cash equivalents |
Cash consists of cash on hand and bank deposits, which are unrestricted as to withdrawal and use. All highly liquid investments with original stated maturity of three months or less are classified as cash and cash equivalents. Cash equivalents approximate or equal fair value due to their short-term nature. The Company’s cash and cash equivalents consist of cash on hand and cash in bank as of June 30, 2021 and 2020.
| H. | Property and equipment |
Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations when incurred, while additions and betterments are capitalized. Depreciation is recorded on a straight-line basis over the useful lives of the assets. When assets are retired or disposed, the asset’s original cost and related accumulated depreciation are eliminated from those accounts and any gain or loss is reflected in income.
The Company capitalizes certain costs associated with the acquisition of software. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the software’s expected useful life.
The estimated useful lives for property and equipment categories are as follows:
| Office equipment and furniture | 3 years | |||
| Leasehold Improvements | 1.8-5 years |
| F-10 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| I. | Fair value measurements |
The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 820, Fair Value Measurements (“ASC 820”), for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices, other than those in Level 1, in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability,
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
There were no transfers between level 1, level 2 or level 3 measurements for the years ended June 30, 2021 and 2020.
Financial assets and liabilities of the Company primarily comprise of cash, prepayments, other receivables, due from related parties, accounts payable and accrued expenses, payroll payable, tax payable and other payables. As of June 30, 2021 and 2020, the carrying values of these financial instruments approximated their fair values due to the short-term maturity of these instruments.
| J. | Segment information and geographic data |
The Company is operating in one segment in accordance with the accounting guidance in FASB ASC Topic 280, Segment Reporting. The company’s revenues are from customers in People’s Republic of China (“PRC”). All assets of the Company are located in the PRC.
| K. | Revenue recognition |
The Company adopted FASB ASC Section 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sales of products and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities as described below.
The Company provides preventative healthcare consulting services. All revenue is recognized when it is both earned and realized. The Company’s policy is to recognize the revenue when service is provided, at that time the sold healthcare product package, ownership and risk of loss have been transferred to the customer, and the payment is reasonably assured. Accordingly, revenue is recognized at the point in time when the service is provided.
| F-11 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Given the nature of this revenue source of the Company’s business and the applicable rules guiding revenue recognition, the Company recognizes revenue when service is provided.
| L. | Income taxes |
The Company follows FASB ASC Section 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740-10-30 requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under ASC 740-10-30, tax positions that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that threshold is met.
The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance.
As a result of the implementation of ASC 740-10, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10. The Company recognized no material adjustments to liabilities or shareholder’s equity as a result of the implementation.
| M. | Earnings (loss) per share |
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings Per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method. Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
| N. | Risks and uncertainties |
In March 2020, the World Health Organization (“WHO”) declared the coronavirus (COVID 19), a global pandemic and public health emergency. The WHO has recommended containment and mitigation measures worldwide and domestically, self-isolation and shelter-in-place requirements have been or are being put in place. At this point, the Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which this disruption may impact its financial statements and future results of operations. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 outbreak and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition.
| F-12 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| O. | Recently adopted accounting pronouncements |
Revenue
In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with Customers (Section 606): Principal versus Agent Considerations (reporting revenue gross versus net). The amendment in this update affects entities with transactions included within the scope of ASC 606, The scope of 606 includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, the amendments in ASU 2016-10 provide more detailed guidance, including additional implementation guidance and examples in the following key areas: 1) identifying performance obligations and 2) licenses of intellectual property. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Section 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). The amendments do not change the core principles of the standard, but clarify the guidance on assessing collectability, presenting sales taxes, measuring noncash consideration and certain transition matters. This update becomes effective concurrently with ASU No. 2014-09. The Company adopted ASU 2016-12 effective July 1, 2018. There was no impact on the Company’s financial statements as a result of adopting 606 for the year ended June 30, 2021 and 2020.
Leases
In July 2018, the FASB issued ASU No. 2018-11, Leases (Section 842): Targeted Improvements, which provides an additional, optional transition method related to implementing the new leases standard. ASU 2018-11 provides that companies can initially apply the new lease standard at adoption and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. The Company’s future minimum based payments used to determine the Company’s lease liabilities mainly include minimum based rent payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
The adoption of ASC 842 had no substantial impact on the Company’s consolidated balance sheets. The most significant impact was the recognition of the operating lease right-of-use assets and lease liabilities for operating leases (see Note 7). The adoption of ASC 842 did not result in a cumulative-effect adjustment to the opening balance of accumulated deficit. In addition, the adoption of the standard did not have a material impact on the Company’s results of operations or cash flows. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
We do not believe that other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
NOTE 3. PREPAYMENTS AND DEFERRED EXPENSES
Prepayments and deferred expenses primarily include prepaid decoration and products in advance to suppliers. As of June 30, 2021 and 2020, prepayments and deferred expenses were $8,786 and $0, respectively.
| F-13 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. PROPERTY AND EQUIPMENT
At June 30, 2021 and 2020, property and equipment, at cost, consisted of:
| June 30, | June 30, | |||||||
| 2021 | 2020 | |||||||
| Office equipment and furniture | $ | 35,058 | $ | - | ||||
| Leasehold improvement | 34,623 | - | ||||||
| Total | 69,681 | - | ||||||
| Accumulated depreciation | 2,556 | - | ||||||
| Total property and equipment, net | $ | 67,125 | $ | - | ||||
The Company recorded depreciation expense of $2,492 and $0 for the years ended June 30, 2021 and 2020, respectively.
NOTE 5. RELATED PARTY TRANSACTIONS
Due from related parties
Due from related parties consists of the following:
| Name of related parties | June 30, 2021 | June 30, 2020 | ||||||
| Zhang Liang | $ | 4,034 | $ | - | ||||
| Zhou Hongxiao | 26,549 | - | ||||||
| $ | 30,583 | $ | - | |||||
Zhang Liang is the President, Chairman of the Board, director and a shareholder of the Company, and Zhou Hongxiao is the CEO of the Company. These advances due from related parties were unsecured, repayable on demand, and bear no interest.
NOTE 6. INCOME TAXES
United States
The Company is subject to the U.S. corporation tax rate of 21%.
Hong Kong
Longduoduo HK was incorporated in Hong Kong and is subject to Hong Kong profits tax. Longduoduo HK is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%. The Company did not have any income (loss) subject to the Hong Kong profits tax.
China
Longduoduo Health Technology and subsidiaries are subject to a 25% standard enterprise income tax in the PRC. There was no provision for income taxes for the year ended June 30, 2021 and 2020.
A reconciliation of income before income taxes for domestic and foreign locations for the years ended June 30, 2021, and 2020 is as follows:
| For the years ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| United States | $ | 82,551 | $ | - | ||||
| Foreign | 295,653 | - | ||||||
| Loss before income taxes | $ | 378,204 | $ | - | ||||
| F-14 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:
| June 30 | June 30 | |||||||
| 2021 | 2020 | |||||||
| Income tax (benefit) at USA statutory rate | (21 | )% | (21 | )% | ||||
| U.S. valuation allowance | 21 | % | 21 | % | ||||
| Income tax (benefit) at PRC statutory rate | (25 | )% | (25 | )% | ||||
| PRC valuation allowance | 25 | % | 25 | % | ||||
| Effective combined tax rate | (0 | )% | (0 | )% | ||||
The Company did not recognize deferred tax assets since it is not likely to realize such deferred taxes. The deferred tax would apply to the Company in the U.S. and Longduoduo Health Technology and subsidiaries in China.
As of June 30, 2021, Longduoduo Health Technology and its subsidiaries has total net operating loss carry forwards of approximately $295,653 in the PRC that expire through 2026. Due to the uncertainty of utilizing these carry forwards, the Company provided a 100% allowance on all deferred tax assets of approximately $73,913 and $0 related to its operations in the PRC as of June 30, 2021 and 2020, respectively. The PRC valuation allowance has increased by approximately $73,913 and $0 for the year ended June 30, 2021, and 2020, respectively.
The Company has incurred losses from its United States operations during the year ended June 30, 2021 of approximately $82,551. The Company’s United States operations consist solely of ownership of its foreign subsidiaries, and the losses arise from administration expenses. Accordingly, management provided a 100% valuation allowance of approximately $17,336 against the deferred tax assets related to the Company’s United States operations as of June 30, 2021, because the deferred tax benefits of the net operating loss carry forwards in the United States are not likely to be utilized. The US valuation allowance has increased by approximately $17,336 for the year ended June 30, 2021.
The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the firm has significant business operations. The tax years under examination vary by jurisdiction. The table below presents the earliest tax year that remain subject to examination by major jurisdiction.
| The year as of | ||
| U.S. Federal | June 30, 2021 | |
| China | June 30, 2020 |
NOTE 7. LEASE
Operating Lease Agreements - On March 31, 2021 the Company leased office space (approximately 1500 square meters) under non-cancellable operating lease agreement with a third party Wudun Qiqige, in Ordos. Under the terms of the agreement, the Company is committed to make total lease payments of $108,394, or RMB 700,000, pay off by one time for the lease period from April 1, 2021 to March 31, 2023. As of June 30, 2021, the payment has not been made.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company did not combine lease and non-lease components.
Most leases do not include options to renew. The exercise of lease renewal options has to be agreed by the lessors. The depreciable life of assets and leasehold improvements are limited by the term of leases, unless there is a transfer of title or purchase option reasonably certain of exercise. Lease expense is recognized on a straight-line basis over the term of the lease. Lease expense related to these noncancelable operating leases was $13,212 and $0 for the year ended June 30, 2021 and 2020, respectively.
Balance sheet information related to the Company’s leases is presented below:
| June 30, 2021 | ||||
| Assets | ||||
| Operating lease right of use assets | $ | 91,198 | ||
| Liabilities | ||||
| Operating lease liabilities - current | $ | 51,185 | ||
| Operating lease liabilities – non-current | 40,013 | |||
| Total Operating lease liabilities | $ | 91,198 | ||
| F-15 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following provides details of the Company’s lease expenses:
| For the year Ended | ||||
| June 30, 2021 | ||||
| Operating lease expenses | $ | 13,212 | ||
Other information related to leases is presented below:
| For the year Ended | ||||
| June 30, 2021 | ||||
| Cash Paid for Amounts Included in Measurement of Liabilities: | ||||
| Operating cash flows from operating leases | $ | - | ||
| Weighted Average Remaining Lease Term: | ||||
| Operating leases | 1.75 years | |||
| Weighted Average Discount Rate | ||||
| Operating leases | 4.75 | % | ||
As most of the Company’s leases do not provide an implicit rate, the Company uses 1-5 years borrowing rate from bank of 4.75% based on the information available at commencement date in determining the present value of lease payments.
Maturities of lease liabilities were as follows:
| For the year ending June 30: | ||||
| 2022 | $ | 54,197 | ||
| 2023 | 40,648 | |||
| Total lease payments | 94,845 | |||
| Less: imputed interest | 3,647 | |||
| Total lease liabilities | $ | 91,198 | ||
Under the terms of the agreement, the Company should pay off the lease payments of $108,394, or RMB 700,000, by issuing the common stock of Longduoduo to the lessor. The aggregate 3,000,000 common shares pursuant to the lease agreement were issued in October, 2021.
NOTE 8. CONTINGENCIES
Contingencies
Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
The Company was not subject to any material loss contingency as of June 30, 2021 and 2020.
| F-16 |
LONGDUODUO COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. BASIC AND DILUTED EARNINGS PER SHARE
Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares comprise shares issuable upon the exercise of share-based awards, using the treasury stock method. The reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for income from continuing operations is shown as follows:
| For the year Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Numerator: | ||||||||
| Net loss attributable to common stockholders | $ | (328,626 | ) | $ | — | |||
| Denominator: | ||||||||
| Basic and diluted weighted-average number of shares outstanding | 164,420,147 | 164,420,147 | ||||||
| Net income per share: | ||||||||
| Basic and diluted | $ | (0.002 | ) | $ | 0.00 | |||
NOTE 10. NON-CONTROLLING INTERESTS
Qingguo, Chengheng and Rongbin are the Company’s majority-owned subsidiary which are consolidated in the Company’s financial statements with non-controlling interests recognized. The Company holds 90%, 80% and 80% interest of Qingguo, Chengheng and Rongbin as of June 30, 2021, respectively.
As of June 30, 2021 and 2020, the non-controlling interests in the consolidated balance sheet was $(50,845) and $0, respectively. For year ended June 30, 2021, the comprehensive loss attributable to common stockholders and non-controlling interests were $334,908 and $50,845, respectively. For the year ended June 30, 2020, the comprehensive loss attributable to common stockholders and non-controlling interests were $0.
NOTE 11. SUBSEQUENT EVENTS
On July 1, 2021, Inner Mongolia Tianju Health Consulting Company Limited (“Tianju”) was registered in Inner Mongolia, China. Longduoduo Health Technology controlled 51% of the ownership of Tianju since established.
On July 26, 2021, Longduoduo HK issued a total of 600 shares to Eden Hall Global Capital Cp., Ltd. for service compensation expense of $914,400.
On July 26, 2021, Longduoduo HK issued a total of 3,822 shares to 32 sales agents for service compensation expense of $5,824,728.
Management has evaluated subsequent events through the date which the consolidated financial statements were available to be issued. All subsequent events requiring recognition as of June 30, 2021 have been incorporated into these consolidated financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
| F-17 |
Dealer Prospectus Delivery Obligation
Until 90 days from the effective date of this Registration Statement, all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
You should rely only on the information contained in this prospectus. We have not authorized any dealer, sales person or other person to give you different information. This prospectus does not constitute an offer to sell nor are they seeking an offer to buy the securities referred to in this prospectus in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus and the documents incorporated by reference are correct only as of the date shown on the cover page of these documents, regardless of the time of the delivery of these documents or any sale of the securities referred to in this prospectus.
LONGDUODUO COMPANY LIMITED
146,079,853
Shares
of
Common Stock
PROSPECTUS
_______, 2021
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with the issuance and distribution of the securities being registered hereby. All such expenses will be borne by the registrant.
| Name of Expense | Amount | |||
| Securities and Exchange Commission registration fee | $ | 13,541.60 | ||
| Transfer Agent Fees(1) | $ | 2,000.00 | ||
| Legal, accounting fees and expenses (1) | $ | 85,000.00 | ||
| Edgar filing, printing and engraving fees (1) | $ | 2,000.00 | ||
| Total (1) | $ | 102,541.60 | ||
| (1) | Estimated. |
Indemnification of Directors and Officers
Section 607.0850 of the Nevada Business Corporation Act authorizes a corporation to provide indemnification to a director, officer, employee or agent of the corporation against expenses reasonably incurred in connection with a proceeding to which he or she is a party by reason of the fact that he or she was or is a director, officer, employee or agent of the corporation, if such party acted in good faith and in a manner he or she 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 or her conduct was unlawful, except that with respect to any action which results in a judgment against the person and in favor of the corporation or with respect to an action in which it is determined that the person derived an improper personal benefit, the corporation may not indemnify unless a court determines that the person is fairly and reasonably entitled to the indemnification. Section 607.0850 of the Nevada Business Corporation Act further provides that indemnification shall be provided if the party in question is successful on the merits.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and control persons pursuant to the foregoing provisions or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, and is, therefore, unenforceable.
