ATI Modular Technology Corp. is
filing this Amendment to its previously filed Transition Report on Form 10-K filed on March 31, 2017 to restate its financial
statements on December 31, 2016 and June 30, 2016. The information in the Transition Report is amended to read in its entirety
as set forth in this Amendment. Except to reflect the restatement of the financial statements, the related disclosure controls
and procedures matters, the information in the Transition Report and this Amendment has not been updated or otherwise changed
to reflect any events, conditions or other developments that have occurred or existed since March 31, 2017, the date the Transition
Report was filed. Accordingly, except solely with regard to the restatement, the related disclosure controls and procedures matters,
all information in the Transition Report and this Amendment speaks only as of March 31, 2017. References made in this Amendment
to "this Form 10-K" mean this Amendment on Form 10-K/A unless the context requires otherwise.
PART
I
Special
Note Regarding Forward-Looking Statements
Information
included or incorporated by reference in this Annual Report on Form 10-K contains forward-looking statements. All forward-looking
statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future
performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only
predictions and speak only as of the date hereof. Forward-looking statements may contain the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “strategy,”
“plan,” “may,” “will,” “would,” “will be,” “will continue,”
“will likely result,” and similar expressions, and are subject to numerous known and unknown risks and uncertainties.
Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies,
capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements.
In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties
identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s
other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those
indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to
any forward-looking statements to reflect future events or developments.
Although
forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements
can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject
to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes
include, without limitation, those specifically addressed under the heading “Risk Factors Related to Our Business”
below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance
on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with
the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC’s
Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov)
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC, including us.
We
disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures
made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may
affect our business, financial condition, results of operations and prospects.
Item
1. Business
General
Corporate History
ATI
Modular Technology Corp. (“ATI Modular,” “we,” “us,” or the “Company”) are an
operating company engaged in the development and the exporting of modular energy efficient technology and processes that allow
government and private enterprises in China to use US-based methods for creating modular spaces, facilities, and properties. We
are in the business of all aspects of modular construction, including but not limited to, (a) the furtherance of modular construction
technology, education and development in developed and undeveloped countries, (b) acquisition and/or installation of construction
equipment, materials, furnishings, adware, insulation, flooring, roofing, wiring, plumbing, heating and air conditioning, and
landscaping, and (c) other businesses directly or tangentially related to these lines of services, including assisting businesses
and entrepreneurs in securing naming, licensing or promotional rights, driving internet and media traffic, increasing visibility
of product and name recognition, and other services. As with any business plan that is aspirational in nature, there is no assurance
we will be able to accomplish all of our objectives or that we will be able to meet our financing needs to accomplish our objectives.
We believe that we are a “shell company,” as defined under Rule 12b-2 of the Exchange Act. Our CIK number is 0001697426,
and we have selected December 31 as our fiscal year.
In
China, the modular construction industry is new and in its very early stages. Though we expect other competitors to come forth,
at this time, there are only three other competitors, and those competitors are based in China. None of the competitors are from
the United States. We believe that it is recognized that United States modular technology is more advanced than our Chinese counterparts,
and the technology is recognized as the gold standard. The construction industry in China, as a whole, has a mandate to immediately
start developing modular technology with cities and provinces developing modular
construction
plans and targets to construct modular in both the public as well as private sectors. Most communities have milestones and are
creating official policies on modular construction with the actual percentage of production mandated by particular target dates.
We
have been sought out by three separate governments in China to assist their communities in developing their modular industry based
upon United States’ technology. We have experience in the construction sector in China and the United States, and thus we
believe we have the leverage in assembling experts in the modular industry to assist in delivery of goods, services, equipment,
technology, and know-how all under the moniker of “Made in the USA.”
We
are currently evaluating a physical location for our operations in China along with a manufacturing facility. Our principal executive
offices are located at 4700 Homewood Court, Suite 100 in Raleigh, North Carolina. We are registered as a foreign business entity
in the State of North Carolina. We lease the office space from Yilaime Corporation, a Nevada corporation doing business in North
Carolina, and a related party to the Company.
The
Company was incorporated on January 2, 1969 as United Gold & Silver Co. (“UGS”). On February 17, 1971, UGS merged
with Lucky Irish Silver, Inc., a Montana corporation, and Deep Creek Mines, Inc., a Washington corporation, in which the surviving
entity’s name remained USG. On November 29, 1999, USG merged with Auto America, Inc., (“Auto America”), a Delaware
corporation, through the filing of Articles of Merger resulting in the surviving entity changing its name from USG to Auto America.
From 2002 to 2007, the State of Washington automatically filed numerous Certificates of Administrative Dissolutions for Auto America
for failure to file annual reports. On May 14, 2007, Auto America filed its final Application of Reinstatement resulting in restoring
the Company to good standing. Also, on May 14, 2007, Auto America filed Amended Articles of Incorporation changing its name to
Charter Equities, Inc. (“Charter Equities”). Charter Equities converted to an Arizona corporation on January 23, 2008.
Shortly thereafter, the Company converted to Nevada corporation and changed its name to Global Recycle Energy, Inc. We amended
our articles of incorporation on June 27, 2016, changing our name to ATI Modular Technology Corp.
Mr.
Alton Perkins (“Mr. Perkins”) is the control person of Yilaime Corporation, AmericaTowne and AXP Holding Corporation.
At this time, the purpose of the Company is to service the construction and related technology needs of the Company, and AmericaTowne
under AmericaTowne’s agreements with the Shexian County Investment Promotion Bureau in developing an AmericaTowne community
in the Hanwang mountains in Shexian, China. The Company also intends on supporting these services in other AmericaTowne ventures
at the invitation of the Xiamen Longyan City Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency
in developing an AmericaTowne Community and an International School in Longyan County China.
The
related export services rendered to the Company in the implementation of its business plan cannot be provided by AmericaTowne
or through the AmericaTowne relationship. In order to avoid conflicts of interest, Mr. Perkins is of the opinion that there must
be a separate and distinct agreement between, in this case, the Company and AXP Holding Corporation. Furthermore, although other
similar IC-DISC entities exist, the Company is able to obtain better terms and conditions from AXP Holding Corporation in light
of Mr. Perkins’ control of AXP Holding Corporation.
AmericaTowne’s
Board of Directors determined that operating and controlling a separate but related entity focused on the development and the
exporting of modular energy efficient technology and processes for government and private enterprises in China would be more prudent
from a risk mitigation and operational standpoint than providing these services under the AmericaTowne business plan. Furthermore,
the intent of the Company is to expand its services and relationships to other similar endeavors in projects not related to AmericaTowne,
thus the need to maintain and operate a separate entity.
Business
Developments in Fiscal Year 2016
On
June 21, 2016, AmericaTowne, the controlling shareholder of the Company by virtue of its majority ownership of common stock in
the Company, entered into a Cooperative Agreement with the Shexian County Investment Promotion Bureau (the “Shexian County
Bureau”) out of Shexian, China (hereinafter, the “AT/Shexian Cooperative Agreement”). The AT/Shexian Cooperative
Agreement relates to the construction of an AmericaTowne location in advancing tourism in the Hanwang mountains.
Under
the terms of the AT/Shexian Cooperative Agreement, AmericaTowne and the Shexian County Bureau have agreed to a strategic partnership
wherein the Shexian County Bureau intends to invest local resources to AmericaTowne for construction of an AmericaTowne community.
In consideration, AmericaTowne intends on investing funds towards the development of the AmericaTowne community. AmericaTowne
will be obligated to bear any and all applicable taxes and the projected investment by AmericaTowne into the development of the
AmericaTowne community is estimated to be $30,000,000. It is anticipated that the definitive agreement will set forth a detailed
projection and proforma associated with the use of funds. There is no guarantee that AmericaTowne will be able to raise this capital
in the event a definitive agreement is executed. Furthermore, AmericaTowne’s ability to raise the necessary capital and
to perform obligations under any definitive agreement might be materially affected in the event the Company is not able to perform
any of its obligations under any future definitive agreement with the Shexian County Bureau.
The
Company is controlled by AmericaTowne by virtue of the AmericaTowne’s majority ownership of common stock. On June 21, 2016,
the Company agreed to participate with the Shexian County Bureau in building local modular construction, researching technology
and intelligent systems related thereto, and servicing the full lifecycle of modular construction in the locale through the execution
of the Cooperative Agreement (the “ATI Modular/Shexian Cooperative Agreement”).
Pursuant
to future negotiations and more definitive agreements, ATI Modular has agreed to purchase the requisite equipment and technology
in performing under the ATI Modular/Shexian Cooperative Agreement. In consideration for the services provided by ATI Modular,
the Shexian County Bureau has agreed to be responsible for providing factories and land, and other resources and manpower in developing
the modular construction. The Company has also agreed to exercise its best efforts in raising approximately $30,000,000 in furthering
the parties’ collective interests under the ATI Modular/Shexian Cooperative Agreement. These funds would be allocated towards
different operating costs than the funds necessary for AmericaTowne to perform under the AT/Shexian Cooperative Agreement. It
is anticipated that the definitive agreement will set forth a detailed projection and proforma associated with the use of funds.
The Company and the Shexian County Bureau have agreed to continue to cooperate in good faith in executing and further agreements
needed in furthering their respective objectives. However, notwithstanding this intent, the Company’s ability to perform
might be materially affected in the event AmericaTowne is not able to meet its obligations in furthering any future definitive
agreement with the Shexian County Bureau.
On
September 8, 2016, the Company entered into the Investment and Cooperation Agreement for ATI Modular Green Building Manufacturing
Project with the Jiangnan Industry Zone in Anhui Province (the “Jiangnan Agreement”). Under the Jiangnan Agreement,
the Company has agreed to manufacture and install modular buildings, and provide research into the development of green building
module manufacturing. The Company has agreed to provide appropriate technology and intelligent systems in providing modular building
lifecycle services. The location of the planned project is the New Material Industry Park in the Jiangnan Industry Zone in Anhui
Province. The parties have projected a cost of $30,000,000.
On
December 28, 2016, the Company entered into the American ATI Modular Technology Company Project Investment Agreement (the “Investment
Agreement”), definitive agreement and supersedes the Jiangnan Cooperation Agreement of September 8, 2016. Under the Investment
Agreement, the Administrative Committee of Jiangnan Industrial Concentration Zone of Anhui Province (hereinafter, “Jiangnan”)
and the Company have agreed to the construction of the Company’s green, modular building and related technology under the
project name “Modular Plant Production Base.”
The
capitalization under the Investment Agreement is, in part, the Company’s responsibility. However, the Company and Jiangnan
have agreed to certain provisions to mitigate against financing risks, including, but not limited to: (a) access upon request
by the Company to local bank loans in the Anhui Province and United States Exim Bank, (b) equity fund insertion up to $3,000,000
USD, and (c) contribution by Jiangnan up to $2,900,000 upon meeting conditions in the Investment Agreement.
