SIPP International Industries, Inc S-1, filed May 10, 2023

SIPP International Industries, Inc. (XAKJ)

S-1 2023-05-10

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Nevada	2000	39-2079723
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

Prospectus Summary		1
The Offering		7
Risk Factors		10
Use of Proceeds		30
Determination of Offering Price		31
Dilution		32
Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Our Business		41
Management		44
Properties		45
Legal Proceedings		46
Certain Relationships and Related Transactions		49
Description of Share Capital		50
Shares Eligible for Future Sale		52
Plan of Distribution		53
Legal Matters		55
Experts		55
Where You Can Find Additional Information		55
Index to Consolidated Financial Statements		F-1

Common Shares offered		140,000,000 Common Shares, $0.001 par value per share.

Common Shares Outstanding before this Offering		1,340,506,117 shares

Common Shares to be Outstanding after this Offering		1,480,506,117 shares

Use of Proceeds;		While there is no minimum number of shares that will be sold in this offering, if we were to sell the entire number of shares registered, we estimate that our net proceeds from this offering will be approximately $1,200,000, based on an initial public offering price of $0.01 per share, after deducting estimated offering expenses. We plan to use the net proceeds of this offering primarily for general corporate purposes, which may include hiring additional sales, marketing and management personnel, and investing in sales and marketing activities, capital expenditures, and other general and administrative matters.

		See Use of Proceeds.

Minimum number of shares to be sold in this offering.		None.

Market for the shares		There is a limited public market for the shares. The shares trade on the OTC Pink Markets under the symbol “SIPN.”

Risk Factors		Investing in these securities involves a high degree of risk. You should be able to bear a complete loss of your investment and should carefully consider the information set forth in Risk Factors before deciding to invest in our common shares. While we face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, based on our current structure, these risks remain immaterial, regardless of the recent statements and regulatory actions by China’s government.

		Adverse changes in economic and political policies of the PRC government could have a material and adverse effect on overall economic growth in China, which could materially and adversely affect our business. General macroeconomic conditions may materially and adversely affect our business, prospects, results of operations and financial position. The PRC government’s control over foreign currency conversion may adversely affect our business and results of operations and our ability to remit dividends. PRC regulation of loans to and direct investments in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our operating subsidiary in China, which could materially and adversely affect our liquidity and our ability to fund and expand business.

		The M&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions. Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment. The M&A Rules, among other things, purport to require CSRC approval prior to the listing and trading on an overseas stock exchange of the securities of an offshore special purpose vehicle established or controlled directly or indirectly by the Material PRC Company or individuals and formed for the purpose of overseas listing through the acquisition of PRC domestic interests held by such Material PRC Company or individuals.

		Based on our understanding of the explicit provisions under PRC Laws, and assuming no offer, issuance or sale of the Common Shares has been or will be made directly or indirectly within the PRC, a prior approval from the CSRC is not required for the Offering. However, there are substantial uncertainties regarding the interpretation and application of the M&A Rules, other PRC Laws and future PRC laws and regulations, and there can be no assurance that any Governmental Agency will not take a view that is contrary to or otherwise different from our opinions stated herein. Subject to any applicable administrative procedures required by PRC Laws, and provided that all required Governmental Authorizations have been duly obtained, the due application of the net proceeds to be received by the Company from the issue Common Shares as disclosed in the Prospectus under the caption “Use of Proceeds” does not and immediately after the Offering will not contravene any applicable PRC Laws, the articles of association or the business licenses of the Material PRC Company, except for such contravention or default which would not be reasonably expected to have a Material Adverse Effect.

		The Company or our subsidiaries are required to obtain from Chinese authorities to operate our business and to offer the securities being registered to foreign investors. The Material PRC Company has obtained all material Governmental Authorizations necessary for its business operations as described in the Prospectus, and such Governmental Authorizations are in full force and effect and all required Governmental Authorizations have been duly obtained.

		The due application of the net proceeds to be received by the Company from the issue of Common Shares as disclosed in the Prospectus under the caption ‘Use of Proceeds’ does not, and immediately after the Offering, will not impact any applicable PRC Laws.

		Our WFOE takes invoices settles the Foreign Exchange with the banks, which pay in Renminbi. No transfer, dividend or distribution has been made to the holding company up to now.

		Earning Distributions

		We rely primarily on dividends paid by WFOE for our cash needs, including the funds necessary to pay dividends and other cash distributions, if any, to our shareholders, to service any debt we may incur and to pay our operating expenses. The Company settles amounts by transferring dividends, or distributions between the holding company and its subsidiaries, or to investors, which have not yet occurred between any of the above. The payment of dividends by entities organized in the PRC is subject to limitations as described herein. If we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of funds from WFOE.

