THE OFFERING
Issuer:
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Square
Chain Corporation
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Securities offered:
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A maximum of 100,000,000
shares of our common stock, par value $0.001 (“Common Stock”) at an offering price of $0.04 per share (the “Offered
Shares”). (See “Distribution.”)
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Number of shares of Common Stock outstanding
before the offering
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187,248,501 issued
and outstanding as of September 30, 2018
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Number of shares of Common Stock to be outstanding
after the offering
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287,248,501 shares,
if the maximum amount of Offered Shares are sold
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Price per share:
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$0.04
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Maximum offering amount:
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100,000,000 shares
at $0.04 per share, or $4,000,000 (See “Distribution.”)
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Trading Market:
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Our Common Stock
is trading on the OTC Markets Pink Open Market Sheets division under the symbol “SQCC.”
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Use of proceeds:
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If we
sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $3,600,000. We will
use these net proceeds for working capital and other general corporate purposes.
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Risk factors:
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Investing
in our Common Stock involves a high degree of risk, including:
Immediate
and substantial dilution.
Limited
market for our stock.
Competition
Limited
operational history
Doubts
about our ability to continue in business
See
“Risk Factors.”
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RISK FACTORS
An investment
in our Common Stock involves a high degree of risk. You should carefully consider the following risk factors, together with the
other information contained in this Offering Circular, before purchasing our Common Stock. Any of the following factors could
harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of
your investment. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking
statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.
Risks Relating
to Our Financial Condition
Our
independent registered accounting firm has expressed concerns about our ability to continue as a going concern.
The report
of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on the
absence of significant revenues, our significant losses from operations and our need for additional financing to fund all of our
operations. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue
and income potential of our proposed business and operations are unknown. If we cannot continue as a viable entity, we may be
unable to continue our operations and you may lose some or all of your investment in our common stock.
We have
limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operation.
As we have
less than ten years of corporate operational history and have yet to generate revenue under our new business model, it is extremely
difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in both the
alternative investments and blockchain technology sectors, which is a rapidly transforming technological sector. There is no guarantee
that we will properly execute our business model in either sector.
As a
growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not
yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not achieved
profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve
profitability. Further, many of our competitors in the field of blockchain technology have a significantly larger user base and
revenue stream, but have yet to achieve profitability. Our ability to continue as a going concern may be dependent upon raising
capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below our revenue levels
in order to achieve positive cash flows, none of which can be assured.
We may
require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
We intend
to continue to make investments to support our business growth and may require additional funds to respond to business challenges,
including the need to develop new features and products or enhance our existing products, improve our operating infrastructure
or acquire complementary businesses and technologies. Accordingly, we may need to engage in continued equity or debt financings
to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our
existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences
and privileges superior to those of our common stock. Any debt financing we secure in the future, could involve restrictive covenants
relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us
to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain
additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms
satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges
could be impaired, and our business may be harmed.
We expect
our quarterly financial results to fluctuate.
We expect
our net sales and operating results to vary significantly from quarter to quarter due to a number of factors, including changes
in:
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Demand
for our products; and
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Our ability to obtain
and retain existing customers; and
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Our ability to develop
our blockchain applications; and
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General economic
conditions, both domestically and in foreign markets; and
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Advertising and
other marketing costs; and
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Costs of creating
our blockchain applications; and
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Retaining key personnel
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Positive returns
on our alternative investments.
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As a result
of the variability of these and other factors, our operating results in future quarters may be below the expectations of our stockholders.
Risks Relating
to Our Business and Industry
The
Company has an evolving business model
As digital
assets and blockchain technologies become more widely available, the Company expects the services and products associated with
them to evolve. As a result, to stay current with the industry, the Company’s business model may need to evolve as well.
From time to time, the Company may modify aspects of its business model relating to its product mix and service offerings. The
Company cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the
business. The Company may not be able to manage growth effectively, which could damage its reputation, limit its growth and negatively
affect its operating results. Such circumstances would have a material adverse effect on the ability of the Company to continue
as a going concern or to pursue this segment at all, which would have a material adverse effect on the business, prospects or
operations of the Company.
We will
need to raise additional capital to continue operations over the coming year.
We anticipate
the need to raise approximately $4,000,000 in capital to fund our operations through December 31, 2019. We expect to use these
cash proceeds, primarily to acquire other blockchain based companies, joint ventures, retain additional key personnel and remain
in full legal and accounting compliance with the SEC. We cannot guarantee that we will be able to raise these required funds or
generate sufficient revenue to remain operational.
Our
monetization strategy is dependent on many factors outside our control.
There is no
guarantee that our efforts to monetize Square Chain Corporation, nor any of the companies we plan on acquiring, will be successful.
Furthermore, our competitors may introduce more advanced consumer and business to business applications that deliver a greater
value proposition to customers. Customers may stop using our business applications for many reasons, including the addition of
advertising, preventing any monetization from occurring. The development of our busness plan may take longer than expected and
cost more money than projected. As blockchain technology and the businesses developed around this technology are new technology,
we anticipate there will be many changes and developments to occur around this technology that may disrupt our business model.
All these factors individually or collectively may preclude us from effectively monetizing our business.
Government
actions or digital distribution platform restrictions could result in our products and services being unavailable in certain geographic
regions, harming future growth.
Due to our
connections to the blockchain industry, governments and government agencies could ban or cause our network or future apps to become
unavailable in certain regions and jurisdictions. This could greatly impair or prevent us from registering new customers at our
online portal in affected areas and prevent current customers from accessing the network. In addition, government action taken
against our service providers, suppliers or partners could cause our network to become unavailable for extended periods of time.
Failure
to identify and acquire technology and assets in the blockchain sector could greatly harm our business model.
Our business
model is reliant on our ability to identify and acquire technology and assets within the blockchain sector. There is no guarantee
that we will be successful in identifying viable companies or successful in acquiring any companies.
We may
be unable to manage growth, which may impact our potential profitability.
Successful
implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management
and financial resources. To manage growth effectively, we will need to:
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Establish
definitive business strategies, goals and objectives;
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Maintain a system
of management controls; and
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Attract and retain
qualified personnel, as well as, develop, train and manage management-level and other employees.
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If we fail
to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock
price may decline.
We may
not be able to compete successfully with other established companies offering the same or similar services and, as a result, we
may not achieve our projected revenue and user targets.
If we are
unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or targets.
We compete with both start-up and established financial and technology companies. Compared to our business, some of our competitors
may have greater financial and other resources, have been in business longer, have greater name recognition and be better established
in the traditional joint b investments and blockchain technology sectors.
We expect
to operate in a highly competitive industry, and if we are not able to compete effectively, our business and operating results
will be harmed.
We expect
that many companies, large and small, will enter the market for blockchain applications. Blockchain users may also develop their
own applications.
We anticipate
that the software for blockchain services will continue to become more sophisticated and effective and that demand for our services
could be adversely affected.
Our target
market may be dominated by large, well-financed, and technologically sophisticated entities that have focused on blockchain solutions.
We expect large integrated technology companies to become more active in our markets, both through acquisition and internal investment.
As costs fall and technology improves, increased market saturation may change the competitive landscape in favor of competitors
with greater scale than we possess. In addition, a few smaller companies may provide blockchain software using a model similar
to ours; the offerings of these smaller companies may reduce the perceived competitive advantage of our services and impact our
market share. If we fail to distinguish our offerings from the other options available, the demand for and market share of those
offerings may decrease.
We anticipate
that certain of our future competitors will have greater name recognition, longer operating histories, and significantly
greater resources than we do. As a result, our competitors may be able to respond more quickly and effectively than we can to
new or changing opportunities, technologies, standards, or client requirements. In addition, current and potential competitors
have established, and may in the future establish, cooperative relationships with vendors of complementary products, technologies,
or services to increase the availability of their products to the marketplace. Current or future competitors may consolidate to
improve the breadth of their products, directly competing with our integrated offerings. Accordingly, new competitors or alliances
may emerge that have greater market share, larger client bases, more widely adopted proprietary technologies, broader offerings,
greater marketing expertise, greater financial resources, and larger sales forces than we have, which could put us at a competitive
disadvantage. Further, in light of these advantages, even if our services are more effective than the product or service offerings
of our competitors, current or potential clients might accept competitive products and services in lieu of purchasing our services.
Increased competition is likely to result in pricing pressures, which could negatively impact our sales, profitability, or market
share. In addition to new niche vendors, who offer stand-alone products and services, we face competition from existing enterprise
vendors, including those currently focused on software solutions, which have information systems in place with clients in our
target market. These existing enterprise vendors may now, or in the future, offer or promise products or services with less functionality
than our services, but that offer ease of integration with existing systems and that leverage existing vendor relationships.
Competing
blockchain platforms and technologies.
The development
and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or
an alternative to distributed ledgers altogether. This may adversely affect the Company and its exposure to various blockchain
technologies. Such circumstances would have a material adverse effect on the ability of the Company to continue as a going concern
or to pursue this segment at all, which would have a material adverse effect on the business, prospects or operations of the Company.
If we
do not continue to innovate and provide services that are useful to users, we may not remain competitive, and our revenues and
operating results could suffer.
Our success
depends on providing services that our prospective users find valuable. Our competitors will constantly develop products and services
that may become more efficient or appealing to our clients. As a result, we must continue to invest significant resources in research
and development in order to enhance our existing services and introduce new high-quality services that clients will want. If we
are unable to predict user preferences or industry changes, or if we are unable to modify our services on a timely basis, we may
lose clients. Our operating results would also suffer if our innovations are not responsive to the needs of our clients, are not
appropriately timed with market opportunity, or are not effectively brought to market. As technology continues to develop, our
competitors may be able to offer results that are, or that are perceived to be, substantially similar to or better than those
generated by our services. This may force us to compete on additional service attributes and to expend significant resources in
order to remain competitive.
Failure
to manage our rapid growth effectively could increase our expenses, decrease our revenue, and prevent us from implementing our
business strategy.