Recent Sales of Unregistered Securities
The following sets forth information regarding all unregistered sales of our securities since our inception on October 25, 2021. All of these sales were exempt from registration under the Securities Act by reason of Section 4(2) of the Securities Act, as transactions by an issuer not involving a public offering, or were exempt from registration pursuant to Regulation S. The recipients of securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates issued in such transactions and there were no investors who are citizens or residents of the United States. We relied on information from purchasers that they were accredited investors and/or such investors were provided adequate information and were otherwise determined to be suitable. In all cases, there was no public solicitation. The issuances of the securities described below were effected without the involvement of underwriters.
| II-1 |
On October 26, 2021, we acquired One Hundred Percent (100%) of the issued and outstanding capital stock of Longduoduo Company Limited (“Longduoduo HK”), a privately held Limited Company registered in Hong Kong in exchange for 300,000,000 shares of our common stock paid to the 49 shareholders of Longduoduo HK. The shares were issued as follows:
| Shareholder | Number of Shares | |||
| Zhang Liang* | 153,920,147 | |||
| Fan Meiying | 1,000,000 | |||
| Kou Yufei | 1,000,000 | |||
| Wang Weidong | 1,000,000 | |||
| Guo Rugang | 1,000,000 | |||
| Cui Lixiang | 1,000,000 | |||
| Meng Yuzhen | 1,000,000 | |||
| Yue Xiumei | 1,000,000 | |||
| Zhang Hua | 1,000,000 | |||
| Zhao Qingguo | 1,000,000 | |||
| Wu Yongli | 1,000,000 | |||
| Huo Haiqing | 500,000 | |||
| Chen Wentong | 1,500,000 | |||
| Xing Yanpeng | 1,500,000 | |||
| Xing Yan Hua | 12,000,000 | |||
| Xing Yanhui | 3,000,000 | |||
| Wang He | 4,000,000 | |||
| Wang Yujie | 3,165,000 | |||
| Li Qiaozhen | 15,955,020 | |||
| Guo Yanhua | 3,184,144 | |||
| Liu Jinping | 817,580 | |||
| Wang Weihua | 4,664,097 | |||
| Dai Ruixiang | 322,144 | |||
| Wang Li | 2,119,750 | |||
| Yan Miaoyi | 869,962 | |||
| Zhang Haifeng | 532,000 | |||
| Zhang Suxiang | 3,887,598 | |||
| Ni Yanhua | 620,000 | |||
| Zhang Xia | 1,039,059 | |||
| Wei Wenxing | 637,850 | |||
| Deng Weiping | 378,500 | |||
| Liu Jiazhong | 15,271,905 | |||
| Niu Shuhong | 687,051 | |||
| Huang Xiao | 390,100 | |||
| Chen Fengguang | 662,776 | |||
| Wang Hua | 1,111,716 | |||
| Wu Zhaoyong | 6,465,922 | |||
| Xu Huibo | 1,060,000 | |||
| Lu Yuewei | 3,687,766 | |||
| Guo Xiaozhen | 16,766,741 | |||
| Gao Ying | 3,000,000 | |||
| Li Yuqing | 727,864 | |||
| Duan Erfen | 2,355,308 | |||
| Wudun Qiqige | 3,000,000 | |||
| Yang Gaojun | 5,000,000 | |||
| Li Zhongfeng | 5,000,000 | |||
| Wang Junying | 1,000,000 | |||
| Zhang Wei | 9,000,000 | |||
| Zhang Yong | 200,000 | |||
| Total | 300,000,000 | |||
| * | Zhang Liang is the Chairman of the Board of the Company |
| II-2 |
Exhibits and Financial Statement Schedules
(a) Exhibits:
See the Exhibit Index immediately following the signature page hereto, which is incorporated by reference as if fully set forth herein.
Undertakings
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to:
| i. | Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| ii. | 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) 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. |
| iii. | 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; |
(2) 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.
(3) 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.
| II-3 |
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, 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, 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.
(5) 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; |
| 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 our 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 of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the provisions 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 the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons 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 is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
| II-4 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement, as amended, to be signed on its behalf by the undersigned, thereunto duly authorized, in Inner Mongolia, China on November 10, 2021.
| LONGDUODUO COMPANY LIMITED. | |||
| By: | /s/ Zhou Hongxiao | ||
| Name: | Zhou Hongxiao | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) | |||
| By: | /s/ Kang Liping | ||
| Name: | Kang Liping | ||
| Title: | Chief Financial Officer | ||
| (Principal Financial Officer) | |||
Pursuant to the requirements of the Securities Act of 1933, this registration statement, as amended, has been signed by the following persons in the capacities and on the dates indicated.
| /s/ Zhang Liang | November 10, 2021 | |
| Zhang Liang | ||
| Chairman of the Board | ||
| /s/ Zhou Hongxiao | November 10, 2021 | |
| Zhou Hongxiao, Chief Executive Officer and Director | ||
| /s/ Kang Liping | November 10, 2021 | |
| Kang Liping, Chief Financial Officer | ||
| II-5 |
EXHIBIT INDEX
II-6
Exhibit 3.1
Exhibit 3.2
BYLAWS
OF
LONGDUODUO COMPANY LIMITED
ARTICLE I. OFFICES.
Section 1. Principal Office. The principal office of Longduoduo Company Limited (the “Corporation”) shall be located 419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China, or at such other place as may from time to time be designated by the Board of Directors. The corporation may have such other offices in such locations as the Board of Directors may designate or as the business of the corporation may require from time to time.
Section 2. Registered Office. The corporation shall maintain a registered office required by the laws of the State of Nevada to be maintained in the State of Nevada, and the registered office and the registered agent at such office may be changed from time to time by the Board of Directors.
ARTICLE II. SHAREHOLDERS.
Section 1. Annual Meeting. The annual meeting of the shareholders of the corporation shall be held on such date and at such time each year as may be designated from time to time by the Board of Directors. Each annual meeting of the shareholders shall be held no more than 13 months after the annual meeting of the shareholders for the previous year.
Section 2. Purposes of Annual Meeting. The annual meeting shall be held for the purpose of electing directors, and for the transaction of such other business as may lawfully come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated for any annual meeting of shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be conveniently held.
Section 3. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, may only be called (a) by the vote of a majority of the entire Board of Directors or action by written consent signed by all of the directors or (b) by the holders of more than fifty percent (50%) of the shares entitled to vote at a meeting of shareholders.
Section 4. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Nevada, as the place of meeting for any annual or for any special meeting of shareholders, or if no designation is made the place of meeting shall be the principal office of the corporation designated in Article I, Section 1.
Section 5. Notice of Meeting. Written or printed notice stating the place, day, and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer of persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address at it appears on the stock transfer books of the corporation, with postage thereon prepaid.
Section 6. Closing of Transfer Books and Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for stated period but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of the shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholder entitled to notice of or to vote at a meeting of shareholders, or of shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof.
Section 7. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation, shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of, and the number of shares held by each, which list, for a period of ten days prior to the meeting, shall be kept on file at the registered office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection of any shareholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting.
Section 8. Quorum of Shareholders. A majority of the outstanding shares of the corporation entitled to vote, represented in person or any proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders.
Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.
Section 10. Voting of Shares. Each outstanding share entitled to vote (common share) shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders.
Section 11. Voting of Certain Shares. Neither treasury shares nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by the corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver and shares held by or under the control of a receiver may be voted by such receiver without transfer thereof into his name if authority so to do be contained in an appropriate order of the Court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledge, and thereafter the pledge shall be entitled to vote the shares so transferred. On or after the date on which written notice of redemption of redeemable shares has been mailed to the holders thereof and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders thereof upon surrender of certificates therefor, such shares shall not be entitled to vote on any matter and shall not be deemed to be outstanding shares. Shares of its own stock held by the corporation in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time.
Section 12. Noncumulative Voting. At each election of directors every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote. No shareholder may cast more than one vote for any one nominee for director.
2
Section 13. Voting Trust. Any number of shareholders of the corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period of not to exceed ten years, by entering into a written voting trust agreement specifying the terms and conditions of the voting trust, by depositing a counterpart of the agreement with the corporation at its registered office, and by transferring their shares to such trustee or trustees for the purpose of the agreement. The counterpart of the voting trust agreement so deposited with the corporation shall be subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and shall be subject to examination by any holder of a beneficial interest in the voting trust, either in person or by agent or attorney, at a reasonable time for any proper purpose.
Section 14. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by a majority of the shareholders entitled to vote with respect to the subject matter thereof.
Section 15. Shareholder Proposals at Annual Meetings.
(a) At an annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before the meeting by a shareholder of the corporation who is a shareholder of record on the date of the giving of the notice provided for in this Section 15 and on the record date for the determination of shareholders entitled to vote at such meeting and who complies with the notice procedures set forth in this in this Section 15.
(b) In addition to any other applicable requirements for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely a shareholder’s notice must be delivered to or mailed and received at the principal offices of the corporation not less than 45 days nor more than 75 days prior to the one-year anniversary of the date on which the corporation first mailed its proxy materials for the previous year’s annual meeting of shareholders (or the date on which the corporation mails its proxy materials for the current year if during the prior year the corporation did not hold an annual meeting or if the date of the annual meeting was changed more than 30 days from the prior year). A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the shareholder, (iv) a description of any material interest of such shareholder in such business, (v) a representation that such shareholder intends to appear in person or by proxy at the meeting to bring such business before the meeting and (vi) any other information required by law.
(c) Notwithstanding anything in the bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 15, provided, however, that nothing in this Section 15 shall be deemed to preclude discussion by any shareholder of any business properly brought before the annual meeting in accordance with said procedure. The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 15 or other rules applicable to the conduct of business at the annual meeting, and if he should so determine he shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted.
(d) Nothing in this Section 15 shall affect the right of a shareholder to request inclusion of a proposal in the corporation’s proxy statement to the extent that such right is provided by an applicable rule of the Securities and Exchange Commission.
3
Section 16. Nominations of Persons for Election to the Board of Directors.
(a) In addition to any other applicable requirements, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors.
(b) Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of shareholders (i) by or at the direction of the Board of Directors, (ii) by any nominating committee or person appointed by the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 16.
(c) Such nominations, other than those made by or at the direction of the Board of Directors or a nominating committee, shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a shareholder’s notice must be delivered to or mailed and received at the principal offices of the corporation, not less than 45 days nor more than 75 days prior to the one-year anniversary of the date on which the corporation first mailed its proxy materials for the previous year’s annual meeting of shareholders (or the date on which the corporation mails its proxy materials for the current year if during the prior year the corporation did not hold an annual meeting or if the date of the annual meeting was changed more than 30 days from the prior year). Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of the corporation which are beneficially owned by the person, and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934; and (b) as to the shareholder giving the notice, (i) the name and record address of the shareholder, and (ii) the class and number of shares of the corporation which are beneficially owned by the shareholder. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation.
(d) To be eligible to be a nominee for election or reelection as a director of the corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 16(c) of these bylaws) to the Secretary at the principal offices of the corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the corporation.
ARTICLE III. BOARD OF DIRECTORS.
Section 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors. Directors shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation.
Section 2. Number, Tenure, and Qualifications. The number of directors of this corporation shall be fixed from time to time by resolution of the Board of Directors. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified.
4
Section 3. Regular Meetings. Regular meetings of the Board of Directors shall be held at such places and at such times as the Board may determine and, if so determined, no notice thereof need be given, provided that the first meeting following a change in such location may be held no less than 48 hours after the determination of such change. A regular meeting of the Board of Directors may be held without notice immediately after the annual meeting of shareholders at the same place at which such meeting was held.
Section 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of any two directors or the Chairman of the Board of Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them.
Section 5. Notice.
(a) No notice is required for regular meetings of the Board of Directors. Notice of special meetings of the Board of Directors shall be given to each director at least three (3) days in advance of the meeting if given by written notice, or at least twenty-four (24) hours in advance of the meeting if given orally, by personal delivery in writing, or by delivery in writing and acknowledged in writing by the director. Written notice may be transmitted by mail, private carrier, personal delivery, telegraph, teletype, facsimile or electronic mail. Oral notice may be communicated in person or by telephone, and is effective when communicated in a comprehensible manner.
(b) Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of the number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.
Section 7. Manner of Acting. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Any action required to be taken at a meeting of the Board of Directors may be taken without a meeting, provided a consent in writing, setting forth the action taken, shall be signed by all of the directors. Such consent shall have the same effect as a unanimous vote.
Section 8. Vacancies. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors then in office though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors, shall be filled by the Board of Directors, such appointment to be until the next annual meeting or a special meeting of the shareholders called for the purpose of electing a director to the office so created.
Section 9. Compensation. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and non-employee directors may be paid a fixed sum for attendance at each such meeting of the Board of Directors. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Any such compensation fixed by the Board of Directors shall be reported to the shareholders.
Section 10. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
Section 11. Removal of Directors. At a meeting called expressly for that purpose, one or more directors or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Any directorship to be filled by reason of the removal of one or more directors by the shareholders may be filled by election by the shareholders at the meeting at which the director or directors are moved.
5
Section 12. Chairman of the Board. The Chairman of the Board of Directors shall be elected by a majority of the directors at any meeting of the Board of Directors, may be an officer of the corporation and, if an officer, may serve as Executive Chairman. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. The Board of Directors may also elect a Vice-Chairman of the Board of Directors who shall, in the absence of the Chairman, preside at all meetings of the shareholders and of the Board of Directors. In the absence of the Chairman or Vice-Chairman, another director selected by the majority of the directors present shall preside at such meetings.
Section 13. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, retain independent counsel or other advisers, and may authorize the seal of the corporation to be affixed to all pages which may require it. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to these bylaws.
ARTICLE IV. OFFICERS.
Section 1. Positions. The officers of the corporation shall be appointed by resolution of the Board of Directors and shall consist of a President, a Secretary and a Treasurer. The Board of Directors may also appoint additional officers by resolution, including without limitation an Executive Chairman (who may be the Chairman of the Board), a Chief Executive Officer and one or more Vice Presidents (who may be designated Senior Vice President or Executive Vice President). The corporation may have such additional or assistant officers as the Board of Directors may appoint from time to time. The Board of Directors shall also have the authority, but shall not be required, to designate officers as the Chief Operating Officer, the Chief Financial Officer or similar such titles.
Section 2. Appointment and Term of Office. The officers of the corporation shall be appointed annually by resolution of the Board of Directors at the first meeting of the Board held after each annual meeting of the shareholders. If officers are not appointed at such meeting, such appointment shall occur as soon as possible thereafter, or may be left vacant. Each officer shall hold office until a successor shall have been appointed and qualified or until said officer’s earlier death, resignation, or removal.
Section 3. President. In the absence of a Chief Executive Officer or Executive Chairman, the president shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.
Section 4. Secretary. The secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the corporation and, when authorized by the Board of Directors, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of the treasurer or an assistant secretary.
6
Section 5. Treasurer. The treasurer shall have charge and custody of all funds and securities of the corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors, and shall perform all other duties incident to the office of treasurer and such other duties as may from time to time be assigned to him by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at the regular meetings of the Board, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.
Section 6. Authority and Duties of Other Officers. Each officer shall have the authority and shall perform the duties set forth in these bylaws or, to the extent consistent with the bylaws, the duties prescribed by the Board of Directors or an officer authorized by the Board to prescribe the duties of such officer.
Section 7. Compensation and Contract Rights. The Board of Directors shall have authority (a) to fix the compensation, whether in the form of salary, bonus, stock options or otherwise, of all officers and employees of the corporation, either specifically or by formula applicable to particular classes of officers or employees, and (b) to authorize officers of the corporation to fix the compensation of subordinate employees. The Board of Directors shall have authority to appoint a Compensation Committee and may delegate to such committee any or all of its authority relating to compensation. The appointment of an officer shall not of itself create contract rights.
Section 8. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.
Section 9. Vacancies. If any office becomes vacant by any reason, the directors may appoint a successor or successors who shall hold office for the unexpired term or leave such office vacant.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS.
Section 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by the Board of Directors or delegated to an officer by resolution of the Board. Such authority may be general or confined to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts, or other orders for the payment of money, notes or other evidence of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select.
7
ARTICLE VI. CERTIFICATES FOR SHARES, THEIR TRANSFER, LOST CERTIFICATES.
Section 1. Certificates For Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the president or a vice president and by the secretary or an assistant secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefor. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors may require and shall give the corporation a bond of indemnity in form and with one or more sureties and in such amount as determined by the Board of Directors, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed, but always subject to the approval of the Board of Directors.
Section 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to the transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VII. DIVIDENDS.
Section 1. When Declared. The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in cash, property, or its own shares, upon the terms and conditions provided by law.
