Company Quick10K Filing
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Dragon Jade
20-F 2018-03-31 Annual: 2018-03-31
20-F 2017-03-31 Annual: 2017-03-31
20-F 2016-03-31 Annual: 2016-03-31
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CRVS Corvus Pharmaceuticals 121
STKS One Group Hospitality 108
MN Manning & Napier 34
UUU Universal Security Instruments 3
STDY Steadymed 0
PAYT Pay My Time 0
ACUR Acura Pharmaceuticals 0
NTRB Nutriband 0
CWI Carey Watermark Investors 0
DGJI 2018-03-31
Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Other Information
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects.
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities.
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 15T. Controls and Procedures
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees.
Item 16E. Purchase of Equity Securities By The Issuers and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-12.1 djilexh12_1.htm
EX-12.2 djilexh12_2.htm
EX-13.1 djilexh13_1.htm
EX-13.2 djilexh13_2.htm

Dragon Jade Earnings 2018-03-31

DGJI 20F Annual Report

Balance SheetIncome StatementCash Flow

20-F 1 djil20f033118.htm DRAGON JADE INTERNATIONAL LTD FORM 20-F, 03.31.18

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
 
FORM 20-F

(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 12 (b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year-ended March 31, 2018
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report   _____________
 
For the transition period from _______________ to _____________
 
Commission File Number 0-53593
 
Dragon Jade International Limited
(Exact name of Registrant as specified in its charter)
 
_____________________________________
(Translation of Registrant's name into English)
 
British Virgin Islands
(Jurisdiction of incorporation or organization)
 
Unit 2, 23/F, New World Tower I, 18 Queens Road, Central Hong Kong, SAR, China
(Address of principal executive offices)
 
Lai Yat Man
Tel: 852 –3588-1780    Fax: 852 – 3005-6381
Unit 2, 23/F, New World Tower I, 18 Queens Road, Central Hong Kong, SAR, China
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:  None
 
Securities registered or to be registered pursuant to Section 12(g) of the Act.
 
Common Stock, No Par Value Shares
(Title of Class)
 
Securities for which there is reporting obligation pursuant to Section 15(d) of the Act:  None.
 
 
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.  57,023,319 shares of common stock, no par value.
 
Indicate by check mark if the registrant is a well-known season issuer, as defined in Rule 405 of the Securities Act.    Yes    No
 
If this report is an annual or  transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes   No
 
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No
 
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer") in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer  
Accelerated filer  
Non-accelerated filer  

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP  
International Financial Reporting Standards as issued by the International Accounting Standards Board  
Other  
 
If   "Other"  has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.  Item 17    Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
 
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 1, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes   No
 
 
 
 
 
 
 
 
 
 
 
 
TABLE  OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends and paying agents
 
 
 
 
Foreign currency exchange rate sensitivity
 
 
Interest rate sensitivity
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
Pursuant to General Instruction E(b) of Form 20-F, this annual report includes the information specified in Parts I, II and III.
 
Pursuant to General Instruction E(c) of Form 20-F, the registrant has elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRELIMINARY NOTE
 
Currencies:     We present our consolidated financial statements in United States dollars. All dollar amounts in this annual report on Form 20-F are stated in United States dollars ("US dollars", "$", or "US$"), except where otherwise indicated. Certain information in this Form 20-F is presented in Hong Kong dollars ("HK dollars" or HK$").  See "Item 3. Key Information - Currency Exchange Rates" for a history of exchange rates of HK$ into US$.
 
Generally Accepted Accounting Principles:     We report our financial results using United States generally accepted accounting principles ("US GAAP").  Unless otherwise specified, all references to financial results herein are to those calculated under US GAAP.
 
Forward-Looking Information: This annual report contains "forward-looking statements." Such forward-looking statements are subject to important risks, uncertainties and other factors, including those set forth under "Item 3.D. Risk Factors" and elsewhere in this annual report, that could cause actual results to differ materially from those stated in the  forward-looking statements.  Any statements in this annual report that are not statements of historical or current facts or conditions may be deemed "forward-looking" statements.  Forward-looking statements often may be identified by terminology such as "intend," "should," "expect," "may," "plan," "anticipate,"  "believe," "estimate," "project," "predict," and the negative and variations of such words and comparable terminology.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment concerning future events, the risks and uncertainties involved in such forward-looking statements may cause actual results, performance and achievements to differ materially from any estimates, predictions, projections or plans about future events.  Statements containing forward-looking information are necessarily based upon a number of factors and assumptions that, while considered reasonable by us as of the date of such statements, are inherently subject to significant business and economic risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statements are based.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART I
 
Item 1.       Identity of Directors , Senior Management and Advisers
 
Our directors and senior management are:
 
LAW Lok Bun has served as President and a director of Dragon Jade International Limited since April 17, 2012 and as a director of Alpha Ultimate Ltd. since inception on April 11, 2012.

LAI Yat Man has served as Chief Executive Officer and a director of Dragon Jade International Limited since September 1, 2012 and as a director of United Asia Medical Network Co. Ltd. since inception on May 6, 1998.

FUNG Kwok Wing has served as Chief Financial Officer and a director of Dragon Jade International Limited since September 1, 2012 and as a director of United Asia Medical Network Co. Ltd. since inception on July 27, 2016.

LO Tsz Fung Philip has served as Independent Non-executive Director and a director of Dragon Jade International Limited since September 1, 2012.

TAI Kam Chiu Daniel (formerly known as TAI Tze Yu Daniel) has served as Independent Non-executive Director and a director of Dragon Jade International Limited since September 1, 2012.

NGAI Wing Mui Phoenix has served as Secretary of Dragon Jade International Limited since June 22, 2012.

LAI Fan Wah (Thomas) has served as Independent Non-executive Director and a director of Dragon Jade International Limited since September 1, 2012 and resigned on May 4, 2016.
 
The business address of all our directors and senior management is Unit 2, 23/F, New World Tower I, 18 Queens Road Central, Hong Kong SAR, China.
 
Our principal bankers are:
 
The Hong Kong and Shanghai Banking Corporation Ltd., 1 Queen's Road Central, Central, Hong Kong
 
The Company's independent registered public accounting firm is Centurion ZD CPA Limited ("Centurion ZD"), Unit 1304, 13th Floor, Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong.

Our securities counsel is Ortoli Rosenstadt LLP, 501 Madison Avenue, 14th Floor, New York, NY 10022.

Our legal advisor is Pillsbury Winthrop Shaw Pittman LLP, 12255 El Camino Real, Suite 300, San Diego, CA 92130-4088.
 
Item 2.       Offer Statistics and Expected Timetable
 
Not applicable.
 
 
 
Item 3.       Key Information
 
A.
Selected financial data:  Dragon Jade International Limited (the "Company") was incorporated on April 14, 2008 in the British Virgin Islands.  The principal activity of the Company is investment holding.
 
In April 2012, the Company chartered a new subsidiary, Alpha Ultimate Limited, under the laws of the Special Administrative Region of Hong Kong, which operates in the health supplement industry.

 
On August 31, 2012, the Company entered into a stock exchange agreement with United Century Holdings Limited, a privately held corporation. On September 1 2012, the Company consummated the transaction contemplated by that stock exchange agreement. All of the capital stock of United Century Holdings Limited was exchanged for an aggregate of 20,003,319 shares of the Company's common stock. The Company became a 100% holding company of United Century Holdings Limited.
 
United Century Holdings Limited ("UCHL") was incorporated on March 2, 2012 under the British Virgin Islands Business Companies Act, 2004 with limited liabilities. UCHL is established as a special purpose holding company whose objective is to become a holding company to consummate an acquisition, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses located in Hong Kong. On July 10, 2012, UCHL executed an acquisition of 7,879,500 out of 8,000,000 ordinary shares, par value $0.1282 (HK$1) per share, of the United Asia Medical Network Company Limited ("UAM") and became a 98.49% holding company of UAM.
 
UAM was incorporated on May 6, 1998, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32. Its principal business is the marketing and sale of health supplement products and providing related medical and health consultancy services.
 
On March 20, 2018, the Company acquired 3,000 shares of Dragon Jade Medical Company Limited (DJMC), representing 30% of the total issued shares of DJMC, at a purchase price of $300 per share for total consideration of $900,000.  DJMC was incorporated on January 25, 2017, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  DJMC was formed to offering medical equipment and aircraft financing solutions, including both direct financial leasing and sale-leaseback services to customers in health care and airlines in China through 100% owned subsidiary Shenzhen Dragon Jade Financial Leasing Company Limited formed under the laws of the Peoples' Republic of China.
 
The following table presents selected financial data for the fiscal year ended March 31, 2018, for the Company:
 
   
For the Years Ended March 31,
 
   
2018
   
2017
   
2016
   
2015
   
2014
 
                               
Revenue
 
$
121,618
   
$
224,920
   
$
336,906
   
$
86,086
   
$
327,764
 
                                         
Cost of revenue
   
(17,113
)
   
(50,155
)
   
(95,103
)
   
(32,186
)
   
(155,616
)
                                         
Loss from operations
   
(6,013,120
)
   
(2,251,716
)
   
(472,153
)
   
(465,361
)
   
(410,495
)
                                         
Net gain/(loss)
   
(5,969,001
)
   
(1,980,785
)
   
292,647
     
(1,842,912
)
   
(1,141,119
)
                                         
Net gain/(loss) per share
   
(0.105
)
   
(0.038
)
   
0.006
     
(0.036
)
   
(0.023
)
 
 
   
March 31,
 
   
2018
   
2017
   
2016
   
2015
   
2014
 
                               
Total assets
   
6,677,434
     
12,526,391
     
290,595
     
56,278
     
496,669
 
                                         
Net assets/(liabilities)
   
6,522,399
     
12,143,593
     
(1,946,715
)
   
(2,234,599
)
   
(609,651
)
                                         
Common stock
   
17,543,961
     
17,183,961
     
1,103,961
     
1,103,961
     
879,839
 
                                         
Dividend declared
   
-
     
-
     
-
     
-
     
-
 
 
Currency Exchange Rates.    All dollar amounts in this Form 20-F are in United States dollars.
 
B.  Capitalization and indebtedness:
 
The Company is authorized to issue 100,000,000 shares of common stock, no par value.  As of March 31, 2018, there were 57,023,319 issued and outstanding shares of common stock.
 
On December 31, 2012, the Company entered into definitive agreements relating to a private placement of $300,000 in principal amount of Convertible Notes due on December 31, 2013, and warrants to the purchasers of such Convertible Notes giving such purchasers the right to purchase up to an aggregate of 600,000 shares of our common stock at an exercise price of $0.50 per share.  At March 31, 2016, the outstanding principal and accrued interest under those Convertible Notes was $300,000.  On April 12, 2016, the Convertible Note was fully converted into 600,000 shares of our common stock. The outstanding principal of $300,000 was converted into 600,000 shares of our common stock at an exercise price of $0.50 per share in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933.

On April 1, 2013, the Company entered into definitive agreements relating to a private placement of $100,000 in principal amount of Convertible Notes due on March 31, 2014, and warrants to the purchasers of such Convertible Notes giving such purchasers the right to purchase up to an aggregate of 200,000 shares of our common stock at an exercise price of $0.50 per share.  At March 31, 2016, the outstanding principal and accrued interest under those Convertible Notes was $100,000.  On March 3, 2017, the Convertible Note was fully repaid.

On March 6, 2017, the Company issued 5,000,000 shares of its common stock to 2 persons at a consideration of $3 per share in transactions exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Regulation S promulgated pursuant to the provisions of that act. None of the recipients of those shares is a U.S. Person, as that term is defined by the provisions of Regulation S. Those shares were issued in off-shore transactions. No directed selling efforts were made in the United States by the Company, any distributor, any of their respective affiliates or any person acting on behalf of the foregoing.
 
C. Reasons for the offer and use of proceeds.
 
Not applicable.
 
D. Risk Factor.  The following risk factors make the Company and our securities speculative and of high risk. Our business, operating results and financial position may be adversely affected by these risk factors, some of which we can't control.  Additional risk factors not presently known by us or that we presently consider immaterial also could adversely affect our business, operating results and financial position, if any of them were to occur. In addition to these risk factors, shareholders and prospective investors should read the forward-looking statements about our future performance and expected results set forth in this annual report carefully before deciding to buy or sell our securities.  See "Forward-Looking Statements," below.
 
 
 
Risks Related to Our Business

Our business is affected by global, national and local economic conditions, as the products we sell are discretionary. We depend upon factors relating to discretionary consumer spending in the East Asia. These factors include economic conditions, consumers, employment rates, the amounts of consumers' disposable income, business conditions, interest rates, consumer debt, availability of credit, and applicable taxation in regional and local markets where we sell our products. There can be no assurance that consumer spending for our products will not be adversely affected by changes in economic conditions.

Our ability to establish effective marketing and advertising campaigns is the key to our success. Our advertisements promote our products and the pricing of such products. If we are unable to increase awareness of our brands and our products, we may not be able to attract new customers. Our marketing activities may not be successful in promoting or pricing our products or retaining and enlarging our customer base. We cannot assure you that our marketing programs will be adequate to support our future growth, which may lead to material adverse effects on our results of operations.