		Our revenue, net income and cash flow are variable. We may experience fluctuations in our results, including our revenue and net income, from period to period, due to a number of other factors, including changes in management fees as well as changes in the amount of distributions, dividends, or interest paid in respect of investments; changes in our operating expenses; or the degree to which we encounter competition and general economic and market conditions. Such variability in the timing and amount of our accruals and management fees may lead to volatility in the trading price of our shares, and, therefore, our results and cash flow for a particular period may not be indicative of our performance in a future period.

		The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenues from our operations, we may be unable to pay dividends on our Shares.

		Pursuant to the Implementation Rules for the new Chinese enterprise income tax law, effective on January 1, 2008, dividends payable by a foreign investment entity to its foreign investors are subject to a withholding tax of up to 10%. Pursuant to Article 10 of the Arrangement Between the Mainland of China and the Hong Kong Special Administration Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income effective December 8, 2006, dividends payable by a foreign investment entity to its Hong Kong investor who owns 25% or more of the equity of the foreign investment entity is subject to a withholding tax of up to 5%.

		The payment of dividends by entities organized in the PRC is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. WFOE is also required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its compulsory reserves fund until the accumulative amount of such reserves reaches 50% of its registered capital.

		The transfer to this reserve must be made before distribution of any dividend to shareholders. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

		Cash dividends, if any, on our Shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%.

	Assumed Offering #1⁽¹⁾⁽⁵⁾		Percent			Assumed Offering #2⁽²⁾⁽⁵⁾		Percent			Assumed Offering #3⁽³⁾⁽⁵⁾		Percent			Maximum Offering⁽⁴⁾⁽⁵⁾		Percent
Offering Expenses	$	50,000		16.7	%	$	50,000		8.3	%	$	50,000		5.6	%	$	50,000		4.2	%
Administrative Expenses	$	50,000		16.7	%	$	50,000		8.3	%	$	50,000		5.6	%	$	50,000		4.2	%
General Corporate Purposes	$	150,000		50.0	%	$	420,000		70.0	%	$	720,000		80.0	%	$	1,020,000		85.0	%
Legal and Professional Fees	$	50,000		16.7	%	$	80,000		13.3	%	$	80,000		8.9	%	$	80,000		6.7	%
Total	$	300,000		100	%	$	600,000		100	%	$	900,000		100	%	$	1,200,000		100	%

(3)	Assumes that we only raise 75% in this offering. This offering is conducted on a best-efforts basis with no minimum; therefore, we could raise significantly less than $1,200,000.
(4)	Assumes that we raise the full amount of our Maximum Offering hereunder, or $1,200,000. This offering is conducted on a best-efforts basis with no minimum; therefore, we could raise significantly less than $1,200,000.
(5)	The Offering is being sold by our officers and directors, who will not receive any compensation for their efforts. No sales fees or commissions will be paid to such officers or directors. Shares may be sold by registered broker or dealers who are members of the NASD and who enter into a Participating Dealer Agreement with the Company. Such brokers or dealers may receive commissions up to ten percent (10%) of the price of the Shares sold.

Percentage of offering sold	100%			75%			50%			25%			10%
Price per share	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01
Total shares purchased		140,000,000			105,000,000			70,000,000			35,000,000			14,000,000
Total proceeds of shares purchased	$	1,400,000		$	1,050,000		$	700,000		$	350,000		$	140,000
less: offering costs	$	(50,000	)	$	(50,000	)	$	(50,000	)	$	(50,000	)	$	(50,000	)
Net proceeds from offering	$	1,350,000		$	1,000,000		$	650,000		$	300,000		$	90,000

Net Tangible book value as of December 31, 2022	$	(305,383	)	$	(305,383	)	$	(305,383	)	$	(305,383	)	$	(305,383	)
Net Tangible book value after the offering	$	1,044,617		$	694,617		$	344,617		$	(5,383	)	$	(215,383	)

Total shares issued at time of offering		1,340,506,117			1,340,506,117			1,340,506,117			1,340,506,117			1,340,506,117
Total shares issued after the offering		1,480,506,117			1,445,506,117			1,410,506,117			1,375,506,117			1,354,506,117
Net tangible book value per share as of December 31, 2022	$	(0.0002	)	$	(0.0002	)	$	(0.0002	)	$	(0.0002	)	$	(0.0002	)
Net tangible book value per share after the offering	$	0.0007		$	0.0005		$	0.0002		$	(0.0000	)	$	(0.0002	)
Net tangible book value per share increase to present shareholders	$	0.0009		$	0.0007		$	0.0005		$	0.0002		$	0.0001
Dilution to investors	$	0.0093		$	0.0095		$	0.0098		$	0.0100		$	0.0102

Percentage of ownership to present shareholders after the offering		90.5	%		92.7	%		95.0	%		97.5	%		99.0	%