After funding,
we expect to experience a period of rapid growth. To manage our anticipated future growth effectively, we must continue to maintain,
and may need to enhance, our information technology infrastructure and financial and accounting systems and controls, as well
as manage expanded operations in geographically distributed locations. We also must attract, train, and retain a significant number
of qualified sales and marketing personnel, professional services personnel, software engineers, technical personnel, and management
personnel. Failure to manage our rapid growth effectively could lead us to over-invest or under-invest in technology and operations;
result in weaknesses in our infrastructure, systems, or controls; give rise to operational mistakes, losses, or loss of productivity
or business opportunities; and result in loss of employees and reduced productivity of remaining employees. Our growth could require
significant capital expenditures and may divert financial resources and management attention from other projects, such as the
development of new services. If our management is unable to effectively manage our growth, our expenses may increase more than
expected, our revenue could decline or may grow more slowly than expected, and we may be unable to implement our business strategy.
We depend
on key employees and face competition in hiring and retaining qualified employees.
Our employees
are vital to our success, and our key management and other employees are difficult to replace. We currently do not have employment
contracts with our key employees. We may not be able to retain highly qualified employees in the future which could adversely
affect our business.
Our
lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and
officers.
We may in
the future be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated
with legal liability
are difficult to assess and quantify, and their existence and
magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”)
insurance. While neither Nevada law nor our Articles of Incorporation or bylaws require us to indemnify or advance expenses to
our officers and directors involved in such a legal action, we have entered into an indemnification agreement with our President
and intend to enter into similar agreements with other officers and directors in the future. Without adequate D&O insurance,
the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service
to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore,
our lack of adequate D&O insuranc
e may make it difficult for us to retain and attract talented and skilled directors
and officers, which could adversely affect our business.
We may
experience significant losses from operations.
Even if we
do generate operating income in one or more quarters in the future, subsequent developments in our industry, customer base, business
or cost structure or an event such as significant litigation or a significant transaction may cause us to again experience operating
losses. We may not become profitable for the long-term, or even for any quarter.
Because
competition for our target employees is intense, we may not be able to attract and retain the highly skilled employees we need
to support our planned growth.
To continue
to execute on our growth plan, we must attract and retain highly qualified personnel. Competition for these personnel is intense,
especially for senior sales executives and engineers with high levels of experience in designing and developing software and Internet-related
services. We may not be successful in attracting and retaining qualified personnel. We have from time to time in the past experienced,
and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate
qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In
addition, in making employment decisions, particularly in the Internet and high-technology industries, job candidates often consider
the value of the equity awards they are to receive in connection with their employment. Volatility in the price of our stock or
failure to obtain stockholder approval for increases in the number of shares available for grant under our equity plans may, therefore,
adversely affect our ability to attract or retain key employees. Furthermore, the requirements to expense equity awards may discourage
us from granting the size or type of equity awards that job candidates require to join our company. If we fail to attract new
personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.
If we
acquire companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder
value, and adversely affect our operating results and the value of our common stock.
As part of
our business strategy, we may acquire, enter into joint ventures with, or make investments in complementary companies, services,
and technologies in the future. Acquisitions and investments involve numerous risks, including:
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difficulties
in identifying and acquiring products, technologies, or businesses that will help our business;
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difficulties
in integrating operations, technologies, services, and personnel;
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diversion
of financial and managerial resources from existing operations;
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the
risk of entering new markets in which we have little to no experience;
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risks
related to the assumption of known and unknown liabilities;
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the
risk of write-offs and the amortization of expenses related to purchased intangible assets; and
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delays
in client purchases due to uncertainty and the inability to maintain relationships with clients of the acquired businesses.
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As a result,
if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions,
we may incur costs in excess of what we anticipate, and management resources and attention may be diverted from other necessary
or valuable activities.
We may
choose to expand by strategic acquisitions of technology and assets. Completion of the any proposed acquisition is subject to
various closing conditions, involves significant costs, and will require considerable attention from our management. Failure to
complete the acquisition could adversely affect our stock price and our future business and operations.
The completion
of the any proposed acquisition is subject to the satisfaction of various closing conditions, including the approval by target
stockholders, and we cannot assure you that such conditions will be satisfied and that the acquisition will be successfully completed.
In the event that the acquisition is not consummated, we will have spent considerable time and resources, and incurred substantial
costs, including costs related to the acquisition, many of which must be paid even if the merger is not completed. If the acquisition
is not consummated, our reputation in our industry and in the investment community could be damaged and, as a result, the market
price of our common stock could decline.
We may
fail to realize the anticipated benefits of any acquisition.
The success
of any acquisition will depend on, among other things, our ability to combine our businesses in a manner that does not materially
disrupt existing relationships and that allows us to achieve operational synergies and capitalize on the increased brand recognition
and customer base of the combined company. If we are not able to achieve these objectives, the anticipated benefits of the acquisition
may not be realized fully or at all or may take longer to realize than expected. In particular, the acquisition may not be accretive
or accelerate sales in near or long term.
The integration
process could result in the loss of key employees; the disruption of our ongoing businesses; or inconsistencies in standards,
controls, procedures, or policies that could adversely affect our ability to maintain relationships with third parties and employees
or to achieve the anticipated benefits of the acquisition. Integration efforts between the two companies will also divert management’s
attention from our core business and other opportunities that could have been beneficial to our shareholders. An inability to
realize the full extent of, or any of, the anticipated benefits of the acquisition, as well as any delays encountered in the integration
process, could have an adverse effect on our business and results of operations, which may affect the value of the shares of our
common stock after the completion of the acquisition.
Further, the
actual integration may result in additional and unforeseen expenses. Operational improvements and actual cost synergies, if achieved
at all, may be lower than we expect and may take longer to achieve than we anticipate. If we are not able to adequately address
these challenges, we may be unable to realize the anticipated benefits of the integration of any acquisition.
Risk Related
to the Blockchain Business
We expect
to derive revenue from a limited number of products and do not have a broadly-diversified product base.
We expect
that a majority of our revenue will be derived from the sale of blockchain products. We also anticipate that a substantial portion
of our future revenue, if any, will also be derived from these products and related services. If the sale of these products and
services is impeded for any reason and we have not diversified our product offerings, our business and results of operations would
be negatively impacted. This includes a diversification from hardware products to software solutions and related services; which
transformation, if not successfully executed, could lead to reduced revenue.
The
sales cycle for our products and technology may be long, and we may incur substantial expenses for sales that do not occur when
anticipated.
The sales
cycle for our products, which is the period of time between the identification of a potential customer and completion of the sale,
is typically lengthy and subject to a number of significant risks over which we have little control. If revenue falls significantly
below anticipated levels, our business would be seriously harmed.
Purchasing
decisions for our products and systems may be subject to delays due to many factors that are not within our control, such as:
(1) The time required for a prospective customer to recognize the need for our products; (2) The significant expense of many data
products and network systems; (3) Customers’ internal budgeting processes; and (4) Internal procedures customers may require
for the approval of large purchases.
As our operating
expenses are based on anticipated revenue levels, a small fluctuation in the timing of sales can cause our operating results to
vary significantly between periods.
We have
a great dependence on a limited number of suppliers and the loss of their manufacturing capability could materially impact our
operations.
In the event
that the supply of components or finished products is interrupted or relations with any of our principal vendors is terminated,
there could be increased costs and considerable delay in finding suitable replacement sources to manufacture our products.
We depend
significantly upon our proprietary technology and intellectual property and the loss of or the successful challenge to our proprietary
rights could require us to divert management attention and could reduce revenue and increase our operating costs.
From time
to time, we may receive claims that we have infringed the intellectual property rights of others, including claims regarding patents,
copyrights, and trademarks. Because of constant technological change in the segments in which we compete, the extensive patent
coverage of existing technologies, and the rapid rate of issuance of new patents, it is possible that the number of these claims
may grow. In addition, former employers of our former, current, or future employees may assert claims that such employees have
improperly disclosed to us the confidential or proprietary information of these former employers. Any such claim, with or without
merit, could result in costly litigation and distract management from day-to-day operations. If we are not successful in defending
such claims, we could be required to stop selling, delay shipments of, or redesign our products, pay monetary amounts as damages,
enter into royalty or licensing arrangements, or satisfy indemnification obligations that we have with our customers. We cannot
assure you that any royalty or licensing arrangements that we may seek in such circumstances will be available to us on commercially
reasonable terms or at all. We have made and expect to continue making significant expenditures to establish our intellectual
property rights and to investigate, defend and settle claims related to the use of technology and intellectual property rights
as part of our strategy to manage this risk. In addition, we license and use software from third parties in our business. These
third-party software licenses may not continue to be available to us on acceptable terms or at all, and may expose us to additional
liability. This liability, or our inability to use any of this third-party software, could result in shipment delays or other
disruptions in our business that could materially and adversely affect our operating results.
We will rely
principally on trade secrets to protect much of our intellectual property in cases where we do not believe that patent protection
is appropriate or obtainable. However, trade secrets are difficult to protect. Although our employees are subject to confidentiality
obligations, this protection may be inadequate to deter or prevent misappropriation of our confidential information. We may be
unable to detect unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our rights. Failure
to obtain or maintain trade secret protection could adversely affect our competitive business position. If we are unable to prevent
third parties from infringing or misappropriating our copyrights, trademarks or other proprietary information, our competitive
position could be adversely affected. In the course of conducting our business, we may inadvertently infringe the intellectual
property rights of others, resulting in claims against us or our customers. Our contracts generally indemnify our customers for
third-party claims for intellectual property infringement by the services and products we provide. The expense of defending these
claims may adversely affect our financial results.
Our
patents and those of our partners may not provide us with competitive advantages.
Our partners
may hold, and we may develop, several patents in the United States and in other countries, which cover multiple aspects of our
technology. If these patents expire, this will affect revenues, profitability, or increase competition. In addition to the issued
patents, there may also be several patents pending in the United States, Europe and other countries. There can be no assurance
that we or our partners will continue to develop proprietary products or technologies that are patentable, that any issued patent
will provide us with any competitive advantages or will not be challenged by third parties, or that patents of others will not
hinder our competitive advantage.
We are
subject to warranty and product liability risks.
A malfunction
of or design defect in our products which results in a breach of a customer’s data security or physical harm or damage from
our products could result in tort or warranty claims against us. We seek to reduce the risk of these losses by attempting to negotiate
warranty disclaimers and liability limitation clauses in our sales agreements. However, these measures may ultimately prove ineffective
in limiting our liability for damages.