Consumer preferences in the health care industry change rapidly and are difficult to predict. The success of our business depends on our ability to anticipate accurately and respond to future changes in consumer demand, maintain the correct inventory, deliver the appropriate products at the right prices and purchase at minimum costs. We must optimize our product selection and inventory based on consumer preferences and sales trends. If we fail to anticipate, identify or react appropriately to changes in consumer demand, we could experience excess inventories, higher than normal markdowns or be unable to sell the products, which will reduce our revenue, financial position and results of operations.

While we must maintain sufficient inventory to operate our business successfully and meet our customers' demands, we must be careful to not overstock. Changing consumer demands, manufacturer backorders and uncertainty surrounding new product launches expose us to increasing inventory risks. Demand for products can change rapidly and unexpectedly, including the back order time and availability for sale. We carry a wide variety of products and must maintain sufficient inventory amounts. We may be unable to sell certain products, in the event that consumer demand changes. Our inventory holding costs will increase, if we maintain excess inventory. However, if we do not have sufficient inventory to fulfill customer orders, we may lose orders or customers, which may adversely affect our business, financial condition and results of operations. We cannot assure you that we can accurately predict consumer demand and events and avoid over-stocking or under-stocking products.

We sell substantially all of our products by our distribution network, which is comprised of small distribution companies that are located in Hong Kong. Our ability to meet customer demand may be significantly limited, if we do not successfully operate our distribution network and logistics facilities, as well as efficiently conduct our distribution activities, or if one or more of our distribution companies or logistics facilities are destroyed or shut down for any reason, including as a result of a natural disaster. Any disruption in the operation of our distribution network could result in higher costs or longer lead times associated with distributing our products.

We may not be successful in expanding a distribution network. Although we intend to expand our distribution network including additional cities and rural areas in East Asia in an effort to increase our geographic appearance. Our distribution, logistics and products may encounter various competitions from similar or substitutive businesses. Therefore, the success of expansion will depend upon many factors, including our ability to form relationships with, and manage an increasing number of, customers base and optimize our distribution network. We must also be able to anticipate and respond effectively to competition. If we fail to expand our distribution network in East Asia as planned or if we are unable to compete effectively, our business, financial condition and results of operations may be materially and adversely affected.

All of our products are shipped using third-party carriers. If a strike or other event prevents or disrupts these carriers from transporting our products, other carriers may be unavailable or may not have the capacity to deliver our products. If adequate third-party sources to ship our products were unavailable at any time, our business would be materially adversely affected.
 

For our product distribution network, we engaged with a few small suppliers for a steady supply of products. We typically distribute products pursuant to annual agency or distribution agreements entered between us and our suppliers or upstream distributors, under which our suppliers provide us with a series of economic incentives and other support. We cannot assure you that manufacturers and other suppliers will continue to sell products to us on commercially reasonable terms, or at all. We also cannot ensure that we will be able to establish new manufacturer and other supplier relationships, or extend existing relationships with suppliers when our agreements with them expire. Our annual agency or distribution agreements with suppliers may be terminated from time to time due to various reasons beyond our control.

We do not directly own any land use rights in connection with the properties we rent. We may lose our rental properties or may not be able to renew leases for them on terms that are reasonable or favorable to us, when those leases expire. This may adversely impact our business, including disrupting our operations or increasing our cost of operations.

We will be exposed to risks inherent in the packaging and distribution of healthcare products, such as the unintentional distribution of counterfeit products. Furthermore, we may sell products which inadvertently have an adverse effect on the health of individuals. Product liability claims may be asserted against us, although we may have the right under applicable Hong Kong laws, rules and regulations to recover from the relevant manufacturer compensation we pay to our customers in connection with a product liability claim. Any product liability claim, product recall, adverse side effects caused by improper use of the products we sell or manufacturing defects may result in adverse publicity regarding us and the products we sell, which would harm our reputation. If we are found liable for product liability claims, we could be required to pay substantial monetary damages. Furthermore, even if we successfully defend ourselves against this type of claim, we could be required to spend significant management, financial and other resources, which could disrupt our business.

Any significant growth in the market for our products or our entry into new markets may require additional employees for managerial, operational, financial and other purposes. As of the date of this annual report, we had 10 full-time employees. During any growth, we may encounter problems related to our operational and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand, train and manage our employees. Continued future growth will impose significant added responsibilities upon our management to identify, recruit, maintain, integrate, and motivate new employees.

We may, also, encounter working capital shortage, as we may need additional funds to finance the purchase of materials and supplies, development of new products, and hiring of additional employees. For effective growth management, we will be required to continue improving our operations, management, and financial systems and controls. Our failure to manage growth effectively may lead to operational and financial inefficiencies, that will have a negative effect on our profitability. We cannot assure investors that we will be able to timely and effectively meet increased demand and maintain the quality standards required by our existing and potential customers.

If adequate additional financing is not available on reasonable terms, we may not be able to undertake our expansion plan or purchase additional equipment for our operations, and we would have to modify our business plans accordingly. There is no assurance that additional funds will be available to us.

We may experience increased capital requirements and, accordingly, we may not have sufficient capital to fund our future operations, without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the release of competitive products by our competitors; and (iii) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

If we cannot obtain additional funds, we may be required to (i) limit our marketing efforts and (ii) decrease or eliminate capital expenditures. Such reductions could materially adversely affect our business and ability to compete.

We may not be able to negotiate terms and conditions for obtaining adequate funds that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. We cannot give you any assurance that any additional funds will be available to us or, if available, will be on terms favorable to us.
 
 
 
We will require substantial additional funding in the future. We have been dependent upon proceeds received from private equity and debt financing to meet our capital requirements in the past. In the future, we likely will require additional funding to meet our capital requirements for our health supplement and traditional Chinese medicine operations and to expand those operations. If we were unable to meet our future funding requirements for working capital and for general business purposes, we could experience operating losses and fail to expand our future operations. If so, our operating results, our business results and our financial position would be adversely affected.
 
We are dependent upon our senior management, particularly LAW Lok Bun and LAI Yat Man, to achieve profitability, and the loss of either one of them could have a material adverse effect upon our business, operating results and financial position. Our operating results and future success depend on our senior management's services and our ability to retain members of our senior management or to replace any of them by attracting, hiring, retaining and motivating other highly skilled personnel who are experienced in managing, marketing and customer servicing. The loss of or inability to replace any member of our senior management could have a material adverse effect upon our business, operating results and financial position.

Our success is dependent upon our ability to compete in providing our health supplements and traditional Chinese medicine. In our industries, there is intense competition, including individuals and large and small entities. Many competitors have substantially greater financial and marketing resources than we do, stronger name recognition, and longer histories of operations. Our success is dependent upon our ability to compete, and our failure to do so could adversely affect our business, financial condition and results of operation.

Our operating results may fluctuate. Our operating results are dependent on a number of factors, many of which we do not control, including (i) the general economic conditions in Hong Kong, China and the world, (ii) the competition, and (iii) our ability to obtain necessary additional funds to maintain operations.

We are subject to certain requirements of the Sarbanes-Oxley Act of 2002 and the related rules and regulations adopted by the Securities Exchange Commission pursuant to that act. If we are unable to comply timely with such requirements or if the costs of compliance are too great, our profitability, the market price of our common stock, and our results of operations and financial condition could be materially adversely affected. The requirements, rules and regulations to which we are subject include Chief Executive Officer/Chief Financial Officer certifications of disclosure in periodic reports and annual reports under the Securities Act of 1933; disclosure regarding conclusions of evaluation of disclosure controls and procedures and internal control of financial reporting; conditions for use of non-GAAP financial measures; disclosure in Management's Discussion and Analysis of certain off-balance sheet arrangements and aggregate contractual arrangements; disclosure of whether or not we have an audit committee financial expert who is independent and experienced, and if not, why not; and disclosure of whether or not we have adopted a written code of ethics for our Chief Executive Officer and senior financial officers, and if not, why not. These requirements involve substantial additional time and effort by our Chief Executive Officer/Chief Financial Officer and additional time, effort and expense for our auditors and counsel, as well as for us, all of whom are subject to potential liabilities for failure to comply with these requirements and some of whom may be unwilling or unable to satisfy these requirements.

Risks Related to Doing Business in China

Any change in government regulations or administrative practices in China and Hong Kong concerning our business may have a negative impact on our business, operating results and financial position. The laws, regulations and policies of the governments in China and Hong Kong and administrative practices in China, our principal jurisdiction, may be changed, applied or interpreted in a manner that will fundamentally alter our ability to carry on our business. The laws, regulations and policies of the government and the administrative practices in China, if changed, may have a detrimental effect on our business, operating results and financial position, resulting in our ability to promote our products and/or operate profitably.
 
 
 
 
Risks Related to Our Common Stock
 
Our common stock may be considered a "penny stock" under SEC rules, which would limit the market for our common stock and our ability to raise capital in an offering of our securities. If shares of our common stock are not listed on a national securities exchange or Nasdaq and do not have a minimum bid price of $5.00 per share, our common stock is considered a "penny stock," as defined in Rule 3a51-1 of the Securities Exchange Act of 1934. SEC rules impose additional specific disclosure and other requirements on broker-dealers effecting transactions in penny stocks, which rules may reduce the market liquidity for our shares.
 
The Securities and Exchange Commission has adopted Rule 15g-9 for transactions in penny stocks which requires that:
 
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
 
 
obtain financial information and investment experience objectives of that person; and
 
 
 
 
make a reasonable determination that transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
 
 
sets forth the basis on which the broker or dealer made the suitability determination;
 
 
 
 
that the broker or dealer received a signed, written agreement from the investor prior to the transaction; and
 
 
 
 
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading; the commissions and other compensation payable to both the broker-dealer and the registered representative in connection with the penny stock transaction; current quotations for the penny stocks and other information relating to the penny stock market; and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in an account and information regarding the limited market in penny stocks.

Our three principal shareholders control us. None of our three principal shareholders holds a majority of our outstanding shares, which is required for the election of directors and other corporate action. But two of our three principal shareholders, Woody Fire Consultancy Limited (28%) and LAI Yat Man (22.38%), acting together, have a majority of our outstanding shares (50.38%) and, therefore, are able to elect all of the members of our board of directors. Those two shareholders, acting together, also are able to block any takeover bid or merger or acquisition proposal that may be beneficial to our other shareholders.

We have not paid and do not intend to pay cash or other dividends on our common stock. Rather, we expect that any earnings will be used in our operations and to finance the expansion of our business. Shareholders and investors in our company will not receive any cash or other dividends in the future and are advised to take this into consideration before making their investment decisions.
 
 
Other Risks

Enforcement of certain civil liabilities. We are a British Virgin Islands corporation doing business outside the United States, in Hong Kong and China. UCHL is a group of Hong Kong corporations doing business in Hong Kong. All of our officers and directors are residents of Hong Kong. All of our assets and those of our officers and directors are located outside the United States, in Hong Kong. Under these circumstances, shareholders and investors may not be able to effect service of process within the United States on such persons and may not be able to enforce against such persons judgments obtained in United States courts predicated on the civil liability provisions of the federal securities laws of the United States; moreover, it is unlikely that foreign courts would enforce, in original actions, liabilities against such persons predicated solely upon the federal securities laws of the United States. Neither the Company nor any of its subsidiaries or officers and directors presently has agreed to accept service of process in the United States or to abide by any judgments obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States, but all would possibly consider doing so in the future, based upon the facts and circumstances presented at that time.
 
The audit report included in this Annual Report was prepared by auditors who are not inspected by the Public Company Accounting Oversight Board and, as a result, you are deprived of the benefits of such inspection. The independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the "PCAOB", is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in the PRC, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditors are not currently inspected by the PCAOB. Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms' audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections in China prevents the PCAOB from regularly evaluating our auditor's statements, audits and quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor's quality control and audit procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Item 4.      Other Information
 
A. History and Development of the Company
Dragon Jade International Limited ("Dragon Jade," "the Company," "we," "us", "our" and similar terms) was incorporated in the British Virgin Islands, with limited liabilities on April 14, 2008.  When the Company was incorporated, its business plan was to engage in a merger or acquisition with a company with operations.  The Company is not and does not intend to be an "investment company," as that term is defined in the Investment Company Act of 1940; in that, it is engaged and proposes to engage in business, by and through wholly owned or majority owned subsidiaries.
 
In April 2012, the Company chartered a new subsidiary, Alpha Ultimate Limited, under the laws of the Special Administrative Region of Hong Kong, which operates in the health supplement industry.
 
On August 31, 2012, the Company entered into a stock exchange agreement with United Century Holdings Limited, a privately held corporation.  On September 1, 2012, the Company consummated the transaction contemplated by that stock exchange agreement.  All of the capital stock of United Century Holdings Limited was exchanged for an aggregate of 20,003,319 shares of the Company's capital stock.  As a result, the Company became a 100% holding company of United Century Holdings Limited.
 