Section 2. Reserve. The Board of Directors may set aside out of the net profits of the corporation available for dividends such sum or sums, before payment of any dividend, as the Board of Directors in their absolute discretion think proper as a reserve fund. to meet contingencies, or for equalizing dividends, or for repairing, or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interests of the corporation, and they may abolish or modify any such reserve in the manner in which it was created.
ARTICLE VIII. SEAL.
Section 1. The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon
8
ARTICLE IX. WAIVER OF NOTICE.
Section 1. Whenever any notice is required to be given to any shareholder or any director of the corporation under the provisions of these bylaws or under the provisions of the laws of the State of Nevada, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE X. AMENDMENTS.
Section 1. In furtherance and not in limitation of the powers conferred by the laws of the State of Nevada, the Board of Directors is expressly authorized and empowered to adopt, amend, alter, change, rescind and repeal the bylaws of the corporation in whole or in part. Except where the Articles of Incorporation of the corporation requires a higher vote, the bylaws of the corporation may also be adopted, amended, altered, changed, rescinded or repealed in whole or in part at any annual or special meeting of the stockholders by the majority vote of the shares of the corporation outstanding and entitled to vote thereon. The Board of Directors may amend or repeal bylaws passed by the Board of Directors but may not amend or repeal the bylaws passed by the shareholders.
ARTICLE XI. INDEMNITY
Section 1. Indemnification of Directors and Officers. The corporation shall, to the maximum extent and in the manner permitted by the Nevada Revised Statutes, as amended, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this paragraph, a director or officer of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
Section 2. Indemnification of Others. The corporation shall have the power, to the extent and in the manner permitted by the Nevada Revised Statutes, as amended, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this paragraph, an employee or agent of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
Section 3. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the Nevada Revised Statutes, as amended.
9
Exhibit 5.1
CHEN DRAKE LAW
6108 STILLMEADOW DRIVE
NASHVILE, TN 37211 27601
| TEL | 310 721 4394 |
| FAX | 888 896 7763 |
November 9, 2021
Board of Directors
Longduoduo Company Limited
419, Floor 4, Comprehensive Building
Second Light Hospital, Ordos Street
Yuquan District, Hohhot
Inner Mongolia, China
Registration Statement on Form S-1
Ladies and Gentlemen:
We have served as special counsel to Longduoduo Company Limited, a Nevada corporation (the “Company”), in connection with the Registration Statement on Form S-1 (the “Registration Statement”), to be filed on the date hereof by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to the registration by the Company of the resale from time to time of up to an aggregate of 146,079,853 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), by the individuals named under the caption “Selling Stockholders” in the Registration Statement.
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents:
| (a) | The Registration Statement and the related base prospectus included therein in the form in which it was filed with the Commission under the Securities Act; |
| (b) | That certain Share Exchange Agreement dated October 26, 2021, by and among the Company, Longduoduo Company Limited, a Hong Kong private limited company (“LDD HK”) and the shareholders of LDD HK (the “Share Exchange Agreement”) |
| (c) | The Articles of Incorporation of the Company, together with all amendments and articles supplementary filed to date with respect thereto (the “Charter”), as certified by the Secretary of State of the State of Nevada as of October 25, 2021, and by the Secretary of the Company on November 9, 2021; |
| (d) | The Company’s Bylaws (the “Bylaws”), as certified by the Secretary of the Company on November 9, 2021; |
| (e) | The resolutions adopted by the board of directors of the Company on October 25, 2021, authorizing and approving, among other things, the Share Exchange Agreement and the issuance of the Shares pursuant to the Share Exchange Agreement (the “Share Exchange Resolutions”), as certified by the Secretary of the Company on November 9, 2021; |
| (f) | The resolutions adopted by the board of directors of the Company on November 9, 2021, authorizing and approving the registration of certain shares of common stock of the Company issued pursuant to the Share Exchange Agreement (the “Registration Resolutions”), as certified by the Secretary of the Company on November 9, 2021; |
| (g) | An executed copy of the certificate of the Secretary of the Company, dated the date hereof, as to certain factual matters; and |
| (h) | The certificate of the Nevada Secretary of State as to the due incorporation, existence and good standing of the Company in the State of Nevada dated October 27, 2021 (the “Good Standing Certificate”). |
For purposes of the opinion expressed below, we have assumed (i) the authenticity of all documents submitted to us as originals, (ii) the conformity to the originals of all documents submitted as certified or photostatic copies and the authenticity of the originals thereof, (iii) the legal capacity of natural persons, (iv) the genuineness of all signatures and (v) the due authorization, execution and delivery of all documents by all parties and the validity and binding effect and enforceability thereof upon the Company.
As to factual matters, we have relied upon representations included in certificates of officers of the Company and in certificates of public officials.
Based upon the foregoing, and having regard for such legal considerations as we have considered necessary for purposes hereof, we are of the opinion that the Shares being sold pursuant to the Registration Statement are duly authorized, and will be, when issued in the manner described in the Registration Statement, legally and validly issued, fully paid and non-assessable.
This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement in accordance with the requirements of Item 16 of Form S-1 and Item 601(b)(5)(i) of Regulation S-K promulgated under the Securities Act. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement with the Commission on the date hereof and to the use of the name of our firm in the section entitled “Legal Matters” in the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act or the rules and regulations promulgated thereunder by the Commission.
This opinion is limited to the matters stated in this letter, and no opinion may be implied or inferred beyond the matters expressly stated in this letter. This opinion is given as of the date hereof, and we assume no obligation to advise you after the date hereof of facts or circumstances that come to our attention or changes in the law, including judicial or administrative interpretations thereof, that occur which could affect the opinions contained herein.
| Very truly yours, | |
| /s/ Chen-Drake Law |
Exhibit 10.1
SHARE
EXCHANGE AGREEMENT
by and among
Longduoduo Company Limited (“LDD or NV”)
a Nevada corporation
and
Longduoduo Company Limited (“LDD HK”)
a Hong Kong private limited company
and
the Shareholders of
LDD HK
a Hong Kong private limited company
Dated as of October 26, 2021
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (hereinafter referred to as “this Agreement”) dated as of October 26, 2021, by and among Longduoduo Company Limited, a Nevada corporation (“LDD” “NV” or the “Company”), Longduoduo Company Limited, a private limited corporation incorporated under the laws of Hong Kong (“LDD HK”) and the undersigned HK Shareholders (as hereinafter defined), constituting holders of all outstanding Ordinary Shares of LDD HK.
W I T N E S S E T H:
WHEREAS, LDD is a newly formed company that intends to file a registration statement on Form S-1 to register its shares of common stock with the Securities and Exchange Commission;
WHEREAS, LDD desires to acquire from the HK Shareholders, and the HK Shareholders desire to sell, Ten Thousand (10,000) shares of the issued and outstanding ordinary shares of LDD HK (“HK Ordinary Stock”), constituting all of the issued and outstanding securities of LDD HK, in consideration of up to Three Hundred Million (300,000,000) shares of LDD common stock, par value $0.001 (“Exchange Shares”) on the terms and conditions set forth below;
WHEREAS, immediately upon consummation of the Closing (as hereinafter defined), the Exchange Shares will be issued to the HK Shareholders on a pro rata basis, in proportion to the ratio of HK Ordinary Stock held by such HK Shareholders, bears to the HK Ordinary Stock held by all the HK Shareholders as of the date of the Closing;
WHEREAS, following the Closing, LDD HK will become a wholly-owned subsidiary of LDD and the Exchange Shares will represent all of the issued and outstanding shares of Common Stock of LDD;
WHEREAS, the parties herein desire the foregoing exchange to be a tax-free exchange under the Internal Revenue Code.
NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the meanings indicated below:
“Affiliate” shall mean with respect to a specified Person, any other Person which, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to a Person (a) any other Person which beneficially owns or holds ten percent (10%) or more of any class of voting securities or other securities convertible into voting securities of such Person or beneficially owns or holds ten percent (10%) or more of any other equity interests in such Person, (b) any other Person with respect to which such Person beneficially owns or holds ten percent (10%) or more of any class of voting securities or other securities convertible into voting securities of such Person, or owns or holds ten percent (10%) or more of the equity interests of the other Person, and (c) any director or senior officer of such Person. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.
“Agreement” shall mean this Share Exchange Agreement together with all exhibits and schedules referred to herein, which exhibits and schedules are incorporated herein and made a part hereof.
“Closing” shall have the meaning set forth in Section 2.2.
“Closing Date” shall mean the date that the Closing takes place.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Commission or SEC” shall mean the United States Securities and Exchange Commission.
“Commission Reports” shall mean the Forms 10-K, 10-Q, 8-K, and other Commission filings required by the Securities Exchange Act of 1934, as amended, and Securities Act of 1933, as amended, which have been filed by the Company with the Commission as at the date of this Agreement.
“Company” shall have the meaning set forth in the recitals.
“Company Common Stock” shall mean the common stock of the Company at par value of USD $0.001 per share.
“Confidential Information” means any information concerning the businesses and affairs of LDD HK or the Company that is not already generally available to the public.
“Effective Time” shall have the meaning set forth in Section 2.3.
“Environmental Laws” shall mean (i) the common law, and (ii) any and all federal, state and local statutes, regulations, rules, orders, ordinances or permits of any governmental authority which pertain to health, the environment, wildlife and natural resources in effect in any and all jurisdictions in which the applicable company conducts business.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Documents” shall have the meaning set forth in Section 3.2.
“Exchange Shares” shall have the meaning set forth in the recitals.
“Financial Statements” shall mean LDD HK and Subsidiaries’ consolidated balance sheets, consolidated statement of operations, changes in stockholders’ equity and cash flow as of and for the fiscal years ended June 30, 2020 and 2021, and the three months ended September 30, 2021. Financial statements for the years ended June 30, 2021 and 2020, shall be audited by an auditor acceptable to the Company in its discretion.
2
“GAAP” shall mean United States generally accepted accounting principles.
“Guaranty” shall mean, as to any Person, all liabilities or obligations of such Person, with respect to any indebtedness or other obligations of any other Person, which have been guaranteed, directly or indirectly, in any manner by such Person, through an agreement, contingent or otherwise, to purchase such indebtedness or obligation, or to purchase or sell property or services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or obligation or to guarantee the payment to the owner of such indebtedness or obligation against loss, or to supply funds to or in any manner invest in the debtor.
“HK Shareholders” shall mean the holders of the HK Ordinary Shares.
“Investments” shall mean, with respect to any Person, all advances, loans or extensions of credit to any other Person (except for extensions of credit to customers in the ordinary course of business), all purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any other investment in any other Person, including partnerships or joint ventures (whether by capital contribution or otherwise) or other similar arrangement (whether written or oral) with any Person, including, but not limited to, arrangements in which (i) the first Person shares profits and losses of the other Person, (ii) any such other Person has the right to obligate or bind the first Person to any third party, or (iii) the first Person may be wholly or partially liable for the debts or obligations of such partnership, joint venture or other entity.
“HK Ordinary Stock” shall mean the ordinary stock of LDD HK.
“Knowledge” shall mean, in the case of any Person who is an individual, knowledge that a reasonable individual under similar circumstances would have after such reasonable investigation and inquiry as such reasonable individual would under such similar circumstances make, and in the case of a Person other than an individual, the knowledge that a senior officer, director or manager of such Person, or any other Person having responsibility for the particular subject matter at issue of such Person, would have after such reasonable investigation and inquiry as such senior officer, director, manager or responsible Person would under such similar circumstances make.
“Law” and “Laws” shall mean any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law.
“LDD HK” shall Longduoduo Company Limited (Company No.: _3070721), a limited company incorporated under the laws of Hong Kong having its registered office at _Unit B & C 20/F Full Win Commercial Centre 573 Nathan Road ,Yaumatei, Kowloon, Hong Kong_.
“Liabilities” shall mean any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise, including, without limitation, liabilities on account of taxes, other governmental charges or Litigation, whether or not of a kind required by GAAP or International Financial Reporting Standards, as applicable, to be set forth on a financial statement.
“Litigation” shall mean any actions, suits, investigations, claims or proceedings.
3
“Material Adverse Effect” shall mean any event or condition of any character which has had or could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), results of operations, assets, liabilities, properties, or business of the Company or LDD HK, as applicable.
“Person” shall mean any natural person, corporation, unincorporated organization, partnership, association, limited liability company, joint stock company, joint venture, trust or government, or any agency or political subdivision of any government or any other entity.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Subsidiary” of any Person shall mean any Person, whether or not capitalized, in which such Person owns, directly or indirectly, an equity interest of more than fifty percent (50%), or which may effectively be controlled, directly or indirectly, by such Person.
“Tax” and “Taxes” shall mean (i) all income, excise, gross receipts, ad valorem, sales, use, employment, franchise, profits, gains, property, transfer, payroll, withholding, severance, occupation, social security, unemployment compensation, alternative minimum, value added, intangibles or other taxes, fees, stamp taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any governmental or regulatory authority with respect thereto, (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of a consolidated, combined, unitary or aggregate group for any taxable period, and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of being a transferee or successor to any person or as a result of any express or implied obligation to indemnify any other Person.
“Tax Returns” shall mean returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.
“Termination Date” shall have the meaning set forth in Section 6.6.
The words “hereof”, “herein” and “hereunder” and the words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms defined in the singular shall have a comparable meaning when used in the plural and vice versa.
4
ARTICLE II
Transactions; Terms of Share Exchange; Manner of Exchange
2.1 Exchange of Shares. At the Closing (as hereinafter defined), one hundred percent (100%) of the HK Ordinary Shares shall be exchanged for 300,000,000 shares of Common Stock of LDD, par value $0.001. From and after the Closing Date, the HK Shareholders shall no longer own any HK Ordinary Shares and the certificates formerly representing HK Ordinary Shares shall represent the pro rata portion of the Exchange Shares issuable in exchange therefor pursuant to this Agreement as set forth in Exhibit A, attached hereto and incorporated herein. Any fractional shares that would result from such exchange will be rounded up to the next highest whole number. Subject to the terms and conditions of this Agreement, at the Closing (as defined below):
(a) Each HK Shareholder shall deliver to the Company the original HK Certificates evidencing all of the issued and outstanding HK Ordinary Shares and all appropriately executed transfer documents in favor of the Company, in order to effectively transfer to the Company the right, title and interest in and to all issued and outstanding HK Ordinary Shares.
(b) the exchange of the HK Ordinary shares for the Exchange Shares shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the Boards of Directors of the Company and LDD HK and the HK Shareholders; and
(c) the Securities issued by the Company in connection with this Agreement are issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933.
2.2 Time and Place of Closing. The closing of the transactions contemplated hereby (the “Closing”) will take place at 10:00 A.M. on the date following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby as set forth in Article VI (other than conditions with respect to actions the respective parties will take at the Closing itself) (the “Closing Date”). The Closing shall be held at the principal office of the Company, or at such other location or time as may be mutually agreed upon by the parties. The parties agree to take all necessary and prompt actions so as to complete the Closing on or before November 30, 2021, or at such other date as may be agreed to by the parties in writing.
2.3 Effective Time. The Exchange and other transactions contemplated by this Agreement shall become effective on the Closing Date (the “Effective Time”).
2.4 Legend On Securities. Each certificate for the Exchange Shares to be issued to any of the HK Shareholders shall bear substantially the following legend:
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “US SECURITIES ACT”), OR THE SECURITY LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERRED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM STATE SECURITIES LAWS. HEDGING TRANSACTION INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLAINCE WITH THE U.S. SECURITIES ACT”.
5
ARTICLE III
Representations and Warranties of the Company
In order to induce the LDD HK and the HK Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, the Company makes the representations and warranties set forth below to LDD HK and the HK Shareholders .
3.1 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite corporate power and authority to carry on its business as presently conducted. The Company is duly qualified to transact business and is in good standing as a foreign corporation in all jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification except where the failure to so qualify would not have a Material Adverse Effect on the Company.
3.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by the Company and all other agreements to be executed, delivered and performed by the Company pursuant to this Agreement (collectively, the “Exchange Documents”) and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate or individual action on the part of the Company. This Agreement and the Exchange Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligation of the Company, assuming the due authorization, execution and delivery of this Agreement by LDD HK and the HK Shareholders, enforceable in accordance with their respective terms, except to the extent that their enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity.