On
September 9, 2016, the Company entered into the Investment and Cooperation Agreement for ATI Modular Green Building Manufacturing
Project with the Yongan government in the Fujian province (the “Yongan Agreement”). Under the Yongan Agreement, similar
to the Jiangnan Agreement, the Company has agreed to manufacture and install modular buildings, and provide research into the
development of green building module manufacturing. The Company has agreed to provide appropriate technology and intelligent systems
in providing modular building lifecycle services. The location of the planned project is Yongan city in the Fujian province, China.
The parties have projected a cost of $30,000,000.
The
Company has agreed to grant the Yongan government audit, access, supervision, inspection and other rights. The Yongan government
has agreed to coordinate any and all necessary services in securing benefits associated with the Company being a foreign investment
enterprise, including but not limited to, providing the site for the manufacturing facility, tax relief, access to financing and
a “Project Headquarter” for the Company, which is defined in the Yongan Agreement. The Yongan Agreement is not a definitive
agreement; rather, it is a memorialization of the parties’ future intent as to the subject matter therein. The Company’s
business plans and objectives could be impaired in the event the parties do not reach a definitive agreement. . The Company is
responsible for financing and providing any necessary facilities inside any factory plant. There is no guarantee that the Company
can secure such financing or develop the necessary facilities.
On
June 27, 2016, we entered into a Sales and Support Services Agreement with Yilaime Corporation, a Nevada corporation
(“Yilaime”). Yilaime is controlled by Mr. Perkins, who is our sole director and officer. Yilaime, and another
related-party – Yilaime Corporation of NC, Inc. (“Yilaime NC”), are the holders of the majority of issued
and outstanding shares of common stock in AmericaTowne, Inc. (“ATI”), a Delaware corporation and fully-reporting
company with the United States Securities and Exchange Commission (the
“SEC”). Under the Services
Agreement, Yilaime will provide the Company with marketing, sales and support services in the Company’s pursuit of ATI
Modular business in China in consideration of a commission equal to 10% of the gross amount of monies procured for the
Company through Yilaime’s services. In consideration of the right to receive this commission, Yilaime has agreed to pay
the Company a quarterly fee of $250,000 starting on July 1, 2016. The Services Agreement is set to expire on June 10, 2020,
absent early termination for breach thereof by either party. Yilaime retains an option to extend the term under its sole
discretion until June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the
Company’s exclusive independent contractor in providing the services in the Services Agreement, and has agreed to a
non-compete and non-circumvent agreement. Yilaime is obligated to provide support services only in a manner that is deemed
commercially acceptable by Yilaime and Yilaime has the sole right to determine the means, manner and method by which services
will be provided and at the time and location of its choosing. Furthermore, as the control person of Yilaime, Mr. Perkins
might make decisions he deems are in the best interests of Yilaime, which might be to the detriment of the goals and
objectives of the Company.
On
June 28, 2016, we entered into a Modular Construction & Technology Services Agreement (the “Modular Services Agreement”)
with AmericaTowne Inc. (“ATI”), a Delaware corporation and fully-reporting company with the SEC. The impetus behind
the Modular Services Agreement was the Company’s Cooperative Agreement with the Shexian County Government, China. Under
the Cooperative Agreement, ATI and the Shexian County Bureau have agreed to a partnership in furthering the development of an
AmericaTowne community in the Hanwang mountains, Shexian, China. In addition, ATI, at the invitation of the Xiamen Longyan City
Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency plan to pursue the development of an AmericaTowne
Community and an International School in Longyan County China.
Under
the Modular Services Agreement, ATI Modular shall provide the
research, development, training
and modular technology in a manner deemed commercially acceptable by ATI based on its commercially reasonable requirements, plans
and specifications, which shall be agreed upon in advance of any substantial and material construction.
ATI will pay the
Company a quarterly fee of $125,000 per quarter. The initial fee under the Modular Services Agreement with AmericaTowne was recorded
as a related-party receivable upon its execution. The Services Agreement is set to expire on June 10, 2020, absent early termination
for breach thereof by either party. ATI retains an option to extend the term under its sole discretion until June 10, 2025 by
providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s exclusive independent
contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent agreement.
On
June 29, 2016, we entered into an IC-DISC Service Provider Agreement with AXP Holding Corporation, a Nevada corporation (“AXP
Holding”) and related party to the Company through Mr. Perkins control of AXP Holding. AXP Holding is an Interest Charge
- Domestic International Sales Corporation, or “IC-DISC”. AXP IC-DISC tax-exempt status was authorized and approved
by the United States Department of the Treasury, Internal Revenue Service. As an IC-DISC, AXP Holding may, under certain conditions,
act as a sister corporation to entities and provide services to assist a company in obtaining lower tax rates on export income.
In addition to the export tax savings provided by AXP, AXP can provide an additional array of services including promoting the
Company’s export activities, purchasing receivables from the Company at a discount through a factoring relationship, and
providing the Company with working capital loans.
The
term under the IC-DISC Service Provider Agreement is set to expire on December 6, 2019, absent early termination for breach thereof
by either party. AXP retains the right to extend the term, exercising its sole discretion, to December 6, 2024 by providing written
notice to the Company by November 6, 2019. AXP has agreed to a non-compete and non-circumvent in providing the services under
the IC-DISC Service Provider Agreement. The Company has agreed to pay AXP a commission fee up to the greater of 50% of the Company’s
export net income or 4% of the Company’s export gross receipts. The Company will determine the exact amount and the method
of payment of the commission fee. The commission fee shall be paid at the option of the Company periodically throughout the year,
but no later than December 31 on annual basis. If there is no commission fee due to no export sales, the Company will pay AXP
an export service fee of $50,000. The export service fee, if any, is due on or before December 31 on an annual basis.
In
addition, for referring businesses from the Company’s “Export Platform” or “Community,” AXP agrees
to pay the Company 25% of each “Sales Export Service Fee” charged and received as an “IC-DISC Commission”
from each Exporter or Licensee resulting from participating in the Export Platform or Community. This fee is called a “Group
Export Consulting Fee” in the IC-DISC Service Provider Agreement, and is due no later than fifteen business days after receipt
from the Exporter or Licensee, but no later than December 31 on an annual basis. For illustrative purposes, if AXP receives and
or charges an Exporter 50% of its net export sales as a commission, and that value is $100,000, AXP would owe the Company 25%,
or $25,000. Furthermore, during the term, the Company shall pay AXP a flat fee of $5,000 per transaction for purchasing receivables
from the Company, plus an interest rate for such factoring at the prime rate plus one-percent.
The
Company is in the early stages of its operations, and many of its plans and objectives are aspirational in nature, and thus might
never come to fruition. At this time, the Company plans to retain engineering and architectural firms based in the United States
who have extensive experience in developing modular structures in the United States, China and other foreign locations based on
market demand, which has not been thoroughly researched to date. The Company has been focused on obtaining quotes, negotiating
formal engagements and researching all aspects of the modular construction industry. While the infrastructure is still in the
developmental stage, the Company is confident that it has the experience, or access to those with experience, in the modular construction
field.
The
Company plans on engaging in onsite placement and delivery of modular structures. Mr. Perkins has extensive experience in operating
business in China. One of the reasons that Mr. Perkins was sought out and invited to participate in developing the modular industry
in China is that he was the co-chairman of a construction company in China - Yilaime Foreign Partnership in Henghsui China. His
experience with Yilaime Foreign Partnership allows ATI Modular to call on local companies in China as well as modular companies
and experts in the United States to help provide on-site services. Yilaime Foreign Partnership is not a related party to the Company,
ATI, Yilaime or AXP.
In
addition, the Company recently joined the Modular Building Institute in Charlottesville, Virginia. In September of 2016, Mr. Perkins
attended the Institute’s annual exposition in order to line up available suppliers, and experts in the modular construction
field.
We
intend on offering support services in all phases of modular construction. Our approach will be to focus on exporting United
States based technology, services and equipment, and general “know-how.” Exporters in our related company,
AmericaTowne, are experienced in the modular field and we plan on allowing those experienced exporters to participate in
various levels of our program.
The
Company currently does not have a principal supplier of raw materials. The Company has identified potential sources of raw materials
in the United States through its membership in the Modular Building Institute. One of our primary challenges will be pricing the
source of raw materials and delivery to China. We are also looking to potential raw material sources in China.
To
operate within China, the Company requires approval of government officials in China. In both cases where the Company has signed
Cooperative or Definitive Agreements (and in the case of the Shexian Agreement), and at the invitation of the local government,
we have the approval to register and conduct business.
Employees
The
Company currently has two full-time employees.
Emerging
Growth Company
We
are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest
of:
(a)
the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount
is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
(b)
the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities
of the issuer pursuant to an effective IPO registration statement;
(c)
the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt;
or
(d)
the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title
17, Code of Federal Regulations, or any successor thereto.
As
an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information
in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting.
This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the
registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal
control structure and procedures for financial reporting.
As
an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which
require the shareholder approval of executive compensation and golden parachutes. 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, that 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 of this election, our financial statements
may not be comparable to companies that comply with public company effective dates.
Item
1A. Risk Factors.
As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this
information.
Item
1B. Unresolved Staff Comments.
Not
applicable.
|
Item
2.
|
Description
of Property.
|
The
Company maintains an office at 4700 Homewood Court, Suite 100 in Raleigh, North Carolina, 27609 as its headquarters. It is currently
in the process of scouting and researching locations for a facility in China. The North Carolina office is leased from Yilaime
Corporation, a Nevada corporation doing business in North Carolina, and a related party to the Company. The North Carolina office
consists of a 1000 square foot office space. It presently houses all eight employees of the Company and is being leased for $2,500
per month from Yilaime. The China location, once established, will serve as a manufacturing location.
We
do not own any properties. We currently have no policy with respect to investments or interests in real estate, real estate mortgages
or securities of, or interests in, persons primarily engaged in real estate activities.
Item
3. Legal Proceedings.
There
are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property
is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
II
Item
5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.
Common
Stock
The
Company has 500,000,000 shares of authorized common stock (CUSIP# 00215H 103), of which, as of the end of its fiscal year had
127,733,337 issued and outstanding. Of the amount of issued and outstanding, ATI owned a total of 100,000,000 shares.
Between
June 13, 2016 and September 13, 2016, Mr. Perkins purchased on the open market, as trustee of the Alton & Xiang Mei Lin Perkins
Family Trust (the “Perkins Trust”), with a tax identification number of 46-7513804, and individually, 15,964 shares
and 101,629 shares, respectively, of the Company’s common stock at the average per share price of $1.91 and $.89, respectively.