United Century Holdings Limited ("UCHL") was incorporated on March 2, 2012, under the British Virgin Islands Business Companies Act, 2004, with limited liabilities.  UCHL is established as a special purpose holding company, whose objective was to become a holding company by an acquisition, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more business located in Hong Kong.  On July 10, 2012, UCHL executed an acquisition of 7,879,500 out of 8,000,000 ordinary shares, par value $0.1282 (HK$1) per share, of the United Asia Medical Network Company Limited ("UAM") and became a 98.49% holding company of UAM.
 

UAM was incorporated on May 6, 1998, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  Its principal business is trading of health supplement products and providing related medical and health consultancy services.
 
On March 20, 2018, the Company acquired 3,000 shares of Dragon Jade Medical Company Limited (DJMC), representing 30% of the total issued shares of DJMC, at a purchase price of $300 per share for total consideration of $900,000.  DJMC was incorporated on January 25, 2017, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  DJMC was formed to offering medical equipment and aircraft financing solutions, including both direct financial leasing and sale-leaseback services to customers in health care and airlines in China through 100% owned subsidiary Shenzhen Dragon Jade Financial Leasing Company Limited formed under the laws of the Peoples' Republic of China.
 
Details of the Company's subsidiaries and associate (which together with the Company are collectively referred to as the "Group") and their principal activity as of March 31, 2018 were as follows:
Name
 
Date of
incorporation/
establishment
 
Place of
incorporation/
registration and
operation
 
Percentage of
equity interest
attributable to
the Company
 
Principal
activities
 
 
 
 
 
 
 
 
 
Alpha Ultimate Ltd. ("AUL")
 
April 11, 2012
 
Hong Kong
 
100
%
 
Health supplement trading
 
 
 
 
 
 
 
 
 
 
United Century Holdings Ltd. ("UCHL")
 
March 2, 2012
 
BVI
 
100
%
 
Investment holding
 
 
 
 
 
 
 
 
 
 
United Asia Medical Network Company Limited ("UAM")
 
May 6, 1998
 
Hong Kong
 
98.49
%
 
Health supplement trading
 
 
 
 
 
 
 
 
 
 
Dragon Jade Medical Company Limited ("DJMC")
 
January 25, 2017
 
Hong Kong
 
30
%
 
Investment holding
 
 
 
 
 
 
 
 
 
 
Shenzhen Dragon Jade Financial Leasing Company Limited ("SZDJFL")
 
September 4, 2017
 
Peoples's Republic
of China
 
30
%
 
Financial leasing
  
The principal executive offices of the Group are located at Unit 2, 23/F, New World Tower I, 18 Queens Road, Central Hong Kong, SAR, China; the telephone number is 852-3580 1788.  There is no agent for service in the United States, LAI Yat Man is the contact person for purposes of this Annual Report on Form 20-F.
 
B.  Business Overview
The Company engages in the health supplement business by and through Alpha Ultimate Ltd. ("AUL") and United Asia Medical Network Company Limited ("UAM"), which sells health supplements (without any limitation or restriction as to customer size, industry or business).  UAM is a company incorporated in Hong Kong with a business network across Asia, including Hong Kong, mainland China, Taiwan, Japan, Korea, Singapore, Malaysia, and Thailand. UAM believes that, with its experience in human biological knowledge and marketing experience, it is able to provide beneficial nutritional products and medical services.  UAM operations include the unique combined use of traditional Chinese medicine and modern western medicine in treatment. Considering the adverse side effects of modern western medicine, the medical professionals of UAM believe that traditional Chinese medicine, with thousands of years of enhancement and empirical evidence, can complement western medicine, which will better serve patients.
 

In September 2015, AUL has begun to sell and distribute the Ultroid® Hemorrhoid Management System ("Ultroid® System") in Hong Kong.  The Ultroid® System, which is FDA cleared and also approved for use in many other nations, is a non-surgical, non-anesthetic, and rapid treatment for hemorrhoidal disease (HD).  The Ultroid® System is unique to the market and currently the only FDA cleared device to treat and cure all four grades of internal and mixed hemorrhoids.  The non-surgical technology is a break-through in painless hemorrhoid therapy requiring no anesthesia and no recuperation time.  Performed in the physician's office in minutes, patients are immediately able to resume their daily activities.
 
Recent Development

In May 2018, the Company has started to develop and operate the human resources business which focuses on recruiting medical practitioners to work in the healthcare industry in China, taking advantage of the Group's close association with the medical community in Taiwan and Hong Kong to access experienced medical professionals, who have the necessary language and cultural skills, and are experienced in both Western and Chinese medicines. We will provide screening, interviews, recommendation, evaluation and review when it comes to recruitments for enterprises. A recruitment advertisement service would also be provided for different industries to show job vacancies on the Company's website. We also provides job consultation, career advice and interview training for job seekers. With our professional medical team, we provide medical consultation, medical advice on new drugs and a worldwide hospital referral service to our clients in Mainland China. We assist our clients to overcome geographical and language barriers by providing a visa application service and medical record translation service.
 
C. Organizational Structure
 
 
 
D. Property, Plants and Equipment
 
Except for some furniture and fixtures and office equipment, such as desks and chairs and computers, no member of the Group has any property.
 
Item 4A.    Unresolved Staff Comments
 
None.
 
 
Item 5.       Operating and Financial Review and Prospects.
 
The Company has sustained losses totaling $5,969,001 for the fiscal year ending March 31, 2018, and had a retained earnings deficit of $10,980,558 as of March 31, 2018.
 
A.   Operating results.
 
Revenue for the fiscal year ended March 31, 2018 decreased by $103,302 to $121,618 from $224,920 for the fiscal year ended March 31, 2017.
 
Selling, general and administrative expenses totaled $6,117,625 for the fiscal year ended March 31, 2018, an increase of $3,691,144, or 152.1% from $2,426,481 for the fiscal year ended March 31, 2017. The general and administrative expenses consist primarily of business development expenses of $3,972,315, salary of $427,989, and audit, legal, and other professional fees of $937,497. The increase in expenses was principally due to the business development expenses related to the exploration of overseas market of "Ultroid® Hemorrhoid Management System" and new business and product development including medical AI robot, cross-border medical services and international human resources management. We expect our general and administrative expenses to continue to increase as we expand our offices into new jurisdictions.

Our senior management, nevertheless, has determined to devote considerable efforts to marketing during the fiscal year ended March 31, 2018, in an attempt to generate new business. Management participated in more seminars for customers in Hong Kong, in order to get into contact with more potential customers. Efforts will also be spent to maintain friendly relationships with former customers, with the aim of acquiring new customers through referrals.

B.   Liquidity and capital resources.
 
As of March 31, 2018, the Company had a working capital surplus of $5,525,037 and cash of $4,756,354. This compares with working capital surplus of $12,065,098 and cash of $1,244,844 as of March 31, 2017. The Company estimates its working capital needs for the next 12 months to be approximately $2,500,000.  As of March 31, 2018, it had sufficient funds on hand to meet such needs.
 
On December 31, 2012, The Company entered into definitive agreements relating to a private placement of $300,000 in principal amount of Convertible Notes due on December 31, 2013, and warrants to the purchasers of such Convertible Notes giving such purchasers the right to purchase up to an aggregate of 600,000 shares of our common stock at an exercise price of $0.50 per share.  At March 31, 2016, the outstanding principal and accrued but unpaid interest under those Convertible Notes was $300,000.  On April 12, 2016, the Convertible Note was fully converted into 600,000 shares of our common stock. The outstanding principal of $300,000 was converted into 600,000 shares of our common stock at an exercise price of $0.50 per share in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933.

On April 1, 2013, the Company entered into definitive agreements relating to a private placement of $100,000 in principal amount of Convertible Notes due on March 31, 2014, and warrants to the purchasers of such Convertible Notes giving such purchasers the right to purchase up to an aggregate of 200,000 shares of our common stock at an exercise price of $0.50 per share.  At March 31, 2016, the outstanding principal and accrued interest under those Convertible Notes was $100,000.  On March 3, 2017, the Convertible Note was fully repaid.

On March 6, 2017, the Company issued 5,000,000 shares of its common stock to 2 persons at a consideration of $3 per share in transactions exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Regulation S promulgated pursuant to the provisions of that act. None of the recipients of those shares is a U.S. Person, as that term is defined by the provisions of Regulation S. Those shares were issued in off-shore transactions. No directed selling efforts were made in the United States by the Company, any distributor, any of their respective affiliates or any person acting on behalf of the foregoing.  First installment of the consideration amounted to $4,462,935 was received on March 2, 2017 and second installment of the consideration amounted to $10,537,065 was received on May 31, 2017.  The Company intends to use the amount received from the shares issuance on its future development activities.
 
C.   Research and development, patents and licenses, etc.
 
Not Applicable.
 
 
D.   Trend information.
 
We expect the serious financial crisis in the United States and elsewhere in the world to continue to adversely affect our business and, therefore, our results of operation during the calendar year 2018.  We anticipate that we will continue to reduce our expenses and may consider making an offering of our securities to raise capital, in the United States and/or in China and Hong Kong.

On January 19, 2017 the Company entered into an exclusive option and remediation agreement with Ultroid, LLC, Ultroid Marketing Development Corporation, and Ultroid Technologies, Inc. (Collectively, "Ultroid").  Ultroid has agreed to grant the Company an exclusive option to purchase the Ultroid assets for $1,000,000 in cash and 500,000 shares of the Company's common stock.  The option is granted by Ultroid in exchange for the Company's agreement to perform certain remediation tasks with respect to the Ultroid Assets and the Company's agreement to stay arbitration proceedings initiated by the Company against Ultroid the option period.

E.  Off-balance sheet arrangements
 
Not Applicable.
 
F.   Tabular disclosure of contractual obligations
 
Not Applicable.
 
Item 6.       Directors, Senior Management and Employees
 
A.   Directors and senior management.   Our directors and senior management are:
 
Mr. Law Lok Bun, age 66, is an Executive Director and the President of the Company. He was appointed as an Executive Director of the Company on April 17, 2012. He is responsible for planning the overall direction of the Company and managing the Company's day to day affairs. He has more than thirty years of experience in pharmaceutical manufacturing, wholesaling and retail operations. He is, currently, a managing director of Merika Medicine Factory Limited. Mr. Law is a graduate of Hong Kong Baptist University, from which he received a B.A. Degree in Analytical Chemistry.

Dr. Lai Yat Man, age 58, is an Executive Director and the Chief Executive Officer of the Company. He was appointed as an Executive Director of the Company on September 1, 2012. He is primarily responsible for the Company's business planning, strategy and management, as well as providing medical and biological information support. He has more than 25 years of experience in the medical and pharmaceutical industries. From 1987 to 1988, he served as the Chief Resident of Emergency Internal Medicine Department of Neihu General Hospital in Taipei. From 1988 to 1995, he served as the Chief of Internal Medicine Department of Tamsui First Hospital in Taipei County. In 1998, he founded United Asia Medical Network Company Limited in Hong Kong. He is, currently, the Chairman of United Asia Medical Network Company Limited. Dr. Lai received his medical degree from the Medical College of National Taiwan University in 1985.

Mr. Fung Kwok Wing, age 44, is an Executive Director and the Chief Financial Officer of the Company. He was appointed as an Executive Director of the Company on September 1, 2012. He is primarily responsible for the business operations, developing the financial strategy, overseeing financial and administrative operations, and the human resources management of the Company. He has more than 10 years of experience in accounting and finance. He is, also, currently, the Chief Financial Officer of United Asia Medical Network Company Limited. Mr. Fung is a member of the American Institute of Certified Public Accountants. Mr. Fung obtained a Bachelor of Social Science in Economics Degree from The Chinese University of Hong Kong in 1995.

Mr. Lo Tsz Fung Philip, age 52, was appointed as an Independent Non-executive Director of the Company on September 1, 2012. Mr. Lo was appointed as a director and the Chairman of the Audit Committee and a member of the Compensation Committee and Corporate Governance Committee of QKL Stores Inc. (NASDAQ: QKLS )in November 2011. Mr. Lo has served as managing director of Shenzhen Xin Wei Managing Consultancy Limited since August 2011, independent non-executive director of Styland Holdings Limited (Hong Kong Exchange Code: 211) since April 2009, and managing director of P&L Financial Consultancy Limited since December 2007. Mr. Lo, also, served as Chief Financial Officer of Wuhan General Group (China) Inc. (NASDAQ: WUHN) from February 2010 to January 2012; Chief Financial Officer of Wuhan Zhongye Yangluo Heavy Machinery Co., Ltd. from December 2007 to January 2009; and Senior Manager of Albert Wong & Co, from June 2006 to December 2007. Mr. Lo received his Bachelor's Degree from University of Wollongong, Australia. He is a member of CPA Australia and a member of HKICPA. We believe that Mr. Lo's knowledge of finance and accounting matters brings a unique expertise to our Board of Directors.
 