3.3 No Violation or Conflict. To the Knowledge of the Company, the execution, delivery and performance of this Agreement and the Exchange Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby: (a) do not violate or conflict with any provision of law or regulation (whether federal, state or local) of the United States of America, or any writ, order or decree of any court or governmental or regulatory authority, or any provision of the Company’s Articles of Incorporation or Bylaws; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default), cause the acceleration of performance, give to others any right of termination, amendment, acceleration or cancellation of or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any instrument or agreement to which the Company is a party or by which the Company or its properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing.
3.4 Consents of Governmental Authorities and Others. To the Knowledge of the Company, other than in connection with the provisions of the Exchange Act, and the Securities Act, no consent, approval, order or authorization of, or registration, declaration, qualification or filing with any federal, state or local governmental or regulatory authority, or any other Person, is required to be made by the Company in connection with the execution, delivery or performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, excluding the execution, delivery and performance of this Agreement by LDD HK and the HK Shareholders.
6
3.5 Conduct of Business. Since inception, the Company has conducted its business in the ordinary and usual course consistent with past practices and there has not occurred any Material Adverse Effect on the Company. Except as disclosed in the Commission Reports, the Company has not (a) amended its Articles of Incorporation or Bylaws; (b) issued, sold or authorized for issuance or sale, shares of any class of its securities (including, but not limited to, by way of stock split or dividend) or any subscriptions, options, warrants, rights or convertible securities or entered into any agreements or commitments of any character obligating it to issue or sell any such securities; (c) redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or any option, warrant or other right to purchase or acquire any such capital stock; (d) suffered any damage, destruction or loss, whether or not covered by insurance, which has had or could reasonably be expected to have a Material Adverse Effect; granted or made any mortgage or pledge or subjected itself or any of its properties or assets to any lien, charge or encumbrance of any kind; (f) made or committed to make any capital expenditures in excess of USD100,000; (g) become subject to any guaranty; (h) granted any increase in the compensation payable or to become payable to directors, officers or employees (including, without limitation, any such increase pursuant to any severance package, bonus, pension, profit-sharing or other plan or commitment); (i) entered into any agreement which would be a material agreement, or amended or terminated any existing material agreement; (j) to the Knowledge of the Company, been named as a party in any Litigation, or become the focus of any investigation by any government or regulatory agency or authority; (k) declared or paid any dividend or other distribution with respect to its capital stock; or (l) to the Knowledge of the Company, experienced any other event or condition of any character which has had, or could reasonably be expected to have, a Material Adverse Effect on the Company.
3.6 Litigation. There is no Litigation pending or, to the Knowledge of the Company, threatened before any court or by or before any governmental or regulatory authority or arbitrator, (a) affecting the Company (as plaintiff or defendant) or (b) against the Company relating to the Company Common Stock or the transactions contemplated by this Agreement.
3.7 Brokers. The Company has not employed any broker or finder, nor has it nor will it incur, directly or indirectly, any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement or the Exchange Documents.
3.8 Compliance. To the Knowledge of the Company, the Company is in compliance with all federal, state, local and foreign laws, ordinances, regulations, judgments, rulings, orders and other requirements applicable to the Company and its assets and properties. To the Knowledge of the Company, the Company is not subject to any judicial, governmental or administrative inquiry, investigation, order, judgment or decree.
3.9 Charter, Bylaws and Corporate Records. True, correct and complete copies of (a) the Articles of Incorporation of the Company, as amended and in effect on the date hereof, and (b) the Bylaws of the Company, as amended and in effect on the date hereof have been provided to LDD HK or the HK Shareholders.
3.10 Subsidiaries. The Company has no Subsidiaries.
7
3.11 Capitalization. As of the date of this Agreement, the authorized capital stock of the Company consists of 500,000,000 shares of common stock, USD $0.001 par value per share, and 30,000,000 shares of preferred stock, USD $0.001 par value per share. As of the date of this Agreement, no securities are issued and outstanding. All shares of outstanding Company Common Stock have been duly authorized, are validly issued and outstanding, and are fully paid and non-assessable.
3.12 Rights, Warrants, Options. There are no outstanding (a) securities or instruments convertible into or exercisable for any of the capital stock or other equity interests of the Company; (b) options, warrants, subscriptions, puts, calls, or other rights to acquire capital stock or other equity interests of the Company; or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by the Company of any capital stock or other equity interests of the Company, or any instruments convertible or exercisable for any such securities or any options, warrants or rights to acquire such securities.
3.14 Absence of Undisclosed Liabilities. Other than as disclosed by the financial statements of the Company, the Company does not have any Liabilities. The Company has no Knowledge of any circumstances, conditions, events or arrangements which may hereafter give rise to any Liabilities of the Company.
3.15 Real Property. The Company does not own any fee simple interest in real property. The Company does not lease, sublease, or have any other contractual interest in any real property.
3.16 Benefit Plans and Agreements. The Company is not a party to any Benefit Plan (as defined in Section 4.17) or employment agreement under which the Company currently has an obligation to provide benefits to any current or former employee, officer, director, consultant or advisor of the Company.
3.17 Material Agreements. The Company has no other material written and oral contracts or agreements including without limitation any: (i) contract resulting in a commitment or potential commitment for expenditure or other obligation or potential obligation, or which provides for the receipt or potential receipt, involving in excess of One Hundred Thousand Dollars (USD100,000.00) in any instance, or series of related contracts that in the aggregate give rise to rights or obligations exceeding such amount; (ii) indenture, mortgage, promissory note, loan agreement, guarantee or other agreement or commitment for the borrowing or lending of money or encumbrance of assets involving more than One Hundred Thousand Dollars (USD100,000.00) in each instance; (iii) agreement which restricts the Company from engaging in any line of business or from competing with any other Person; or (iv) any other contract, agreement, instrument, arrangement or commitment that is material to the condition (financial or otherwise), results of operation, assets, properties, liabilities, or business of the Company (collectively, and together with the employment agreements, Benefit Plans and all other agreements required to be disclosed on any schedule to this Agreement, the “Material Company Agreements”).
3.18 Disclosure. No representation or warranty of the Company contained in this Agreement, and no statement, report, or certificate furnished by or on behalf of the Company to LDD HK or the HK Shareholders pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading or omits to state a material fact necessary in order to provide LDD HK or the HK Shareholders with full and proper information as to the business, financial condition, assets, liabilities, and results of operation of the Company and the value of the properties or the ownership of the Company.
8
ARTICLE IV
Representations and Warranties of LDD HK and the HK Shareholders
In order to induce the Company to enter into this Agreement and to consummate the transactions contemplated hereby, each of LDD HK and each HK Shareholder, with respect to himself or herself, hereby severally and not jointly makes the representations and warranties set forth below to the Company.
4.1 Organization. LDD HK is a private limited company duly organized, validly existing and in good standing under the laws of the Hong Kong. LDD HK has all requisite corporate power and authority to carry on its business as presently conducted. LDD HK is duly qualified to transact business in Hong Kong and is in good standing as a foreign corporation in all jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification except where the failure to so qualify would not have a Material Adverse Effect on LDD HK.
4.2 Authorization; Enforceability. Each of LDD HK and such HK Shareholder has the capacity to execute, deliver and perform this Agreement. This Agreement and all other documents executed and delivered by LDD HK and such HK Shareholder pursuant to this Agreement have been duly executed and delivered and constitute the legal, valid and binding obligations of LDD HK and such HK Shareholder, as applicable, assuming the due authorization, execution and delivery of this Agreement by the Company, enforceable in accordance with their respective terms, except to the extent that their enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principals of equity. LDD HK has obtained the authorization and consent from each HK Shareholder to exchange the HK Ordinary Shares for the Exchange Shares and to otherwise consummate the transactions contemplated herein.
4.3 No Violation or Conflict. The execution, delivery and performance of this Agreement and the other documents contemplated hereby by LDD HK and the HK Shareholders and the consummation of the transactions contemplated hereby: (a) do not violate or conflict with any provision of law or regulation of Hong Kong, or any writ, order or decree of any court or governmental or regulatory authority, or any provision of LDD HK’s memorandum and articles of association; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default), cause the acceleration of performance, give to others any right of termination, amendment, acceleration or cancellation of or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of LDD HK or the HK Shareholders pursuant to any instrument or agreement to which LDD HK or any of the HK Shareholders is a party or by which the HK Shareholders, LDD HK or its or his properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing.
4.4 Consents of Governmental Authorities and Others. No consent, approval or authorization of, or registration, qualification or filing with governmental or regulatory authority, or any other Person, is required to be made by LDD HK or the HK Shareholders in connection with the execution, delivery or performance of this Agreement by LDD HK or the HK Shareholders or the consummation by LDD HK or the HK Shareholders of the transactions contemplated hereby, excluding the execution, delivery and performance of this Agreement by the Company.
9
4.5 Litigation. There is no Litigation pending or threatened before any court or by or before any governmental or regulatory authority or arbitrator (a) affecting LDD HK or the HK Shareholders (as plaintiff or defendant) or (b) against LDD HK or the HK Shareholders relating to LDD HK Ordinary Stock or the transactions contemplated by this Agreement.
4.6 Brokers. None of LDD HK nor, to the Knowledge of LDD HK, the HK Shareholders has employed any broker or finder, and has not incurred and will not incur, directly or indirectly, any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement or the Exchange Documents.
4.7 Compliance. LDD HK is in compliance with all ordinances, regulations, judgments, rulings, orders and other requirements imposed by the government of the Hong Kong applicable to LDD HK and its assets and properties, except where such noncompliance would not have a Material Adverse Effect on LDD HK. To the Knowledge of LDD HK and the HK Shareholders, it is not subject to any judicial, governmental or administrative inquiry, investigation, order, judgment or decree.
4.8 Charter, Bylaws and Corporate Records. The Company has been provided with true, correct and complete copies of (a) the memorandum and articles of association of LDD HK, as amended and in effect on the date hereof and (b) the minute book of LDD HK (containing all corporate proceedings from the date of incorporation). Such minute book contains accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and shareholders of LDD HK from the date of its incorporation to the date hereof which were memorialized in writing.
4.9 Capitalization. LDD HK has authorized 10,000 shares of LDD HK Ordinary Stock, of which Ten Thousand (10,000) shares are issued and outstanding. The issued and outstanding shares of LDD HK Ordinary Stock constitute one hundred percent (100%) of the issued and outstanding capital stock of LDD HK. All of the outstanding shares of LDD HK Ordinary Stock have been duly authorized, are validly issued and outstanding, and are fully paid and non-assessable. There are no dividends which have accrued or been declared but are unpaid on the capital stock of LDD HK.
4.10 Subsidiaries. Except for the subsidiaries set forth in Exhibit B attached hereto and incorporated herein, LDD HK has no Subsidiaries.
4.11 Rights, Warrants, Options. There are no outstanding: (a) securities or instruments convertible into or exercisable for any of the capital stock or other equity interests of LDD HK; (b) options, warrants, subscriptions or other rights to acquire capital stock or other equity interests of LDD HK; or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by LDD HK of any capital stock or other equity interests of LDD HK, or any instruments convertible or exercisable for any such securities or any options, warrants or rights to acquire such securities.
10
4.12 Conduct of Business. Except as set forth below, since June 30, 2020, LDD HK has conducted its business in the ordinary and usual course consistent with past practices and there has not occurred any Material Adverse Effect in the condition (financial or otherwise), results of operations, properties, assets, liabilities, or business of LDD HK. Since June 30, 2020, LDD HK has not (a) amended its memorandum and articles of association; (b) issued, sold or authorized for issuance or sale, shares of any class of its securities (including, but not limited to, by way of stock split or dividend) or any subscriptions, options, warrants, rights or convertible securities or entered into any agreements or commitments of any character obligating it to issue or sell any such securities; (c) redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or any option, warrant or other right to purchase or acquire any such capital stock; (d) suffered any damage, destruction or loss, whether or not covered by insurance, which has had or could reasonably be expected to have a Material Adverse Effect on any of its properties, assets, or business; granted or made any mortgage or pledge or subjected itself or any of its properties or assets to any lien, charge or encumbrance of any kind; (f) made or committed to make any capital expenditures in excess of USD100,000; (g) become subject to any guaranty; (h) granted any increase in the compensation payable or to become payable to directors, officers or employees (including, without limitation, any such increase pursuant to any severance package, bonus, pension, profit-sharing or other plan or commitment); (i) entered into any agreement which would be a material agreement, or amended or terminated any existing material agreement; (j) been named as a party in any Litigation, or become the focus of any investigation by any government or regulatory agency or authority; (k) declared or paid any dividend or other distribution with respect to its capital stock; or (l) experienced any other event or condition of any character which has had, or could reasonably be expected to have, a Material Adverse Effect on LDD HK.
4.13 Taxes.
(a) all Taxes payable by LDD HK (if any) have been fully and timely paid or are fully provided for;
(b) neither LDD HK nor any Person on behalf of or with respect to LDD HK has executed or filed any agreements or waivers extending any statute of limitations on or extending the period for the assessment or collection of any Tax. No power of attorney on behalf of LDD HK with respect to any Tax matter is currently in force;
(c) LDD HK is not a party to any Tax-sharing agreement or similar arrangement with any other party (whether or not written), and LDD HK has not assumed any Tax obligations of, or with respect to any transaction relating to, any other Person, or agreed to indemnify any other Person with respect to any Tax;
(d) No Tax Return concerning or relating to LDD HK or its operations has ever been audited by a government or taxing authority, nor is any such audit in process or pending, and LDD HK has not been notified of any request for such an audit or other examination. To the Knowledge of the HK Shareholders, no claim has been made by a taxing authority in a jurisdiction where Tax Returns concerning or relating to LDD HK or its operations have not been filed, that it is or may be subject to taxation by that jurisdiction;
(e) Except for consolidations and combinations with the Subsidiaries set forth in Exhibit B attached hereto and incorporated herein, LDD HK has never been included in any consolidated, combined, or unitary Tax Return; and
(f) LDD HK has complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes, and has duly and timely withheld from employee salaries, wages and other compensation, and has paid over to the appropriate taxing authorities, all amounts required to be so withheld and paid over for all periods under all applicable laws.
4.14 Environmental Matters. (a) No real property used by LDD HK presently or in the past has been used to manufacture, treat, store, or dispose of any hazardous substance and such property is free of all such substances such that the condition of the property is in compliance with applicable Environmental Laws; (b) LDD HK is in compliance with all Environmental Laws applicable to LDD HK or its business as a result of any hazardous substance utilized by LDD HK in its business or otherwise placed at any of the facilities owned, leased or operated by LDD HK, or in which LDD HK has a contractual interest; (c) LDD HK has not received any complaint, notice, order, or citation of any actual, threatened or alleged noncompliance by LDD HK with any Environmental Laws; and (d) there is no Litigation pending or threatened against LDD HK with respect to any violation or alleged violation of the Environmental Laws, and there is no reasonable basis for the institution of any such Litigation.
(a) 4.15 Financial Statements. The Financial Statements shall: (a) have been prepared in accordance with the books of account and records of LDD HK; (b) fairly present, and are true, correct and complete statements in all material respects of LDD HK’s financial condition and the results of its operations at the dates and for the periods specified in those statements; and (c) have been prepared in accordance with International Financial Reporting Standards consistently applied with prior periods.
4.16 Absence of Undisclosed Liabilities. Other than as disclosed in the Financial Statements, LDD HK does not have any Liabilities. None of LDD HK nor the HK Shareholders haves any Knowledge of any circumstances, conditions, events or arrangements which may hereafter give rise to any Liabilities of LDD HK.
4.17 Employment Agreements; Employee Benefit Plans and Employee Payments. LDD HK is not a party to any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) under which LDD HK currently has an obligation to provide benefits to any current or former employee, officer, director, consultant or advisor of LDD HK (collectively, “Benefit Plans”).
11
4.18 Assets & Liabilities. LDD HK has good, clear and marketable title to all the tangible properties and tangible assets reflected in the Financial Statements as being owned by LDD HK or acquired after the date thereof which are, individually or in the aggregate, material to LDD HK’s business (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all material liens.