Purchasers of stock in the offering
Price per Share		0.01			0.01			0.01			0.01			0.01

Name	Age	Position(s)
Min Jiang	50	President, CEO, Treasurer, Chairman of the Board of Directors
Zonghan Wu	44	Secretary and Director

Name	Number of Shares of Common Stock		Percentage
Min Jiang 69 Waterfall Blvd, The Ponds, NSW 2769, Australia		848,101,224		63.3	%

Zonghan Wu 46 Reeves Road, Pakuranga 2010, New Zealand				0	%

All executives officers, directors, and beneficial ownership thereof as a group 2 people)				63.3	%

Name	Number of Shares of Series A Preferred Stock		Percentage
Min Jiang 69 Waterfall Blvd, The Ponds, NSW 2769, Australia		0		0	%

Zonghan Wu 46 Reeves Road, Pakuranga 2010, New Zealand		0		0	%

All executives officers, directors, and beneficial ownership thereof as a group 2 people)		0		0	%

		Page
Report of Independent Registered Public Accounting Firm (5035)		F-2

Consolidated Balance Sheets as of December 31, 2021 and 2022		F-3

Consolidated Statements of Operations for the years ended December 31, 2021 and 2022		F-4

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2022		F-5

Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the years ended December 31, 2021 and 2022		F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2022		F-7

Notes to the Consolidated Financial Statements		F-8

		As of December 31,
	Note	2021			2022
		US$			US$
ASSETS
Current assets:
Cash and cash equivalents	3		1,786			1,925
Prepaid expenses and other current assets	4		-			59,305
Inventory	5		-			51,820
Total current assets			1,786			113,050
Property and equipment, net	6		-			19,886
Other non-current assets			-			-
TOTAL ASSETS			1,786			132,936

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	8		-			65,490
Amounts due to a related party	10		17,691			8,868
Advances from customers			-			49,955
Accrued expenses and other current liabilities	9		26,590			314,006
Total current liabilities			44,281			438,319
TOTAL LIABILITIES			44,281			438,319
Commitments and contingencies			-			-
Shareholders’ deficit:
Common stock, par value $0.001, 2,000,000,000 shares authorized; 1,340,506,117 and 740,506,117 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively	12		740,506			1,340,506
Preferred Stock			10,000			-
Additional paid-in capital			19,206,092			18,749,114
Accumulated deficit			(19,998,792	)		(20,401,088	)
Accumulated other comprehensive income (loss)			(301	)		6,085
Total shareholders’ deficit			(42,495	)		(305,383	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT			1,786			132,936

		For the years ended December 31,
	Note	2021			2022
		US$			US$
Net revenues	11		-			692,308
Cost of revenues			-			637,649
Gross profit			-			54,659

Operating expenses:
General and administrative expenses			92,268			385,034
Total operating expenses			92,268			385,034
(Loss) income from operations			(92,268	)		(330,375	)
Interest income (expense), net			-			(118	)
Bank charge			118			251
Foreign exchange (losses) gains, net			-			-
Other expenses(net）			-			72,801
(Loss) income before income taxes			(92,386	)		(403,309	)
Income tax expenses			-			-
Share of loss in equity method investment			-			-
Net (loss) income			(92,386	)		(403,309	)
Net (loss) income attributable to ordinary shareholders			(92,386	)		(403,309	)

Net loss per ordinary share:
Basic and diluted	13		(0.00	)		(0.00	)
Weighted average shares used in calculating net loss per ordinary share:
Basic and diluted	13		524,106,716			907,172,784

	Number of Preferred Stock			Preferred Stock			Ordinary shares				Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive (Income) Loss			Total shareholders’ equity (deficit)
	Shares			US$			Shares		US$		US$			US$			US$			US$
Balance at December 31, 2020		10,000,000			10,000			492,404,893		492,404		19,404,002			(19,906,406	)		-			-

Net Loss		-			-			-		-		-			(92,386	)		-			(92,386	)
Issuance of ordinary shares		-			-			248,101,224		248,102		(197,910	)		-			-			50,192
Foreign currency translation adjustments		-			-			-		-		-			-			(301	)		(301	)
Balance at December 31, 2021		10,000,000			10,000			740,506,117		740,506		19,206,092			(19,998,792	)		(301	)		(42,495	)

Net Income		-			-			-		-		-			(403,309	)		-			(403,309	)
Issuance of ordinary shares upon follow-on public offering, net of issuance cost		(10,000,000	)		(10,000	)		600,000,000		600,000		(456,978	)		-			-			133,022
Foreign currency translation adjustments		-			-			-		-		-			(860	)		8,259			7,399
Balance at December 31, 2022		-			-			1,340,506,117		1,340,506		18,749,114			(20,402,961	)		7,958			(305,383	)