 
TAI Kam Chiu Daniel (formerly known as TAI Tze Yu Daniel), age 57, was appointed as an Independent Non-executive Director of the Company on September 1, 2012. He has more than 20 years of management and supervision experience in various enterprises, which engage in the businesses of electronic products, catering and trading. From 1990 to 2006, he was a Manager and General Manager of Sharp-Roxy (HK) Limited in Hong Kong. He was primarily responsible for the planning, direction and control of all sales, advertising and promotion activities related to consumer electronic products. In addition to the local sales in Hong Kong, he had full responsibility and accountability of the corporate sales, sales administration and support, and new business development. From 2006 to 2007, he was a manager and director of Rakutei Dinning & Bar. From 2007 to 2009, he was a General Manager of Kelvin Electric Trading Company Limited. He is, currently, a Managing Director of Aqua Gold Holding Company Limited since 2009.  From 2003 to the present, Mr. Tai has served as a Director and Executive Director of Radio Association of Hong Kong. He was the Fellow of The Professional Validation Centre of Hong Kong Business Sector in 2005.
 
There is no family relationship between any of the directors and officers of the Company or AUL or UCHL or UAM.
 
B.  Compensation.
 
The Company has paid and will pay each independent director annual compensation of US$1,500. None of our officers and none of our non-independent directors receive any compensation from the Company.  Also, all of our officers and directors are entitled to receive compensation from UAM for services rendered to UAM.
 
None of the members of our senior management receives any other form of remuneration, such as bonuses, stock awards, stock options, or benefits, such as country club memberships or automobiles.
 
No amounts were set aside or accrued by UAM to provide pension, retirement or similar benefits to senior management.
 
C.   Board Practices.
 
The current terms of office of our directors expire at the next annual meeting of our shareholders, when their successors are elected and qualified.
 
There, currently, is no agreement as to compensation to be paid to the executive officers who, also, serve as non-independent directors (LAW Lok Bun, LAI Yat Man and FUNG Kwok Wing).  Each of such executive officers / directors has other employment, and provides services to the Company on an as-needed basis. The Company has not accrued salary to these persons, issued shares as compensation, issued stock options or warrants, or recorded contributed capital for the services provided by them and no employment agreements exist. The Company is not aware of any accounting pronouncement that requires the compensation of executive officers / directors (other than for certain non-profit organizations) who provide executive services on an as-needed basis.
 
Our board of directors maintains an Audit Committee.  Lo Tsz Fung Philip serves as the chairman, and Tai Kam Chiu Daniel, serve as member of the Audit Committee. Lo Tsz Fung Philip is an "audit committee financial expert" as defined by the rules of the NASDAQ Stock Market, Inc. and Rule 10A-3(b)(i) under the Securities Exchange Act of 1934, applicable to members of an audit committee.  The Audit Committee is appointed by our board of directors to assist our board of directors in monitoring (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal and external auditors.
 
D.   Employees.
 
As of March 31, 2018, we had 8 full-time employees.  As of that date, none of our employees were represented by a labor union.
 
  
E.   Share Ownership.
 
The shares of the Company that are beneficially owned by LAW Lok Bun, LAI Yat Man and Woody Fire Consultancy Limited "control" the Company, because of their shareholdings and related management positions. The following table sets forth, as of March 31, 2018, the beneficial ownership of shares of the common stock of the Company beneficially owned by (1) each person known to be the beneficial owner of more than 5% of our shares of our common stock and (2) each of the members of senior management identified in Item 6.A., above.  (The term "beneficial owner" of securities refers to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or disposition of the securities or to receive the economic benefit of ownership of the securities.  A person also is considered to be the "beneficial owner" of securities that such person has the right to acquire within 60 days by option or other agreement.  Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a "controlling interest," which means the direct or indirect power to direct the management and policies of the entity.)
 
NAME
 
SHARES OWNED
   
PERCENT OF CLASS
 
                 
Woody Fire Consultancy Limited*
   
15,970,000
     
28.00
 
Lai Yat Man
   
12,762,804
     
22.38
 
Law Lok Bun
   
7,000,000
     
12.28
 
Fung Kwok Wing
   
-
     
-
 
Lo Tsz Fung Philip
   
-
     
-
 
Lai Fan Wah (Thomas)
   
-
     
-
 
Tai Kam Chiu Daniel
   
-
     
-
 
 
               
Officers & Directors as a Group (6 persons)
   
19,762,804
     
34.66
%
   
* LO Hsin Yu is the shareholder of and has a controlling interest in Woody Fire Consultancy Limited.
 
 
There is no arrangement involving any person named in the table that involves the issue or grant of options for our shares or any shares.
 
Item 7.       Major Shareholders and Related Party Transactions
 
A.   Major Shareholders. As of March 31, 2018, our major shareholders, LAW Lok Bun, LAI Yat Man and Woody Fire Consultancy Limited, beneficially own, respectively, 7,000,000 shares of the Company's common stock, or 12.28%, 12,762,804 shares or 22.38% and 15,970,000 shares or 28.00%.  See Item 6.E., above.  On April 15, 2012, the shareholders of the Company entered into a Purchase and Sales Agreement with a group led by LAW Lok Bun to acquire 27,910,000 issued shares of the Company's common stock. That agreement, also, provided that Mr. Law be elected to the Board of Directors and the Company charter a new subsidiary, Alpha Ultimate Limited, under the laws of the Special Administrative Region of Hong Kong, which will operate in the traditional Chinese medicine industry. The transaction closed on June 22, 2012.  On September 1, 2012, the Company acquired 100% of the total issued shares of UCHL capital stock from its original shareholders, in exchange for an aggregate of 20,003,319 shares of the Company's common stock.
 
We are not, directly or indirectly, owned or controlled by another corporation, by any foreign government, or by any other natural or legal person, severally or jointly. We know of no arrangement the operation of which may at a subsequent date result in a change in control.

Our shareholders do not have different voting rights.
 

B.   Related Party Transactions.   Since April 1, 2012, there has been no related party transaction, except (i) business development fees of $3,879,000 paid to Woody Fire Consultancy Limited, a major shareholder of the Company and (ii) the amount of $3,672 due LAI Yat Man for funds advanced to the Company, AUL and UAM, which amount has no due date or maturity date and does not accrue any interest. (Related party transactions are transactions or loans between the Company and (a) enterprises directly or indirectly controlled by the Company; (b) associates of our major shareholders; (c) our major shareholders; (d) our senior management or (e) entities directly or indirectly controlled by our major shareholders or senior management.)
 
C.  Interests of experts and counsel.   No counsel or accountant for the Company has been employed on a contingent basis or owns shares of common stock of the Company or of AUL, UCHL, or UAM.
 
Item 8.       Financial Information
 
A.  Consolidated Statements and Other Financial Information
 
The following consolidated financial statements and other financial information are included as part of this Annual Report, after "Signatures" from page 21 to 39 as following:
 
Dragon Jade International Limited.
Front cover
Index
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of March 31, 2018 and 2017
Consolidated Statements of Operations and Comprehensive Loss for the years ended March 31, 2018, 2017 and 2016.
Consolidated Statements of Cash Flow for the years ended March 31, 2018, 2017 and 2016.
Consolidated Statements of Change in Stockholders Equity (Deficit) for the years ended March 31, 2018, 2017 and 2016.
Notes to Consolidated Financial Statements
Schedules
 
Legal and Administrative Proceedings
 
Except as set forth below and disclosed elsewhere in the annual report, currently there is no legal proceeding pending or threatened against to which we are a party of. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise.
 
We are engaged in litigation with three closely related entities, Ultroid Technologies, Inc., Ultroid Marketing Development Corp., and Ultroid, LLC (the "Ultroid Entities"), in connection with a commercial relationship between the Company and the Ultroid Entities which was initiated with the June 29, 2015 International Distribution Agreement between the Company and Ultroid Technologies, Inc. granting the Company an exclusive distributorship for Ultroid's Hemorrhoid Management System medical product in Hong Kong.  On January 3, 2017, we gave notice to the Ultroid Entities of the Company's demand for arbitration alleging breach of contract and claiming damages suffered by the Company in excess of $1,145,000 for failure to fill paid orders for product, failure to maintain the regulatory status of the exclusively licensed medical device, and damages to Company's business suffered as a consequence of such breach.  By mutual agreement of the parties on January 19, 2017, the arbitration was stayed and the parties entered into an Exclusive Option and Remediation Agreement pursuant to which the Ultroid Entities have granted the Company the option to acquire certain assets of the Ultroid Entities related to the Ultroid Hemorrhoid Management System; the Ultroid Entities and the Company also entered into a Security Agreement pursuant to which the Ultroid Entities granted a security interest to the Company in such assets of the Ultroid Entities.
 
 
On September 22, 2017, the Ultroid Entities sent a letter to the Company purporting to claim that the option period under the Exclusive Option and Remediation Agreement had expired.  The Company disputed the Ultroid Entities' claims and filed suit against the Ultroid entities in the United States District Court for the Middle District of Florida claiming that the Ultroid Entities had breached the Exclusive Option and Remediation Agreement and the Security Agreement.  In this suit, the Company seeks damages in excess of $2 million and foreclosure of the Company's security interest in the secured assets related to the Ultroid product.   The Ultroid Entities brought a motion to dismiss the Company's claims on November 20, 2017 and the Court denied their motion on February 8, 2018.  On February 22, 2018, the Ultroid Entities answered the Company's complaint and filed certain counterclaims. The Company denied all of the Counterclaims of the Ultroid Entities in its Reply on March 15, 2018.  On May 15, 2018 the Company moved for judgment on the pleadings with respect to all of the Ultroid Entities' Counterclaims as lacking foundation in law or fact.  The Company's motion for judgment on the pleadings is fully briefed by the parties and remains pending before the Court.  Fact discovery is ongoing in the case and trial is scheduled for April 1, 2019.

Dividend Policy
 
We have never declared or paid any cash dividends on our common shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the Board of Directors may deem relevant.
 
Under British Virgin Islands law, we may only pay dividends from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital.
 
B.   Significant Changes.
 
None.
 
Item 9.       The Offer and Listing
 
A.   Offer and listing details.

The initial bid and asked prices submitted for quotation by the sponsoring broker-dealer are determined arbitrarily by negotiation between that broker-dealer and us and may not necessarily have any relationship to our asset value, earnings, financial condition or other established criteria of value; such prices will be subject to change, as a result of market conditions and other factors.
 
The prices of our shares of common stock are quoted on the OTCQX market.  The OTCQX market is a significantly more limited market than the New York Stock Exchange or NASDAQ system.  The quotation and the prices of our shares of common stock on the OTCQX market may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock and could depress the trading price of our common stock and have a long-term adverse impact on our ability to raise capital in the future.
 

When fewer shares of a security are traded on the OTCQX market, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information.  Due to lower trading volumes in shares of our common stock, there may be a lower likelihood of a person's orders for shares of our common stock being executed, and current prices may differ significantly from the price one was quoted at the time of a person's order entry.
 
For the periods indicated, the following table sets forth the high and low bid prices per share of common stock.
 
Fiscal Year March 31, 2019
 
High Bid
   
Low Bid
 
First Quarter
 
$
4
     
1.65
 
                 
Fiscal Year March 31, 2018
 
High Bid
   
Low Bid
 
First Quarter
 
$
8
   
$
4
 
Second Quarter
 
$
6.3
   
$
3.3
 
Third Quarter
 
$
4.99
   
$
1.14
 
Fourth Quarter
 
$
3.3
   
$
0.72
 
                 
Fiscal Year March 31, 2017
 
High Bid
   
Low Bid
 
First Quarter
 
$
4
   
$
1.95
 
Second Quarter
 
$
5
   
$
2.5
 
Third Quarter
 
$
7
   
$
2
 
Fourth Quarter
 
$
6.7
   
$
2
 
 
 
The transfer agent for our shares of common stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, NV 89119.

B.  Plan of distribution.   Not applicable.
 
C.  Markets.   See Item 9.A., above.
 
D.  Selling shareholders.   Not applicable. 
 
E.  Dilution.   Not applicable.
 
F.   Expenses of the issue.   Not applicable.
 
Item 10.      Additional Information
 
A.   Share capital.   Pursuant to Section 6.1 of our Memorandum of Association, we are authorized to issue 100,000,000 shares of no par value common stock.  As of March 31, 2018, our recent fiscal year end, 57,023,319 of our authorized shares of common stock were issued and outstanding,  As of July 10, 2018, the latest practical date, 57,023,319 of our authorized shares of common stock were issued and outstanding,  Pursuant to Section 7 of our Memorandum of Association, holders of our common stock are entitled to one vote per share on each matter submitted to a vote of our shareholders, the right to an equal share in any dividend paid by the Company, and the right to an equal share in the distribution of surplus assets, if any, on liquidation of the Company.  Holders of our common stock do not have preemptive rights to purchase additional shares of our common stock or other subscription rights.  Our common stock has no conversion rights and is not subject to redemption or any sinking fund provisions.  All shares of our common stock are entitled to share equally in dividends from legally available sources, as determined by the board of directors.  Upon dissolution or liquidation of the Company, whether voluntary or involuntary, holders of our common stock are entitled to receive assets of the Company available for distribution to our shareholders.
 