4.19 Disclosure. No representation or warranty of LDD HK or the HK Shareholders contained in this Agreement, and no statement, report, or certificate furnished by or on behalf of LDD HK or the HK Shareholders to the Company pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading or omits to state a material fact necessary in order to provide the Company with full and proper information as to the business, financial condition, assets, liabilities, or results of operation of LDD HK and the value of the properties or the ownership of LDD HK.
4.20 Further Representations and Warranties. Each of LDD HK and each of the HK Shareholders further hereby acknowledges, represents and warrants to the Company with respect to itself, himself or herself that:
a. The shares of the Company Common Stock (collectively, the “Securities”) to be issued to them pursuant to this Agreement HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCIES AND NO REGISTRATION STATEMENT HAS BEEN FILED WITH ANY REGULATORY AGENCY;
b. It, he or she is not an underwriter and each such holder would be acquiring the Securities solely for investment for his or her own account and not with a view to, or for, resale in connection with any distribution within the meaning of the federal securities act, the state securities acts or any other applicable state securities acts;
c. It, he or she is not a person in the United States of America and at the time the buy order was originated, such holder was outside the United States of America and is not a citizen of the United States (a “U.S. person”) as that term is defined in Regulation S of the Securities Act and was not formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act;
d. It, he or she understands the speculative nature and risks of investments associated with the Company, and confirms that the acquisition of the Securities would be suitable and consistent with his or her investment program and that their financial position enables him or her to bear the risks of this investment;
e. To the extent that any federal, and/or state securities laws shall require, it, he or she hereby agrees that any securities acquired pursuant to this Agreement shall be without preference as to assets;
f. The certificate for shares of the Securities will contain a legend that transfer is prohibited except in accordance with the provisions of Regulation S and Regulation D;
g. It, he or she has had the opportunity to ask questions of the Company and has received all information from the Company to the extent that the Company possessed such information, necessary to evaluate the merits and risks of any investment in the Company. Further, it, he or she has received: (1) all material books, records and financial statements of the Company; (2) all material contracts and documents relating to the proposed transaction; (3) all documents and reports filed with the Commission; and, (4) an opportunity to question the appropriate executive officers or partners;
h. It, he or she has satisfied the suitability standards and securities laws imposed by the government of the respective country he or she resides;
i. It, he or she has adequate means of providing for his or her current needs and personal contingencies and has no need to sell the Securities acquired in the foreseeable future (that is at the time of the investment, it, he or she can afford to hold the investment for an indefinite period of time);
j. It, he or she has sufficient knowledge and experience in financial matters to evaluate the merits and risks of this investment and further, is capable of reading and interpreting financial statements. Further, it, he or she is a “sophisticated Shareholder” as that term is defined in applicable court cases and the rules, regulations and decisions of the United States Securities and Exchange Commission;
k. The offer and sale of the Securities referred to herein is being made outside the United States within the meaning of and in full compliance with Regulation S;
l. It, he or she is not a U. S. person within the meaning of Regulation S and is not acquiring the Shares for the account or benefit of any U. S. person;
m. It, he or she hereby agrees not to engage in any hedging transactions involving the securities described herein unless in compliance with the Securities Act and Regulation S or Regulation D, as applicable, promulgated thereunder; and
n. It, he or she agrees to resell such
Securities only in accordance with the provisions of Regulation S or Regulation D, as applicable, pursuant to registration under the Securities
Act, or pursuant to an available exemption from registration.
12
ARTICLE V
Additional Agreements
5.1 Survival of the Representations and Warranties. The representations and warranties and covenants set forth in Article III and Article IV of this Agreement shall survive the Closing until the expiration of twelve (12) months from the Closing Date. No claim for indemnity with respect to breaches of representations and warranties may be brought by any party hereto, other than a claim for fraud or intentional misrepresentation, after expiration of the applicable survival period therefore as set forth in this Section 5.1.
5.2 Investigation. The representations, warranties, covenants and agreements set forth in this Agreement shall not be affected or diminished in any way by any investigation (or failure to investigate) at any time by or on behalf of the party for whose benefit such representations, warranties, covenants and agreements were made. All statements contained herein or in any schedule, certificate, exhibit, list or other document required to be delivered pursuant hereto, shall be deemed to be representations and warranties for purposes of this Agreement; provided, that any knowledge or materiality qualifications contained herein shall be applicable to such other documents.
5.3 General Confidentiality. Each of the parties hereto will treat and hold as such all of the Confidential Information of the other party, refrain from using any of the Confidential Information except in connection with this Agreement, and unless there is a closing on the Exchange, deliver promptly to the owner of such Confidential Information or destroy, at the request and option of the owner of the Confidential Information, all tangible embodiments (and all copies) of the Confidential Information which are in its possession. In the event that any of the parties is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, that party will notify the affected party promptly of the request or requirement so that the affected party may seek an appropriate protective order or waive compliance with the provisions of this Section 5.3. If, in the absence of a protective order or the receipt of a waiver hereunder, any of the parties is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, that Party may disclose the Confidential Information to the tribunal; provided, however, that the disclosing party shall use its commercially reasonable efforts to obtain, at the request of the affected party, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the affected party shall designate. The foregoing provisions shall not apply to any Confidential Information which is generally available to the public immediately prior to the time of disclosure.
5.4 Tax Treatment. None of the Company, LDD HK nor the HK Shareholders will knowingly take any action, written or otherwise, which would result in the transactions contemplated by this Agreement not being accounted for as tax-free exchange under the Code.
5.5 General. In case at any time after the Closing Date any further action is necessary to carry out the purposes of this Agreement, each of the parties will take such further action (including the execution and delivery of such further instruments and documents) as the other party reasonably may request, all at the sole cost and expense of the requesting party.
13
ARTICLE VI
Closing; Deliveries; Conditions Precedent
6.1 Closing; Effective Date. All proceedings taken and all documents executed at the Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed.
6.2 Deliveries
(a) At Closing, the Company shall deliver the following documents to the LDD HK:
(i) a copy of the resolutions of the Board of Directors of the Company (i) approving the acquisition of the HK Ordinary Shares by the Company from the HK Shareholders in exchange for Three Hundred Million (300,000,000) shares of the Company Common Stock in aggregate under the terms and conditions of this Agreement; and (ii) the issuance of the Exchange Shares to the HK Shareholders in accordance with Section 2 hereof and the other documents contemplated hereby and the transactions contemplated hereby and thereby.
(ii) the certificate referred to in Section 6.3(c).
(b) At Closing, the HK Shareholders and LDD HK shall deliver the following documents to the Company:
(i) the certificates or Records representing all of the HK Ordinary Shares (i.e. 100% of the issued and outstanding shares of HK Ordinary Shares);
(ii) a certificate from a director or the company secretary of LDD HK, as of a recent date, as to the good standing of LDD HK and certifying its Memorandum and Articles of Association;
(iii) certificates, dated the Closing Date, signed by the Chief Executive Officer of LDD HK setting forth that authorizing resolutions were adopted by LDD HK’s Board of Directors approving the transfer of all the HK Ordinary Shares to the Company, this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby;
(iv) the Financial Statements; and
(v) the certificates referred to in Section 6.4(d).
6.3 Conditions Precedent to the Obligations of LDD HK and the HK Shareholders . Each and every obligation to consummate the transactions described in this Agreement and any and all liability of LDD HK and the HK Shareholders to the Company shall be subject to the following conditions precedent:
(a) Representations and Warranties True. Each of the representations and warranties of the Company contained herein or in any certificate or other document delivered pursuant to this Agreement or in connection with the transactions contemplated hereby shall be true and correct in all material respects as of the Closing Date with the same force and effect as though made on and as of such date.
(b) Performance. The Company shall have performed and complied in all material respects with all of the agreements, covenants and obligations required under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) The Company’s Certificate. The Company shall have delivered to LDD HK a certificate dated the Closing Date and signed by a director of the Company, certifying that the conditions specified in Sections 6.3(a) and (b) above have been fulfilled.
(d) Consents. The Company shall have obtained all authorizations, consents, waivers and approvals as may be required to consummate the transactions contemplated by this Agreement.
14
6.4 Conditions Precedent to the Obligations of the Company. Each and every obligation of the Company to consummate the transactions described in this Agreement and any and all liability of the Company to LDD HK and the HK Shareholders shall be subject to the fulfilment of the following conditions precedent:
(a) Representations and Warranties True. Each of the representations and warranties of LDD HK and the HK Shareholders contained herein or in any certificate or other document delivered pursuant to this Agreement or in connection with the transactions contemplated hereby shall be true and correct in all material respects as of the Closing Date with the same force and effect as though made on and as of such date.
(b) Performance. LDD HK and the HK Shareholders shall have performed and complied in all material respects with all of the agreements, covenants and obligations required under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or contemplated by this Agreement, no event or condition shall have occurred which has adversely affected or may adversely affect in any respect the condition (financial or otherwise) of LDD HK between the date of execution of this Agreement and the Closing Date.
(d) Certificates. LDD HK and the HK Shareholders shall have delivered a certificate or Records addressed to the Company, dated the Closing Date, certifying that the conditions specified in Sections 6.4(a), (b) and (c) above have been fulfilled.
(e) Consents. LDD HK and the HK Shareholders shall have obtained all authorizations, consents, waivers and approvals as may be required to consummate the transactions contemplated by this Agreement, including but not limited to those with respect to any material agreement of LDD HK.
(f) Due Diligence Review. The Company shall have completed within thirty (30) days from the date of this Agreement of its due diligence investigation of LDD HK to its satisfaction.
(g) Financial Statements. LDD HK shall have delivered to the Company the Financial Statements. The Financial Statements shall: (a) have been prepared in accordance with the books of account and records of LDD HK; (b) fairly present, and are true, correct and complete statements in all material respects of LDD HK’s financial condition and the results of its operations at the dates and for the periods specified in those statements; and (c) have been prepared in accordance with United States GAAP consistently applied with prior periods.
6.5 Best Efforts. Subject to the terms and conditions provided in this Agreement, each of the parties shall use their respective best efforts in good faith to take or cause to be taken as promptly as practicable all reasonable actions that are within its power to cause to be fulfilled those of the conditions precedent to its obligations or the obligations of the other parties to consummate the transactions contemplated by this Agreement that are dependent upon its actions, including obtaining all necessary consents, authorizations, orders, approvals and waivers.
6.6 Termination. This Agreement and the transactions contemplated hereby may be terminated at any time prior to the occurrence of the Closing by the mutual consent of the parties hereto; (b) by the Company, if the Closing has not occurred on or prior to December 1, 2021, or such other date as may be agreed to by the parties hereto (such date of termination being referred to herein as the “Termination Date”), provided the failure of the Closing to occur by such date is not the result of the failure of the party seeking to terminate this Agreement to perform or fulfil any of its obligations hereunder; (d) by the Company at any time at or prior to Closing in its sole discretion if (i) any of the representations or warranties of the HK Shareholders or LDD HK in this Agreement are not in all material respects true, accurate and complete or if the HK Shareholders or LDD HK breaches in any material respect any covenant contained in this Agreement, provided that such misrepresentation or breach is not cured within fourteen (14) days after notice thereof, but in any event prior to the Termination Date or (ii) any of the conditions precedent to the obligation of LDD HK and the HK Shareholders to conduct the Closing have not been satisfied by the date required thereof. If this Agreement is terminated pursuant to this Section 6.6, written notice thereof shall promptly be given by the party electing such termination to the other party and, subject to the expiration of the cure periods provided in clauses (c) and (d) above, if any, this Agreement shall terminate without further actions by the parties and no party shall have any further obligations under this Agreement.
6.7 Shares Issuance. Within Thirty (30) days after the Closing, the Company shall take all necessary steps to issue and deliver to the HK Shareholders the share certificates or other records evidencing the Exchange Shares issuable in the names of the respective HK Shareholders for the respective number of shares to which such HK Shareholders are entitled pursuant to Section 2 hereof.
15
ARTICLE VII
Miscellaneous
7.1 Notices. Any notice, demand, claim or other communication under this Agreement shall be in writing and delivered personally or sent by certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses as follows (or at such other addresses as shall be specified by the parties by like notice):
| If to the Company: | Longduoduo Company Limited |
419, Floor 4, Comprehensive Building
Second Light Hospital, Ordos Street
Yuquan District, Hohhot, Inner Mongolia, China
Attn: Secretary
If to LDD HK or the HK Shareholders :To the address set forth below LDD HK
or the HK Shareholder’s signature, as applicable
Such notice shall be deemed delivered upon receipt against acknowledgment thereof if delivered personally, on the third business day following mailing if sent by certified mail, upon transmission against confirmation if sent by facsimile and on the next business day if sent by overnight courier.
7.2 Entire Agreement; Incorporation. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein contain every obligation and understanding between the parties relating to the subject matter hereof and merges all prior discussions, negotiations, agreements and understandings, both written and oral, if any, between them, and none of the parties shall be bound by any conditions, definitions, understandings, warranties or representations other than as expressly provided or referred to herein. All schedules, exhibits and other documents and agreements executed and delivered pursuant hereto are incorporated herein as if set forth in their entirety herein.
7.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, legal representatives, and permitted assigns.
7.4 Assignment. This Agreement may not be assigned by any party without the written prior consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
7.5 Waiver and Amendment. Any representation, warranty, covenant, term or condition of this Agreement which may legally be waived, may be waived, or the time of performance thereof extended, at any time by the party hereto entitled to the benefit thereof, and any term, condition or covenant hereof (including, without limitation, the period during which any condition is to be satisfied or any obligation performed) may be amended by the parties thereto at any time. Any such waiver, extension or amendment shall be evidenced by an instrument in writing executed on behalf of the party against whom such waiver, extension or amendment is sought to be charged. No waiver by any party hereto, whether express or implied, of its rights under any provision of this Agreement shall constitute a waiver of such party’s rights under such provisions at any other time or a waiver of such party’s rights under any other provision of this Agreement. No failure by any party thereof to take any action against any breach of this Agreement or default by another party shall constitute a waiver of the former party’s right to enforce any provision of this Agreement or to take action against such breach or default or any subsequent breach or default by such other party.
7.6 No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement, except as otherwise provided herein.
16
7.7 Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof, shall be declared invalid, void or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such invalid, void or unenforceable provision with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, void or unenforceable provision.
7.8 Expenses. Except as otherwise provided herein, each party agrees to pay, without right of reimbursement from the other party, the costs incurred by it incident to the performance of its obligations under this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, costs incident to the preparation of this Agreement, and the fees and disbursements of counsel, accountants and consultants employed by such party in connection herewith.
7.9 Headings. The table of contents and the section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of any provisions of this Agreement.
7.10 Other Remedies; Injunctive Relief. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that subject to Section 7.13 hereof, the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court in the state of Nevada, this being in addition to any other remedy to which they are entitled at law or in equity. In any action at law or suit in equity to enforce this Agreement or the rights of the parties hereunder, the prevailing party in any such action or suit shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.
7.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Facsimile signatures shall be deemed valid and binding.
7.12 Governing Law. This Agreement has been entered into and shall be construed and enforced in accordance with the laws of the State of Delaware, without reference to the choice of law principles thereof.
7.13 Jurisdiction and Venue. This Agreement shall be subject to the jurisdiction of the courts of the State of Nevada. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of Nevada by virtue of a failure to perform an act required to be performed in the State of Nevada and irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of Nevada for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in the State of Nevada, and further irrevocably waive any claim that any suit, action or proceeding brought in the State of Nevada has been brought in an inconvenient forum.
7.14 Participation of Parties. The parties hereby agree that they have consulted their respective counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding, or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
7.15 Further Assurances. The parties hereto shall deliver any and all other instruments or documents reasonably required to be delivered pursuant to, or necessary or proper in order to give effect to, all of the terms and provisions of this Agreement including, without limitation, all necessary stock powers and such other instruments of transfer as may be necessary or desirable to transfer full and complete ownership of the HK Ordinary Shares to the Company or the issuance of the Exchange Shares to the holders of the HK Ordinary Shares, as the case may be, free and clear of any liens or encumbrances.