Perkins and Perkins Trust used personal funds for the purchase. The total number of shares issued and outstanding as of the date
of this annual report equals 127,737,470. ATI, Perkins Trust and Perkins beneficially own 110,117,593 shares, or 87%, of the Company’s
common stock.
There
is no established public trading market for the Company’s common shares. Prior to June 27, 2016, the Company was incorporated
as Global Recycle Energy, Inc. (“GREI”). On June 27, 2016, the Company amended its Articles of Incorporation
with the State of Nevada to change the name of the Company to ATI Modular Technology Corporation. This name change has been
updated on the company profile on OTC Markets group, Inc. (“OTC”) operated by the Financial Industry Regulatory Authority
(“FINRA”). Our Notice of Corporate Ction was recently approved by FINRA, formalizing the name change from GREI
to ATI Modular and updating our symbol from GREI to ATMO.
The
Company is subject to Alternative Reporting Standards. The range of high and low bid information for the Company’s common
shares for each full quarterly period within the two most recent fiscal years, and any subsequent interim period for which financial
statements are included, or as required under Article 3 of Regulation S-X, is as follows:
|
|
1/1/15-3/31/15
|
|
4/1/15-6/30/15
|
|
7/1/15-9/30/15
|
|
10/1/15-12/31/15
|
|
1/1/16-3/31/16
|
|
4/1/16-6/30/16
|
|
7/1/16-9/30/16
|
|
10/1/16-12/31/16
|
|
High
|
|
|
|
0.14
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.14
|
|
|
|
0.44
|
|
|
|
0.4
|
|
|
|
9.74
|
|
|
|
8.95
|
|
|
Low
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.01
|
|
|
|
0.09
|
|
|
|
0.1
|
|
|
|
0.15
|
|
|
|
0.4
|
|
|
|
7.5
|
|
As
of December 31, 2016, there are approximately 174 record holders of our common stock with an aggregate of 126,733,337 shares issued
and outstanding. The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in
the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s
business. We have no securities authorized for issuance under any Equity Compensation Plans.
OTC
has discontinued the display of the Company’s quotes. The Company is currently listed by FINRA as a Caveat Emptor security
and public interest concern with the OTC. The potential reasons for this categorization are set forth at http://www.otcmarkets.com/stock/ATMO/quote,
even though no specific reason has been stated by OTC.
Preferred
Stock
We
do not have a class of preferred stock.
Dividends
We
have not paid any dividends on our common stock to date and do not intend to pay dividends prior to the completion of a business
combination. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to
a business combination will be within the discretion of our then board of directors. It is the present intention of our board
of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate
declaring any dividends in the foreseeable future.
Securities
Authorized for Issuance under Equity Compensation Plans
The
Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock
or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which
has the power to issue any or all of our authorized but unissued shares without stockholder approval.
Recent
Sales of Unregistered Securities
Within
the past three years, the Company issued a total of 100,500,000 shares of unregistered securities. In 2016, the Company had issued
100,000,000 shares to Joseph Arcaro (“Arcaro”) for services rendered in the amount of $100,000. ATI subsequently purchased
these shares on June 2, 2016 in a private transaction without solicitation or through the use of a broker or intermediary. As
a condition of closing the Stock Purchase Agreement with Arcaro, Arcaro facilitated the cancellation of 500,000 shares of the
Company’s common stock previously issued in 2016 for rights under an oil lease. The Company has no further rights, title
or interest in the oil lease. In both issuances, the Company relied on Section 4(2) of the Securities Act of 1933, as amended.
We believe that Section 4(2) was available because neither of the issuances involved underwriters, underwriting discounts or commissions;
restrictive legends had been placed on the certificates; no sales were made by general solicitation; and the issuances were made
to an accredited investor in consideration of a release of a debt obligation.
Issuer
Purchases of Equity Securities
None.
Item
6. Selected Financial Data
As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this
information.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
You
should read the following discussion of our financial condition and results of operations together with the audited financial
statements and the notes to the audited financial statements included in this Annual Report on Form 10-K. This discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those
anticipated in these forward-looking statements.
We
qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on
exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
-
have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
-
comply
with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an
auditor discussion and analysis);
-
submit
certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;"
and
-
disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
of the CEO's compensation to median employee compensation.
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
The
Company is in the early stages of its operations, and many of its plans and objectives are aspirational in nature, and thus might
never come to fruition. At this time, the Company plans to retain engineering and architectural firms based in the United States
who have extensive experience in developing modular structures in the United States, China and other foreign locations based on
market demand, which has not been thoroughly researched to date. The Company has been focused on obtaining quotes, negotiating
formal engagements and researching all aspects of the modular construction industry. While the infrastructure is still in the
developmental stage, the Company is confident that it has the experience, or access to those with experience, in the modular construction
field.
The
Company plans on engaging in onsite placement and delivery of modular structures. Mr. Perkins has extensive experience in operating
business in China. One of the reasons that Mr. Perkins was sought out and invited to participate in developing the modular industry
in China is that he was the co-chairman of a construction company in China - Yilaime Foreign Partnership in Henghsui China. His
experience with Yilaime Foreign Partnership allows ATI Modular to call on local companies in China as well as modular companies
and experts in the United States to help provide on-site services. Yilaime Foreign Partnership is not a related party to the Company,
ATI, Yilaime or AXP.
In
addition, the Company recently joined the Modular Building Institute in Charlottesville, Virginia. In September of 2016, Mr. Perkins
attended the Institute’s annual exposition in order to line up available suppliers, and experts in the modular construction
field.
We
intend on offering support services in all phases of modular construction. Our approach will be to focus on exporting United States
based technology, services and equipment, and general “know-how.” Exporters
in
our related company, AmericaTowne, are experienced in the modular field and we plan on allowing those experienced exporters to
participate in various levels of our program.
The
Company currently does not have a principal supplier of raw materials. The Company has identified potential sources of raw materials
in the United States through its membership in the Modular Building Institute. One of our primary challenges will be pricing the
source of raw materials and delivery to China. We are also looking to potential raw material sources in China.
To
operate within China, the Company requires approval of government officials in China. In both cases where the Company has signed
Cooperative Agreements (and in the case of the Shexian Agreement), and at the invitation of the local government, we have the
approval to register and conduct business.
Fiscal
Year
Our
fiscal year ends on December 31.
Results
of Operations
We
plan to raise capital following our recent change in status to an operating entity through the offering of shares of common stock
or preferred stock to investors. We anticipate we will need to pursue capital to fund our operations over the next twelve months.
We believe we will be able to raise the necessary capital to carry out our business plan, but there is no assurance that we will
be able to do so.
Overview
In
fiscal year 2016, the Company achieved $750,000 in revenue. We can make no assurances that we will find commercial success in
any of our products. We also rely upon the Service Agreements with AmericaTowne, and Yilaime for revenues. We are a new company
and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality
to our business as we began operations for the first quarter of 2017. We intend on relying on AmericaTowne and Yilaime for operational
support. If we cannot achieve independent commercial success, we may need to continue to rely on AmericaTowne and Yilaime for
support. If AmericaTowne or Yilaime at any time decides to alter or change materially our arrangement, we could experience a material
adverse effect on the Company.
Results
of Operations through December 31, 2016
Our
operating results are summarized as follows:
|
|
For the Six Months Ended
|
|
For the Years Ended
|
|
|
December 31
|
|
June 30
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
750,000
|
|
|
|
—
|
|
|
$
|
125,000
|
|
|
|
—
|
|
Costs of Revenue
|
|
$
|
175,613
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating Expenses
|
|
$
|
463,448
|
|
|
$
|
4,650
|
|
|
$
|
132,552
|
|
|
$
|
3,859
|
|
Net Income (Loss)
|
|
$
|
110,939
|
|
|
($
|
4,650
|
)
|
|
($
|
7,552
|
)
|
|
($
|
3,859
|
)
|
Pursuant
to the Company's Service Agreements, AmericaTowne recognized $250,000 and $500,000 with AmericaTowne and Yilaime, respectively
for the six months ended December 31, 2016. For the six months ended December 31, 2016, the Company incurred cost of revenues
of $175,613. The cost of revenues stems from the agreement between Yilaime and the Company whereby Yilaime acts as the Company’s
exclusive representative. For six months ended December 31, 2015, there was no cost of revenues.
We
can make no assurances that we will find commercial success in any of our revenue producing contracts. We are a new company and
thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to
our business as we began operations in the first quarter of 2017.
The
Company discloses that all revenues recorded and reflected in this annual report are related to service agreements with related
parties. Specifically, the Company has entered into agreements with AmericaTowne and Yilaime, as described above and incorporated
herein by reference. The Company is controlled by one of its related parties, AmericaTowne, by virtue of AmericaTowne holding
a majority of the Company’s issued and outstanding restricted common stock.
Operating
Expenses
Our
operating expenses are largely attributable to office, rent and professional fees related to our reporting requirements as a public
company and implementation of our business plan. For the six months ended December 31, 2016 our operating expenses were $463,448,
while the operating expenses for the years ending June 30, 2016 and June 30, 2015 were $132,552 and $3,859, respectively.
Net
Income
As
a result of our operations, for the six months ended December 31, 2016, the Company reported net income after provision for income
tax of $84,423. Compared to the years ended June 30, 2016 and June 30, 2015, our net income was ($3,693) and ($3,859), respectively.
The increase in our net income is due to starting our business plan and generating revenues from related parties in relation to
services provided pursuant to certain contracts, as explained above.
Liquidity
and Capital Resources
Working Capital
|
|
December
31
|
June
30
|
June
30
|
|
|
2016
|
2016
|
2015
|
|
|
(Restated)
|
(Restated)
|
|
|
|
|
|
|
Current
Assets
|
|
$601,855
|
$137,991
|
-
|
Current
Liabilities
|
|
$236,215
|
$49,699
|
$3,859
|
Working
Capital (Deficit)
|
|
$365,640
|
$88,292
|
($3,859)
|
On December 31,
2016, June 30, 2016 and June 30, 2015, we have working capital (deficit) of $365,640, $88,292 and ($3,859), respectively. This
increase in working capital is due to implementing our initial business plans.
Cash Flow
|
|
For the Six Months Ended
|
|
For the Year Ended
|
|
|
December 31
|
|
June 30
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(48,243
|
)
|
|
|
—
|
|
|
$
|
4,156
|
|
|
|
—
|
|
Cash used in investing activities
|
|
$
|
2,540
|
|
|
|
—
|
|
|
$
|
4,156
|
|
|
|
—
|
|
Cash provided by financing activities
|
|
$
|
145,049
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Increase (Decrease) in cash
|
|
$
|
94,266
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cash
Provided by Operating Activities
Compared
to June 30, 2016, December 31, 2015, and June 30, 2015, the increase in cash used in operating activities as of December 31, 2016
is mainly due to increase in accounts receivable.