There were no changes in voting rights involved in this transaction.
 
B.   Memorandum and Articles of Association.
 
(1)  The Company was incorporated under the Territory of the British Virgin Islands BVI Business Companies Act 2004, on April 14, 2008.  Section 5.1 of our Memorandum of Association provides that the Company has full capacity to carry on or undertake any business or activity, do any act and enter into any transaction.
 
(2)  Section 8 of our Articles of Association provides that the minimum number of directors shall be one; there is no maximum number of directors.  There are no limitations or restrictions on the borrowing power of directors; there are no age limit requirements and no shareholding requirements.

Section 13 of our Articles of Association, concerning conflicts of interest, provides that a director shall disclose that he is interested in a transaction entered into or to be entered into by the Company and such director may vote on a matter relating to such transaction, attend a meeting of directors relating to such transaction, and sign a document on behalf of the Company or do anything in his capacity as a director that relates to such transaction.
 
(3)  Section 18 of our Articles of Association provides that our directors may authorize a distribution by way of dividend at any time, if they are satisfied that immediately after such distribution the value of the Company's assets will exceed its liabilities and the Company will be able to pay its debts as they become due.  Section 7 of our Memorandum of Association provides that each share of our common stock is entitled to one vote at a meeting of our shareholders or on any resolution of our shareholders; share equally in any dividend paid by the Company; and share equally in the distribution of any surplus assets of the Company on its liquidation.  There are no pre-emptive rights.
 
(4)  Section 8 of our Articles of Association provides that the rights of our shareholders may be varied with the consent in writing, or by resolution passed at a meeting, by holders of more than 50% of our issued shares of our common stock.
 
(5)  Section 7 of our Articles of Association provides that any director may convene a meeting of our shareholders and our shareholders entitled to exercise 30% or more of the voting rights may request directors in writing to convene a meeting of our shareholders.
 
(6)  There are no limitations or restrictions on the rights of non-resident or foreign shareholders to own shares of our common stock or to hold or exercise voting rights.
 
(7)  There are no provisions that would have an effect of delaying, deferring or preventing a change in control of the Company.
 
(8)  There are no provisions governing the threshold above which shareholder ownership must be disclosed.
 
C.   Material contracts.   There have been no material contracts since the formation of the Company.

D.   Exchange controls.   Neither the British Virgin Islands nor Hong Kong has any system of exchange controls, and there is no restriction of any kind on the repatriation of capital or the remittance of dividends, profits, interests, royalties or other payments to non-resident holders of the Company's securities.
 
 
 
Foreign exchange in China is primarily regulated by:
 
 
The Foreign Currency Administration Rules (1996), as amended; and
 
 
 
 
The Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.
 
Under the Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest and royalties payments, and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however, is subject to the approval of SAFE or its local counterpart.
 
Under the Administration Rules for the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterpart.
 
E.    Taxation.   Shareholders will not be subject to taxation, including withholding provisions, in the British Virgin Islands or Hong Kong.  The Company assumes no responsibility for the withholding of any tax upon the payment of dividends, and there is no tax treaty between the British Virgin Islands and the United States regarding such withholding.
 
The Company is subject to applicable taxes in Hong Kong, but our shareholders are exempt.
 
There is no tax treaty between the United States and Hong Kong.
  
For United States federal income tax purposes, the gross amount of all distributions paid with respect to our common stock to a person subject to United States federal income taxation, generally, will be treated as foreign source dividend income to such person.  Gain or loss from the sale of shares of our common stock, generally, will be subject to federal income taxation at a maximum federal income tax rate from 15% to 20%, if that common stock was held for more than 12 months or as ordinary income, if that common stock was held for less than 12 months.

Shenzhen Dragon Jade Financial Leasing Company Limited conducts businesses in China and is subject to tax in Chinese jurisdiction.
 
G.   Statement by experts.  The auditors of the Company are Centurion ZD CPA Limited, Unit 1304, 13th Floor, Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong.  The financial statements included as part of this Annual Report have been included herein in reliance upon the authority of such auditors, as experts in accounting and auditing.

H.   Documents on display.   Item 19 sets forth a list of exhibits; that list is incorporated herein by reference.

I.   Subsidiary information.   Information concerning AUL, UCHL, and UAM, our subsidiaries, is included throughout this Annual Report; AUL's, UCHL's, and UAM's financial statements, also, are included in the consolidated financial statements.
 
Item 11.      Quantitative and Qualitative Disclosures About Market Risk
 
We have not entered into market risk sensitive instruments for any purpose.
 
Item 12.      Description of Securities Other than Equity Securities.
 
Not applicable.
 
 
PART II
 
Item 13.      Defaults, Dividend Arrearages and Delinquencies
 
There has not been a material default in the payment of principal or interest relating to our indebtedness.
 
We have not paid any dividends.
 
Item 14.      Material Modifications to the Rights Of Security Holders And Use of Proceeds
 
The rights of the holders of our common stock have not been modified or qualified by any instrument defining such rights or the issuance of any other securities.
 
Item 15.      Controls and Procedures
 
Evaluation of disclosure controls and procedures
 
The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act").  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must anticipate the fact that there are resource constraints and management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
 
Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, the Company's disclosure controls and procedures are designed at a reasonable assurance level and effective to provide reasonable assurance that information the Company is required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
   
Management's report on internal control over financial reporting
 
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is a process designed by, or under the supervision of, the Company's Chief Executive Officer and Chief Financial Officer and effected by the Company's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate, because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
The Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based upon its assessment, management, including the Company's Chief Executive Officer and Chief Financial Officer, concluded that, as of March 31, 2018, the Company's internal control over financial reporting was effective.
 
Attestation report of the registered public accounting firm.   This annual report does not include an attestation report of the Company's public accounting firm regarding internal control over financial reporting.  Management's evaluation was not subject to such attestation report pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to report only management's evaluation on this annual report.
 
 
Changes in internal control over financial reporting.   Management regularly reviews its system of internal control over financial reporting and makes changes to the Company's processes and systems to improve controls and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
 
There were no changes in the Company's internal control over financial reporting that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
 
The Company will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may make modifications from time to time as considered necessary or desirable.
 
Item 15T.    Controls and Procedures
 
Not Applicable.
 
Item 16.      [Reserved]
 
Item 16A.   Audit committee financial expert
 
Our board of directors maintains an Audit Committee.  Lo Tsz Fung Philip serves as the chairman, and Tai Kam Chiu Daniel, serve as member of the Audit Committee. Lo Tsz Fung Philip is an "audit committee financial expert" as defined by the rules of the NASDAQ Stock Market, Inc. and Rule 10A-3(b)(i) under the Securities Exchange Act of 1934 applicable to members of an audit committee.  The Audit Committee is appointed by our board of directors to assist our board of directors in monitoring (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal and external auditors.
 
Item 16B.   Code of Ethics
 
We haven't adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, but expect to do so before March 31, 2019.
 
Item 16C.   Principal Accountant Fees and Services
 
Audit Fees:   The aggregate fees for each of the two fiscal years ended March 31, 2018, and March 31, 2017, for professional services rendered by Centurion ZD CPA Limited for the two fiscal years ended March 31, 2018, and March 31, 2017, our principal accountants for the audit of our annual financial statements, were $60,000 for the fiscal year ended March 31, 2018, and $40,000 for the fiscal year ended March 31, 2017.
 
Audit-Related Fees:   Centurion ZD CPA Limited did not perform or bill for any audit-related services during the two fiscal years ended March 31, 2018, and March 31, 2017.
 
Tax Fees:   Centurion ZD CPA Limited did not render or bill for any services relating to tax compliance, tax advice or tax planning during the two fiscal years ended March 31, 2018, and March 31, 2017.

All Other Fees:   Centurion ZD CPA Limited did not provide any products or other services during the two fiscal years ended March 31, 2018, and March 31, 2017.
 

Item 16D.  Exemptions from the Listing Standards for Audit Committees.
 
Not Applicable.
 
Item 16E.   Purchase of Equity Securities by the Issuers and Affiliated Purchasers
 
None of our shares was purchased by us or an affiliated purchaser, such as an officer or director during the last fiscal year.

Item 16F.   Change in Registrant's Certifying Accountant

Not Applicable.

Item 16G.   Corporate Governance

Not Applicable.

Item 16H.   Mine Safety Disclosure

Not Applicable.
 
PART III
 
Pursuant to General Instruction E(c) of Form 20-F, the Company has elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.
 
Item 17.      Financial Statements
 
The financial statements and other financial information included in this Annual Report are listed in Item 8, above, and are incorporated herein by reference.
 
Item 18.      Financial Statements
 
The financial statements and other financial information included in this Annual Report are listed in Item 8, above, and are incorporated herein by reference.
 
Item 19.      Exhibits
 
Exhibits and Exhibit Index.   The following Exhibits are filed as part of this Annual Report as amended or incorporated by reference to the same exhibit number in either (1) the annual report on Form 20FR12G or an amendment thereto, or (2) this annual report on Form 20-F or an amendment thereto, as specified in the footnotes to the Exhibit Index below.
 
 
 
Exhibit Index
 
Exhibit No.
 
Description
 
 
 
1*
 
Memorandum and Articles of Association
 
 
 
2*
 
Specimen Common Stock Certificate
 
 
 
8*
 
Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Previously filed.

**
Filed herewith.

 
SIGNATURES
 
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
       
 
 
 
 
Hong Kong, July 30, 2018
By:
/s/ Lai Yat Man
 
 
 
Lai Yat Man, Chief Executive Officer
 
 
 
 
 
 
By:
/s/ Fung Kwok Wing
 
 
 
Fung Kwok Wing, Chief Financial Officer
 
 
 
 
 
 
 


 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
CONSOLIDATED FINANCIAL STATEMENTS

 
March 31, 2018
 
Together With Report Of
 
Independent Registered Public Accounting Firm
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DRAGON JADE INTERNATIONAL LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 

 




 
 
 
 

CENTURION ZD CPA LIMITED
CERTIFIED PUBLIC ACCOUNTANTS (PRACTISING)
Unit 1304, 13th Floor, Two Harbourfront,
22 Tak Fung Street, Hunghom,
Hong Kong
Tel : (852) 2851 7954
Fax: (852) 2545 4086
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
To:      The Board of Directors and Shareholders of
 Dragon Jade International Limited
 
Opinion on the Financial Statements
 
We have audited the accompanying consolidated balance sheets of Dragon Jade International Limited and subsidiaries (the "Company") as of March 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive loss, changes in equity and cash flows for each of the years in the three-year period ended March 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2(q) to the financial statements, the Company has suffered from losses from operation and significant accumulated deficits. The Company comes to have insufficient cash flows generated from operation and provided for development. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 
 
Basis for Opinion
 
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
/s/ Centurion ZD CPA Limited
We have served as the Company's auditor since 2013.
 
Hong Kong, China          
July 30, 2018
 
 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
Consolidated Balance Sheets
 
 
 
March 31,
   
March 31,
 
 
 
2018
   
2017
 
 
           
Assets
           
Current assets
           
Cash and Bank Deposits
 
$
4,756,354
   
$
1,244,844
 
Subscription receivable
   
-
     
10,537,065
 
Loan receivable
   
700,439
     
324,284
 
Trade receivable
   
2,090
     
51,019
 
Deposit & Prepayments
   
96,633
     
111,792
 
Inventory
   
124,556
     
178,892
 
Total current assets
   
5,680,072
     
12,447,896
 
 
               
Investment in Associate
   
891,984
     
-
 
Plant, machinery and equipment, net
   
105,378
     
78,495
 
Total non-current assets
   
997,362
     
78,495
 
Total assets
   
6,677,434
     
12,526,391
 
 
               
Liabilities and stockholders' equity
               
Current liabilities
               
Accounts Payable
   
97
     
5,379
 
Amount due to Directors
   
3,672
     
283,682
 
Accruals & Other payable
   
151,266
     
93,737
 
Convertible promissory note
   
-
     
-
 
Total current liabilities
   
155,035
     
382,798
 
 
               
Stockholders' equity
               
Common stock, 100,000,000 shares authorized and 57,023,319 shares and 56,663,319  shares issued at no par value at March 31, 2018 and March 31, 2017 respectively
   
17,543,961
     
17,183,961
 
Common shares to be issued
   
-
     
-
 
Accumulated losses
   
(10,980,558
)
   
(5,011,557
)
Other Comprehensives Income
   
-
     
-
 
Total stockholders' equity
   
6,563,403
     
12,172,404
 
 
               
Non-controlling interest
   
(41,004
)
   
(28,811
)
 
               
Total liabilities and stockholders' equity
 
$
6,677,434
   
$
12,526,591
 
 
 
 
 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
Consolidated Statements of Operations and Comprehensive Loss
 
 
 
For the Years Ended March 31,
 
 
 
2018
   
2017
   
2016
 
 
                 
Revenue
 
$
121,618
   
$
224,920
   
$
336,906
 
 
                       