7.16 Publicity. No public announcement or other publicity concerning this Agreement or the transactions contemplated hereby shall be made without the prior written consent of both the Company and LDD HK as to form, content, timing and manner of distribution. Nothing contained herein shall prevent any party from making any filing required by federal or state securities laws or stock exchange rules of the United States of America.
7.17 No Solicitation. None of LDD HK, the HK Shareholders nor the Company shall authorize or permit any of its officers, directors, agents, representatives, managers, members, agents, or advisors to solicit, initiate or encourage or take any action to facilitate the submission of inquiries, proposals or offers from any person relating to any matter concerning any merger, consolidation, business combination, recapitalization or similar transaction involving LDD HK or the Company, respectively, other than the transaction contemplated by this Agreement or any other transaction the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the Exchange or which would or could be expected to dilute the benefits to each of the parties of the transactions contemplated hereby. LDD HK, the HK Shareholders and the Company, as the case may be, will immediately cease and cause to be terminated any existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
17
IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written.
| LONGDUODUO COMPANY LIMITED | ||
| a Nevada Corporation | ||
| By: | ||
| Zhou Hongxiao, Chief Executive Officer | ||
| LONGDUODUO COMPANY LIMITED | ||
| a Hong Kong private limited company | ||
| By: | ||
| Zhang Liang | ||
| Its: | CEO and Director | |
Approved and Accepted by the LONGDUODUO COMPANY LIMITED Shareholders as of _________, 2021.
| Zhang Liang | Fan Meiying | Kou Yufei | Wang Weidong | |||
| Guo Rugang | Cui Lixiang |
Meng Yuzhen |
Yue Xiumei | |||
Zhang Hua |
Zhao Qingguo |
Wu Yongli |
Huo Haiqing | |||
Xing Yan Hua |
Chen Wentong |
Xing Yanhui |
Xing Yanpeng | |||
Wang He |
Wang Yujie |
Li Qiaozhen |
Guo Yanhua | |||
Liu Jinping |
Wang Weihua |
Dai Ruixiang |
Wang Li | |||
Yan Miaoyi |
Zhang Haifeng |
Zhang Suxiang |
Ni Yanhua | |||
Zhang Xia |
Wei Wenxing |
Deng Weiping |
Liu Jiazhong | |||
Wu Zhaoyong |
Xu Huibo |
Lu Yuewei |
Guo Xiaozhen | |||
Gao Ying |
Li Yuqing |
Duan Erfen |
Wudun Qiqige | |||
Yang Gaojun |
Li Zhongfeng |
Wang Junying |
Zhang Wei | |||
| Zhang Yong | ||||||
EXHIBIT A: Exchange of Shares
| Longduoduo (HK) Shareholder | Longduoduo (HK) Shares | Longduoduo (NV) Exchange Shares | ||||||
| Zhang Liang | 5,131.00 | 153,920,147.00 | ||||||
| Fan Meiying | 33.00 | 1,000,000.00 | ||||||
| Kou Yufei | 33.00 | 1,000,000.00 | ||||||
| Wang Weidong | 33.00 | 1,000,000.00 | ||||||
| Guo Rugang | 33.00 | 1,000,000.00 | ||||||
| Cui Lixiang | 33.00 | 1,000,000.00 | ||||||
| Meng Yuzhen | 33.00 | 1,000,000.00 | ||||||
| Yue Xiumei | 33.00 | 1,000,000.00 | ||||||
| Zhang Hua | 33.00 | 1,000,000.00 | ||||||
| Zhao Qingguo | 33.00 | 1,000,000.00 | ||||||
| Wu Yongli | 33.00 | 1,000,000.00 | ||||||
| Huo Haiqing | 17.00 | 500,000.00 | ||||||
| Mary | 400.00 | 12,000,000.00 | ||||||
| Chen Wentong | 50.00 | 1,500,000.00 | ||||||
| Julia | 100.00 | 3,000,000.00 | ||||||
| Xing Yanpeng | 50.00 | 1,500,000.00 | ||||||
| Wang He | 133.00 | 4,000,000.00 | ||||||
| Wang Yujie | 106.00 | 3,165,000.00 | ||||||
| Li Qiaozhen | 532.00 | 15,955,020.00 | ||||||
| Guo Yanhua | 106.00 | 3,184,144.00 | ||||||
| Liu Jinping | 27.00 | 817,580.00 | ||||||
| Wang Weihua | 155.00 | 4,664,097.00 | ||||||
| Dai Ruixiang | 11.00 | 322,144.00 | ||||||
| Wang Li | 71.00 | 2,119,750.00 | ||||||
| Yan Miaoyi | 29.00 | 869,962.00 | ||||||
| Zhang Haifeng | 18.00 | 532,000.00 | ||||||
| Zhang Suxiang | 130.00 | 3,887,598.00 | ||||||
| Ni Yanhua | 21.00 | 620,000.00 | ||||||
| Zhang Xia | 35.00 | 1,039,059.00 | ||||||
| Wei Wenxing | 21.00 | 637,850.00 | ||||||
| Deng Weiping | 13.00 | 378,500.00 | ||||||
| Liu Jiazhong | 509.00 | 15,271,905.00 | ||||||
| Niu Shuhong | 23.00 | 687,051.00 | ||||||
| Huang Xiao | 13.00 | 390,100.00 | ||||||
| Chen Fengguang | 22.00 | 662,776.00 | ||||||
| Wang Hua | 37.00 | 1,111,716.00 | ||||||
| Wu Zhaoyong | 216.00 | 6,465,922.00 | ||||||
| Xu Huibo | 35.00 | 1,060,000.00 | ||||||
| Lu Yuewei | 123.00 | 3,687,766.00 | ||||||
| Guo Xiaozhen | 559.00 | 16,766,741.00 | ||||||
| Gao Ying | 100.00 | 3,000,000.00 | ||||||
| Li Yuqing | 24.00 | 727,864.00 | ||||||
| Duan Erfen | 79.00 | 2,355,308.00 | ||||||
| Wudun Qiqige | 100.00 | 3,000,000.00 | ||||||
| Yang Gaojun | 167.00 | 5,000,000.00 | ||||||
| Li Zhongfeng | 167.00 | 5,000,000.00 | ||||||
| Wang Junying | 33.00 | 1,000,000.00 | ||||||
| Zhang Wei | 300.00 | 9,000,000.00 | ||||||
| Zhang Yong | 7.00 | 200,000.00 | ||||||
| Total | 10,000.00 | 300,000,000.00 | ||||||
EXHIBIT B
LDD HK SUBSIDIARIES
| Name | Place of Incorporation | |
| Longduoduo Health Technology Company Limited | China | |
| Inner Mongolia Qingguo Health Consulting Company Limited | China | |
| Inner Mongolia Rongbin Health Consulting Company Limited | China | |
| Inner Mongolia Chengheng Health Consulting Company Limited | China | |
| Inner Mongolia Tianju Health Consulting Company Limited | China |
Exhibit 10.2
Cooperation Agreement
Party A: Hohhot Aihua Traditional Chinese Medicine Hospital (General Partnership)
Principal: Hao Yongrui
Party B: Inner Mongolia Qinguo Health Consulting Co., Ltd
Principal: Zhang Liang
For the purpose of facilitating the implementation of “Great Health” medical technology service project in the Inner Mongolia, the Parties have, on basis of good faith, equality and mutual benefits, reached a consensus through friendly negotiation, as follows:
I. Content of consultation and cooperation
Party A and Party B shall mainly cooperate with each other with regard to the following programs, “Immunological Ozonated Autohemotherapy”, “Meridian-regulating and Consciousness-restoring Iatrotechnics”, “PRP”, “Relaxation therapy”, “Vegetative Nerve Regulation (anterior)” and “Conventional Therapy” etc.
1. Party A shall offer the venue & qualifications for the cooperation programs as well as the management of medical quality & safety, medical staff, medicines and consumables etc.
2. Party B shall carry out the market operation and customer relationship management for “Immunological Ozonated Autohemotherapy”, “Meridian-regulating and Consciousness-restoring Iatrotechnics”,and such businesses in a legitimate and normative manner.
II. Term of cooperation
Term of cooperation between the Parties is five (5) years, from April 01, 2021 until March 31, 2026.
III. Rights, duties and obligations of Party A
1. Party A shall take charge of procurement and quality control for doctor resources and related medicines & consumables for this Project.
2. Party A shall be responsible for equipment operation and further medical services for the customers.
3. Party A shall control the medical risks. In case of any medical accident, Party A shall assume the compensation solely while Party B shall not bear any liability of compensation.
4. Party A is obliged to cooperate with Party B in completing the market exploitation; to attend related activities organized by Party B; and to allow Party B to use its trademark, designation and image for facilitating those activities in a legitimate and normative manner.
5. Party A shall provide the negotiation room, waiting room and office (the entire fourth floor of Aihua Hospital, 700 m2 in total) to Party B, rent free. During the cooperation period, all utilities and such fees for heating and property management shall be undertaken by Party B, at the amount determined as per the actual consumption.
6. Party A shall give the settlement receipt to Party B on a regular basis.
7. Party A is entitled to from time to time know the operation conditions of this Project while Party B shall cooperate actively.
IV. Rights, duties and obligations of Party B
1. Party B shall assure the legitimacy of all businesses executed, be responsible for the development and benefits of both Parties and handle with all contradictions and disputes arising on the operation market. In such a case, Party A shall not assume any liability.
2. Where any dispute or compensation is arisen from the event that any customer is not satisfied with the therapeutic effect after treatment, both Parties shall make joint efforts to give solution to the customer according to the practical conditions and do their best to maintain good relations with the customer and keep the customer satisfied.
3. Party A is the sole strategic partner of Party B with respect to the “Great Health” Project in Hohhot.
4. Party B shall make sure that those health programs promoted are mainly those programs cooperated with Aihua TCM Hospital.
5. Provided that any customer has any demand for medical care in the course of business, Party B shall preferentially recommend the doctors and experts from Aihua Hospital to the customer, for assessment, determination of therapeutic schedule and medical treatment.
V. Liabilities for breach of contract
1. Party A shall strictly follow the foregoing provisions and in case of any violation, compensate Party B for all actual economic losses arising therefrom.
2. Party B shall strictly follow the foregoing provisions and in case of any violation, compensate Party A for all actual economic losses arising therefrom.
VI. Settlement of disputes
1. This Agreement is governed by laws of the People’s Republic of China.
2. If there is any dispute arising from or in connection with the existence, effect, performance, interpretation and termination of this Agreement, both Parties shall solve through friendly negotiation; if negotiation fails or either Party refuses to negotiate, either Party is entitled to submit it to the local court or arbitration committee of Hohhot City for settlement.
VII. This Agreement is made in duplicate and shall come into force as from the date when both Parties sign their names on it. Each Party shall have two copies for record. Provided that any content of this Agreement must be modified, the supplementary agreement shall have the same effect with this Agreement.
VIII. Both Parties are willing to conclude this Agreement and have read & understood, and agreed to be bound by all provisions herein.
(The reminder of this page is intentionally left
blank.)
2
On behalf of
Party A: Hohhot Aihua Traditional Chinese Medicine Hospital (General Partnership) (seal)
Legal representative or authorized agent: Hao Yongrui (signature)
Date: March 26, 2021
On behalf of
Party B: Inner Mongolia Qinguo Health Consulting Co., Ltd (seal)
Legal representative or authorized agent: Zhang Liang (signature)
Date: March 26, 2021
3
Exhibit 10.3
0472-7151120
Cooperation Agreement
for
“Great Health” Medical Technology Service Project
between
Baotou Jinshi Zhongyi Nephropathy Hospital
and
Longduoduo Health Technology Co., Ltd
Party A: Baotou Jinshi Zhongyi Nephropathy Hospital
Legal Representative: Jin Wei
Party B: Longduoduo Health Technology Co., Ltd
Legal Representative: Zhang Liang
For the purpose of facilitating the implementation of “Great Health” medical technology service project in the Inner Mongolia, the Parties have, based on good faith, equality and mutual benefits, reached a consensus through friendly negotiation, as follows:
I. Content of consultation and cooperation
Party A and Party B shall mainly cooperate with each other with regard to the following programs, “Meridian-regulating and Consciousness-restoring Iatrotechnics”, “Double Blood Purification”, “Immunological Ozonated Autohemotherapy” and such medical services.
1. Party A shall offer the venue & qualifications for the cooperation programs as well as the management of medical quality & safety, medical staff, medicines and consumables etc.
2. Party B shall carry out the market operation and customer relationship management for “Meridian-regulating and Consciousness-restoring Iatrotechnics”, “Double Blood Purification”, “Immunological Ozonated Autohemotherapy” and such businesses in a legitimate and normative manner.
II. Term of cooperation
Term of cooperation between the Parties is five (5) years, from October 15, 2020 until October 15, 2025.
III. Rights, duties and obligations of Party A
1. Party A shall take charge of procurement and quality control for doctor resources and related medicines & consumables for this Project.
2. Party A shall be responsible for equipment operation and further medical services for the customers.
| Page 1 of 6 |
0472-7151120
3. Party A shall control the medical risks. In case of any medical accident, Party A shall assume the compensation solely while Party B shall not bear any liability of compensation.
4. Party A is obliged to cooperate with Party B in completing the market exploitation; to attend related activities organized by Party B; and to allow Party B to use its trademark, designation and image (which cannot be used by Party B without written consent of Party A) for facilitating those activities in a legitimate and normative manner.
5. Party A shall provide the office area around 1,000 m2 (i.e., in view of Party A’s relocation, removal or such force majeure events, size of office area provided to Party B shall be arranged by Party A additionally) – the entire seventh floor of Jinshi Hospital, to Party B, rent free, to facilitate the business development of this Project. During the cooperation period, the total utilities and such fees for heating and property management shall be 10,000.00 Yuan (in words: TEN THOUSAND YUAN ONLY) and shall be paid by Party B to Party A prior to the 25th day every month.
6. Party A shall give the settlement receipt to Party B on a regular basis.
7. Party A is entitled to from time to time know the operation conditions of this Project while Party B shall cooperate actively.
IV. Rights, duties and obligations of Party B
1. Party B shall assure the legitimacy of all businesses executed and be responsible for the development and benefits of both Parties. In case of any penalty, dispute and direct or indirect losses suffered by Party A, the compensation cost shall be borne by Party B solely and, Party A shall not assume any liability.
2. Where any dispute or compensation is arisen from the event that any customer is not satisfied with the therapeutic effect after treatment, Party B shall undertake corresponding responsibilities while Party A shall not assume any liability.
3. Party A is the sole strategic partner of Party B with respect to the “Great Health” Project in Baotou City.
4. Party B will give 50,000 original issue stocks (value: 50,000 Yuan) to Party A.
5. Party B shall assure that the min quarterly business volume with Party A is over 200,000 Yuan.
6. Within 10 working days upon conclusion of this Agreement, main equipment allocated by Party B onto the seventh floor of Party A shall include: one set of HQ tester, Terahertz thermal therapeutic apparatus and cerebral circulation physiotherapy instrument etc. and additional instruments and equipment shall be timely allocated as per the business demand in future.
V. Distribution of related benefits
1. Double blood purification program: pay 13,000 Yuan/ time (including expenses for all consumables and pre-treatment examination) to Party A.
2. Immunological ozonated autohemotherapy: pay 1,200 Yuan (including expenses for all consumables) to Party A for every course of treatment (10 times).
| Page 2 of 6 |
0472-7151120
3. “Meridian-regulating and consciousness-restoring iatrotechnics”: pay 980 Yuan/ time (including expenses for all consumables) to Party A.
4. Where any customer is transferred by Party B to any other department of Party A, corresponding commission shall be paid by Party A to Party B with respect to all physical examination, inspection and treatment programs conducted by Party B for that customer. For more details, see the Annex below.
VI. Termination
Provided that either Party intends to terminate the cooperation before its expiration, the Party shall inform the other Party at least 3 months in advance, to negotiate for termination.
VII. Liabilities for breach of contract
1. Party A shall strictly follow the foregoing provisions and in case of any violation, compensate Party B for all actual economic losses arising therefrom.