In addition
to any monetary liability for the failure of our products, an actual or perceived breach of network or data security at one of
our customers could adversely affect the market’s perception of us and our products and could have an adverse effect on
our reputation and the demand for our products. Similarly, an actual or perceived breach of network or data security within our
own systems could damage our reputation and have an adverse effect on the demand for our products.
If we
are unable to sell additional products and services to our end-customers, our future revenue and operating results will be harmed.
Our future
success depends, in part, on our ability to expand the deployment of our platform with existing end-customers. This may require
increasingly sophisticated and costly sales efforts that may not result in additional sales. The rate at which our end-customers
purchase additional products and services depends on a number of factors, including the perceived need for additional security
products and services as well as general economic conditions. Further, existing end-customers have no contractual obligation to
and may not renew their subscription and support and maintenance contracts after the completion of their initial contract period.
Our end-customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction
with our services and our end-customer support, the frequency and severity of subscription outages, our product uptime or latency,
and the pricing of our, or competing, services. Additionally, our end-customers may renew their subscription and support and maintenance
services for shorter contract lengths or on other terms that are less economically beneficial to us. We also cannot be certain
that our end-customers will renew their subscription and support and maintenance services. If our efforts to sell additional products
and services to our end-customers are not successful or our end-customers do not renew their subscription and support and maintenance
agreements or renew on less favorable terms, our revenues may grow more slowly than expected or decline.
A network
or data security incident may allow unauthorized access to our network or data, harm our reputation, create additional liability
and adversely impact our financial results.
Increasingly,
companies are subject to a wide variety of attacks on their networks on an ongoing basis. In addition to traditional computer
“hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, and denial of
service attacks, sophisticated nation-state and nation-state supported actors now engage in intrusions and attacks (including
advanced persistent threat intrusions) and add to the risks to our internal networks and the information they store and process.
Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate
these risks. Furthermore, as a well-known provider of security solutions, we may be a more attractive target for such attacks.
A breach in our data security could compromise our networks or networks secured by our products, creating system disruptions or
slowdowns and exploiting security vulnerabilities of our products, and the information stored on our networks could be accessed,
publicly disclosed, altered, lost, or stolen, which could subject us to liability and cause us financial harm. Although we have
not yet experienced significant damages from unauthorized access by a third party of our internal network, any actual or perceived
breach of network security in our internal systems could result in damage to our reputation, negative publicity, loss of channel
partners, end-customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems,
and costly litigation. Any of these negative outcomes could adversely impact the market perception of our products and services
and investor confidence in our company and could seriously harm our business or operating results.
If we
are unable to hire, integrate, train, retain, and motivate qualified personnel and senior management, our business could suffer.
Our future
success depends, in part, on our ability to continue to attract, integrate, and retain qualified and highly skilled personnel.
We will be substantially dependent on the service of engineering personnel because of the complexity of our platform. Additionally,
any failure to hire, train, and adequately incentivize our sales personnel or the inability of our recently hired sales personnel
to effectively ramp to target productivity levels could negatively impact our growth and operating margins. Competition for highly
skilled personnel, particularly in engineering, is often intense. Our geographical location, being outside the San Francisco Bay
Area, may put us at a disadvantage. In addition, the industry in which we operate generally experiences high employee attrition.
Although we have entered into employment offer letters with our key personnel, these agreements have no specific duration and
constitute at-will employment. We do not maintain key person life insurance policies on any of our employees. The loss of one
or more of our key employees could seriously harm our business. If we are unable to attract, integrate, or retain the qualified
and highly skilled personnel required to fulfill our current or future needs, our business, financial condition, and operating
results could be harmed.
Our future
performance also depends on the continued services and continuing contributions of our senior management to execute on our business
plan and to identify and pursue new opportunities and product innovations. The loss of services of senior management or the ineffective
management of any leadership transitions, especially within in our sales organization, could significantly delay or prevent the
achievement of our development and strategic objectives, which could adversely affect our business, financial condition, and operating
results.
Further, we
believe that a critical contributor to our success and our ability to retain highly skilled personnel has been our corporate culture,
which we believe fosters innovation, teamwork, passion for end-customers, focus on execution, and the facilitation of critical
knowledge transfer and knowledge sharing. As we grow and change, we may find it difficult to maintain these important aspects
of our corporate culture. Any failure to preserve our culture as we grow could limit our ability to innovate and could negatively
affect our ability to retain and recruit personnel, continue to perform at current levels or execute on our business strategy.
Defects,
errors, or vulnerabilities in our products or services, the failure of our products or services to block a virus or prevent a
security breach, misuse of our products, or risks of product liability claims could harm our reputation and adversely impact our
operating results.
Because our
products and services are complex, they have contained and may contain design or manufacturing defects or errors that are not
detected until after their commercial release and deployment by our end-customers. For example, from time to time, certain of
our end-customers have reported defects in our products related to performance, scalability, and compatibility. Additionally,
defects may cause our products or services to be vulnerable to security attacks, cause them to fail to help secure networks, or
temporarily interrupt end-customers’ networking traffic. Because the techniques used by computer hackers to access or sabotage
networks change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these
techniques and provide a solution in time to protect our end-customers’ networks. Furthermore, provider of blockchain solutions,
our networks, products, including cloud-based technology, and services could be targeted by attacks specifically designed to disrupt
our business and harm our reputation. In addition, defects or errors in our subscription updates or our products could result
in a failure of our services to effectively update end-customers’ hardware and cloud-based products. Our data centers and
networks may experience technical failures and downtime, may fail to distribute appropriate updates, or may fail to meet the increased
requirements of a growing installed end-customer base, any of which could temporarily or permanently expose our end-customers’
networks, leaving their networks unprotected against the latest security threats. Moreover, our products must interoperate with
our end-customers’ existing infrastructure, which often have different specifications, utilize multiple protocol standards,
deploy products from multiple vendors, and contain multiple generations of products that have been added over time. As a result,
when problems occur in a network, it may be difficult to identify the sources of these problems.
The occurrence
of any such problem in our products, whether real or perceived, could result in:
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expenditure
of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors
or defects or to address and eliminate vulnerabilities; loss of existing or potential end-customers or channel partners;
|
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delayed
or lost revenue; delay or failure to attain market acceptance; an increase in warranty claims compared with our historical
experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and
|
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litigation,
regulatory inquiries, or investigations that may be costly and harm our reputation.
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Further, our
products may be misused by end-customers or third parties that obtain access to our products. For example, our products could
be used to censor private access to certain information on the Internet. Such use of our products for censorship could result
in negative press coverage and negatively affect our reputation.
The limitation
of liability provisions in our standard terms and conditions of sale may not fully or effectively protect us from claims as a
result of federal, state, or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries.
The sale and support of our products also entails the risk of product liability claims. Although we may be indemnified by our
third-party manufacturers for product liability claims arising out of manufacturing defects, because we control the design of
our products, we may not be indemnified for product liability claims arising out of design defects. We maintain insurance to protect
against certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim
asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation,
divert management’s time and other resources, and harm our reputation.
We will
rely on our channel partners to sell substantially all of our products, and if these channel partners fail to perform, our ability
to sell and distribute our products and services will be limited, and our operating results will be harmed.
A substantial
amount of our revenue will be generated by sales through our channel partners, including distributors and resellers. We will provide
our channel partners with specific training and programs to assist them in selling our products, but there can be no assurance
that these steps will be effective. In addition, our channel partners may be unsuccessful in marketing, selling, and supporting
our products and services. We may not be able to incentivize these channel partners to sell our products to end-customers and,
in particular, to large enterprises. These channel partners may also have incentives to promote our competitors’ products
and may devote more resources to the marketing, sales, and support of such competitive products. Our agreements with our channel
partners may generally be terminated for any reason by either party with advance notice prior to each annual renewal date. We
cannot be certain that we will retain these channel partners or that we will be able to secure additional or replacement channel
partners. In addition, any new channel partner requires extensive training and may take several months or more to achieve productivity.
Our channel partner sales structure could subject us to lawsuits, potential liability, and reputational harm if, for example,
any of our channel partners misrepresent the functionality of our products or services to end-customers or violate laws or our
corporate policies. If we fail to effectively manage our sales channels or channel partners, our ability to sell our products
and services and operating results will be harmed.
Our
research and development efforts may not produce successful products or platform features that result in significant revenue,
cost savings or other benefits in the near future, if at all.
Developing
our products, platform features and related enhancements is expensive. Our investments in research and development may not result
in significant design improvements, marketable products or platform features, or may result in products or platform features that
are more expensive than anticipated. Additionally, we may not achieve the cost savings or the anticipated performance improvements
we expect, and we may take longer to generate revenue, or generate less revenue, than we anticipate. Our future plans include
significant investments in research and development and related product opportunities. We believe that we must continue to dedicate
a significant amount of resources to our research and development efforts to maintain our competitive position. However, we may
not receive significant revenue from these investments in the near future, if at all, or these investments may not yield the expected
benefits, either of which could adversely affect our business and operating results.
A portion
of our revenue may be generated by sales to government entities, which are subject to a number of challenges and risks.
Sales to government
entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive, and time-consuming,
often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. The substantial
majority of our sales to date to government entities have been made indirectly through our channel partners. Government certification
requirements for products like ours may change, thereby restricting our ability to sell into the federal government sector until
we have attained the revised certification. If our products are late in achieving or fail to achieve compliance with these certifications
and standards, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling
our products to such governmental entity, or be at a competitive disadvantage, which would harm our business, operating results,
and financial condition. Government demand and payment for our products and services may be impacted by public sector budgetary
cycles, contracting requirements, and funding authorizations, with funding reductions or delays adversely affecting public sector
demand for our products and services. Government entities may have statutory, contractual, or other legal rights to terminate
contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact
our future operating results. Governments routinely investigate and audit government contractors’ administrative processes,
and any unfavorable audit could result in the government refusing to continue buying our products and services, a reduction of
revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could adversely impact
our operating results in a material way. Finally, for purchases by the U.S. government, the U.S. government may require certain
products to be manufactured in the United States and other relatively high cost manufacturing locations, and we may not manufacture
all products in locations that meet such requirements, affecting our ability to sell these products to the U.S. government.