Costs of revenues
   
(17,113
)
   
(50,155
)
   
(95,103
)
 
                       
Gross profits
   
104,505
     
174,765
     
241,803
 
 
                       
Expenses
                       
Selling, general and administrative
   
(6,117,625
)
   
(2,426,481
)
   
(713,956
)
 
                       
Income/(loss) from operations
   
(6,013,120
)
   
(2,251,716
)
   
(472,153
)
 
                       
Other income
   
39,942
     
2,024
     
37
 
 
                       
Share of loss of an associate
   
(8,016
)
   
-
     
-
 
Gain/(Loss) on change in fair value of convertible note liability
   
-
     
260,000
     
760,000
 
Total other income/(loss)
   
31,926
     
262,024
     
760,037
 
 
                       
Gain/(Loss) before income tax
   
(5,981,194
)
   
(1,989,692
)
   
287,884
 
 
                       
Income tax
   
-
     
-
     
-
 
 
                       
Non-controlling interest
   
12,193
     
8,907
     
4,763
 
 
                       
Net gain/(loss)
   
(5,969,001
)
   
(1,980,785
)
   
292,647
 
 
                       
Currency exchange gain/(loss)
   
-
     
-
     
-
 
 
                       
Comprehensive gain/(loss)
 
$
(5,969,001
)
 
$
(1,980,785
)
 
$
292,647
 
 
                       
Net Gain/(Loss) per share
 
$
(0.105
)
 
$
(0.038
)
 
$
0.006
 
 
                       
Net Comprehensive Gain/(Loss) per share
 
$
(0.105
)
 
$
(0.038
)
 
$
0.006
 
 
                       
Weighted average common shares outstanding
   
56,880,579
     
51,852,557
     
51,063,319
 
 
 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
Consolidated Statements of Changes in Stockholders' Equity
 
                                  Total  
 
             
Common
   
Retained
   
Other
   
Stockholders'
 
 
 
Common
   
Shares To Be
   
Earnings
   
Comprehensive
   
Equity
 
 
 
Shares
   
Stock
   
Issued
   
(Deficit)
   
Income
   
 (Deficit)
 
 
                                   
Balance, March 31, 2014
   
50,413,319
     
449,839
     
430,000
     
(1,480,507
)
   
-
     
(600,668
)
 
                                               
Net loss for the year
   
-
     
-
     
-
     
(1,842,912
)
   
-
     
(1,842,912
)
 
                                               
Issuance of Stock
   
650,000
     
654,122
     
(430,000
)
   
-
     
-
     
224,122
 
 
                                               
Balance, March 31, 2015
   
51,063,319
     
1,103,961
     
-
     
(3,323,419
)
   
-
     
(2,219,458
)
 
                                               
Net gain for the year
   
-
     
-
     
-
     
292,647
     
-
     
292,647
 
 
                                               
Issuance of Stock
   
-
     
-
     
-
     
-
     
-
     
-
 
 
                                               
Balance, March 31, 2016
   
51,063,319
     
1,103,961
     
-
     
(3,030,772
)
   
-
     
(1,926,811
)
 
                                               
Net loss for the year
   
-
     
-
     
-
     
(1,980,785
)
   
-
     
(1,980,785
)
 
                                               
Issuance of Stock
   
5,600,000
     
16,080,000
     
-
     
-
     
-
     
16,080,000
 
 
                                               
Balance, March 31, 2017
   
56,663,319
     
17,183,961
     
-
     
(5,011,557
)
   
-
     
12,172,404
 
 
Net loss for the year
   
-
     
-
     
-
     
(5,969,001
)
   
-
     
(5,969,001
)
 
                                               
Issuance of Stock
   
360,000
     
360,000
     
-
     
-
     
-
     
360,000
 
 
                                               
Balance, March 31, 2018
   
57,023,319
     
17,543,961
     
-
     
(10,980,558
)
   
-
     
6,563,403
 

 
 
 
 
 
 
 
 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
Cash Flow Statement
 
 
 
For the Years Ended March 31,
 
 
 
2018
   
2017
   
2016
 
 
                 
Cash flows from operating activities
                 
Net gain / (loss)
 
$
(5,969,001
)
 
$
(1,980,785
)
 
$
292,647
 
Adjustments to reconcile net income/(loss) to  net cash used in operating activities:
                       
Depreciation
   
38,922
     
28,086
     
4,068
 
Share of loss of an associate
   
8,016
     
-
     
-
 
Consultancy fees paid by shares issuance
   
360,000
     
-
     
-
 
Non-controlling interest
   
(12,193
)
   
(8,907
)
   
(4,763
)
Changes in assets and liabilities:
                       
Deposits and other receivables
   
(360,995
)
   
(420,864
)
   
(8,046
)
Account receivables
   
48,928
     
(10,527
)
   
(25,489
)
Inventory
   
54,336
     
13,100
     
(190,042
)
Deferred tax assets
   
-
     
-
     
-
 
Accounts payables
   
(5,282
)
   
(14,938
)
   
9,381
 
Accrued liabilities and other payables-Third party
   
57,529
     
46,363
     
19,221
 
Amount due to directors
   
(280,010
)
   
(445,927
)
   
677,821
 
Convertible promissory notes
   
-
     
(260,000
)
   
(760,000
)
Net cash (used in) operating activities
   
(6,059,750
)
   
(3,054,399
)
   
14,798
 
 
                       
Cash flow from investing activities
                       
Investment in associate
   
(900,000
)
   
-
     
-
 
Acquisition of assets
   
(65,805
)
   
(82,498
)
   
(25,128
)
Net cash (used in) investing activities
   
(965,805
)
   
(82,498
)
   
(25,128
)
 
                       
Cash flow from financing activities
                       
Cash for issuance of shares
   
10,537,065
     
4,462,935
     
-
 
Repayment of convertible promissory note
   
-
     
(100,000
)
   
-
 
Net cash provided by financing activities
   
10,537,065
     
4,362,935
     
-
 
                         
Effect of foreign exchange rate  changes  on cash and cash equivalent
                       
 
                       
Cash and cash equivalents:
                       
Net increase (decrease)
   
3,511,510
     
1,226,038
     
(10,330
)
Balance at beginning of period
   
1,244,844
     
18,806
     
29,136
 
Balance at end of period
   
4,756,354
     
1,244,844
     
18,806
 
 
                       
                         
Supplemental cash flow information:
                       
Cash paid for income taxes
   
-
     
-
     
-
 
Cash paid for interest
 
$
-
   
$
-
   
$
-
 

 
 
 
DRAGON JADE INTERNATIONAL LIMITED
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
1.  The Company
 
Dragon Jade International Limited (the "Company") was incorporated on April 14, 2008 in the British Virgin Islands.  The principal activity of the Company is investment holding.
 
In April 2012, the Company chartered a new subsidiary, Alpha Ultimate Limited under the laws of the Special Administrative Region of Hong Kong which operates in the health supplement industry.
 
On August 31, 2012 the Company entered into a stock exchange agreement with United Century Holdings Limited, a privately held corporation.  On September 1 2012, the Company consummated the transaction contemplated by the stock exchange agreement.  All of the capital stock of United Century Holdings Limited was exchanged for an aggregate of 20,003,319 shares of the Company's capital stock.  The Company became a 100% holding company of United Century Holdings Limited.
 
United Century Holdings Limited ("UCHL") was incorporated on March 2, 2012 under the British Virgin Islands Business Companies Act, 2004 with limited liabilities.  UCHL is established as a special purpose holding company whose objective is to become a holding company by consummate an acquisition, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more business located in Hong Kong.  On July 10, 2012, UCHL executed an acquisition of 7,879,500 out of 8,000,000 ordinary shares, par value $0.1282 (HK$1) per share, of the United Asia Medical Network Company Limited ("UAM") and became a 98.49% holding company of UAM.
 
UAM was incorporated on May 6, 1998 as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  Its principal business is trading of health supplement products and providing related medical and health consultancy services.
 
On March 20, 2018, the Company acquired 3,000 shares of Dragon Jade Medical Company Limited (DJMC), representing 30% of the total issued shares of DJMC, at a purchase price of $300 per share for total consideration of $900,000.  DJMC was incorporated on January 25, 2017, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  DJMC was formed to offering medical equipment and aircraft financing solutions, including both direct financial leasing and sale-leaseback services to customers in health care and airlines in China through 100% owned subsidiary Shenzhen Dragon Jade Financial Leasing Company Limited formed under the laws of the Peoples' Republic of China.
 
Details of the Company's subsidiaries and associate (which together with the Company are collectively referred to as the "Group") and their principal activity as of March 31, 2018 were as follows:
 
Name
 
Date of
incorporation/
establishment
 
Place of
incorporation/
registration and
operation
 
Percentage of
equity interest
attributable to
the Company
   
Principal
activities
 
 
 
 
 
       
     
Alpha Ultimate Ltd. ("AUL")
 
April 11, 2012
 
Hong Kong
   
100
%
 
Health supplement trading
 
 
 
 
 
         
     
United Century Holdings Ltd. ("UCHL")
 
March 2, 2012
 
BVI
   
100
%
 
Investment holding
 
 
 
 
 
         
     
United Asia Medical Network Company Limited ("UAM")
 
May 6, 1998
 
Hong Kong
   
98.49
%
 
Health supplement trading
 
 
 
 
 
         
     
Dragon Jade Medical Company Limited ("DJMC")
 
January 25, 2017
 
Hong Kong
   
30
%
 
Investment holding
 
 
 
 
 
         
     
Shenzhen Dragon Jade Financial Leasing Company Limited ("SZDJFL")
 
September 4, 2017
 
Peoples's Republic of China
   
30
%
 
Financial leasing
 
 
2.  Summary of Significant Accounting Policies
 
(a) Basis of Consolidation
 
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
 
The consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company accounts and transactions have been eliminated in consolidation.
 
Equity Method Investee
 
The accompanying consolidated financial statements of the Company included the Company's proportionate share of the net income or loss under equity method as follows:
(1)
The Associate company DJMC is a 30% ownership Associate of the Company, represented a 30% economic interest in DJMC and subsidiary.
(2)
The Associate company SZDJFL is a wholly owned subsidiary of DJMC. The Company indirectly owned 30% through its ownership interest of DJMC, represented a 30% economic interest in SZDJFL,

All intra-entity profits and losses with regards to the Company's equity method investees have been eliminated.
 
(b) Use of Estimates
 
In preparing financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported periods. Significant estimates include depreciation. Actual results could differ from those estimates.
 
(c) Cash and Cash Equivalents
 
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of March 31, 2018, the Company did not have any cash equivalents.
 
(d) Inventories
 
Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the weighted average basis and comprises direct materials, direct labor and an appropriate proportion of overhead.
 
Net realizable value is based on estimated selling prices less any further costs expected to be incurred for completion and selling expense.
 
(e) Accounts Receivable
 
Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts will be recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging, ongoing business relation and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. At March 31, 2018, the Company has no allowance for doubtful accounts, as per the management's judgment based on their best knowledge.
 
(f) Deposit and prepayments
 
Deposit and Prepayments represent cash paid in advance to suppliers. As of March 31, 2018, prepayments included cash paid advances to suppliers, and prepaid expenses, such as water and electricity fees.
 
 
(g) Plant and Equipment
 
Plant and equipment is stated at cost. Depreciation is provided principally by use of the straight-line method over the useful lives of the related assets, except for leasehold properties, which are depreciated over the terms of their related leases or their estimated useful lives, whichever is less. Expenditures for maintenance and repairs, which do not improve or extend the expected useful life of the assets, are expensed to operations while major repairs are capitalized.
 
The estimated useful lives are as follows:
 
 
Furniture and fittings
5 years
 
Computer equipment
5 years
 
The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets, and, if any, is recognized in the statement of operations.
 
(h) Impairment of Assets
 
The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in FASB ASC 360 Property, Plant, and Equipment (formerly Statement of Financial Accounting Standards ("SFAS") No. 144). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.
 
(i) Income Taxes
 
Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities or assets are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and the financial reporting amounts at each year end.
 
A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.
 
(j) Revenue Recognition
 
Revenues represent the invoiced value of goods sold recognized upon the shipment of goods to customers. Revenues are recognized when all of the following criteria are met:

Persuasive evidence of an arrangement exists;
Delivery has occurred or services have been rendered;
The seller's price to the buyer is fixed or determinable; and
Collectability is reasonably assured.
 
(k) Foreign Currency Transactions
 
The consolidated financial statements of the Company are presented in United States Dollars ("US$"). Transactions in foreign currencies during the period are translated into US$ at the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into US$ at the exchange rates prevailing at that date. All transaction differences are recorded in the income statement.
 