2. Party B shall strictly follow the foregoing provisions and in case of any violation, all facilities and equipment allocated by Party B onto the seventh floor of Party A shall be deducted and Party B shall compensate Party A for all actual economic losses arising therefrom.
VIII. Settlement of disputes
1. This Agreement is governed by laws of the People’s Republic of China.
2. If there is any dispute arising from or in connection with the existence, effect, performance, interpretation and termination of this Agreement, both Parties shall solve through friendly negotiation; if negotiation fails or either Party refuses to negotiate, either Party is entitled to submit it to the local court or arbitration committee of Jiuyuan District for settlement.
IX. This Agreement is made in quadruplicate and shall come into force as from the date when both Parties sign their names on it. Each Party shall have two copies for record. Provided that any content of this Agreement must be modified, the supplementary agreement shall have the same effect with this Agreement.
X. Both Parties are willing to conclude this Agreement and have read & understood, and agreed to be bound by all provisions herein.
(The reminder of this page is intentionally left blank.)
On behalf of
Party A: Baotou Jinshi Zhongyi Nephropathy Hospital (seal)
Legal representative or authorized agent: Jin Wei (signature)
Date: October 15, 2020
On behalf of
Party B: Longduoduo Health Technology Co., Ltd (seal)
Legal representative or authorized agent: Zhang Liang (signature)
Date: October 15, 2020
| Page 3 of 6 |
0472-7151120
Annex I:
Supplementary Cooperation Agreement
Party A: Baotou Jinshi Zhongyi Nephropathy Hospital
Legal Representative: Jin Wei
Party B: Longduoduo Health Technology Co., Ltd
Legal Representative: Zhang Liang
For the purpose of facilitating the implementation of “Great Health” medical technology service project in the Inner Mongolia, the Parties have, based on good faith, equality and mutual benefits, reached a consensus with respect to the premises provided by Party A to Party B for use through friendly negotiation, as follows:
1. With respect to the premises provided by Party A for executing the cooperation project, all expenses for finishing and decoration shall be fully borne by Party B.
2. Premises provided by Party A shall be used for executing the cooperation project in a legitimate and normative manner only. Provided that Party B violates any provision, all economic losses arising therefrom shall be fully borne by Party B and Party A shall be entitled to terminate the agreement unilaterally.
3. Party B shall repair all damages of infrastructures and equipment such as water, electricity, heating, fire protection, elevator, door & window, sanitary wares and housing etc. attributable to Party B itself and assure the normal service of infrastructures and equipment at the premises.
4. Main frame structure of the housing shall not be affected by finishing and decoration conducted by Party B
5. During the agreement period, Party B shall fulfill various maintenance obligations and undertake the corresponding expenses inside the premises.
6. Provided that personal injury & casualties are caused by fire, water leakage, electric leakage or such accident happened in the process of finishing & decoration and usage and both Parties suffer any loss therefrom, Party B shall bear all responsibilities and undertake the compensation cost.
7. Upon expiration or early termination of the Agreement, all attached finishing created by Party B shall be left to Party A for free.
This Agreement is made in duplicate and shall come into force as from the date when both Parties sign their names on it. Each Party shall have one copy for record. This supplementary agreement shall be deemed as Annex I to the agreement concluded on October 15, 2020 and have the same effect with the original agreement.
Both Parties are willing to conclude this Agreement and have read & understood, and agreed to be bound by all provisions herein.
(The reminder of this page is intentionally left blank.)
| Page 4 of 6 |
0472-7151120
On behalf of
Party A: Baotou Jinshi Zhongyi Nephropathy Hospital (seal)
Legal representative or authorized agent: Jin Wei (signature)
Date: October 17, 2020
On behalf of
Party B: Longduoduo Health Technology Co., Ltd (seal)
Legal representative or authorized agent: Zhang Liang (signature)
Date: October 17, 2020
| Page 5 of 6 |
0472-7151120
Agreement for Medical Service Project Handover
Party A: Longduoduo Health Technology Co., Ltd
Legal Representative: Zhang Liang
Party B: Inner Mongolia Rongbin Health Consulting Co., Ltd
Legal Representative: Duan Erfen
In accordance with the Contract Law of the People’s Republic of China, the Parties have, on the basis of mutual benefits, reached the following agreement through friendly negotiation, for mutual compliance.
I. Content:
1. Party A signed the Cooperation Agreement for “Great Health” Medical Technology Service Project between Baotou Jinshi Zhongyi Nephropathy Hospital and Longduoduo Health Technology Co., Ltd (hereinafter referred to as “the Original Agreement”) with Baotou Jinshi Zhongyi Nephropathy Hospital (hereinafter referred to as “Jinshi Hospital”) on October 15, 2020. Party B is a holding subsidiary of Party A and there is no substantial business for Party A. Upon establishment of the subsidiary (i.e. Party B), Party A plans to hand all businesses within the area defined in the Original Agreement over to Party B for operation. Now therefore, Party A delivers all rights and obligations under the Original Agreement to Party B for exercise and fulfillment.
2. Party B shall handle with all business transactions with Jinshi Hospital instead of Party A.
3. Party B shall undertake all expenses defined in the Original Agreement (including those utilities and expenses for heating and property management (10,000 Yuan/ month) paid by Party A to Jinshi Hospital before establishment of Party B).
II. This Agreement shall come into force as from the date when legal representatives or authorized agents of both Parties sign their names and affix seals on it. This Agreement is made in duplicate and each Party holds one copy.
III. All matters unmentioned herein shall be determined by both Parties through negotiation and the supplementary agreement shall be concluded with respect to those matters. Supplementary agreement shall have the same legal effect with this Agreement.
|
On behalf of
Party A: Longduoduo Health Technology Co., Ltd (seal) |
On behalf of
Party B: Inner Mongolia Rongbin Health Consulting Co., Ltd (seal) |
| Legal Representative: Zhang Liang (signature) | Legal Representative: Duan Erfen (stamp) |
| Date: March 18, 2021 | Date: March 18, 2021 |
Page 6 of 6
Exhibit 10.4
Premises Lease Contract and Share Purchase Agreement
Party A: Wudun Qiqige
ID Card No.: 152727197109193622
Tel.: 13904778104
Party B: Inner Mongolia Chengheng Health Consulting Co., Ltd
Contact Person: Zhang Liang
Tel.: 18648623260
In accordance with the Contract Law and related provisions, both Parties have, on the basis of mutual benefits and joint development, reached a consensus with respect to the premises lease contract and concluded this Agreement through friendly negotiation, for mutual compliance.
Article I. Location and scope of lease
1. The premises leased by Party A locate at No. 7 Building Rongjingyuan Commercial & Residential Community No. 56 Yihua North Road Dongsheng District.
2. The premises leased by Party A include Room 413 dormitory on the fourth floor, office area on the entire fifth floor and conference room on the sixth floor, with the area of 1,500 m2 in total.
Article II. Purpose of lease
The premises are leased as the office area, employee dormitory and conference room.
Article III. Rent
Both Parties have agreed that the two-year rent and the selling price of office facilities are: 50,000 Yuan – rent for Room 413 on the fourth floor; 500,000 Yuan – rent for the entire fifth floor; 150,000 Yuan – rent for conference room on the sixth floor; and 100,000 Yuan – selling price for all attached office facilities, totally 800,000 Yuan.
Article IV. Term of lease
The term of lease is from April 01, 2021 until March 31, 2023.
Article V. Obligations and responsibilities of both Parties
Within the term of lease, both Parties shall fulfill their own obligations and undertake their responsibilities respectively.
I. Obligations and responsibilities of Party A
1. Party A shall provide the complete conditions for premises use to Party B and assure that Party B can utilize the office and facilities in a reasonable manner.
II. Obligations and responsibilities of Party B
1. Within the term of lease, Party B shall utilize the premises of Party A as well as the ancillary facilities and office supplies in a reasonable manner. With regard to any damage to the premises or facilities arising from improper use, Party B shall repair or undertake the economic compensation.
2. Party B must properly protect all properties inside the premises, take waterproof, fireproof and anti-theft measures, and assure the safe and legitimate operation.
3. In view of using requirement, Party B can carry out necessary finishing & decoration works without affecting the structure of such premises with the consent of Party A.
4. Within the term of lease, Party B must not sublease, lend, subcontract or transfer the premises without the consent of Party A.
5. Upon expiration of the lease term, this agreement shall be renewed or terminated through friendly negotiation between the Parties.
Article VI. Payment of various expenses
1. Utilities: Party B shall pay the utilities by itself. During April 01, 2021 ~ June 30, 2021, no utilities will be paid and thereafter, utilities shall be paid by Party B as per the actual consumption. Upon expiration of the lease term, Party B shall not undertake the utilities any longer. Adjustment of utilities shall conform to the policies of the local government.
2. Property management fee: from April 01, 2021 until June 30, 2021, no property management fee will be paid and thereafter, such fee shall be paid by Party B as per the area occupied; where the property management is undertaken by Party B itself, it shall be solved by Party B.
3. Expenses for installation of telephone, broadband network, cable television and such facilities for use of the premises shall be borne by Party B.
4. Heating fee: paid by Party B.
Article VII. Termination
Within the term of lease, Party A is entitled to terminate this Contract under any of the following circumstances:
1. The use right of land where the premises locate is withdrawn by law in advance.
2. The premises are requisitioned by law for social common interests or urban construction.
3. The premises are damaged or identified as a dilapidated building.
4. Party B cannot continue leasing due to force majeure events.
5. Party B uses the premises for any illegal activity and thus causes damage to public and social interests.
6. Party B changes the purpose of the premises in violation of the Contract. The premises are damaged or main structure of the premises is damaged due to improper management of Party B.
| 2 |
Article VIII. Share Purchase agreement
1. Through negotiation, Party B will lease the premises and office facilities of Party A, while Party A shall procure the stock rights of the holding company of Party B by rent and conversion of assets.
2. Party A shall pay CNY 800,000 – the total sum of rents and selling price of office facilities as mentioned in Article III above and CNY 200,000 in cash to Party B, to procure 3,000,000 shares (USD 0.0508/ share, totally USD 152,400) of Longduoduo Company Limited – a holding company to be established by Party B.
Article IX. Settlement of disputes
1. All disputes arising from or in connection with this Contract shall be solved by both Parties through negotiation but if negotiation fails, either Party is entitled to file a lawsuit to the local court.
2. With respect to any economic dispute, illegal or undisciplined activity and improper safety measures attributable to Party B within the term of lease, all responsibilities shall be undertaken by Party B.
Article X. Others
1. With regard to all matters unmentioned herein, a supplementary agreement can be concluded by the Parties through negotiation.
2. This Contract is made in duplicate and each Party holds one copy.
Party A: Wudun Qiqige (signature & fingerprint)
Party B: Inner Mongolia Chengheng Health Consulting Co., Ltd (seal)
Representative: Guo Xiaozhen (signature)
Date: March 30, 2021
| 3 |
Lease Agreement and List of Second-Hand Office Facilities Attached
| Location | Name | Quantity | Unit | Remarks | ||||
| President office | One set of sofas (two small one big + 1 tea table) | 1 | Set | 20,000 | ||||
| President office | One set of tea table (1 table + 4 chairs) | 1 | Set | 5,000 | ||||
| CEO office | Rosewood sofa (two small one big sofa + 1 tea table + 1 sofa cabinet + 1 wooden stool) | 1 | Set | 20,000 | ||||
| Market Dept. II | Rosewood tea table (1 table + 2 chairs) | 1 | Set | 5,000 | ||||
| Market Operation Dept. | Rosewood sofa (two small one big sofa + 1 tea table) | 1 | Set | 23,000 | ||||
| Wudun Qiqige Office | Rosewood sofa (two small one big sofa + 1 tea table) | 1 | Set | 23,000 | ||||
| Others | File cabinet, sofa cabinet, bed and wall pictures etc. | 1 | Lot | 4,000 | ||||
| Total | 100,000 |
| 4 |
Electronic Receipt for Online Banking, China Construction Bank
| Currency: CNY Date: September 15, 2021 Voucher No.: Account details number – transaction serial number: 754-15000061800QP0CPSIL | |||
|
Drawee
|
Full name: Wudun Qiqige |
Payee
|
Full name: Inner Mongolia Chengheng Health Consulting Co., Ltd |
| Account No.: 6217000460002777993 | Account No.: 15050168664600000802 | ||
| Bank of Deposit: Yijin Huoluoxi Street Subbranch, China Construction Bank | Bank of Deposit: Ordos Tianjiao road Branch, China Construction Bank | ||
| Amount (in words) | CNY TWO HUNDRED THOUSAND ONLY | Amount (in figure) | 200,000.000 |
| Purpose | Cash/ remit | Cash | |
| Abstract | Transfer into | ||
|
Important note: accepted by the bank successfully. This receipt cannot be deemed as the final basis of transaction between the drawee and the payee. Formal receipt shall be printed on the second day upon successful transaction.
Special seal for electronic receipt, China Construction Bank (seal)
| |||
Receipt
No. 0000842
Date: September 15, 2021
This is to certify that Wuzi Qiqige has paid the investment amount of TWO HUNDRED THOUSAND YUAN ONLY (200,000 Yuan).
Inner Mongolia Chengheng Health Consulting Co., Ltd (seal)
| 5 |
Type of transaction: transfer into the account of China Construction Bank
Transaction channel: mobile banking
Transfer amount: CNY 200,000.00
Amount (in words): CNY TWO HUNDRED THOUSAND ONLY
Voucher No.: 144299751956
Payee
Account Name: Inner Mongolia Chengheng Health Consulting Co., Ltd
Account No.: 1505 0168 6646 0000 0802
Receiving bank: China Construction Bank
Drawee
Account Name: Wudun Qiqige
Account No.: 6217***7993
Special seal for electronic receipt of China Construction Bank (seal)
Important Note
This receipt is used to indicate that the transfer transaction is accepted successfully but not mean that the capital has been transferred into the beneficiary’s account and thus cannot be deemed as the final basis for confirmation of transaction between the payee and the drawee.
Unfolded
| For more details, please subscribe the Wechat official account “China Construction Bank”. |  |
| 6 |
Exhibit 10.5
Cooperation Agreement
for
“Great Health” Medical Technology Service Project
between
Zhongyi Hospital Branch of Inner Mongolia Jiuzun Health Examination Service Co., Ltd
and
Inner Mongolia Chengheng Health Consulting Co., Ltd
Party A: Zhongyi Hospital Branch of Inner Mongolia Jiuzun Health Examination Co., Ltd
Legal Representative: Hao Meiqin
Party B: Inner Mongolia Chengheng Health Consulting Co., Ltd
Legal Representative: Guo Xiaozhen
For the purpose of facilitating the implementation of “Great Health” medical technology service project in the Inner Mongolia, the Parties have, based on good faith, equality and mutual benefits, reached a consensus through friendly negotiation, as follows:
I. Content of consultation and cooperation
Party A and Party B shall mainly cooperate with each other with regard to “the Third-generation Ozone Therapy Device – Autologous Blood Immunotherapy” etc.
1. Party A shall offer the venue & qualifications for the cooperation programs as well as the management of medical quality, technology & safety, medical staff, medicines and consumables etc. necessary for the project operation.
2. Party B shall carry out the market operation and customer relationship management for the medical business of “the Third-generation Ozone Therapy Device – Autologous Blood Immunotherapy” in a legitimate and normative manner.
II. Term of cooperation
Term of cooperation between the Parties is five (5) years, from May 29, 2021 until May 28, 2026.
III. Rights, duties and obligations of Party A
1. Party A shall take charge of procurement and quality control for doctor resources and related medicines & consumables for this Project.
2. Party A shall be responsible for equipment operation and further medical services for the customers.
3. Party A shall control the medical risks. In case of any medical accident, Party A shall assume the compensation solely while Party B shall not bear any liability of compensation.
4. Party A is obliged to cooperate with Party B in completing the market exploitation; to attend related activities organized by Party B; and to allow Party B to use its trademark, designation and image for facilitating those activities in a legitimate and normative manner.