Our
ability to sell our products is dependent on the quality of our technical support services and those of our channel partners,
and the failure to offer high-quality technical support services could have a material adverse effect on our end-customers’
satisfaction with our products and services, our sales, and our operating results.
After our
products are deployed within our end-customers’ networks, our end-customers depend on our technical support services, as
well as the support of our channel partners, to resolve any issues relating to our products. Our channel partners often provide
similar technical support for third parties’ products and may therefore have fewer resources to dedicate to the support
of our products. If we or our channel partners do not effectively assist our end-customers in deploying our products, succeed
in helping our end-customers quickly resolve post-deployment issues, or provide effective ongoing support, our ability to sell
additional products and services to existing end-customers would be adversely affected and our reputation with potential end-customers
could be damaged. Many larger enterprise, service provider, and government entity end-customers have more complex networks and
require higher levels of support than smaller end-customers. If we or our channel partners fail to meet the requirements of these
larger end-customers, it may be more difficult to execute on our strategy to increase our coverage with larger end-customers.
Additionally, if our channel partners do not effectively provide support to the satisfaction of our end-customers, we may be required
to provide direct support to such end-customers, which would require us to hire additional personnel and to invest in additional
resources. It can take several months to recruit, hire, and train qualified technical support employees. We may not be able to
hire such resources fast enough to keep up with unexpected demand, particularly if the sales of our products exceed our internal
forecasts. As a result, our and our channel partners’ ability to provide adequate and timely support to our end-customers
will be negatively impacted, and our end-customers’ satisfaction with our products and services will be adversely affected.
Additionally, to the extent that we may need to rely on our sales engineers to provide post-sales support while we are ramping
our support resources, our sales productivity will be negatively impacted, which would harm our revenues. Our or our channel partners’
failure to provide and maintain high-quality support services could have a material adverse effect on our business, financial
condition, and operating results.
Claims
by others that we infringe their proprietary technology or other rights could harm our business.
Companies
in the enterprise security industry own large numbers of patents, copyrights, trademarks, domain names, and trade secrets and
frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property
or other rights. Third parties have asserted and may in the future assert claims of infringement of intellectual property rights
against us.
Third parties
may also assert such claims against our end-customers or channel partners, whom our standard license and other agreements obligate
us to indemnify against claims that our products infringe the intellectual property rights of third parties. In addition, to the
extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited, that they
have divulged proprietary or other confidential information, or that their former employers own their inventions or other work
product. Furthermore, we may be unaware of the intellectual property rights of others that may cover some or all of our technology
or products. As the number of products and competitors in our market increases and overlaps occur, infringement claims may increase.
While we intend to increase the size of our patent portfolio, our competitors and others may now and in the future have significantly
larger and more mature patent portfolios than we have. In addition, litigation may involve patent holding companies or other adverse
patent owners who have no relevant product revenue and against whom our own patents may therefore provide little or no deterrence
or protection. In addition, we have not registered our trademarks in all of our geographic markets and failure to secure those
registrations could adversely affect our ability to enforce and defend our trademark rights. Any claim of infringement by a third
party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management
from our business, and could require us to cease use of such intellectual property. Furthermore, because of the substantial amount
of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information
could be compromised by disclosure during this type of litigation. A successful claimant could secure a judgment or we may agree
to a settlement that prevents us from distributing certain products or performing certain services or that requires us to pay
substantial damages, royalties, or other fees. Any of these events could seriously harm our business, financial condition, and
operating results.
Our
proprietary rights may be difficult to enforce or protect, which could enable others to copy or use aspects of our products without
compensating us.
We rely and
expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants, and third
parties with whom we have relationships, as well as trademark, copyright, patent, and trade secret protection laws, to protect
our proprietary rights. We have filed various applications for certain aspects of our intellectual property. Valid patents may
not issue from our pending applications, and the claims eventually allowed on any patents may not be sufficiently broad to protect
our technology or products. We cannot be certain that we were the first to make the inventions claimed in our pending patent applications
or that we were the first to file for patent protection, which could prevent our patent applications from issuing as patents or
invalidate our patents following issuance. Additionally, the process of obtaining patent protection is expensive and time-consuming,
and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually
provide adequate defensive protection or competitive advantages to us. Additional uncertainty may result from changes to patent-related
laws and court rulings in the United States and other jurisdictions. As a result, we may not be able to obtain adequate patent
protection or effectively enforce any issued patents.
Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use
information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants,
vendors, and end-customers, and generally limit access to and distribution of our proprietary information. However, we cannot
be certain that we have entered into such agreements with all parties who may have or have had access to our confidential information
or that the agreements we have entered into will not be breached. We cannot guarantee that any of the measures we have taken will
prevent misappropriation of our technology. Because we may be an attractive target for computer hackers, we may have a greater
risk of unauthorized access to, and misappropriation of, our proprietary information. In addition, the laws of some foreign countries
do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not
enforce these laws as diligently as government agencies and private parties in the United States. From time to time, we may need
to take legal action to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation
could result in substantial costs and diversion of resources and could negatively affect our business, operating results, and
financial condition. Attempts to enforce our rights against third parties could also provoke these third parties to assert their
own intellectual property or other rights against us or result in a holding that invalidates or narrows the scope of our rights,
in whole or in part. If we are unable to protect our proprietary rights (including aspects of our software and products protected
other than by patent rights), we may find ourselves at a competitive disadvantage to others who need not incur the additional
expense, time, and effort required to create the innovative products that have enabled us to be successful to date. Any of these
events would have a material adverse effect on our business, financial condition, and operating results.
Our
use of open source software in our products could negatively affect our ability to sell our products and subject us to possible
litigation.
Our products
contain software modules licensed to us by third-party authors under “open source” licenses. Some open source licenses
contain requirements that we make available applicable source code for modifications or derivative works we create based upon
the type of open source software we use. If we combine our proprietary software with open source software in a certain manner,
we could, under certain open source licenses, be required to release the source code of our proprietary software to the public.
This would allow our competitors to create similar products with lower development effort and time and ultimately could result
in a loss of product sales for us.
Although we
monitor our use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open
source licenses have not been interpreted by United States courts, and there is a risk that these licenses could be construed
in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products. From time to
time, there have been claims against companies that distribute or use open source software in their products and services, asserting
that open source software infringes the claimants’ intellectual property rights. We could be subject to suits by parties
claiming infringement of intellectual property rights in what we believe to be licensed open source software. If we are held to
have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue
offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our
products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our
proprietary code, any of which could adversely affect our business, operating results, and financial condition.
In addition
to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial
software, as open source licensors generally do not provide warranties or assurance of title or controls on origin of the software.
In addition, many of the risks associated with usage of open source software, such as the lack of warranties or assurances of
title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have established processes
to help alleviate these risks, including a review process for screening requests from our development organizations for the use
of open source software, but we cannot be sure that our processes for controlling our use of open source software in our products
will be effective.
We license
technology from third parties, and our inability to maintain those licenses could harm our business.
We incorporate
technology that we license from third parties, including software, into our products and services. We cannot be certain that our
licensors are not infringing the intellectual property rights of third parties or that our licensors have sufficient rights to
the licensed intellectual property in all jurisdictions in which we may sell our products. In addition, some licenses may be non-exclusive,
and therefore our competitors may have access to the same technology licensed to us. Some of our agreements with our licensors
may be terminated for convenience by them. If we are unable to continue to license any of this technology because of intellectual
property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our
license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell products and services
containing such technology would be severely limited, and our business could be harmed. Additionally, if we are unable to license
necessary technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable
to do in a commercially feasible manner or at all, and we may be required to use alternative technology of lower quality or performance
standards. This would limit and delay our ability to offer new or competitive products and services and increase our costs of
production. As a result, our margins, market share, and operating results could be significantly harmed.
Our
failure to adequately protect personal information could have a material adverse effect on our business.
A wide variety
of provincial, state, national, and international laws and regulations apply to the collection, use, retention, protection, disclosure,
transfer, and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and
being tested in courts and may result in ever-increasing regulatory and public scrutiny as well as escalating levels of enforcement
and sanctions. Further, the interpretation and application of foreign laws and regulations in many cases is uncertain, and our
legal and regulatory obligations in foreign jurisdictions are subject to frequent and unexpected changes, including the potential
for various regulatory or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate
prior laws or regulations, or to increase penalties significantly. For example, the recently adopted E.U. General Data Protection
Regulation imposes more stringent data protection requirements and provides for greater penalties for noncompliance. Our failure
to comply with applicable laws and regulations, or to protect personal data, could result in enforcement action against us, including
fines, imprisonment of company officials and public censure, claims for damages by end-customers and other affected individuals,
damage to our reputation and loss of goodwill (both in relation to existing end-customers and prospective end-customers), any
of which could have a material adverse effect on our operations, financial performance, and business. Evolving and changing definitions
of personal data and personal information, within the E.U., the United States, and elsewhere, especially relating to classification
of IP addresses, machine identification, location data, and other information, may limit or inhibit our ability to operate or
expand our business, including limiting strategic partnerships that may involve the sharing of data. Even the perception of privacy
concerns, whether or not valid, may harm our reputation and inhibit adoption of our products by current and future end-customers.
If we
do not effectively hire and train our direct sales force, we may be unable to add new customers or increase sales to our existing
customers, and our business will be adversely affected.
We will be
substantially dependent on our direct sales force to obtain new customers and increase sales with existing customers. There is
significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant
revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel
to support our growth, particularly in international markets. New hires require significant training and may take significant
time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect,
and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan
to do business. In addition, a large percentage of our sales force is new to our Company. If we are unable to hire and train a
sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or
increasing sales to our existing customer base, our business will be adversely affected.
Our
future technology alliance partners may expose us to a range of business risks and uncertainties that could have a material adverse
impact on our business and financial results.
We intend
to enter into technology alliance partnerships with third parties to support our future growth plans. Such relationships include
technology licensing, joint technology development and integration, research cooperation, co-marketing activities and sell-through
arrangements. We face a number of risks relating to our technology alliance partnerships that could prevent us from realizing
the desired benefits from such partnerships on a timely basis or at all, which, in turn, could have a negative impact on our business
and financial results.