 
The accompanying consolidated financial statements are presented in United States dollars (US$). The Company's subsidiary in Hong Kong has its local currency, Hong Kong Dollars ("HK$"), as its functional currency.  On consolidation, the financial statements of the Company's subsidiary in Hong Kong is translated from HK$ into US$ in accordance with FASB ASC Topic 830 Foreign Currency Matters (formerly SFAS No. 52, "Foreign Currency Translation").  During 2016, 2017 and 2018, the Hong Kong dollars are translated from HK$ with a ratio of US$1.00=HK$7.80, a fixed exchange rate maintained between Hong Kong and United States derived from the Hong Kong Monetary Authority pegging HK$ and US$ monetary policy. Accordingly, all assets and liabilities are translated at the exchange rates prevailing at the balance sheet dates and all income and expenditure items are translated at the average rates for each of the period. Translation of amounts from HK$ into US$ has been made at the following exchanges rates for the respective periods:
 
   
For the Years Ended March 31,
 
   
2018
   
2017
   
2016
 
                   
Twelve months ended HKD:USD exchange rate
   
7.8
     
7.8
     
7.8
 
Average twelve months ended HKD:USD exchange rate
   
7.8
     
7.8
     
7.8
 
Twelve months ended RMB:USD exchange rate
   
6.23944
     
N/A
     
N/A
 
Average twelve months ended RMB:USD exchange rate
   
6.23944
     
N/A
     
N/A
 
 
(l) Fair Value of Conversion Features
 
In accordance with FASB ASC 815 Derivatives and Hedging, the conversion feature of the Convertible Notes is separated from the debt instrument and accounted for separately as a derivative instrument. On the date the Convertible Notes are issued, the conversion feature was recorded as a liability at its fair value, with future decreases in fair value recognized as earnings and increases in fair values recognized as expenses.
The Company used the Black-Scholes-Merton option-pricing model to obtain the fair value of the conversion feature. The Company's expected volatility assumption is based on the historical volatility of the Company's stock. The expected life assumption is primarily based on the expiration date of the conversion features. The risk-free interest rate for the expected term of the conversion features is based on the U.S. Treasury yield curve in effect at the time of measurement.

(m) Earnings/(Losses) Per Share
 
Basic losses per share is computed by dividing the earnings for the year by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities by including other potential common stock, including stock options and warrants, in the weighted average number of common shares outstanding for a period, if dilutive.
 
(n) Accumulated Other Comprehensive Income
 
Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes for the year in which such are obtained.
 
(o) Stock-Based Compensation
 
We account for stock-based compensation in accordance with FASB ASC 718 Compensation – Stock Compensation which requires that companies account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in their statements of operations. Under FASB ASC 718 we are required to measure compensation costs for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.
 
(p) Equity-Based Payments to Non-employees

The Company accounts for equity-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity-Based Payments to Non-Employees that are issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services. If the fair value of goods or services received in a share-based payment transaction with nonemployees is more reliably measureable than the fair value of the equity instruments issued, the fair value of the goods or services received shall be used to measure the transaction. In contrast, if the fair value of the equity instruments issued in a share-based payment transaction with nonemployees is more reliably measured than the fair value of the consideration received, the transaction shall be measured based on the fair value of the equity instruments issued.
 
 
(q) Going Concern

As shown in the accompanying consolidated financial statements, the Company has an accumulated deficit of $10,980,568 as of March 31, 2018. The Company will be required to raise additional capital to fund its operations, and will continue to attempt to raise capital resources from both related and unrelated parties until such time as the Company is able to generate revenues sufficient to maintain itself as a viable entity. These factors have raised substantial doubt about the Company's ability to continue as a going concern. There can be no assurances that the Company will be able to raise additional capital or achieve profitability. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
The Company plans to strengthen its core business, control its overall expenditures, improve the efficiency of its operations and continue its efforts to expand by exploring additional product lines and market opportunities.
 
(r) New Accounting Pronouncements

The FASB has issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. They also provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. . Early adoption is permitted for all entities.
 
The FASB has issued Accounting Standards Update No. 2017-02, Not-for-Profit Entities - Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity. The amendments clarify when a not-for-profit entity that is a general partner or a limited partner should consolidate a for-profit limited partnership or similar legal entity once the amendments in Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, become effective. The amendments maintain how not-for-profit general partners currently apply the consolidation guidance in Subtopic 810-20 by including that guidance within Subtopic 958-810. The amendments also add to Subtopic 958-810 the general guidance in Subtopic 810-10 on when not-for-profit limited partners should consolidate a limited partnership. The Company does not expect ASU 2017-02 to have a significant impact on its results of operations and financial condition. 
 
The FASB has issued Accounting Standards Update (ASU) No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. The amendments add paragraph 250-10-S99-6 which includes the text of "SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period (in accordance with Staff Accounting Bulletin [SAB] Topic 11.M)." Following is the text of the SEC Staff Announcement: This announcement applies to ASU No. 2014- 09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments. FN1SAB Topic 11.M provides the SEC staff view that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosuresFN2 about the potential material effects of those ASUs on the financial statements when adopted. Consistent with Topic 11.M, if a registrant does not know or cannot reasonably estimate the impact that adoption of the ASUs referenced in this announcement is expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant's current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed: FN 1 This announcement also applies to any subsequent amendments to guidance in the ASUs that are issued prior to a registrant's adoption of the aforementioned ASUs. FN 2 Topic 11.M provides SEC staff views on disclosures that registrants should consider in both Management's Discussion & Analysis (MD&A) and the notes to the financial statements. MD&A may contain cross references to these disclosures that appear within the notes to the financial statements.
 
 
The FASB has issued Accounting Standards Update (ASU) No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, which adopt the amendments should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
 
The FASB has issued Accounting Standards Update No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. A contract may involve the transfer of both nonfinancial assets and financial assets (e.g., cash and receivables). The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The amendments are effective at the same time Topic 606, Revenue from Contracts with Customers is effective. For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.
 
The FASB has issued Accounting Standards Update No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. The amendments relate primarily to the reporting by an employee benefit plan (a plan) for its interest in a master trust. A master trust is a trust for which a regulated financial institution (bank, trust company, or similar financial institution that is regulated, supervised, and subject to periodic examination by a state or federal agency) serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. The amendments are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented. The amendments apply to reporting entities within the scope of Topic 960, Plan Accounting - Defined Benefit Pension Plans, Topic 962, Plan Accounting - Defined Contribution Pension Plans, or Topic 965, Plan Accounting - Health and Welfare Benefit Plans. Under Topic 960, investments in master trusts are presented in a single line item in the statement of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in practice. For each master trust in which a plan holds an interest, the amendments require a plan's interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by general type, within the plan's financial statements. The amendments remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments. Current U.S. GAAP does not require disclosure by plans of the master trust's other assets and liabilities. Examples of those balances include amounts due from brokers for securities sold, amounts due to brokers for securities purchased, accrued interest and dividends, and accrued expenses. The amendments require all plans to disclose: (a) their master trust's other asset and liability balances; and (b) the dollar amount of the plan's interest in each of those balances. Lastly, investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets are generally provided in both the defined benefit pension plan financial statements and the health and welfare benefit plan financial statements. Stakeholders noted that the disclosures are redundant. The amendments remove that redundancy and do not require that the investment disclosures relating to the 401(h) account assets be provided in the health and welfare benefit plan's financial statements. The amendments will require the health and welfare benefit plan to disclose the name of the defined benefit pension plan in which those investment disclosures are provided, so that participants can easily access those statements for information about the 401(h) account assets, if needed.
 

The FASB has issued Accounting Standards Update (ASU) No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments apply to all employers, including not-for-profit entities, that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation — Retirement Benefits. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments also allow only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset). The amendments are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. FASB Issues ASU on Premium Amortization.
 
The FASB has issued Accounting Standards Update (ASU) 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. Under current GAAP, entities normally amortize the premium as an adjustment of yield over the contractual life of the instrument. Stakeholders have expressed concerns with the current approach on the basis that current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. Further, there is diversity in practice (1) in the amortization period for premiums of callable debt securities, and (2) in how the potential for exercise of a call is factored into current impairment assessments. Another issue is that the practice in the United States is to quote, price, and trade callable debt securities assuming a model that incorporates consideration of calls (also referred to as "yield-to-worst" pricing). The ASU shortens the amortization period for certain callable debt securities held at a premium and requires the premium to be amortized to the earliest call date. However, the amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments are effective for public business entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods. For other entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020. Early adoption is permitted. Entities are required to apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The entity is required to provide disclosures about a change in accounting principle in the period of adoption.
 
The FASB has issued Accounting Standards Update (ASU) No. 2017-09, Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting. ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award. The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to the modification of the terms and conditions of a share-based payment award. Diversity in practice has arisen in part because some entities apply modification accounting under Topic 718 for modifications to terms and conditions that they consider substantive, but do not when they conclude that particular modifications are not substantive. Others apply modification accounting for any change to an award, except for changes that they consider purely administrative in nature. Still others apply modification accounting when a change to an award changes the fair value, the vesting, or the classification of the award. In practice, it appears that the evaluation of a change in fair value, vesting, or classification may be used to evaluate whether a change is substantive. Although the Master Glossary of the FASB Accounting Standards Codification™ currently defines the term modification as "a change in any of the terms or conditions of a share-based payment award," Topic 718 does not contain guidance on what changes are substantive or purely administrative. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. These amendments require the entity to account for the effects of a modification unless all of the following conditions are met: The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for: (a) public business entities for reporting periods for which financial statements have not yet been issued, and (b) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an award modified on or after the adoption date.
 
 
The FASB has issued Accounting Standards Update (ASU) 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services. ASU 2017-10 applies to the accounting by operating entities for service concession arrangements within the scope of Topic 853. ASU 2017-10 clarifies that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements.
 
Example: A public-sector entity grantor (government) enters into an arrangement with an operating entity under which the operating entity will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). ASU 2017-10 clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services in all cases for service concession arrangements within the scope of Topic 853. Effective date: For an entity that has not adopted Topic 606, Revenue from Contracts with Customers, before the issuance of ASU 2017-10, the effective date is the same as the effective date for Topic 606 (whether that is early or at the required date for Topic 606 adoption).
 
For an entity that has adopted Topic 606 before the issuance of ASU 2017-10, the effective date is as follows:
 
      For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission, the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
 
      For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
 
Earlier adoption is permitted for all entities, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic 606 before or after the issuance of the Update.
 
The FASB has issued Accounting Standard Update (ASU) No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480);Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 simplifies the accounting for certain financial instruments with down round features, a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings. The ASU is based on recommendations from the Private Company Council (PCC). Down round features are common in warrants, convertible preferred shares, and convertible debt instruments issued by private companies and development-stage public companies. Private company and other stakeholders expressed concern that current accounting guidance creates unnecessary cost and complexity for organizations that issue financial instruments with down round features by requiring, on an ongoing basis, fair value measurement of the entire instrument or conversion option. It creates, they assert, unnecessary income statement volatility associated with changes in value of a company's own share price, and does not reflect the economics of the down round feature, which exists to protect certain investors from declines in the issuer's share price under certain circumstances. The new ASU addresses these concerns by requiring companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity. The ASU also addresses navigational concerns within the FASB Accounting Standards Codification® related to an indefinite deferral available to private companies with mandatorily redeemable financial instruments and certain noncontrolling interests, one that created significant "pending content" in the Codification. To address this concern, the FASB decided to reclassify the indefinite deferral as a scope exception, which does not have an accounting effect. The provisions of the new ASU related to down rounds are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities.
 
 
 
The FASB has issued an Accounting Standards Update (ASU) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new standard is intended to improve and simplify accounting rules around hedge accounting. The ASU is effective for public companies in 2019 and private companies in 2020. Early adoption is permitted. The new standard refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The new standard takes effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, for public companies and for fiscal years beginning after December 15, 2019 (and interim periods for fiscal years beginning after December 15, 2020), for private companies. Early adoption is permitted in any interim period or fiscal years before the effective date of the standard.
 
The FASB has issued Accounting Standards Update (ASU) No. 2017-13.This ASU adds, amends, and supersedes SEC paragraphs of the Accounting Standards Codification (ASC) related to the adoption and transition provisions of ASU No. 2014-09, Revenue From Contracts with Customers and ASU 2016-02, Leases,for public business entities. The ASU is titled ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments. ASU 2017-13 codifies portions of an SEC Staff Announcement made at the July 20, 2017 Emerging Issues Task Force (EITF) meeting essentially delaying the effective date of the revenue recognition and leases standards for a subset of public entities . The SEC Observer made the following SEC Staff Announcement, "Transition Related to Accounting Standards Updates No. 2014-09 and 2016-02," at the July 20, 2017 EITF meeting: The SEC staff would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC adopting (1) ASC Topic 606, Revenue from Contracts with Customers for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and (2) ASC Topic 842, Leases for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. A public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC may still elect to adopt ASC Topic 606 and ASC Topic 842 according to the public business entity effective dates. This announcement is applicable only to public business entities that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC. This announcement is not applicable to other public business entities.
 
The FASB has issued Accounting Standards Update (ASU) No. 2017-14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606). ASU 2017-14 includes amendments to certain SEC paragraphs within the FASB Accounting Standards Codification (Codification). ASU 2017-14 amends the Codification to incorporate the following previously issued guidance from the SEC.
 