5. Party A shall provide the negotiation & waiting room (in view of Party A’s relocation, removal or such force majeure events, size of office area provided to Party B shall be arranged by Party A additionally) to Party B; and Jiuzun Zhongyi Hospital shall give two waiting rooms to Longduoduo members, rent free, to facilitate the patients. All utilities, expenses for heating and property management and office furniture shall be undertaken by Party A.
6. Party A shall give the settlement receipt to Party B on a regular basis.
7. Party A is entitled to from time to time know the operation conditions of this Project while Party B shall cooperate actively.
IV. Rights, duties and obligations of Party B
1. Party B shall assure the legitimacy of all businesses executed and be responsible for the development and benefits of both Parties. In case of any contradiction and dispute happened on the market, Party B shall assume corresponding responsibilities solely, to the satisfaction of various customers.
2. Party A is the sole strategic partner of Party B with respect to the “Great Health” Project in Ordos.
3. Party B shall assure that those medical care programs promoted are mainly those cooperated with Jiuzun Hospital.
V. Distribution of related benefits
1. As to those patients of the Third-generation Ozone Therapy Device – Autologous Blood Immunotherapy, the treatment plan shall be determined on the premise of assuring that those patients conform to the treatment conditions by clinical examination, with the treatment cost of 120 Yuan/ time.
2. Prior to treatment, revenue for auxiliary examination for the patients shall be divided by the Parties (60% for Party A and 40% for Party B).
3. The supplementary agreement shall be concluded with respect to other cooperation programs.
VI. Termination
1. The Third-generation Ozone Therapy Device – Autologous Blood Immunotherapy conducted by Party A shall have the retail price of 375 Yuan/ time [no lower than 375 Yuan/ time].
2. In the process of promotion, the price determined by Party A shall be no higher than 375 Yuan/ time (reasonable member price for Party A customer member).
3. Provided that the Third-generation Ozone Therapy Device – Autologous Blood Immunotherapy conducted by Party A is lower than 375 Yuan/ time, Party B will terminate the Cooperation Agreement automatically.
Provided that either Party intends to terminate the cooperation before its expiration, the Party shall inform the other Party at least 1 month in advance, to negotiate for termination.
| 2 |
VII. Liabilities for breach of contract
1. Party A shall strictly follow the foregoing provisions and in case of any violation, compensate Party B for all actual economic losses arising therefrom.
2. Party B shall strictly follow the foregoing provisions and in case of any violation, compensate Party A for all actual economic losses arising therefrom.
VIII. Settlement of disputes
1. This Agreement is governed by laws of the People’s Republic of China.
2. If there is any dispute arising from or in connection with the existence, effect, performance, interpretation and termination of this Agreement, both Parties shall solve through friendly negotiation; if negotiation fails or either Party refuses to negotiate, either Party is entitled to submit it to the local court or arbitration committee of Ordos for settlement.
IX. This Agreement is made in duplicate and shall come into force as from the date when both Parties sign their names on it. Each Party shall have two copies for record. Provided that any content of this Agreement must be modified, the supplementary agreement shall have the same effect with this Agreement.
X. Both Parties are willing to conclude this Agreement and have read & understood, and agreed to be bound by all provisions herein.
(The reminder of this page is intentionally left blank.)
On behalf of
Party A: Zhongyi Hospital Branch of Inner Mongolia Jiuzun Health Examination Co., Ltd (seal)
Legal representative or authorized agent: Hao Meiqin (stamp)
Date: May 29, 2021
On behalf of
Party B: Inner Mongolia Chengheng Health Consulting Co., Ltd (seal)
Legal representative or authorized agent: Guo Xiaozhen (stamp)
Date: May 29, 2021
| 3 |
Exhibit 10.6
Contract of Medical Technology Commissioned Service
Party A: Ulanqab Mengzhong Rehabilitation TCM Hospital Co., Ltd, address: No. 8 Building Happiness Commercial Plaza Xingfu Street Jining District Ulanqab City, unified social credit code: 91150900MA0MWCN51B, Liu Junfang – managing director of the foregoing company.
Party B: Longduoduo Health Technology Co., Ltd, address: No. 419 Floor 4th Multi-Use Building Erqing Hospital Ordos Street Yuquan District Hohhot City, Inner Mongolia Autonomous Region, unified social credit code: 91150104MA0QTDXG5T, legal representative: Zhang Liang – managing director of the foregoing company.
For the purpose of facilitating the implementation of “Great Health” medical technology service project in the Inner Mongolia, the Parties have, on the basis of fair resources, reached a consensus with respect to the medical service rendered by Party A to Party B in accordance with the Civil Code of the People’s Republic of China through negotiation, as follows:
I. Content of medical service
Medical services rendered by Party A to the natural persons designated by Party B shall include but not limit to: “Immunological Ozonated Autohemotherapy”, “Meridian-regulating and Consciousness-restoring Iatrotechnics”, “PRP”, “Relaxation therapy”, “Vegetative Nerve Regulation” and “Conventional Therapy” etc.
II. Term of cooperation
The term of medical service is determined as one year provisionally, from June 20, 2021 until June 19, 2022.
III. Rights, duties and obligations of Party A
1. Party A shall take charge of procurement and quality control for doctor resources and related medicines & consumables for this Project.
2. Party A shall render the medical services in strict accordance with national standards.
3. Party A shall control the medical risks. In case of any medical accident, Party A shall assume the compensation solely while Party B shall not bear any liability of compensation.
4. Party A is obliged to cooperate with Party B in completing the market exploitation.
5. Party A shall provide the rest room, waiting room and office (one floor) to related workers and designated patients of Party B.
6. Party A shall give the settlement receipt to Party B on a regular basis.
IV. Rights, duties and obligations of Party B
1. Party B shall assure the legitimacy of all businesses executed, be responsible for the development and benefits of both Parties and handle with all contradictions and disputes arising on the operation market. In such a case, Party A shall not assume any liability.
2. Provided that any patient designated by Party B enjoys the medical service rendered by Party A but the customer is not satisfied with the therapeutic effects and any dispute or compensation is claimed therefrom, Party B shall handle with it at its own discretion.
3. Party A is the sole hospital entrusted by Party B to render medical service in Ulanqab.
V. Settlement price for medical service project
1. Immunological Ozonated Autohemotherapy: Party B shall pay 800 Yuan to Party A for every minor course of treatment (5 times), 160 Yuan/ time on average (including all expenses), and pay 1,600 Yuan to Party A for every major course of treatment (10 times) (including all expenses);
2. Meridian-regulating and Consciousness-restoring Iatrotechnics: Party B shall pay 900 Yuan/ time to Party A.
3. Blood Thinning Program: Party B shall pay 88 Yuan/ time to Party A.
4. PRP, 7-day Relaxation therapy, Vegetative Nerve Regulation and Faradization (after the customers of Party B completing the foresaid treatment programs, Party A will collect 50% of the total expenses only).
5. With regard to the testing items associated with the foregoing programs, Party A will collect 67% of the total expenses.
6. In the event that the patient designated by Party B is hospitalized or receives the outpatient services (physical therapy and medicines), Party A will collect 90% of the total expenses.
VI. Termination
1. Provided that Party B engages in any improper false advertising, high expense collection and such acts that may seriously affect Party A’s interests, Party A is entitled to terminate the Contract unilaterally.
2. Where Party A collects any fee at the amount lower than the medical service price as agreed hereunder, Party B is entitled to terminate this Contract.
3. In the event that either Party intends to terminate the cooperation before expiration, the other Party shall be informed one month in advance, for negotiation.
VII. Liabilities for breach of contract
1. Party A shall strictly follow the foregoing provisions and in case of any violation, compensate Party B for all actual economic losses arising therefrom.
2. Party B shall strictly follow the foregoing provisions and in case of any violation, compensate Party A for all actual economic losses arising therefrom.
VIII. Settlement of disputes
This Agreement is governed by laws of the People’s Republic of China. If there is any dispute, both Parties shall solve through friendly negotiation; if negotiation fails, either Party is entitled to submit it to the local people’s court of Jining District Ulanqab City for litigation.
IX. This Agreement is made in duplicate and shall come into force as from the date when both Parties sign their names on it. The supplementary agreement shall have the same effect with this Agreement.
X. Both Parties are willing to conclude this Agreement and have read & understood, and agreed to be bound by all provisions herein.
The reminder of this page is intentionally left blank.
| 2 |
On behalf of
Party A: Ulanqab Mengzhong Rehabilitation Hospital Co., Ltd (seal)
Legal representative or authorized agent: Liu Junfang (signature)
Date: June 20, 2021
On behalf of
Party B: Longduoduo Health Technology Co., Ltd (seal)
Legal representative or authorized agent: Zhang Liang (signature)
Date: June 20, 2021
| 3 |
Supplementary agreement:
WHEREAS, the Parties concluded the Contract of Medical Technology Commissioned Service on June 20, 2021. Item 5 of Article III – Rights, duties and obligations of Party A of the original contract, “Party A shall provide the rest room, waiting room and office (one storey) to related workers and designated patients of Party B”, is now defined as follows:
1. Rest room, waiting room and office provided by Party A to related workers and designated patients of Party B means the entire 5th floor of Mengzhong Rehabilitation Hospital at No. 8 Building Happiness Commercial Plaza Xingfu Street Jining District Ulanqab City, Inner Mongolia Autonomous Region, with the area of 600 m2 approximately.
2. Occupation period of the foresaid premises by Party B shall be same as the term of cooperation as defined in the master contract concluded by and between both Parties. Provided that the cooperation agreement is extended, the occupation period will be automatically extended as per the master contract, to the period same as the cooperation agreement, unless otherwise stated.
3. During the occupation period, the foresaid premises shall be used by Party B at no cost, and all utilities and expenses for gas and heating etc. shall be borne by Party A.
|
On behalf of
Party A: Ulanqab Mengzhong Rehabilitation Hospital Co., Ltd (seal) |
On behalf of
Party B: Inner Mongolia Tianju Health Consulting Co., Ltd (seal) |
| 4 |
Agreement for Medical Service Project Handover
Party A: Longduoduo Health Technology Co., Ltd
Legal Representative: Zhang Liang
Party B: Inner Mongolia Tianju Health Consulting Co., Ltd
Legal Representative: Li Yuqing
In accordance with the Contract Law of the People’s Republic of China, the Parties have, on the basis of mutual benefits, reached the following agreement through friendly negotiation, for mutual compliance.
I. Content:
1. Party A signed the Contract of Medical Technology Commissioned Service (hereinafter referred to as “the Original Agreement”) with Ulanqab Mengzhong Rehabilitation TCM Hospital Co., Ltd (hereinafter referred to as “Mengzhong Hospital”) on June 20, 2021. Party B is a holding subsidiary of Party A and there is no substantial business for Party A. upon establishment of Party B – a subsidiary of Party A, Party A plans to hand all businesses within the area defined in the Original Agreement over to Party B for operation. Now therefore, Party A delivers all rights and obligations under the Original Agreement to Party B for exercise and fulfillment.
2. Party B shall handle with all business transactions with Mengzhong Hospital instead of Party A.
II. This Agreement shall come into force as from the date when legal representatives or authorized agents of both Parties sign their names and affix seals on it. This Agreement is made in duplicate and each Party holds one copy.
III. All matters unmentioned herein shall be determined by both Parties through negotiation and the supplementary agreement shall be concluded with respect to those matters. Supplementary agreement shall have the same legal effect with this Agreement.
|
On behalf of
Party A: Longduoduo Health Technology Co., Ltd (seal)
|
On behalf of
Party B: Inner Mongolia Tianju Health Consulting Co., Ltd (seal)
| |
| Legal Representative: Zhang Liang (signature) | Legal Representative: Li Yuqing (signature) | |
| Date: July 05, 2021 | Date: July 05, 2021 |
| 5 |
Exhibit 10.7
Date: October 25, 2021
Zhang Liang
419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China 010000
Appointment Letter
We are pleased to appoint Zhang Liang as President and Chairman of the Board with the following terms and condition:
1. Job Title and Description- You will be employed in the position of President and Chairman of the Board.
2. Salary Break up- You will be given a Total Salary of RMB 13,000 per month. The salary structure is as follows:
a. Basic Salary paid by Longduoduo Company Limited.
b. Basic Salary paid by subsidiaries of Longduoduo Company Limited.
3. Place of posting- China. Your job is transferable between any of the Units / Sister Concerns of the Company.
4. Working Hours- irregular working hours.
5. Contract Type- The term of this Contract shall be unlimited and the Employee shall be a full-time employee. Each Party may terminate this Contract by providing 30 days written a notice of intention to terminate the Contract to the other Party.
6. You will abide by all the rules and regulations of the Organization, which shall be modified /changed by the Management from time to time.
7. You will not be permitted to work anywhere else on a part-time /full-time basis or seek any other employment, so long as you remain an employee of the organization.
8. The notice period for termination of service before the contract period shall be one month from the employee and employer’s side. Management reserves the right to relieve you immediately on receipt of the resignation notice without paying any compensation.
9. Please sign and return the copy of this letter as a token for your acceptance of the Appointment and the terms and conditions.
On behalf of Longduoduo Company Limited (signature)
I hereby accept the appointment and the above-mentioned terms and conditions.
Zhang Liang
Date: October 25, 2021
Exhibit 10.8
Date: October 25, 2021
Zhou Hongxiao
419, Floor 4, Comprehensive Building, Second Light Hospital, Ordos Street, Yuquan District, Hohhot, Inner Mongolia, China 010000
Appointment Letter
We are pleased to appoint Zhou Hongxiao as Chief Executive Officer, Director and Secretary with the following terms and condition:
1. Job Title and Description- You will be employed in the position of Chief Executive Officer, Director and Secretary of the board.
2. Salary Break up- You will be given a Total Salary of RMB 13,000 per month. The salary structure is as follows:
a. Basic Salary paid by Longduoduo Company Limited.
b. Basic Salary paid by subsidiaries of Longduoduo Company Limited.
3. Place of posting- China. Your job is transferable between any of the Units / Sister Concerns of the Company.
4. Working Hours- irregular working hours.
5. Contract Type- The term of this Contract shall be unlimited and the Employee shall be a full-time employee. Each Party may terminate this Contract by providing 30 days written a notice of intention to terminate the Contract to the other Party.
6. You will abide by all the rules and regulations of the Organization, which shall be modified /changed by the Management from time to time.
7. You will not be permitted to work anywhere else on a part-time /full-time basis or seek any other employment, so long as you remain an employee of the organization.
8. The notice period for termination of service before the contract period shall be one month from the employee and employer’s side. Management reserves the right to relieve you immediately on receipt of the resignation notice without paying any compensation.
9. Please sign and return the copy of this letter as a token for your acceptance of the Appointment and the terms and conditions.
On behalf of Longduoduo Company Limited (signature)
I hereby accept the appointment and the above-mentioned terms and conditions.
Zhou Hongxiao
Date: October 25, 2021
Exhibit 21.1
List of Company Subsidiaries
The Longduoduo Company Limited and Subsidiaries
| Name | Place of Incorporation | |
| Longduoduo Company Limited | Nevada | |
| Longduoduo Company Limited | Hong Kong | |
| Longduoduo Health Technology Company Limited | China | |
| Inner Mongolia Qingguo Health Consulting Company Limited | China | |
| Inner Mongolia Rongbin Health Consulting Company Limited | China | |
| Inner Mongolia Chengheng Health Consulting Company Limited | China | |
| Inner Mongolia Tianju Health Consulting Company Limited | China |
Exhibit 23.1
 |
Audit • Tax • Consulting • Financial Advisory Registered with Public Company Accounting Oversight Board (PCAOB) |
Consent of Independent Registered Public Accounting Firm
We hereby consent to the inclusion in this Registration Statement on Form S-1 of Longduoduo Company Limited of our report dated November 10, 2021, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, relating to the consolidated financial statements of Longduoduo Company Limited and its subsidiaries, which appear in such Registration Statement. We also consent to the reference to us under the caption “Experts” in such Registration Statement.
| /s/ KCCW Accountancy Corp. | |
| Diamond Bar, California | |
| November 10, 2021 |