Technology
alliance partnerships require significant coordination between the parties involved, particularly if a partner requires that we
integrate its products with our products. This could involve a significant commitment of time and resources by our technical staff
and their counterparts within our technology alliance partner. The integration of products from different companies may be more
difficult than we anticipate, and the risk of integration difficulties, incompatible products and undetected programming errors
or defects may be higher than the risks normally associated with the introduction of new products. It may also be more difficult
to market and sell products developed through technology alliance partnerships than it would be to market and sell products that
we develop on our own. Sales and marketing personnel may require special training, as the new products may be more complex than
our other products.
We will invest
significant time, money and resources to establish and maintain relationships with our technology alliance partners, but we have
no assurance that any particular relationship will continue for any specific period of time. Generally, our agreements with these
technology alliance partners are terminable without cause with no or minimal notice or penalties. If we lose a significant technology
alliance partner, we could lose the benefit of our investment of time, money and resources in the relationship. In addition, we
could be required to incur significant expenses to develop a new strategic alliance or to determine and implement an alternative
plan to pursue the opportunity that we targeted with the former partner.
If our
products do not effectively interoperate with our customers’ IT infrastructure, installations could be delayed or cancelled,
which would harm our business.
Our products
must effectively interoperate with our customers’ existing or future IT infrastructure, which often has different specifications,
utilizes multiple protocol standards, deploys products from multiple vendors, and contains multiple generations of products that
have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these
problems. If we find errors in the existing software or defects in the hardware used in our customers’ infrastructure or
problematic network configurations or settings, we may have to modify our software or hardware so that our products will interoperate
with our customers’ infrastructure. In such cases, our products may be unable to provide significant performance improvements
for applications deployed in our customers’ infrastructure. These issues could cause longer installation times for our products
and could cause order cancellations, either of which would adversely affect our business, results of operations and financial
condition. In addition, government and other customers may require our products to comply with certain security or other certifications
and standards. If our products are late in achieving or fail to achieve compliance with these certifications and standards, or
our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our products to
such customers, or may otherwise be at a competitive disadvantage, either of which would harm our business, results of operations,
and financial condition.
We may not be able to compete
successfully with other established companies offering the same or similar services and, as a result, we may not achieve our projected
revenue and user targets.
If we are
unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or customer
targets. We compete with both start-up and established blockchain technology companies. Compared to our business, some of our
competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be
better established in the blockchain or technological markets.
Government
regulation of the Blockchain industry and digital assets is evolving, and unfavorable changes could substantially harm our business
and results of operations.
We are subject
to general business regulations and laws as well as Federal and state regulations and laws specifically governing securities and
digital assets. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services,
and increase the cost of providing online services. These regulations and laws may cover taxation, tariffs, user privacy, data
protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband
residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues
such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable
resolution of these issues may harm our business and results of operations.
The
failure to enforce and maintain our intellectual property rights could enable others to use names confusingly similar to Square
Chain Corporation and other names and marks used by our business, which could adversely affect the value of the brand.
The success
of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that
regard, we believe that our trade name is valuable asset that is critical to our success. As of the date of this prospectus, we
have not submitted our trademark application for our name, Square Chain Corporation In the event we elect to submit an application
to the U.S. Patent and Trademark Office, there is no guarantee that they will grant us a trademark. The unauthorized use or other
misappropriation of our trade name could diminish the value of our business concept and may cause a decline in our revenue.
We expect
to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate
financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to
manage our expenses.
We estimate
that it will cost approximately $50,000 annually to maintain the proper management and financial controls for our filings required
as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls,
we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock
price and adversely affect our ability to raise capital.
Due
to our involvement in the blockchain industry, we may have a difficult time obtaining the various insurances that are desired
to operate our business, which may expose us to additional risk and financial liabilities.
Insurance
that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult
for us to find and more expensive, because we are a service provider to companies in the digital asset sector. There are no guarantees
that we will be able to find such insurances in the future, or that the cost will be affordable to us. If we are forced to go
without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose
us to additional risk and financial liabilities. In 2018, Square Chain Corporation expects to begin offering health, dental and
vision insurance to its employees at an estimated monthly cost of $1,000-$2,000. Square Chain Corporation will carry general liability
insurance. We do not currently hold any other forms of insurance, including directors’ and officers’ insurance. Because
we do not have any other types of insurance, if we are made a party of a legal action, we may not have sufficient funds to defend
the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Forms of Attack Against the
Ethereum Network
Exploitation
of Flaws in the Ethereum Network’s Source Code
As with any
other computer code, the Ethereum Network source code may contain certain flaws. Several errors and defects have been found and
corrected, including those that disabled some functionality for users, exposed users’ information, or allowed users to create
multiple views of the Ethereum Network. Such flaws have been discovered and quickly corrected by the Core Developers or the Ethereum
community, thus demonstrating one of the advantages of open source codes that are available to the public: open source codes rely
on transparency to promote community-sourced identification and solution of problems within the code.
Greater
than Fifty Percent of Network Computational Power
Malicious
actors can structure an attack whereby such actor gains control of more than half of the Ethereum Network’s processing power
or “hashrate.” Computer scientists and cryptographers believe that the immense collective processing power of the
Ethereum Network makes it impracticable for an actor to gain control of computers representing a majority of the processing power
on the Ethereum Network.
If a malicious
actor acquired sufficient computational power necessary to control the Ethereum Network (which amount would be well in excess
of fifty percent), it would be able to engage in double-spending, or prevent some or all transactions from being confirmed, and
prevent some or all other miners from mining any valid new blocks. The malicious actor or group of actors, however, would not
be able to reverse other people’s transactions, change the fixed number of Ethers generated per new block, or transfer previously
existing Ether that belong to other users.
Cancer
Nodes
This form
of attack involves a malicious actor propagating “cancer nodes” to isolate certain users from the legitimate Ethereum
Network. A target user functionally surrounded by cancer nodes would be put on a separate “network,” allowing the
malicious actor to relay only blocks created by the separate network and thus opening the target user to double-spending attacks.
By using cancer nodes, a malicious actor also can disconnect the target user from the Ethereum economy entirely by refusing to
relay any blocks or transactions. Ethereum software programs make these attacks more difficult by limiting the number of outbound
connections through which users are connected to the Ethereum Network.
Manipulating
Blockchain Formation
A malicious
actor may attempt to double-spend Ether by manipulating the formation of the Blockchain rather than through control of the Ethereum
Network. In this type of attack, a miner creates a valid new block containing a double-spend transaction and schedules the release
of such attack block so that it is added to the Blockchain before a target user’s legitimate transaction can be included
in a block. All double-spend attacks require that the miner sequence and execute the steps of its attack with sufficient speed
and accuracy. Users and merchants can dramatically reduce the risk of a double-spend attack by waiting for multiple confirmations
from the Ethereum Network before settling a transaction. The Ethereum Network still may be used to execute instantaneous, low-value
transactions without confirmation to the extent the recipient of Ether determines that a malicious miner would be unwilling to
carry out a double-spend attack for low-value transactions because the reward from mining would be higher than the small profit
gained from double-spending. Users and merchants can take additional precautions by adjusting their Ethereum Network software
programs to connect only to other well-connected nodes and to disable incoming connections. These precautions reduce the risk
of double-spend attacks involving manipulation of a target’s connectivity to the Ethereum Network.
General
Business Risks
Nevada
law may make it more difficult and time-consuming to acquire the Company, thereby reducing our vulnerability to an unsolicited
proposal for our takeover.
Under Nevada
law,
a qualified corporation shall not, directly or indirectly, enter into or engage
in any business combination with any interested stockholder or any affiliate or associate of the interested shareholder for a
period of three (3) years after the date the stockholder became an interested stockholder, unless: (i) Prior to the time the stockholder
became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder; or (iii) On or after the time the stockholder became an
interested stockholder, the business combination is approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds (2/3) of the outstanding voting
stock which is not owned by the interested stockholder.
Our
business and operations may experience rapid growth. If we fail to manage our growth, our business and operating results could
be harmed and we may have to incur significant expenditures to address the additional operational and control requirements of
this growth.
We may experience
rapid growth in our sales and operations, which may place significant demands on our management, operational and financial infrastructure.
If we do not manage our growth, the quality of our products and services could suffer, which could negatively affect our brand
and operating results. To manage this growth, we will need to continue to improve our operational, financial and management controls
and our reporting systems and procedures. These systems enhancements and improvements will require significant capital expenditures
and allocation of valuable management resources. If the improvements are not implemented successfully, our ability to manage our
growth will be impaired and we may have to make significant additional expenditures to address these issues, which could harm
our financial position. The required improvements may include: Enhancing our information and communication systems to attempt
to optimize proper service to our customers, and Enhancing systems of internal controls to ensure timely and accurate reporting
of all of our operations
If we
fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our
business and the trading price of our stock.
Effective
internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide
reliable financial reports or prevent fraud, our brand and operating results could be harmed. We may in the future discover areas
of our internal controls that need improvement. We cannot be certain that any measures we implement will ensure that we achieve
and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new
or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail
to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our stock.
We have
no operating history under our new business model utilizing blockchain technology in an emerging and rapidly evolving market.
This makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
We have no
operating history under our new business model utilizing blockchain technology. You must consider our business and prospects in
light of the risks and difficulties we will encounter as an early-stage company in a new and rapidly evolving market. We may not
be able to successfully address these risks and difficulties, which could materially harm our business and operating results.
We
cannot be certain that additional financing will be available on reasonable terms when required, or at all.
From
time to time, we may need additional financing. Our ability to obtain additional financing, if and when required, will depend
on investor demand, our operating performance, the condition of the capital markets, and other factors. We cannot assure you that
additional financing will be available to us on favorable terms when required, or at all. We may need to raise additional funds
through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences, or privileges
senior to the rights of our Common Stock, and our existing stockholders may experience dilution.
Rapid
technological changes.
The industries
in which the Company intends to compete with are subject to rapid technological changes. No assurances can be given that the technological
advantages which may be enjoyed by the Company in respect of their technologies cannot or will not be overcome by technological
advances in the respective industries rendering the Company’s technologies obsolete or non-competitive.
Lack
of indications of product acceptability.