The FASB has issued Accounting Standards Update (ASU) No. 2018-01, Leases (Topic 842):Land Easement Practical Expedient for Transition to Topic 842, which clarifies the application of the new leases guidance to land easements and eases adoption efforts for some land easements. ASU 2018-01 is expected to reduce the cost of adopting the new leases standard for certain land easements. It is also an attempt to help ensure that companies can make a successful transition to the standard without compromising the quality of information provided to investors about these transactions. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity's land for a specified purpose. Land easements are used by utility and telecommunications companies, for example, when they need to take a small strip of land, or easement, to bury wires. Not all companies have historically accounted for them as leases. Stakeholders pointed out that the requirement to evaluate all old and existing land easements, sometimes numbering in the tens of thousands, to determine if they meet the definition of a lease under the new standard could be very costly. They also noted there would be limited benefit to applying this requirement, as many of their land easements would not meet the definition of a lease, or even if they met that definition, many of their easements are prepaid and, therefore, already are recognized on the balance sheet. The land easements ASU addresses this by providing an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old leases standard; and Clarifying that new or modified land easements should be evaluated under the new leases standard, once an entity has adopted the new standard.
 
The FASB issued an Accounting Standards Update (ASU) that helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act.
 
 
ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.
 
The ASU requires financial statement preparers to disclose:
 
      A description of the accounting policy for releasing income tax effects from AOCI;
 
      Whether they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act; and
 
      Information about the other income tax effects that are reclassified.
 
The amendments affect any organization that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.
 
The FASB Issues ASU No. 2018-06 to Supersede Circular 202 for Depository and Lending Institutions. The FASB has issued Accounting Standards Update (ASU) No.2018-06,Codification Improvements to Topic 942, Financial Services—Depository and Lending. ASU 2018-06 removes outdated guidance related to the Office of the Comptroller of the Currency's Banking Circular 202, Accounting for Net Deferred Tax Charges (Circular 202) in Subtopic 942-740, Financial Services—Depository and Lending—Income Taxes and should have no effect on reporting entities. The amendments in ASU 2018-06 are effective immediately.
 
3.  Income Taxes
 
BRITISH VIRGIN ISLANDS
The Company was incorporated in the British Virgin Islands and, under the current laws of the British Virgin Islands, is not subject to income taxes.

HONG KONG
No Hong Kong Profits Tax has been provided in the financial statements as Alpha Ultimate Ltd and United Asia Medical Network Co Ltd were in a tax loss position during the year.

CHINA
Shenzhen Dragon Jade Financial Leasing Company Limited conducts businesses in China and is subject to tax in Chinese jurisdiction.
  
4.  Retirement and Welfare Benefits
 
The employees of the Company are members of the Mandatory Provident Fund operated by the Hong Kong government. The company contributes 5% according to the different payroll range of the employee, and the maximum amount of contribution is up to $192 (HK$1,500) per month.
 
Shenzhen Dragon Jade Financial Leasing Company Limited pays the social insurance for its employees in accordance with the rates provided under the PRC Social Insurance Law, and shall withhold the social insurance that should be assumed by the employees.
 
5.  Cash and Bank Deposit
 
Cash and cash equivalents are summarized as follows:
 
 
 
2018
 
2017
 
 
       
Cash at Bank
 
$
4,756,354
   
$
1,244,844
 
Cash on Hand
   
-
     
-
 
Total
 
$
4,756,354
   
$
1,244,844
 
 
6. Loan Receivable
 
On January 19, 2017, Dragon Jade International Limited entered into an agreement with an unrelated party in the amount of $65,850. The amount is interest free, secured by the assets of unrelated party and has no fixed term of repayment.  Balance due at March 31, 2018 is $184,879.  This loan was rendered to the unrelated party in connection with FDA compliance service for the benefit of the Company.
 
On March 7, 2017, a subsidiary, United Asia Medical Network Company Limited ("UAMN") entered into the loan agreement with an unrelated party in the amount of $256,410, plus the term of the loan amount is bearing 12% interest per annum, without collateral and the due date is extended from March 7, 2018 to May 31, 2018 as agreed by UAMN and the unrelated party.
 
On August 7, 2017, a subsidiary, United Asia Medical Network Company Limited ("UAMN") entered into the loan agreement with an unrelated party in the amount of $256,410, plus the term of the loan amount is bearing 5% interest per annum, without collateral and the due date is on August 7, 2019.
 
Loans receivable
 
2018
   
2017
 
 
           
An unrelated party (Interest-free)
 
$
184,879
   
$
65,850
 
An unrelated party (12% interest bearing)
   
289,287
     
258,434
 
An unrelated party (5% interest bearing)
   
226,273
     
-
 
Total
 
$
700,439
   
$
324,284
 
                 
Loan interest earned and accrued
 
$
39,337
   
$
2,023
 
 
7.  Trade Receivables, Net
 
Trade receivables comprise the followings:
 
2018
 
2017
 
 
       
Trade receivables, gross
 
$
2,090
   
$
51,019
 
Provision for doubtful debts
   
-
     
-
 
Trade receivables, net
 
$
2,090
   
$
51,019
 

All of the above trade receivables are due within one year of aging.
 
Allowance was made when collection of the full amount is no longer probable.  Management reviews and adjusts this allowance periodically based on historical experience, current economic climate as well as its evaluation of the collectability of outstanding accounts. The Group evaluates the credit risks of its customers utilizing historical data and estimates of future performance.
 
 
 8.  Inventories

Inventories comprise the followings:
 
 
2018
   
2017
 
 
           
Finished goods
 
$
124,556
   
$
178,892
 
 
               
 
 
$
124,556
   
$
178,892
 
 
9.  Property, Plant and Equipment, Net
 
Property, plant and equipment, net comprise the followings:
 
 
2018
   
2017
 
 
           
At cost
           
Leasehold improvement, furniture and office equipment
 
$
179,198
   
$
113,393
 
 
               
 
  $       $    
Less: accumulated depreciation
   
(73,820
)
   
(34,898
)
 
               
 
 
$
105,378
   
$
78,495
 

Depreciation expenses are included in the statement of income as follows:
 
 
2018
   
2017
 
 
           
Selling, general and administrative
 
$
38,922
   
$
28,086
 
 
               
Total depreciation expenses
 
$
38,922
   
$
28,086
 
 
10.  Income Taxes
 
The Company, including the holding company Dragon Jade International Limited and intermediate holding company United Century Holdings Ltd., is being registered in the British Virgin Islands and which conducts all of its business through its subsidiaries incorporated in Hong Kong, is not subject to federal income tax until the operating profits was rebounded back to Untied States. The subsidiaries are Alpha Ultimate Ltd, and United Asia Medical Network Co Ltd (see note 1).
 
Alpha Ultimate Ltd, and United Asia Medical Network Co Ltd, being registered in the Hong Kong, are subject to HK's Profit Tax ("HKPT"). Under applicable income tax laws and regulations, an enterprise located in Hong Kong, including the district where our operations are located, is subject to a rate of 16.5% for the years ended March 31, 2018.
 
The Group uses the asset and liability method, where deferred tax assets and liabilities are determined based in the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.
 
 
A reconciliation between the income tax computed at the HK statutory rate and the Group's provision for income tax is as follows:
 
 
2018
   
2017
 
 
           
HKPT
   
16.5
%
   
16.5
%
 
               
Provision for income taxes
   
16.5
%
   
16.5
%
  
11.  Related Party Transactions
 
Since April 1, 2012, there has been no related party transaction, except (i) business development fees of $3,879,000 paid to Woody Fire Consultancy Limited, a major shareholder of the Company and (ii) the amount of $3,672 due LAI Yat Man for funds advanced to the Company, AUL and UAM, which amount has no collateral, due date or maturity date and does not accrue any interest.
 
12.  Concentrations and Credit Risk
 
The Company operates principally in Hong Kong and grants credit to its customers in this geographic region. Hong Kong has a relatively stable economy. However, it is always possible that unanticipated events in foreign countries could disrupt the Company's operations.
 
Financial instruments that potentially subject the Group to a concentration of credit risk consist of cash and accounts receivable.
 
The Company does not require collateral to support financial instruments that are subject to credit risk.
 
13.  Commitments and Contingencies
 
As of March 31, 2018 and 2017, the company did not have any contingent liabilities.
 
14.  Investment in Associate

On March 20, 2018, the Company acquired 3,000 shares of Dragon Jade Medical Company Limited (DJMC), representing 30% of the total issued shares of DJMC, at a purchase price of $300 per share for total consideration of $900,000.

DJMC was incorporated on January 25, 2017, as a limited liability company under Hong Kong Companies Ordinance, Chapter 32.  DJMC was formed to offering medical equipment and aircraft financing solutions, including both direct financial leasing and sale-leaseback services to customers in health care and airlines in China through 100% owned subsidiary Shenzhen Dragon Jade Financial Leasing Company Limited formed under the laws of the Peoples' Republic of China.  On January 25, 2017, Kwok Wing Fung, CFO of the Company, was appointed as a director of DJMC.

The Company exercises significant influence over Dragon Jade Medical Company Limited as it owns 30% of the voting shares and through a common director.  It accounts for its investment on the equity basis.
   
2018
   
2017
 
             
Balance at the beginning of year
           
Acquisition of 3,000 shares in DJMC
 
$
900,000
   
$
-
 
Share of equity loss
   
(8,016
     
-
 
Balance at the end of year
 
$
891,984
   
$
-
 
 
 
15.  Legal Proceedings

On January 19, 2017 the Company entered into an exclusive option and remediation agreement with Ultroid, LLC, Ultroid Marketing Development Corporation, and Ultroid Technologies, Inc. (Collectively, "Ultroid entities").  Ultroid has agreed to grant the Company an exclusive option to purchase the Ultroid assets for $1,000,000 in cash and 500,000 shares of the Company's common stock.  The option is granted by Ultroid in exchange for the Company's agreement to perform certain remediation tasks with respect to the Ultroid Assets and the Company's agreement to stay arbitration proceedings initiated by the Company against Ultroid the option period.
 
On September 22, 2017, the Ultroid entities sent a letter to the Company purporting to claim that the option period under the Exclusive Option and Remediation Agreement had expired.  The Company disputed the Ultroid Entities' claims and filed suit against Ultroid entities in the United States District Court for the Middle District of Florida (civil action No. 8:17-cv-02422-JDW-TBM) claiming that the Ultroid entities had breached the Exclusive Option and Remediation Agreement and the Security Agreement.  In this suit, the Company seeks damages in excess of $2 million and foreclosure of the Company's security interest in the secured assets related to the Ultroid product.  The Ultroid entities brought a motion to dismiss the Company's claims on November 20, 2017 and the Court denied their motion on February 8, 2018.
 
On February 22, 2018, the Ultroid entities answered the Company's complaint and filed counterclaims alleging that the Company had, in the course of entering into the Exclusive Option and Remediation Agreement and Security Interest, violated the Florida Deceptive and Unfair Trade Practices Act, the Racketeering Influenced and Corrupt Organizations Act, and Florida's Civil Remedies for Criminal Practices Act and engaged in conspiracy and fraud in the inducement; the Ultroid entities additionally alleged that the Company had breached the Exclusive Option and Remediation Agreement.  The Company denied all of the Counterclaims of the Ultroid Entities in its Reply on March 15, 2018.
 
On May 15, 2018 the Company moved for judgment on the pleadings with respect to all of the Ultroid entities' Counterclaims alleging fraud, conspiracy and violations of the Florida Deceptive and Unfair Trade Practices Act, the Racketeering Influenced and Corrupt Organizations Act, and Florida's Civil Remedies for Criminal Practices Act as lacking foundation in law or fact.  The Company's motion for judgment on the pleadings is fully briefed by the parties and remains pending before the Court.  Fact discovery is ongoing in the case and trial is scheduled for April 1, 2019.
 
16.  Subsequent Events
 
The Company has evaluated events subsequent to March 31, 2018 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
 
 
 
 
 
 

 
SCHEDULE A
 

DRAGON JADE MEDICAL COMPANY LIMITED AND SUBSIDIARY
 
Consolidated Balance Sheets
 
 
 
March 31,
   
March 31,
 
 
 
2018
   
2017
 
 
           
Assets
           
Current assets
           
Cash and Bank Deposits
 
$
109,857
   
$
-
 
Subscription receivable
   
2,100,000
     
-
 
Loans receivable
   
964,296
     
-
 
Other receivable
   
33,010
     
-
 
Deposit & Prepayments
   
25,972
     
-
 
Total current assets
   
3,233,135
     
-
 
 
               
Plant, machinery and equipment, net
   
28,378
     
-
 
                 
Total assets
   
3,261,513
     
-
 
 
               
Liabilities and stockholders' equity
               
Current liabilities
               
Amount due to Directors
   
17,533
     
-
 
Accruals & Other payable
   
234,236
     
-
 
Tax payable
   
1,255
     
-
 
Total current liabilities
   
253,024
     
-
 
 
               
Stockholders' equity
               
Ordinary shares, 10,000  shares issued at no par value