Cash
Used in Investing Activities
We
spent $2,540 on fixed assets for the six months ended December 31, 2016, as compared to $4,156, $0 for the years ended June 30,
2016 and June 30, 2015, and $0 for the six months ended December 31, 2015.
Cash
Provided by Financing Activities
Compared
to June 30, 2016, December 31, 2015, and June 30, 2015, our cash used in financing activities increased $145,049 for the six months
ended December 31, 2016. The increase is due to proceeds from issuance of common stock in 2016.
As
of December 31, 2016, the Company had enough cash including receivables to operate its business at the current level for the next
twelve months, but insufficient cash to achieve our business goals and initiatives set forth above. To address the cash situation,
the Company continues to manage its cash accounts and receivables closely.
To
date, we have been able to meet all our account payable obligations within a five to ten-day window. If required, we can extend
this window to improve our cash flow position. Additionally, we have a plan to increase sales. There is no assurance that we will
be able to maintain this level of operations.
The
success of our business plan beyond the next twelve months is contingent upon us growing our business, keeping costs down, increasing
revenue and obtaining additional equity and/or debt financing. We intend to fund operations through our pro-active efforts to
monitor receivables, and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures,
working capital, or other cash requirements. We do have a commitment from Chizhou government to provide cash infusions and or
loan guarantees as we complete our operations in China. Other than Chizhou, we do not have any formal commitments or arrangements
for the sales of stock or the advancement or loan of funds at this time.
There
is no assurance that such additional financing will be available to us on acceptable terms, or at all or that our receivable plan
will be effective in the future.
Plan
of Operation and Cash Requirements
The
Company anticipates that its expenses over the next twelve months will be approximately $5,000,000 as described in the table below.
These estimates may change significantly depending on the nature of our business activities and our ability to raise capital from
our shareholders or other sources.
Description
|
|
Potential Completion Date
|
|
Estimated Expenses $
|
Initial Plant and Operations Set-up
|
|
12 months
|
|
|
250,000
|
|
Salaries
|
|
12 months
|
|
|
300,000
|
|
Utility expenses
|
|
12 months
|
|
|
50,000
|
|
Investor relations costs
|
|
12 months
|
|
|
50,000
|
|
Marketing expenses
|
|
12 months
|
|
|
100,000
|
|
Professional fees
|
|
12 months
|
|
|
150,000
|
|
Other administrative expenses
|
|
12 months
|
|
|
100,000
|
|
Equipment Purchases
|
|
12 months
|
|
|
4,000,000
|
|
Total
|
|
|
|
|
5,000,000
|
|
Our
other administrative expenses for the year will consist primarily of transfer agent fees, bank and interest charges and general
office expenses. The professional fees are related to our regulatory filings throughout the year and include legal, accounting
and auditing fees. The equipment purchases and plant set-up are related to the materially definitive agreement with Jiangnan.
Based
on our planned expenditures, we will require approximately $5,000,000 to proceed with our business plan over the next twelve months.
If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan
and we will be forced to proceed with a scaled back business plan based on our available financial resources.
We
intend to raise the balance of our cash requirements for the next twelve months pursuant to our agreement with Jiangnan by accessing
upon request bank loans, bank guarantees and equity funding. Additionally, we may have private placements, shareholder loans or
possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising
enough money through such efforts, we may review other financing possibilities such as bank loans. At this time, other than our
agreement with Jiangnan we do not have a commitment from any third-party to provide us with financing. There is no assurance that
any financing will be available to us or if available, on terms that will be acceptable to us.
Even
though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for
funding our operations, as we do not have sufficient tangible assets to secure any such financing. We anticipate that any additional
funding will be in the form of equity financing from the sale of our common stock. At the close of 2016, we are considering financing
arrangements for our common stock. However, the arrangements are not final and we cannot provide any assurance that we will be
able to raise sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing,
we may be forced to abandon our business plan.
Off-Balance
Sheet Arrangements
We
have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources and would be considered material to investors.
Item
7A. Quantitative and Qualitative Disclosures about Market Risk.
As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this
information.
Item
8. Financial Statements and Supplementary Data.
Please
see the financial statements beginning on page F-1 located in this annual report on Form 10-K and incorporated herein by reference.
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There
are not and have not been any changes in or disagreements between the Company and its accountants on any matter of accounting
principles, practices or financial statement disclosure.
Item
9A. Controls and Procedures.
The
Company's Chief Executive, Alton Perkins, is responsible for establishing and maintaining disclosure controls and procedures for
the Company.
Evaluation
of Disclosure Controls and Procedures
For
purposes of this Item 9A., the term disclosure controls and procedures means controls and other procedures of the
Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files
or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a
et seq.
and hereinafter the
“Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules
and forms of the Securities and Exchange Commission (the “Commission”), and (ii) include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal
executive and principal financial officers, or persons performing similar functions, as appropriate to allow
timely
decisions regarding required disclosure. Our disclosure controls and procedures do not yet comply with the requirements in
(i) and (ii) above.
On
December 31, 2016, Alton Perkins reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f)
and 15d-15(f) of the Exchange Act) as of the end of the period covered by this report and has concluded that (i) the Company’s
disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded,
processed, summarized, and reported within the time periods specified in the rules and forms of the Commission due to material
weaknesses identified. The material weaknesses identified relate to the lack of proper segregation of duties and the lack of sufficient
qualified accounting and other finance personnel with an appropriate level of U.S. GAAP knowledge and experience.
Report
of Management on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial
reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal
control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions;
providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing
reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and
providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material
effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, our
internal control over financial reporting does not provide assurance that a misstatement of our financial statements would be
prevented or detected and is not effective.
On
December 31, 2016, management conducted an evaluation of the effectiveness of our internal control over financial reporting and
found it to be not effective subsequent to filing our Annual Report on Form 10-K for the year ended December 31, 2016 with
the Commission. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based
on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Management has concluded that the Company’s internal controls over financial reporting are not effective.
The material weaknesses identified relate to the lack of proper segregation of duties and the lack of sufficient qualified accounting
and other finance personnel with an appropriate level of U.S. GAAP knowledge and experience. As we obtain additional funding and
employ additional personnel, we will implement programs recommended by the Treadway Commission to remediate the material weaknesses.
Our
independent public accountant, Yichien Yeh, CPA (“YY”) has not conducted an audit of our controls and procedures regarding
internal control over financial reporting. Consequently, YY expresses no opinion with regards to the effectiveness or implementation
of our controls and procedures with regards to internal control over financial reporting.
Changes
in Internal Controls over Financial Reporting
There
were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls
as of the end of the fiscal year, December 31, 2016 as covered by this report that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
Inherent
Limitations on Effectiveness of Controls
The
Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent
or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur
because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of
two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to
risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance
with policies or procedures.
Item
9B. Other Information.
Not
applicable.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
(a) Identification
of Directors and Executive Officers.
Our
officers and directors and additional information concerning them are as follows:
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Alton
Perkins
|
|
65
|
|
Chief
Executive, Secretary, Treasurer and Director
|
Alton
Perkins – Sole Director and Officer
.
Mr.
Perkins has been the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary of the Company
since the change in control event on June 27, 2016. Mr. Perkins serves in these same capacities for ATI, Yilaime, Yilaime NC and
AXP Holding. Mr. Perkins is a former decorated Air Force Officer and Missile Launch Officer with 22 years of military service,
who graduated from the University of Southern Illinois with a B.S. in Business Administration and a M.B.A. from the University
of North Dakota. Between 1988 and 1997, he held CEO positions with start-up companies in the jet fuels, defense contracting, construction,
business consulting and development, and real estate industries. Between 1997 and 2009, Mr. Perkins served as the CEO and Chief
Technology Officer for internet, childcare operations, media, and realty development companies. From 2009 to the present, Mr.
Perkins has served as Chairman of Yilaime and its related entities – ATI, Yilaime NC and AXP Holding.
Mr.
Perkins has expertise in conducting business in China. Living and working in China studying Chinese consumer habits, working with
Chinese entrepreneurs and government agencies, he developed the AmericaTowne® and AmericaStreet™ concepts.
Mr.
Perkins lived in China between September 1, 2010 and April 28, 2012. He worked for the Yilaime Foreign Invested Partnership in
Hengshui, China between September 19, 2010 and December 30, 2012. In addition to serving as Co-Chair of Yilaime Foreign Invested
Partnership in China, an entity focused on real estate development, he served as a chief consultant to a major Chinese chemical
company responsible for funding and technology transfer, and coordinated business with USA based auditors, DOW Chemical and USA
Exim Bank. Mr. Perkins is the recently appointed sole director and officer of ATI Nationwide Holding Corp., f/k/a EXA, Inc., a
Florida corporation (“ATI Nationwide”). The Company’s largest shareholder – ATI, closed on the purchase
of the majority and controlling interest of ATI Nationwide on October 13, 2016. ATI Nationwide is listed on the OTC:Pinks as “ATIN.”
No Company funds were used to purchase ATI’s interest in ATI Nationwide.
Mr.
Perkins is subject to a Desist and Refrain Order dated March 21, 2008 (the “Order”) issued by the State of California’s
Business, Transportation and Housing Agency, Department of Corporations (the “Department”). In 2003, Mr. Perkins had
been the Chief Executive Officer of Sunburst Holding Corporation (“Sunburst”). The Department alleged that in May
of 2003, Sunburst and Mr. Perkins offered and sold securities through general solicitation to finance art-related activities.
The Department alleged that Sunburst and Mr. Perkins omitted material facts, and more specifically, that Mr. Perkins had pled
no contest to felony counts related to an indictment for fraudulent misappropriation of funds in a fiduciary capacity in Maryland,
and had received a five-year suspended sentence.
The
Department was of the opinion that investments offered and sold by Sunburst and Mr. Perkins constituted securities, which were
subject to qualification under the California law, and that the securities were offered without being qualified, and were not
exempt, in violation of California law. The Department ordered Sunburst and Mr. Perkins to desist and refrain from the further
offer or sale of securities in California unless and until qualification has been made under the law or unless exempt. The Department
also ordered that Sunburst and Mr. Perkins to desist and refrain from offering or selling or buying or offering to buy securities
in California, including but not limited to stock, by means of any written or oral communication which includes an untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading (discussed below). Mr. Perkins did not agree with the proposed order and filed a complaint
with the Department. Mr. Perkins complaint was based on the fact that the shares in question were subject to a Registration statement
filed by Sunburst and the shares were not required to be qualified and or authorized by the State of California since the shares
had been appropriately registered with the SEC.
Mr.