The success
of the Company will be dependent upon its ability to develop commercially acceptable products and to sell such products in quantities
sufficient to yield profitable results. To date, the Company has received no indications of the commercial acceptability of any
of its proposed products. Accordingly, the Company cannot predict whether its products can be marketed and sold in a commercial
manner.
Reliance
upon third parties.
The Company
does not intend on maintaining a significant technical staff nor does it intend on manufacturing its products. Rather it will
rely heavily on consultants, contractors, and manufacturers to design, develop and manufacture its products. Accordingly, there
is no assurance that such third parties will be available when needed at affordable prices.
Protection
of intellectual property.
The success
of the Company will be dependent, in part, upon the protection of its various proprietary technologies from competitive use. Certain
of its technologies are the subject of various patents in varying jurisdictions. In addition to the patent applications, the Company
relies on a combination of trade secrets, nondisclosure agreements and other contractual provisions to protect its intellectual
property rights. Nevertheless, these measures may be inadequate to safeguard the Company’s underlying technologies. If these
measures do not protect the intellectual property rights, third parties could use the Company’s technologies, and its ability
to compete in the market would be reduced significantly.
In the future,
the Company may be required to protect or enforce its patents and patent rights through patent litigation against third parties,
such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time, and could divert
management’s attention from other business concerns. These actions could put the Company’s patents at risk of being
invalidated or interpreted narrowly, and any patent applications at risk of not issuing. In defense of any such action, these
third parties may assert claims against the Company. The Company cannot provide any assurance that it will have sufficient funds
to vigorously prosecute any patent litigation, that it will prevail in any of these suits, or that the damages or other remedies
awarded, if any, will be commercially valuable. During the course of these suits, there may be public announcements of the results
of hearings, motions and other interim proceedings or developments in the litigation, which could result in the negative perception
by investors, which could cause the price of the Company’s common stock to decline dramatically.
Risks Related
to this Offering
We
are a shell company pursuant to Rule 405 of the Securities Act. This may impact our ability to attract additional capital.
We
have no assets and our operations appear to have been primarily organizational since we discontinued previous operations as of
March 5, 2018. We are a shell company pursuant to Rule 405 of the Securities Act. The consequences of shell company status may
affect our ability attract additional capital. Under SEC Rule 144 restricted and control securities may be resold in reliance
on Rule 144 unless and until the company has has ceased to be a shell company, is subject to the reporting requirements of section
13 or 15(d) of the Exchange Act, has filed all reports and other materials required to be filed by section 13 or 15(d) of the
Exchange Act, during the preceding 12 months and has filed current “Form 10 information” with the SEC reflecting its
status as an entity. When these conditions are satisfied, then those securities may be sold subject to the requirements Rule 144
after one year has elapsed from the date that the issuer filed “Form 10 information” with the SEC.
The
unavailability of Rule 144 may affect our ability to attract additional capital as investors may not be willing to purchase restricted
or control securities unless they can sell under Rule 144.
There
has been a limited public market for our Common Stock prior to this Offering, and an active market in which investors can resell
their shares may not develop.
Prior to this
Offering, there has been a limited public market for our Common Stock. We cannot predict the extent to which an active market
for our Common Stock will develop or be sustained after this Offering, or how the development of such a market might affect the
market price of our Common Stock. The initial offering price of our Common Stock in this Offering will be agreed between us and
the underwriters based on a number of factors, including market conditions in effect at the time of the Offering, and it may not
be in any way indicative of the price at which our shares will trade following the completion of this Offering. Investors may
not be able to resell their shares at or above the initial offering price.
Investors
in this Offering will exp
erience immediate and substantial dilution
.
If all of
the shares offered hereby are sold, investors in this Offering will own 31.0% of the then outstanding shares of all classes of
common stock, resulting in a dilution of $0.036 per share to investors in this offering. Please
see
“Dilution”
for further information.
The
market price of our Common Stock may fluctuate, and you could lose all or part of your investment.
The offering
price for our Common Stock will be set by us based on a number of factors and may not be indicative of prices that will prevail
on OTCMarkets or elsewhere following this Offering. The price of our Common Stock may decline following this Offering. The stock
market in general, and the market price of our Common Stock will likely be subject to fluctuation, whether due to, or irrespective
of, our operating results, financial condition and prospects.
Our financial
performance, our industry’s overall performance, changing consumer preferences, technologies and advertiser requirements,
government regulatory action, tax laws and market conditions in general could have a significant impact on the future market price
of our Common Stock. Some of the other factors that could negatively affect our share price or result in fluctuations in our share
price include:
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actual
or anticipated variations in our periodic operating results;
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changes
in earnings estimates;
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changes
in market valuations of similar companies;
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actions
or announcements by our competitors;
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adverse
market reaction to any increased indebtedness we may incur in the future;
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additions
or departures of key personnel;
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actions
by stockholders;
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speculation
in the press or investment community; and
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our
intentions and ability to list our Common Stock on a national securities exchange and our subsequent ability to maintain such
listing.
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We do
not expect to declare or pay dividends in the foreseeable future.
We do not
expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development
and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they
sell their securities, and holders may be unable to sell their securities on favorable terms or at all.
Our
financial statements are unaudited and have not been reviewed by an independent accountant.
Management
has prepared the Company’s financial statements. These statements have not been audited. No independent accountant has reviewed
these financial statements.
Because
we do not have an audit or compensation committee, shareholders will have to rely on our directors, none of whom is not independent,
to perform these functions.
We do not
have an audit or compensation committee comprised of an independent director. Indeed, we do not have any audit or compensation
committee. The Board of Directors performs these functions as a whole. No members of the Board of Directors are an independent
director. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions
concerning management compensation and audit issues that may affect management decisions.
Because
we lack certain internal controls over financial reporting in that we do not have an audit committee and our Board of Directors
has no technical knowledge of U.S. GAAP and internal control of financial reporting and relies upon the Company’s financial
personnel to advise the Board on such matters, we are subject to increased risk related to financial statement disclosures.
We lack certain
internal controls over financial reporting in that we do not have an audit committee and our Board of Directors has no technical
knowledge of U.S. GAAP and internal control of financial reporting and relies upon the Company’s financial personnel to
advise the Board on such matters. Accordingly, we are subject to increased risk related to financial statement disclosures.
Our
control shareholder holds a significant percentage of our outstanding voting securities, which could reduce the ability of minority
shareholders to effect certain corporate actions.
Our control
shareholder is the beneficial owner of 100.00% of our Series B Preferred Stock, which, along with his ownership of common stock,
controls 94.7% of the voting securities prior to the Offering and 64.0% of our outstanding voting securities after the Offering,
assuming all 100,000,000 shares of common stock in this Offering are sold. As a result of this ownership, he possesses and can
continue to possess significant influence and can elect and can continue to elect a majority of our Board of Directors and authorize
or prevent proposed significant corporate transactions. His ownership and control may also have the effect of delaying or preventing
a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential
acquirer from making a tender offer.
Provisions
in our certificate of incorporation and by-laws may discourage, delay or prevent a change of control of our company or changes
in our management and, therefore, may depress the trading price of our stock.
Our
certificate of incorporation and by-laws include certain provisions that could have the effect of discouraging, delaying or preventing
a change of control of our company or changes in our management, including, among other things:
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restrictions
on the ability of our stockholders to fill a vacancy on the board of directors;
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our ability to issue
preferred stock with terms that the board of directors may determine, without stockholder approval, which could be used to
significantly dilute the ownership of a hostile acquirer;
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the inability of
our stockholders to call a special meeting of stockholders;
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our directors may
only be removed from the board of directors for cause by the affirmative vote of stockholders representing a majority of the
outstanding stock entitled to vote thereon;
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the absence of cumulative
voting in the election of directors, which may limit the ability of minority stockholders to elect directors;
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Upon
completion of this offering, we will not be subject to the current and periodic reporting requirements.
As a Regulation
A, Tier 1 issuer, you will not be subject to the periodic and current reporting requirements under Rule 257(b) of Regulation A.
The
preparation of our consolidated financial statements involves the use of estimates, judgments and assumptions, and our consolidated
financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.
Financial
statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates,
judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes
in these estimates, judgments and assumptions may occur from period to period over time. Significant areas of accounting requiring
the application of management’s judgment include, but are not limited to, determining the fair value of assets and the timing
and amount of cash flows from assets. These estimates, judgments and assumptions are inherently uncertain and, if our estimates
were to prove to be wrong, we would face the risk that charges to income or other financial statement changes or adjustments would
be required. Any such charges or changes could harm our business, including our financial condition and results of operations
and the price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding
of our consolidated financial statements and our business.
If securities
industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market
trading volume of our Common Stock could be negatively affected.
Any trading
market for our Common Stock will be influenced in part by any research reports that securities industry analysts publish about
us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry
analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected.
In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us
unfavorably, or discontinues coverage or us, the market price and market trading volume of our Common Stock could be negatively
affected.
Future
issuances of our Common Stock or securities convertible into our Common Stock, or the expiration of lock-up agreements that restrict
the issuance of new Common Stock or the trading of outstanding stock, could cause the market price of our Common Stock to decline
and would result in the dilution of your shareholding.
Future issuances
of our Common Stock or securities convertible into our Common Stock, and/or conversion of the Notes convertible into Common Stock,
or the expiration of lock-up agreements that restrict the sale of Common Stock by selling shareholders, or the trading of outstanding
stock, could cause the market price of our Common Stock to decline. We cannot predict the effect, if any, of the exercise of conversion
of the Notes into Common Stock or other future issuances of our Common Stock or securities convertible into our Common Stock,
or the future expirations of lock-up agreements, on the price of our Common Stock. In all events, future issuances of our Common
Stock would result in the dilution of your shareholding. In addition, the perception that locked-up parties will sell their securities
when the lock-ups expire, could adversely affect the market price of our Common Stock.
Our
shares are subject to the penny stock rules, making it more difficult to trade our shares.
The SEC has
adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or
authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system. If the price of our Common Stock is less than $5.00,
our Common Stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.
In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those
rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser
and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement
to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure
requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore
stockholders may have difficulty selling their shares.
Our
management has broad discretion as to the use of certain of the net proceeds from this Offering.