	For the years ended December 31,
	2021				2022
	US$		%		US$		%
Shenzhen Ruicheng Network Technology Co., LTD		-		-		692,308		100.00	%

	As of December 31,
	2021				2022
	US$		%		US$		%
Sichuan Zhiwei Wanjia Food Co., LTD		-		-		36,689		56.02	%

	Amount
	(US$)
Cash and cash equivalent		2,614
Prepaid expenses and other current assets		195,306
Property and equipment, net		19,703
Accounts payable		27,551
Advances from customers		444,913
Accrued expenses and other current liabilities		134,717
Total net assets		(389,558	)
Attributed to the Company		(389,558	)
Consideration:
Accumulated 100,000,000 common stock		100,000
Goodwill		489,558

Exhibit No.		Description
3.1		Articles of Incorporation of the Company Inc., as amended
3.2		Amended and Restated Bylaws of the Company
3.3		Articles of Incorporation of Chengzhao International Holdings Ltd
3.4		Articles of Incorporation of Sichuan Ruichengyuan Agricultural and Sideline Products Distribution Co., Ltd*
4.1		Share Exchange Agreement
5.1		Opinion of McMurdo Law Group, LLC, legal counsel*
23.1		Consent of Shandong Haoxin Certified Public Accountants Co., Ltd
23.2		Consent of McMurdo Law Group, LLC (included in Exhibit 5.1)
99.1		Subscription Agreement
107		Filing fee schedule

	SIPP INTERNATIONAL INDUSTRIES, INC.

	By:	/s/ Min Jiang
		Min Jiang, CEO, CFO, and Director

	By:	/s/ Min Jiang
		Wan Nyuk Ming, CEO, CFO, and Director

	By:	/s/ Zonghan Wu
		Zonghan Wu, Secretary and Director

		Dated: November 1, 2022

Chengzhao International Holdings LTD.

By:	/s/ Jiang, Min
Name:	Jiang, Min
Title:	Director

/s/ Jiang, Min
Jiang, Min

Sipp International Industries, Inc.

By:	/s/ Jiang, Min
Name:	Jiang, Min
Title:	Chief Executive Officer

Mailing Address (if different from above):
	Street	City/State	Zip

☐	Individual	☐	Custodian for

☐	Tenants in Common	☐	Uniform Gifts to Minors Act of the State of: __________________

☐	Joint Tenants with rights of Survivorship	☐	Corporation (Inc., LLC, LP) – Please list all officers, directors, partners, managers, etc.

☐	Partnership (Limited Partnerships use “Corporation”)	☐	Other (please explain)

☐	Trust

☐	Community Property

	(a)	Buyer is at least eighteen (18) years of age with an address as set forth in this Subscription Agreement.

	(b)	Except as set forth in the Prospectus and the exhibits thereto, no representations or warranties, oral or otherwise, have been made to Buyer by the Company or any other person, whether or not associated with the Company or this offering. In entering into this transaction, Buyer is not relying upon any information, other than that contained in the Prospectus and the exhibits thereto and the results of any independent investigation conducted by Buyer at Buyer’s sole discretion and judgment.

	(c)	Buyer understands that his or her investment in the Shares is speculative and involves a high degree of risk, and is not recommended for any person who cannot afford a total loss of the investment. Buyer is able to bear the economic risks of an investment in the offering and at the present time can afford a complete loss of such investment.

	(d)	Buyer is under no legal disability nor is Buyer subject to any order which would prevent or interfere with Buyer’s execution, delivery and performance of this Subscription Agreement or his or her purchase of the Shares. The Shares are being purchased solely for Buyer’s own account and not for the account of others and for investment purposes only, and are not being purchased with a view to or for the transfer, assignment, resale or distribution thereof, in whole or part. Buyer has no present plans to enter into any contract, undertaking, agreement or arrangement with respect to the transfer, assignment, resale or distribution of any of the Shares.

	(e)	Buyer has (i) adequate means of providing for his or her current financial needs and possible personal contingencies, and no present need for liquidity of the investment in the Shares, and (ii) a liquid net worth (that is, net worth exclusive of a primary residence, the furniture and furnishings thereof, and automobiles) which is sufficient to enable Buyer to hold the Shares indefinitely.

	(f)	If the Buyer is acting without a Purchaser Representative, Buyer has such knowledge and experience in financial and business matters that Buyer is fully capable of evaluating the risks and merits of an investment in the offering.

	(g)	Buyer has been furnished with the Prospectus.

	(h)	Buyer understands that Buyer shall be required to bear all personal expenses incurred in connection with his or her purchase of the Shares, including without limitation, any fees which may be payable to any accountants, attorneys or any other persons consulted by Buyer in connection with his or her investment in the offering.