Perkins has been in compliance with the Order since issuance. The Order is not related in any manner with respect to the Company
or its related parties. To the extent the Order was entered (i.e. only copy available for inspection by management is an unsigned
version), there is no restriction on Mr. Perkins from engaging in an offering in California provided he complies with the appropriate
disclosures and laws. The Company is not aware of any similar orders in any other jurisdiction.
The
Company further discloses that the aforementioned Order references the failure of Mr. Perkins to disclose his eleven (11) prior
pleas of nolo contender in the Circuit Court for Prince George’s County, Maryland, for fraudulent misappropriation by a
fiduciary in connection with a real estate transaction unrelated to the Company or its subsidiaries. On or about March 10, 2000,
Mr. Perkins had been arraigned on eleven counts of fraudulent misappropriation by a fiduciary. The alleged misappropriation occurred
on or about November 24, 1999 (i.e. the date set by the Court as the offense date). Mr. Perkins pled nolo contendre on August
31, 2000 without any admission or finding of guilt. Mr. Perkins was and had been given a five-year suspended sentence, which has
since expired. Mr. Perkins disclosed to the Company that he had subsequently obtained a judgment out of the Superior Court of
Mecklenburg County in North Carolina in the amount of $125,000 against an individual who defamed him and published false comments
related to his nolo contendre plea. The company further discloses that the state of Virginia Division of Securities conducted
an investigation into the matter and did not hold the same opinion as the State of California. After careful review of the matter
and applicable law, they concluded that no action was warranted and stated that “the matter is closed.”
B.
Significant Employees.
None
C.
Family Relationships.
Mr.
Perkins’ wife, Xiang Mei Lin Perkins, is a beneficiary under the Perkins Trust.
D.
Involvement in Certain Legal Proceedings.
Except
as otherwise disclosed, no officer, director, or persons nominated for such positions, promoter or significant employee has been
involved in the last ten years in any of the following:
|
•
|
Any
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;
|
|
|
|
|
•
|
Any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
|
|
|
•
|
Being
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; and
|
|
|
|
|
•
|
Being
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission
to have viol-ated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
Audit
Committee
Alton
Perkins, the Company’s sole director, acts as the Audit Committee. The Company has no separate committees. The Company has
no qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes
that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for
a qualified individual for hire.
Code
of Ethics
We
do not currently have a code of ethics. The company is in the early stages of development and its chief executive and sole director,
Mr. Perkins, has not yet developed a code of ethics. The Company intends on developing one as the Company’s business expands.
Prior
Blank Check Company Experience
Mr.
Perkins is the only member of management who has served as an officer or director of a prior blank check company.
Name
|
|
Filing
Date Registration
Statement
|
|
Operating
Status
|
|
SEC
File
Number
|
|
Pending
Business
Combinations
|
|
Additional
Information
|
|
|
|
|
|
|
|
|
|
|
|
AmericaTowne,
Inc.
|
|
May
12, 2015
|
|
Effective
November 5, 2015
|
|
000-55206
|
|
None
|
|
None
|
ATI
Nationwide Holding Corp.
|
|
N/A
|
|
Shell
Company
|
|
000-1591387
|
|
None
|
|
None
|
Mr.
Perkins beneficial ownership in ATI is set forth in this Registration Statement. ATI, formerly known as Alpine 5, Inc., filed
its Form 10-12G/A on June 13, 2014. ATI ceased to be a blank check company on March 3, 2015 upon the Commission having no further
comment on ATI’s disclosures on Form 8-K, Item 5.06 (Change in Shell Status). ATI is publicly reporting with the Commission.
ATI is engaged in exporting and consulting in the exporting of American made goods, products and services to China and Africa
through strategic relationships in China and in the United States.
ATI’s
aim is to provide upper and middle-income consumers in China with ‘Made In The USA’ goods and services allowing customers
to experience the United States’ culture and lifestyle. In order to facilitate these objectives, ATI plans on creating a
50-plus acre plot consisting of small businesses, hotel, villas, senior care facilities, a theme park and performing arts center
– all located on specific acreage in China depicting American lifestyle and the American experience. This is commonly referred
to by ATI as the ‘AmericaTowne Community’ concept.
The
development of the AmericaTowne Community is aspirational in nature. There are barriers to entry that make it difficult for entrants
into the industry including, but not limited, to the socio-political environment in China. Although the Company provides different
types of services and intends on providing a variety of products through its contractual relationships, the key notable competitors
are China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN), and Xinyuan Real Estate Co., Ltd
(XIN), and IFM Investments Limited (CTC). As ATI develops its business model further, it expects additional competitors to service
and the competitive picture to become clearer.
ATI
is the majority and controlling shareholder of ATI Nationwide Holding Corp., a Florida corporation (“ATI Nationwide”).
ATI Nationwide is formerly known as EXA, Inc. ATI Nationwide recently had its Notice of Corporate Action with FINRA approved,
formally changing ATI Nationwide’s name and changing its symbol from EXAI to ATIN.ATI acquired the controlling interest
in ATI Nationwide through a private stock acquisition with Carson Holdings, LLC, a Utah limited liability company, and Joseph
C. Passalaqua, an individual, which closed on October, 7 2016. ATI
Nationwide is a blank check company; however, through
ATI’s performance under the Master Joint Venture and Operational Agreement with Nationwide Microfinance Limited, a Ghanaian
corporation, which has been disclosed by ATI on Form 8-K dated July 14, 2016, ATI Nationwide is in the process of taking necessary
steps to cease being a blank check company; however, there is no guarantee that it will be able to cease being a blank check company.
Nominating
Committee
We
have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.
Item
11. Executive Compensation.
On
July 1, 2016, the Company entered into an Employment Agreement with Mr. Perkins to serve as the Company’s Chairman of the
Board, President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary (the “Employment Agreement”).
The term of the Employment Agreement is five years with successive one-year option terms. In consideration his services under
the Employment Agreement, the Company issued 10,000,000 shares of restricted common stock to Mr. Perkin’s designee –
the Perkins Trust, which is allowed for under Section 3.2 of the Employment Agreement.
The
stock issuance is subject to certain lock-up provisions in the Employment Agreement, which are more thoroughly set forth in the
enclosed exhibit. Until the Company acquires additional capital, it is not anticipated that Mr. Perkins, or any future officer
or director will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf
of the Company
Mr.
Perkins, who is also a director, officer and control person of ATI, intends to devote very limited time to our affairs. Other
than as set forth above, the Company has no stock option, retirement, pension, or profit sharing programs for the benefit of directors,
officers or other employees, but our sole officer and director may recommend adoption of one or more such programs in the future.
The Company does not have a standing compensation committee or a committee performing similar functions, since the Board of Directors
has determined not to compensate the officer and director.
Summary
Compensation Table
Name
and Principle Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Nonequity
Incentive Plan Compensation
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
Alton
Perkins (PEO)
|
2016
|
$-
|
$-
|
$50,000
|
$-
|
$-
|
$-
|
$-
|
$-
|
Outstanding
Equity Awards at Fiscal Year-End
Name
|
Option
awards
|
Stock
awards
|
Number
of securities underlying unexercised options
(#) exercisable
|
Number
of securities
underlying
unexercised
options
(#) unexercisable
|
Equity
incentive
plan awards: Number of
securities
underlying
unexercised
unearned
options
(#)
|
Option
exercise price
($)
|
Option
expiration date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares of units of stock that have not vested
($)
|
Equity
incentive
plan awards: Number of
unearned
shares, units or other rights that have not vested
(#)
|
Equity
incentive
plan awards: Market or payout value of
unearned
shares, units or other rights that have not vested
($)
|
Alton
Perkins
|
25,000,000
|
-
|
-
|
1.5%
of prevailing share price
|
12/31/2012
|
-
|
-
|
-
|
-
|
Director
Compensation
Name
|
Fees
earned or paid in cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation earnings
($)
|
All
other compensation
($)
|
Total
($)
|
Alton
Perkins
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
following table sets forth the ownership of our common stock by each person known by us to be the beneficial owner of more than
5% of our outstanding common stock as a group as of December 31, 2016. There are not any pending arrangements that may cause a
change in control. The information presented below has been presented in accordance with the rules of the SEC and is not necessarily
indicative of ownership for any other purpose.
A
person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct
the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially
any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through
the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to
be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is
calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which
such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding
as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60
days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner.
Name
and Address
(1)
|
|
Amount
and Nature of
Beneficial Ownership
|
|
Percentage
of Class
(2)
|
|
|
Alton
Perkins
(3)
|
|
110,117,593
(4)
|
|
86.8
%
|
|
|
|
|
|
|
_________________
|
|
|
(1)
|
The
address for the person named in the table above is c/o the Company.
|
|
|
|
|
|
|
(2)
|
Based
on 126,740,708 shares outstanding as of the date of this annual report.
|
|
|
|
|
|
|
(3)
|
Alton
Perkins is Chief Executive Officer, Chief Financial Officer, Secretary and Director of the Company.
|
|
|
|
|
|
|
|
|
|
(4)
|
Individually,
and through Yilaime and Perkins Trust
|
|
|
|
|
|
|
|
|
This
table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has
sole or shared voting and investment power with respect to the shares indicated as beneficially owned.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
Company agreed to issue Mr. Perkins, or his authorized designee, an option to purchase up to 5,000,000 shares of common stock
of the Company per year at any time prior to the conclusion of the first year of the Employment Agreement, i.e. prior to 365 days
after execution of the Employment Agreement, at a price of 1.5% per share of the closing price of the Company’s stock quoted
on a major exchange or OTC Market one business day before purchase, and annually thereafter for a total of 5 consecutive years.
The shares purchased under this option are subject to all rights and lock-up restrictions set forth in the Employment Agreement.
The following chart is provided pursuant to Item 201(d) of Regulation S-K:
Plan
Category
|
|
Number
of securities to be issued
upon
exercise of outstanding
options,
warrants, and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
|
|
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
(a))
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
25,000,000
|
1.5%
|
|
|
|
|
0
|
|
Equity
compensation plans not approved by security holders
|
|
N/A
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
TOTAL
|
|
25,000,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item
13. Certain Relationships and Related Transactions.
Except
as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required
to be disclosed pursuant to Item 404 of Regulation S-K.
Item
14. Principal Accounting Fees and Services.
Yichien
Yeh, CPA is the Company’s independent registered public accounting firm. Set below are aggregate fees billed by Yichien
Yeh CPA for professional services rendered for the year ended December 31, 2016.
Audit
Fees
The
fees for the audit services billed and to be billed by Yichien Yeh, CPA for the year ended December 31, 2016 amounted to $26,500.
Audit-Related
Fees
None.
Tax
Fees
There
were no fees billed by Yichien Yeh, CPA for professional services for tax compliance, tax advice, and tax planning for 2016.
All
Other Fees
There
were no fees billed by Yichien Yeh, CPA for other products and services for 2016.