We intend
to use up to $400,000 of the net proceeds from this Offering (if we sell all of the shares being offered) for working capital
and other general corporate purposes. However, we cannot specify with certainty the particular uses of such proceeds. Our management
will have broad discretion in the application of the net proceeds designated for use as working capital or for other general corporate
purposes. Accordingly, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our
management may spend a portion or all of the net proceeds from this Offering in ways that holders of our Common Stock may not
desire or that may not yield a significant return or any return at all. The failure by our management to apply these funds effectively
could harm our business. Pending their use, we may also invest the net proceeds from this Offering in a manner that does not produce
income or that loses value. Please see “Use of Proceeds” below for more information.
Cautionary
Statement Regarding Forward-Looking Statements
This Offering
Circular contains various “forward-looking statements.” You can identify forward-looking statements by the use of
forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,”
“could,” “should,” “seeks,” “approximately,” “intends,” “plans,”
“projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar
words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements
may be impacted by a number of risks and uncertainties.
The forward-looking
statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information
currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as
a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition,
liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully
consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these
and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”
USE OF PROCEEDS
If we sell
all of the shares being offered, our net proceeds (after our estimated offering expenses of $400,000) will be $3,600,000. We will
use these net proceeds for:
If 25% of
the Shares offered are sold:
Percentage
of Offering Sold
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Offering
Proceeds
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Approximate
Offering
Expenses
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Total
Net Offering Proceeds
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Principal
Uses of Net Proceeds
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Blockchain Software Development
$346,000
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Salaries $100,000
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Acquire Blockchain Assets $75,022
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Legal $25,000
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Marketing $20,000
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Consulting $80,000
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Working capital $180,000
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Loan Repayment $73,978
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25.00
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%
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$
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1,000,000
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$
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100,000
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$
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900,000
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If 50% of
the Shares offered are sold:
Percentage
of Offering Sold
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Offering
Proceeds
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Approximate
Offering
Expenses
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Total
Net Offering Proceeds
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Principal
Uses of Net Proceeds
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Blockchain Software Development
$800,000
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Salaries $200,000
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Acquire Blockchain Assets $231,022
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Legal $35,000
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Marketing $90,000
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Consulting $180,000
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Working capital $607,500
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Loan Repayment $73,978
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50.00
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%
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$
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2,000,000
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$
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200,000
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$
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1,800,000
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If 100% of
the Shares offers are sold:
Percentage
of Offering Sold
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Offering
Proceeds
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Approximate
Offering Expenses
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Total
Net Offering Proceeds
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Principal
Uses of Net Proceeds
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Blockchain Software Development
$1,720,900`
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Salaries $300,000
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Acquire Blockchain Assets $605,122
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Legal $80,000
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Marketing $70,000
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Consulting $250,000
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Working capital $500,000
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Loan Repayment $73,978
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100.00
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%
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$
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4,000,000
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$
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400,000
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$
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3,600,000
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The precise
amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.
As indicated
in the table above, if we sell only 25% or 50% of the shares offered for sale in this Offering, we would expect to use the resulting
net proceeds for the same purposes as we would use the net proceeds from a sale of 100% of the shares, and in approximately the
same proportions, until such time as such use of proceeds would leave us without working capital reserve. At that point we would
expect to modify our use of proceeds by limiting our expansion, leaving us with the working capital reserve indicated.
The expected
use of net proceeds from this Offering represents our intentions based upon our current plans and business conditions, which could
change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures,
specifically with respect to working capital, may vary significantly depending on numerous factors. The precise amounts that we
will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors. As a result,
our management will retain broad discretion over the allocation of the net proceeds from this Offering.
In the event
we do not sell all of the shares being offered, we may seek additional financing from other sources in order to support the intended
use of proceeds indicated above. If we secure additional equity funding, investors in this Offering would be diluted. In all events,
there can be no assurance that additional financing would be available to us when wanted or needed and, if available, on terms
acceptable to us.
DILUTION
If you purchase
shares in this Offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference
between the price to the public charged for each share in this Offering and the net book value per share of our Common Stock after
this Offering.
Our historical
net book value as of September 30, 2018 was
$(172,799) or $(0.0009)
per
then-outstanding share of our Common Stock. Historical net book value per share equals the amount of our total assets less total
liabilities, divided by the total number of shares of our Common Stock outstanding, all as of the date specified.
The following
table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 50% and 25%
of the shares offered for sale in this Offering (after deducting estimated offering expenses of $400,000, $200,000 and $100,000,
respectively):
Percentage of
shares offered that are sold
|
|
100%
|
|
50%
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price to the public
charged for each share in this Offering
|
|
$
|
0.0500
|
|
|
$
|
0.0500
|
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical net book
value per share as of March 31, 2018 (1)
|
|
|
(0.0009
|
)
|
|
|
(0.0009
|
)
|
|
|
(0.0009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in net book
value per share attributable to new investors in this Offering (2)
|
|
|
$0.0129
|
|
|
|
$0.0078
|
|
|
|
$0.0043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book
value per share, after this Offering
|
|
|
$0.0119
|
|
|
|
$0.0069
|
|
|
|
$0.0034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution per share
to new investors
|
|
|
$0.0281
|
|
|
|
$0.0331
|
|
|
|
$0.0366
|
|
(1)
|
Based
on net book value as of September 30, 2018 of
$(172,799)
and
187,248,501 outstanding shares of Common stock.
|
|
|
(2)
|
After deducting
estimated offering expenses of $400,000, $200,000, and $100,000, respectively.
|
During the
quarter ended March 31, 2018, the Company’s President, CEO, CFO, Secretary and Chairman of the Board, Mr. Jeffrey J. Parker,
provided advances to the Company for working capital purposes for a total of $73,978 in related party advances currently outstanding
due upon demand. On March 27, 2018, the Company issued an 5% unsecured promissory note to Mr. Parker in the amount of $73,978.
As of June 7, 2018, $73,978 was outstanding with accrued interest of $719.51 which is reflected as accounts payable and notes
payable – related party in the accompanying unaudited balance sheets. Please
see
Note- 9.2 Related
party balances for further information.
On April 15,
2018, the Company issued 7,500,000 shares of its common stock to Jeffrey J. Parker for his acceptance of the roles of Chief
Executive Officer, Chief Financial Officer and Chairman of the Board. Mr. Parker was not required to purchase the shares thus
his cost basis is $0. On the date of issuance, the Company’s common stock closed at $.05, which equates to a valuation of
$375,000. If the same number of shares were to be purchased through the Company’s offering statement, the cost basis to
the purchaser would be $.05 per share for a total of $375.000.
Percentage
Ownership Not Including Certain Shares
Share
Structure
|
|
Number
of Shares
Outstanding
|
|
|
Percent
of Class
Before Offering
|
|
|
Percent
of Class
After Offering
|
|
Shares
outstanding prior to offering (a)
|
|
|
178,748,501
|
|
|
|
100.00
|
%
|
|
|
65.2
|
%
|
Shares offered in
offering (b)
|
|
|
100,000,000
|
|
|
|
0.00
|
%
|
|
|
34.8
|
%
|
Total shares
|
|
|
278,748,501
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
(a)
|
Shares outstanding prior
to the Offering Statement not including the 7,500,000 shares issued to Jeffrey J. Parker.
|
|
(b)
|
Total shares outstanding after the offering
equals 278,748,501 and assumes that all shares in the offering are sold.
|
Percentage
Ownership Including All Shares Issued and Outstanding
Share
Structure
|
|
Number
of Shares
Beneficially Owned
|
|
|
Percent
of Class
Before Offering
|
|
|
Percent
of Class
After Offering
|
|
Shares
outstanding prior to offering (a)
|
|
|
178,748,501
|
|
|
|
95.97
|
%
|
|
|
62.4
|
%
|
Shares issued to
Jeffrey J. Parker
|
|
|
7,500,000
|
|
|
|
4.03
|
%
|
|
|
2.6
|
%
|
Shares offered in
offering (b)
|
|
|
100,000,000
|
|
|
|
0
|
%
|
|
|
34.9
|
%
|
Total shares
|
|
|
286,248,501
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
(a)
|
The
7,500,00 shares issued to Jeffrey J. Parker included in the Percent of Class Before and After Offering
|
|
(b)
|
Total shares outstanding
after the offering equals 266,248,501 and assumes that all shares in the offering are sold.
|
|
(c)
|
Purchasers of the
shares in the offering statement are diluted by 0.60% due to the 7,500,000 shares issued to Mr. Parker
|
DISTRIBUTION
This
Offering Circular is part of an Offering Statement that we filed with the SEC, using a continuous offering process. Periodically,
as we have material developments, we will provide an Offering Circular supplement that may add, update or change information contained
in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent
statement made by us in a subsequent Offering Circular supplement. The Offering Statement we filed with the SEC includes exhibits
that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular
and the related exhibits filed with the SEC and any Offering Circular supplement, together with additional information contained
in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the
SEC. See the section entitled “Additional Information” below for more details.
Exchange
Listing
Our Common
Stock is quoted on the OTC Markets’ Pink Open Market under the symbol “SQCC.” The Company’s previous trading
symbol was “ATSR.”
Pricing
of the Offering
Prior to the
Offering, there has been a limited public market for the Offered Shares. The initial public offering price was determined by us.
The principal factors considered in determining the initial public offering price include:
|
●
|
the
information set forth in this Offering Circular and otherwise available;
|
|
●
|
our
history and prospects and the history of and prospects for the industry in which we compete;
|
|
●
|
our
past and present financial performance;
|
|
●
|
our
prospects for future earnings and the present state of our development;
|
|
●
|
the
general condition of the securities markets at the time of this Offering;
|
|
●
|
the
recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
|
|
●
|
other
factors deemed relevant by us.
|
Offering
Period and Expiration Date
This Offering
will start on or after the Qualification Date and will terminate if the Maximum Offering is reached or, if it not is reached,
on the Termination Date.
Procedures
for Subscribing
When you decide
to subscribe for Offered Shares in this Offering, you should:
Go to
www.minivest.com
,
click on the “Invest Now” button and follow the procedures as described.
|
1.
|
Electronically
receive, review, execute and deliver to us a subscription agreement; and
|
|
2.
|
Deliver
funds directly by wire or electronic funds transfer via ACH to the specified account maintained by us.
|
Any potential
investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment
decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity
to review this Offering Circular.