Audit
Committee’s Pre-Approval Process
The
Board of Directors acts as the audit committee of the Company, and accordingly, all services are approved by all the members of
the Board of Directors.
Yichien
Yeh, CPA Oakland Gardens, New York, June 4, 2017
ATI
Modular Technology Corp
|
Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31
|
June
30
|
June
30
|
|
|
|
|
|
|
2016
|
2016
|
2015
|
|
|
|
|
|
|
(Restated)
|
(Restated)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
$ 94,266
|
$ -
|
$ -
|
Accounts
receivable, net - related parties
|
|
|
458,755
|
118,750
|
-
|
Other
receivables - related parties
|
|
|
48,834
|
-
|
-
|
Advances
to officers
|
|
|
|
-
|
19,241
|
-
|
Total
Current Assets
|
|
|
|
|
601,855
|
137,991
|
-
|
|
|
|
|
|
|
|
|
|
Office
Equipment Furniture & Fixtures
|
|
|
6,280
|
4,156
|
-
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
$ 608,135
|
$ 142,147
|
$ -
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Libilities
|
|
|
|
|
|
|
|
Accounts
payable and ccrued expenses
|
|
|
$ 209,699
|
$ 19,699
|
$ 3,859
|
Deposit
from customers
|
|
|
|
-
|
30,000
|
-
|
Income
tax payable
|
|
|
|
|
26,516
|
-
|
-
|
Total
Current Liabilities
|
|
|
|
236,215
|
49,699
|
3,859
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
|
236,215
|
49,699
|
3,859
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common
stock,$0.001 par value, 500,000,000 shares authorized;
|
|
|
|
126,733,337,
116,075,716 and 16,075,716 shares issued and
|
|
|
|
outstanding,
respectively.
|
|
|
|
126,733
|
116,076
|
16,076
|
Common
stock subscribed
|
|
|
|
982
|
-
|
-
|
Additional
paid in capital
|
|
|
|
833,363
|
32,953
|
32,953
|
Deferred
compensation
|
|
|
|
(450,000)
|
-
|
-
|
Receivable
for issuance of stock
|
|
|
(167,000)
|
-
|
-
|
Retained
Earnings
|
|
|
|
|
27,842
|
(56,581)
|
(52,888)
|
Total
stockholders' equity
|
|
|
|
371,920
|
92,448
|
(3,859)
|
Total
liabilities and stockholders' equity
|
|
|
$ 608,135
|
$ 142,147
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
ATI
Modular Technology Corp
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Six Months Ended
|
For
the Years Ended
|
|
|
|
|
|
December
31
|
June
30
|
|
|
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
- related parties
|
|
|
$ 750,000
|
$ -
|
$ 125,000
|
$ -
|
Cost
of revenues - related parties
|
|
175,613
|
-
|
-
|
-
|
Gross
profit
|
|
|
|
574,387
|
-
|
125,000
|
-
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
463,448
|
4,650
|
132,552
|
3,859
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from operation
|
|
110,939
|
(4,650)
|
(7,552)
|
(3,859)
|
|
|
|
|
|
|
|
|
|
Other
Income
|
|
|
|
-
|
-
|
3,859
|
-
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from operation before taxes
|
110,939
|
(4,650)
|
(3,693)
|
(3,859)
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
26,516
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
$ 84,423
|
$ (4,650)
|
$ (3,693)
|
$ (3,859)
|
|
|
|
|
|
|
|
|
|
Earnings
(Loss) per common share-basic and diluted
|
$ 0.00
|
$ (0.00)
|
$ (0.00)
|
$ (0.00)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
shares
outstanding basic and diluted
|
|
121,171,157
|
16,075,716
|
16,075,716
|
16,075,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
ATI
Modular Technology Corp
|
Statements
of Changes in Stockholders' Equity
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Additional
|
|
|
|
Receivable
|
|
|
|
|
|
|
|
Common
Stock
|
|
Stock
|
|
Paid-In
|
|
Deferred
|
|
for
Issuance
|
|
Retained
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Sunscribed
|
|
Capital
|
|
Compensation
|
|
of
Stock
|
|
Earnings
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2014
|
16,075,716
|
$
|
16,076
|
$
|
-
|
$
|
32,953
|
$
|
-
|
$
|
-
|
$
|
(49,029)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended June 30, 2015
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3,859)
|
|
(3,859)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2015
|
16,075,716
|
$
|
16,076
|
$
|
-
|
$
|
32,953
|
$
|
-
|
$
|
-
|
$
|
(52,888)
|
$
|
(3,859)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
100,000,000
|
|
100,000
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended June 30, 2016
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3,693)
|
|
(3,693)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2016
|
116,075,716
|
$
|
116,076
|
$
|
-
|
$
|
32,953
|
$
|
-
|
$
|
-
|
$
|
(56,581)
|
$
|
92,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for proceeds
|
657,621
|
|
657
|
|
982
|
|
310,410
|
|
-
|
|
(167,000)
|
|
-
|
|
145,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
10,000,000
|
|
10,000
|
|
|
|
490,000
|
|
(500,000)
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of Deferred Compensation
|
-
|
|
-
|
|
-
|
|
-
|
|
50,000
|
|
-
|
|
-
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income for the period ended December 31, 2016
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
84,423
|
|
84,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2016
|
126,733,337
|
$
|
126,733
|
$
|
982
|
$
|
833,363
|
$
|
(450,000)
|
$
|
(167,000)
|
$
|
27,842
|
$
|
371,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
|
|
ATI
Modular Technology Corp
|
|
|
|
|
|
|
|
|
|
|
For
the Six Months Ended
|
For
the Year Ended
|
|
|
|
|
|
|
December
31
|
June
30
|
|
|
|
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net
loss of the period
|
|
|
$ 84,423
|
$ (4,650)
|
$ (3,693)
|
$ (3,859)
|
|
Adjustments
to reconcile net loss from operations
|
|
|
|
|
|
Bad
debt expense
|
|
|
|
17,895
|
-
|
6,250
|
-
|
|
Depreciation
|
|
|
|
416
|
-
|
-
|
-
|
|
Shares
issued for services
|
|
|
-
|
-
|
100,000
|
-
|
|
Amortization
on deferred compensation
|
|
50,000
|
-
|
-
|
-
|
|
Changes
in Operating Assets and Liabilities
|
|
|
|
-
|
|
Accounts
receivable
|
|
|
(357,899)
|
-
|
(125,000)
|
-
|
|
Other
receivables
|
|
|
|
(48,834)
|
-
|
-
|
-
|
|
Advances
to officers
|
|
|
19,241
|
-
|
(19,241)
|
-
|
|
Accounts
payable and accrued expenses
|
190,000
|
4,650
|
15,840
|
3,859
|
|
Deposit
from customers
|
|
|
(30,000)
|
-
|
30,000
|
-
|
|
Income
tax payable
|
|
|
26,516
|
-
|
-
|
-
|
|
Net
cash used in operating activities
|
|
(48,243)
|
-
|
4,156
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(2,540)
|
-
|
(4,156)
|
-
|
|
Net
cash used in investinging activities
|
|
(2,540)
|
-
|
(4,156)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of stock
|
|
145,049
|
-
|
-
|
-
|
|
Net
cash provided by financing activities
|
|
145,049
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and equivalents
|
94,266
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and equivalents at beginning of the period
|
-
|
-
|
-
|
-
|
|
Cash
and equivalents at end of the period
|
|
$ 94,266
|
$ -
|
$ -
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
Interest
paid
|
|
|
|
$ -
|
$ -
|
$ -
|
$ -
|
|
Income
taxes paid
|
|
|
|
$ -
|
$ -
|
$ -
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATI
MODULAR TECHNOLOGY CORP
Notes to Financial Statements
NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
ATI
Modular Technology Corp., defined above and herein as the “Company” formerly Global Recycle Energy, Inc., was incorporated
under the laws of the State of Nevada on March 7, 2008. The Company is engaged in the development and the exporting of modular
energy efficient technology and processes that allow government and private enterprises in China to use US-based methods for creating
modular spaces, facilities, and properties. As with any business plan that is aspirational in nature, there is no assurance we
will be able to accomplish all our objective or that we will be able to meet our financing needs to accomplish our objectives.
The
Company is an operating company engaged in the development and the exporting of modular energy efficient and smart technology
and processes that allow government and private enterprises in China and elsewhere to use US-based methods for creating modular
spaces, facilities, and properties. The Company is in the business of all aspects of modular and smart construction, including
but not limited to, (a) the furtherance of modular and smart construction technology, education, development and production in
developed and undeveloped countries, (b) acquisition and/or installation of construction equipment, materials, furnishings, hardware,
insulation, flooring, roofing, wiring, plumbing, heating and air conditioning, and landscaping, and (c) other businesses directly
or tangentially related to these lines of services, including assisting businesses and entrepreneurs in securing naming, licensing
or promotional rights, driving internet and media traffic, increasing visibility of product and name recognition, and other services.
Our
principal executive offices are located at 4700 Homewood Court, Suite 100 in Raleigh, North Carolina. We are registered as a foreign
business entity in the State of North Carolina. We lease the office space from Yilaime Corporation, a Nevada corporation doing
business in North Carolina, and a related party to the Company, as set forth below. Our physical location for our operations in
China along with a manufacturing
facility is Jiangnan Industry Zone, Chizhou City, Anhui
Province, China. In carrying out its business plan the Company is in the process of registering its wholly owned subsidiary Anhui
Ao De Xin Modular Building Technology Co. Ltd. in Jiangnan Industry Zone, Chizhou, China.
The
Company entered an Investment and Cooperation Agreement with the Jiangnan Industry Zone in Anhui Province, China dated September
8, 2016 (the “Jiangnan Cooperation Agreement”). On December 28, 2016, the Company entered the definitive agreement,
American ATI Modular Technology Company Project Investment Agreement (the “Investment Agreement”) with the Administrative
Committee, Jiangnan Industry Zone in Anhui Province. The Investment Agreement superseded the Jiangnan Cooperation Agreement. Under
the Investment Agreement, the Administrative Committee of Jiangnan Industrial Concentration Zone of Anhui Province (hereinafter,
“Jiangnan”) and the Company have agreed to the construction of the Company’s green, modular building and related
technology under the project name “Modular Plant Production Base.”
Under
the Investment Agreement, the Company has agreed to manufacture and install modular buildings, and provide research into the development
of green building module manufacturing using US based technology. The Company has agreed to provide appropriate technology and
intelligent systems in providing modular building lifecycle services. In addition, to modular and smart technology, the Company
and Jiangnan has agreed to establish: 1) a modular development institute research and training center; 2) an entrepreneurial incubator;
3) an engineering technology research center; 4) an industrial design center; 5) a post-doctoral workstations and engineering
laboratories; and 6) an international student intern summer work program. Where possible the Company’s aim is to increase
US exports by using American based technology, equipment and services. (Strategy)
The
Company entered the Modular Services Agreement with AmericaTowne, a related party and the majority and controlling shareholder
of the Company, to support AmericaTowne’s obligations under the Shexian Agreement in designing, installing and manufacturing
American modular technology for use in all government and private buildings throughout Shexian County, and elsewhere in China.
The terms and conditions of the Modular Services Agreement with AmericaTowne and the Shexian Agreement are set forth above.
Also,
the Company has entered the Yongan and Shexian Agreements to pursue the development of business opportunities involving modular
technology and investments, and business development. While we plan to have robust operations in the United States and international
locations, we expect the bulk of our operations and revenue will come from China.
China's
economy and its government impact our revenues and operations. While the Company has an agreement in place with the government
of Jiangnan as well as the approval by government officials in Shexian and Yongan China to operate facilities there is no assurance
that we will operate the facilities successfully. Additionally, the Company will need government approval in other locations in
China to operate other aspects of our business plan. There is no assurance that we will be successful in obtaining approvals from
government entities in other locations to operate other aspects of our business plan. Finally, Mr. Perkins, as a control person
of each entity – AmericaTowne and the Company, might elect to forego certain obligations of AmericaTowne under other Corporative
Agreements currently in place or not enter more definitive agreements with Governments in China and elsewhere, which in turn,
could impact the Company’s ability to meet its business plan set forth herein.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
These
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
("U.S. GAAP").
On May 9, 2017, the Company
reported that it had reached a determination to restate its previously filed financial statements for the six months ended December
31, 2016 and for the year ended June 30, 2016. The restatement had no effect on net income for the six months ended December 31,
2016 and for the year ended June 30, 2016. The restatement relates to revoke application of pushdown accounting in accordance
with ASC 805-20-15-4.
The following summarizes
the effects of restatement:
|
Previously
Reported
|
Adjustment
|
Restated
|
Goodwill:
|
|
|
|
12/31/2016
|
$206,992
|
(206,992)
|
$-
|
6/30/2016
|
$206,992
|
(206,992)
|
$-
|
Additional
paid in capital:
|
|
|
|
12/31/2016
|
$1,040,355
|
(206,992)
|
$833,363
|
6/30/2016
|
$239,945
|
(206,992)
|
$32,953
|
Change
in Fiscal Year End
The
Company has filed its Form 8-K on January 31 of 2017 to change the Company's fiscal year end from June 30 to December 31. As a
result of this change, the Company is filing a Transition Report on Form 10-K for the six-month transition period ended December
31, 2016. References to any of the Company’s fiscal years mean the fiscal year ending December 31 of that calendar year.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the
opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included.
Actual results could differ from those estimates.
Financial
Instruments
The
carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses, interest payable
and short-term notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.
Cash
Equivalents
The
Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash
equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.
However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository
institutions in which those deposits are held.
Property,
Plant, and Equipment
Property,
plant and equipment are initially recognized recorded at cost. Gains or losses on disposals are reflected as gain or loss in the
period of disposal. The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs
may include structural improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred.
Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
For
the six month ended December 31, 2016 and 2015, depreciation expense is $416 is $0, respectively. For the years ended June 30,
2016 and 2015, depreciation expense is $0.
For the years ended June 30, 2016 and 2015,
the Company’s effective income tax rate is 0% resulting from full provision of allowance valuation on deferred tax assets
from the Company’s net loss.
Income
Taxes
Income
taxes are provided in accordance with Statement of Financial Accounting Standards ASC 740 Accounting for Income Taxes. A deferred
tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry
forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates on the date of enactment.
The
Company was established under the laws of the State of Nevada and is subject to U.S. federal income tax and Nevada state income
tax, if any. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established
when necessary to reduce deferred income tax assets to the amount expected to be realized.
For
the six months ended December 31, 2016, statutory U.S tax rate is
24%
based on the
Company’s pre-tax net income in 2016. The Company’s 2016 effective income tax rate
is
24
%.
For the years ended June 30, 2016 and 2015, the Company’s effective
income tax rate is 0% resulting from full provision of allowance valuation on deferred tax assets from the Company’s net
loss.
Earnings
per Share
In
February 1997, the FASB issued ASC 260, "Earnings per Share", which specifies the computation, presentation and disclosure
requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 supersedes the provisions of
APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company
has adopted the provisions of ASC 260 effective (inception).
Basic
earnings and net loss per share amounts are computed by dividing the net income by the weighted average number of common shares
outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
Segment
Information
The
standard, "Disclosures about Segments of an Enterprise and Related Information", codified with ASC 280, requires certain
financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise.
The Company believes that it operates in business segment of marketing and sales in China while the Company's general administration
function is performed in the United States. On December 31, 2016, all assets and liabilities are located in the United States
where the income and expense has been incurred since inception to December 31, 2016.
Impact
of New Accounting Standards
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's
results of operations, financial position, or cash flow.
Revenue
Recognition
The
Company's revenue recognition policies comply with FASB ASC Topic 605. The Company follows paragraph 60510S991 of the FASB Accounting
Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned.
The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably assured.
The
Company does not provide unconditional right of return, price protection or any other concessions to its customers.
There
were no sales returns and allowances from inception to December 31, 2016.
In
the first step of the review process, we compare the estimated fair value of the reporting unit with its carrying value. If the
estimated fair value of the reporting unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value
of the reporting unit is less than its carrying amount, we proceed to the second step of the review process to calculate the implied
fair value of the reporting unit goodwill in order to determine whether any impairment is required. We calculate the implied fair
value of the reporting unit goodwill by allocating the estimated fair value of the reporting unit to all of the assets and liabilities
of the reporting unit as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting
unit’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss for that excess amount.
In allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit, we use
industry and market data, as well as knowledge of the industry and our past experiences.
We
base our calculation of the estimated fair value of a reporting unit on the income approach. For the income approach, we use internally
developed discounted cash flow models that include, among others, the following assumptions: projections of revenues and expenses
and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new
units; and estimated discount rates. We base these assumptions on our historical data and experience, third-party appraisals,
industry projections, micro and macro general economic condition projections, and our expectations.
We
have had no goodwill impairment charges for the six months ended December 31, 2016, the estimated fair value of each of our reporting
units exceeded its' respective carrying amount by more than 100 percent based on our models and assumptions.
NOTE
3. GOING CONCERN
The
Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable
to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The
Company is still in development stage and has not created sufficient revenue to cover any operating losses it may incur.
Management's plans include the raising of capital through the equity markets to fund future operations, seeking additional
acquisitions, and generating of revenue through our business. However, there can be no assurances the Company will be
successful in its efforts to secure additional equity financing and obtaining sufficient revenue producing contracts. These
factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might result from this uncertainty.
NOTE
4. ACCOUNT RECEIVABLES – RELATED PARTIES
The
nature of the accounts receivable for December 31, 2016 in the amount of $63,250 are for modular construction and technology services
and utilization of anticipated modular construction technology by AmericaTowne pursuant to the Modular Construction & Technology
Services Agreement between AmericaTowne and the Company dated June 28, 2016 (hereinafter, the “ATI Services Agreement”)
and $419,650 for the Sales and Support Services Agreement with Yilaime on June 27, 2016 (the “Yilaime Services Agreement”).
On December 31, 2016, the Company's allowance for bad debt is $24,145, which provides a net receivable balance of $458,755.
Accounts
receivable consist of the following:
|
|
31-Dec
|
|
30-June
|
|
30-June
|
|
|
2016
|
|
2016
|
|
2015
|
Accounts receivable- related parties
|
|
|
482,900
|
|
|
|
125,000
|
|
|
|
0
|
|
Less: Allowance for doubtful accounts
|
|
|
(24,145
|
)
|
|
|
(6,250
|
)
|
|
|
0
|
|
Accounts receivable, net
|
|
|
458,755
|
|
|
|
118,750
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad
debt expense was $17,895 and $0 for the six months ended December 31, 2016 and 2015, respectively. Bad debt expense was $6,250
and $0 for the fiscal year ended June 30, 2016 and for June 30, 2015 respectively.
Allowance
for bad debt policy
Our bad debt
policy is determined by the Company's periodic review of each account receivable for reasonable assurance of collection. Factors
considered are the exporter's financial condition, past payment history if any, any conversations with the exporter about the
exporter's financial conditions and any other extenuating circumstances. Based upon the above factors the Company makes a determination
whether the receivable is reasonable assured of collection. Based upon our review if required we adjust the allowance for bad
debt. As of December 31, 2016, June 30, 2016, and June 30, 2015, based upon our limited history, our allowance for bad debt is
just above bad debt we anticipate will be written off for the year.
NOTE
5. SHAREHOLDER'S EQUITY
The stockholders' equity
section of the Company contains the following classes of capital stock:
Common stock,
$ 0.001 par value: 500,000,000 shares authorized; 126,733,337, 116,075,716 and 16,075,716 shares issued and outstanding as of
December 31, 2016, June 31, 2016 and June 30, 2015, respectively; Preferred stock, none: 0 shares authorized; but not issued and
outstanding.
NOTE
6. STOCK BASED COMPENSATION
The
Company entered into an employment lock-up agreement on July 1, 2016 with Alton Perkins to serve as the Chairman of the Board,
President, Chief Executive Officer, Chief Financial Officer and Secretary. The term of Mr. Perkins' agreement is five years with
the Company retaining an option to extend in one-year periods. In consideration for Mr. Perkins' services, the Company has agreed
to issue to his designee, the Alton & Xiang Mei Lin Perkins Family Trust, 10,000,000 shares of common stock. The Company may
elect in the future to include money compensation to Mr. Perkins or his designee for his services provided there is sufficient
cash flow.
For
the six months ended December 31, 2016, $50,000 of stock compensation was charged to operating expenses and $450,000 was recorded
as deferred compensation on December 31, 2016.
NOTE
7. RELATED PARTIES TRANSACTIONS
The
Company intends on relying on other businesses controlled by our sole director and officer, and beneficial owner of the majority
shares of common stock in the Company – Alton Perkins, in implementing its business plan.
Mr.
Perkins is the control person of Yilaime Corporation, AmericaTowne and AXP Holding Corporation. At this time, the purpose of the
Company is to service the construction and related technology needs of AmericaTowne under AmericaTowne’s agreements with
the Shexian County Investment Promotion Bureau in developing an AmericaTowne community in the Hanwang mountains in Shexian, China.
The Company also intends on supporting these services in other AmericaTowne ventures at the invitation of the Xiamen Longyan City
Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning Agency in developing an AmericaTowne Community and
an International School in Longyan County China.
The
related export services rendered to the Company in the implementation of its business plan cannot be provided by AmericaTowne
or through the AmericaTowne relationship. In order to avoid conflicts of interest, Mr. Perkins is of the opinion that there must
be a separate and distinct agreement between, in this case, the Company and AXP Holding Corporation. Furthermore, although other
similar IC-DISC entities exist, the Company is able to obtain better terms and conditions from AXP Holding Corporation in light
of Mr. Perkins’ control of AXP Holding Corporation.
AmericaTowne’s
Board of Directors determined that operating and controlling a separate but related entity focused on the development and the
exporting of modular energy efficient technology and processes for government and private enterprises in China would be more prudent
from a risk mitigation and operational standpoint than providing these services under the AmericaTowne business plan. Furthermore,
the intent of the Company is to expand its services and relationships to other similar endeavors in projects not related to AmericaTowne,
thus the need to maintain and operate a separate entity.
Cooperative
Agreement (Shexian County Government, China)
The
Company’s majority and controlling shareholder – AmericaTowne, is a party under the Cooperative Agreement with the
Shexian County Investment Promotion Bureau (the “Shexian Agreement”). Under the Shexian Agreement, AmericaTowne and
the Shexian County Bureau have agreed to a partnership in furthering the development of an AmericaTowne community in the Hanwang
mountains. Although not definitive at this time, the parties have agreed that, in consideration for AmericaTowne’s investment
of approximately $30,000,000 into the development, plus any additional tax paid to the local government, where applicable, the
Shexian County Bureau will dedicate local resources, including land (which AmericaTowne would be required to obtain rights through
local bid invitation), and participation with AmericaTowne in an agreed upon equity split through a future definitive agreement.
The
Company will be providing construction and technology services to AmericaTowne in facilitating AmericaTowne’s obligations
under the Shexian Agreement. The Company’s ability to generate revenue under its agreement with AmericaTowne could be impaired
in the event AmericaTowne is not able to meet its obligations under the Shexian Agreement. Furthermore, Mr. Perkins, as a control
person of each entity, might elect to forego certain obligations of AmericaTowne under the Shexian Agreement or not enter into
a more definitive agreement with the Shexian County Bureau, which in turn, could impact the Company’s ability to meet its
business plan set forth herein.
Sales
and Support Services Agreement (Yilaime Corporation)
On
June 27, 2016, we entered into a Sales and Support Services Agreement with Yilaime Corporation, a Nevada corporation (“Yilaime”).
Yilaime is controlled by Alton Perkins, who is our sole director and officer. Yilaime, and another related-party – Yilaime
Corporation of NC, Inc. (“Yilaime NC”), are the holders of the majority of issued and outstanding shares of common
stock in AmericaTowne, Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). Mr. Perkins is also the Trustee of the Alton & Xiang Mei Lin Perkins Family
Trust (“Perkins Trust”) and the AXP Nevada Asset Protection Trust 1 (“AXP”), which holds 5,100,367 and
120,000 shares, respectively, of the issued and outstanding common stock in ATI. Mr. Perkins is the beneficial owner of 20,674,484
shares of ATI, which equals 90.11% of issued and outstanding shares. Mr. Perkins is the beneficial owner of the majority and controlling
interest in the Company through his direct holdings, and beneficial holdings through Yilaime, AXP and the Perkins Trust. ATI,
Perkins Trust and Mr. Perkins beneficially own 110,117,593 shares, or 86%, of the Company’s common stock.
Under
the Services Agreement, Yilaime will provide the Company with marketing, sales and support services in the Company’s pursuit
of ATI Modular business in China in consideration of a commission equal to 10% of the gross amount of monies procured for the
Company through Yilaime’s services. In consideration of the right to receive this commission, Yilaime has agreed to pay
the Company a quarterly fee of $250,000 starting on July 1, 2016. The Services Agreement is set to expire on June 10, 2020, absent
early termination for breach thereof by either party. Yilaime retains an option to extend the term under its sole discretion until
June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s exclusive
independent contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent
agreement.
Yilaime
is obligated to provide support services only in a manner that is deemed commercially acceptable by Yilaime and Yilaime has the
sole right to determine the means, manner and method by which services will be provided and at the time and location of its choosing.
Furthermore, as the control person of Yilaime, Mr. Perkins might make decisions he deems are in the best interests of Yilaime,
which might be to the detriment of the goals and objectives of the Company.
Modular
Construction & Technology Services Agreement (AmericaTowne)
On
June 28, 2016, we entered into a Modular Construction & Technology Services Agreement (the “Modular Services Agreement”)
with AmericaTowne Inc. (“ATI”), a Delaware corporation and fully-reporting company with the United States Securities
and Exchange Commission (the “SEC”). The impetus behind the Modular Services Agreement was the Company’s Cooperative
Agreement with the Shexian County Government, China. Under the Cooperative Agreement, ATI and the Shexian County Bureau have agreed
to a partnership in furthering the development of an AmericaTowne community in the Hanwang mountains, Shexian, China. In addition,
ATI, at the invitation of the Xiamen Longyan City Chamber of Commerce, Xiamen/Longyan China and the Xiamen City Growth Planning
Agency plan to pursue the development of an AmericaTowne Community and an International School in Longyan County China.
Under
the Modular Services Agreement, ATI Modular shall provide the research, development, training and modular technology in a manner
deemed commercially acceptable by ATI based on its commercially reasonable requirements, plans and specifications, which shall
be agreed upon in advance of any substantial and material construction. ATI will pay the Company a quarterly fee of $125,000 per
quarter. The initial fee was paid upon signing the Modular Services Agreement. The Services Agreement is set to expire on June
10, 2020, absent early termination for breach thereof by either party. ATI retains an option to extend the term under its sole
discretion until June 10, 2025 by providing written notice to the Company by March 10, 2019. Yilaime has agreed to be the Company’s
exclusive independent contractor in providing the services in the Services Agreement, and has agreed to a non-compete and non-circumvent
agreement.
Interest
Charge – Domestic International Sales Agreement (AXP Holding Corporation)
On
June 29, 2016, we entered into an IC-DISC Service Provider Agreement with AXP Holding Corporation, a Nevada corporation (“AXP
Holding”) and related party to the Company through Mr. Perkins control of AXP Holding. AXP Holding is an Interest Charge
- Domestic International Sales Corporation, or “IC-DISC”. AXP IC-DISC tax-exempt status was authorized and approved
by the United States Department of the Treasury, Internal Revenue Service. As an IC-DISC, AXP Holding may, under certain conditions,
act as a sister corporation to entities and provide services to assist a company in obtaining lower tax rates on export income.
In addition to the export tax savings provided by AXP, AXP can provide an additional array of services including promoting the
Company’s export activities, purchasing receivables from the Company at a discount through a factoring relationship, and
providing the Company with working capital loans.
The
term under the IC-DISC Service Provider Agreement is set to expire on December 6, 2019, absent early termination for breach thereof
by either party. AXP retains the right to extend the term, exercising its sole discretion, to December 6, 2024 by providing written
notice to the Company by November 6, 2019. AXP has agreed to a non-compete and non-circumvent in providing the services under
the IC-DISC Service Provider Agreement.
The
Company has agreed to pay AXP a commission fee up to the greater of 50% of the Company’s export net income or 4% of the
Company’s export gross receipts. The Company will determine the exact amount and the method of payment of the commission
fee. The commission fee shall be paid at the option of the Company periodically throughout the year, but no later than December
31 on annual basis. If there is no commission fee due to no export sales, the Company will pay AXP an export service fee of $50,000.
The export service fee, if any, is due on or before December 31 on an annual basis.
In
addition, for referring businesses from the Company’s “Export Platform” or “Community,” AXP agrees
to pay the Company 25% of each “Sales Export Service Fee” charged and received as an “IC-DISC Commission”
from each Exporter or Licensee resulting from participating in the Export Platform or Community. This fee is called a “Group
Export Consulting Fee” in the IC-DISC Service Provider Agreement, and is due no later than fifteen business days after receipt
from the Exporter or Licensee, but no later than December 31 on an annual basis. For illustrative purposes, if AXP receives and
or charges an Exporter 50% of its net export sales as a commission, and that value is $100,000, AXP would owe the Company 25%,
or $25,000. Furthermore, during the term, the Company shall pay AXP a flat fee of $5,000 per transaction for purchasing receivables
from the Company, plus an interest rate for such factoring at the prime rate plus one-percent.
In
addition, Joseph Arcaro is the Company’s prior Chief Executive Officer, Chief Financial Officer, Secretary and Chairman
of the Board of Directors.
The
Company recognizes and confirms the requirements in ACS 850 10506 to disclose all related party transactions between the Company
and related party transactions and or relationships.
Pursuant
to ASC 850-10-50-6, the Company makes the following transaction disclosures:
The
Company also leases office space from Yilaime for $2,500/month.
Operating
Statement Related Party Transactions (for the six months ending December 31, 2016 and 2015; for the years ended June 30, 2016
and 2015).
(a)
$15,000, $0, $2,500 and $0 for general and administrative expenses for rent expenses the Company paid to Yilaime towards its lease
agreement.
(b)
$250,000, $0, $125,000 and $0 in revenues for ATI Services Agreements with the Company; $500,000, $0, $0 and $0 in revenues
for Yilaime Services Agreements with the Company.
(c)
$110,939, $0, $0 and $0 of compensation expense for AXP Holding Corp charges for DISC;
(d)
$175,613, $0, $0 and $0 costs of revenues to Yilaime for services pursuant to the Service
Agreement;
(e)
$50,000, $0, $0 and $0 for general and administrative operating expenses recorded as stock compensation
for respective employment agreements;
(f)
$3,334, $0, $0 and $0 for general and administrative expenses for commissions and fees;
(g)
$198,000, $0, $0 and $0 for operational expense for Anhui Ao De Xin Modular Construction Technology Co., Ltd.
(h)
$0, $0, $100,000 and $0 of compensation expense by issuing 100,000,000 shares to Joseph Arcaro.
(i)
$0, $0, $3,859 and $0 other income of debt forgiveness from Joseph Arcaro
Balance
Sheet Related Party Transactions (on December 31, 2016, June 30, 2016 and June 30, 2015)
(a)
$60,088, 118,750 and $0 net account receivables ATI owes to the Company;
(b)
$398,668, $0 and $0 net account receivables Yilaime owes to the Company;
(c)
$48,834, $0 and $0 prepayments to AXP Holding Corp; and
(d)
$198,000, $0 and $0 as accounts payable to Anhui Ao De Xin Modular Construction Technology Co., Ltd.; and
(e)
$450,000, $0 and $0 as deferred compensation pursuant to respective employment agreements.
(f)
$0, $19,241 and $0 advances to officers-Alton Perkins
(g)
$0 $30,000 and $0 deposit from customers- Yilaime.