Right to
Reject Subscriptions
. After we receive your complete, executed subscription agreement and the funds required under the subscription
agreement have been transferred to the escrow account, we have the right to review and accept or reject your subscription in whole
or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without
interest or deduction.
Acceptance
of Subscriptions
. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue
the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change
your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.
Under Rule
251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds
which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent
fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s
annual income or net worth (please see below on how to calculate your net worth).
NOTE: For
the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation
must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an
amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements
may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds
for the purchase of the Offered Shares.
In order to
purchase offered Shares and prior to the acceptance of any funds from an investor, an investor will be required to represent,
to the Company’s satisfaction, that he is either an accredited investor or is in compliance with the 10% of net worth or
annual income limitation on investment in this Offering.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should
read the following discussion and analysis of our financial condition and results of our operations together with our consolidated
financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking
statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the
timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of
factors, including those discussed in the sections entitled “Risk Factors”, “Cautionary Statement Regarding
Forward-Looking Statements” and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for
information about our Critical Accounting Policies and Recently Issued Accounting Pronouncements.
Management’s
Discussion and Analysis
The Company
has not had material revenues from operations in each of the last two fiscal years.
Under
its most recent business model, the Company operated as a travel related services company throughout Asia, , including online
travel platforms and services, online hotel and flights booking and reservation services, managing and operating hotels including
Zhuhai Tengda Business Hotel and Tengda Mansion.
In
March 2018, the Board of Directors elected to shift the Company’s business model to concentrate on business opportunities
within blockchain technology. Square Chain Corporation
has
designed a multi-faceted business model to take advantage of the significant emerging opportunities being developed utilizing
blockchain technology. The opportunities we have identified to date cross many industries such as finance, shipping and healthcare
just to name a few, which will help minimize our exposure to any single sector. We have associated ourselves with leading experts
in the field of blockchain technologies, allowing for a broad overview of exciting applications being developed. Our ability to
identify applications having significant market potential early in their development will allow for investment opportunities for
Square Chain Corporation that will help drive our growth. The Company’s plan to enter the new and exciting blockchain technology
sector will be through acquisitions, joint ventures, equity stakes and eventually through in-house development.
The
Company’s plan to enter the new and exciting blockchain technology sector will be through acquisitions, joint ventures,
equity stakes and eventually through in-house development.
Plan of
Operation for the Next Twelve Months
The Company
believes that the proceeds of this Offering will satisfy its cash requirements for the next twelve months. To complete the Company’s
entire development plan, it may have to raise additional funds in the next twelve months.
The Company
may make significant changes in the number of employees at the corporate level, as well as retaining the services of software
developers as contract labor or employees.
Investments.
The
Company intends to make substantial investment in its blockchain business segment either through acquisitions, joint ventures,
retaining software developers or a combination thereof.
Marketing
and sales.
The Company will incur substantial marketing and sales expenses which will consist primarily of salaries,
and benefits for our employees engaged in sales, sales support, marketing, business development, and customer service functions.
Our marketing and sales expenses also include marketing and promotional expenditures.
Cost of
revenue.
The Company expects that the cost of revenue for its operations will consist primarily of expenses associated
with the development and distribution of our products. These include expenses related to providing products and services and salaries
and benefits for employees on our operations teams.
Research
and development.
The Company will continue to engage in research and development expenses. These will consist primarily
of salaries, and benefits for employees who are responsible for building new products as well as improving existing products.
We will expense all of our research and development costs as they are incurred.
General
and administrative.
The majority of our general and administrative expenses will consist of salaries, benefits, and share-based
compensation for certain of our executives as well as our legal, finance, human resources, corporate communications and policy
employees, and other administrative employees. In addition, general and administrative expenses include professional and legal
services. The Company expects to incur substantial expenses in marketing the current Offering, in closing sales, and in promoting
and managing its operations.
Off-Balance
Sheet Arrangements
The Company
has no off-balance sheet arrangements.
Quantitative
and Qualitative Disclosures about Market Risk
In the ordinary
course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign
currency exchange rates, or that may otherwise arise from transactions in derivatives.
The preparation
of financial statements in conformity with GAAP requires our management 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 consolidated financial
statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates. The Company’s significant estimates and assumptions include the fair value of the Company’s common stock,
stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to the
Company’s deferred tax assets.
Contingencies
Certain conditions
may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be
resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal
counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may
result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings
or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the
assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can
be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates
a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material,
would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which
case the guarantees would be disclosed.
Upon completion
of this offering, we will not be subject to current and periodic reporting requirements. As a Regulation A, Tier 1 issuer, we
will not be subject to the periodic and current reporting requirements under Rule 257(b) of Regulation A.
BUSINESS
Square Chain
Corporation (“Square Chain”), sometimes referred to herein as “we,” “us,” “our,”
and the “Company” and/or “Square Chain Corporation” was incorporated under the laws of the State of Arizona
on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996, the Company reincorporated under
the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately 242 shares of the
Nevada corporation for each share of the Arizona corporation. On October 28, 2009, the Company filed Amended and Restated Articles
of Incorporation effectively changing the name of the corporation to Piranha Ventures, Inc. On November 21, 2011, the Company
filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation to
Realgold International, Inc. On May 16, 2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary
of State of Nevada changing its name from Realgold International, Inc. to Asia Travel Corporation. On March 8, 2018, the Company
filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square Chain Corporation.
The trading
symbol for our Common Stock is ‘SQCC.” Our previous trading symbol was “ATSR” prior to our filing a name
change with the State of NV and an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority
in March 2018.
Our
Business
Under its
most recently discontinued business model, the Company carried out business operations through its prior wholly owned Hong Kong
subsidiary Asia Travel Ltd (Hong Kong) (formerly named “Realgold Venture Pte Limited”) and its affiliated entities
in China including Zhuhai Tengda International Travel Agency Co., Ltd and Zhuhai Tengda Business Hotel Co., Ltd. Through its subsidiary
and affiliated entities, Square Chain Corporation provided travel related services throughout Asia, including online travel platforms
and services, online hotel and flights booking and reservation services, managing and operating hotels including Zhuhai Tengda
Business Hotel and Tengda Mansion. Asia Travel Corporation’s business model is unique as it generates revenues from diverse
revenue streams by providing various travel services and acquiring various assets, which distinguishes Asia Travel Corporation
from other travel service providers and put it at the competitive edge.
In March 2018,
the Board of Directors elected to shift the Company’s business model to concentrate on business opportunities within blockchain
technology. Square Chain has designed a multi-faceted business model to take advantage of the significant emerging opportunities
being developed utilizing blockchain technology. The opportunities we have identified to date cross many industries such as real
estate, finance, shipping/logistics and healthcare. We have associated ourselves with leading experts in the field of blockchain
technologies, allowing for a broad overview of exciting software applications with significant opportunities for in-house development.
The applications we have identified early in their development will drive our growth.
Through the
operations of its blockchain business segment, Square Chain Corporation believes it can develop direct business relationships
and opportunities to participate in operating projects that directly benefit from blockchain technology
.
Unlike most
companies pivoting into the blockchain space, Square Chain Corporation is not pursuing ownership in cryptocurrencies or tokens.
Likewise, Square Chain has no plans to pursue, or participate, in any type of an ICO. We do not have the management systems in
place to manage the custodial obligations coins and tokens present. Furthermore, the Company has no plans to enter the increasingly
crowded arena of cryptocurrency mining.
Our goal is
to develop blockchain applications internally, participate in third party blockchain application development and invest in companies
developing blockchain applications that solve real world industry pain points for specific businesses. Our revenue will be derived
from the sale of our blockchain applications through B to B software distribution channels, monetizing investments in blockchain
applications developed by third parties and participating in business opportunities via joint ventures or partnerships with existing
companies that can benefit from blockchain applications we provide.
The company
has identified an industry that has the potential to take advantage of the capabilities and goals of blockchain technology. We
have had preliminary discussions with an expert and current 30-year participant in the direct response television industry (DRTV)
to conduct a study to determine potential blockchain applications that can solve operational pain points in his business, as well
as the industry in general. The areas of interest for this study that can determine a successful DRTV program include:
|
●
|
Media
|
|
|
|
|
●
|
Inbound Call Centers
|
|
|
|
|
●
|
Offers
|
|
|
|
|
●
|
Back-end Optimization
|
|
|
|
|
●
|
Fulfillment
|
|
|
|
|
●
|
Merchant Processing
|
|
|
|
|
●
|
Budgeting &
Scheduling
|
|
|
|
|
●
|
Creative Direction
|
|
|
|
|
●
|
International Distribution
|
|
|
|
|
●
|
Retail Distribution
|
Within these
areas of interest of a successful DRTV program, we will be particularly interested in the areas of inbound call centers and the
integrity of the ordering process, customer data integrity, fulfillment logistics, including inventory management, global supply
chain issues and payment systems.
Upon funding,
we will commence a white paper study project by hiring a blockchain consulting group already identified to conduct a thorough
review of the DRTV business mentioned above. The study will include extensive discussions with the DRTV’s management team
to gain a detailed perspective about their business operations, including in depth details of particular pain points that can
be improved upon through blockchain technology. We have determined that this white paper study will take 30 to 60 days and cost
an estimated $12,000 - $18,000.
If the study
concludes that blockchain technology applications can be developed to address these operational challenges, then we would begin
the process of hiring a blockchain applications developer to develop an application, or multiple applications, incorporating the
solutions. If the application(s) proves to be successful, then Square Chain could market the product(s) to other industry participants.
Secondarily,
as part of this study, Square Chain is in exploratory discussions with the local identified company to participate in a DRTV product
and product launch. This would allow us to actively participate in the entire DRTV process, offering us the insight to know the
industry needs inside and out, and increasing the likelihood of a successful blockchain application(s) product(s) roll out to
the industry.
The estimated
cost for a DRTV project is $175,000. The components of this investment would include:
|
●
|
Infomercial
production costs
|
|
●
|
On-air talent costs
|
|
●
|
Media time slot
purchases
|
|
●
|
Initial inventory
costs
|
|
●
|
Ecommerce product
website costs
|
|
●
|
Call center set
up costs
|
|
●
|
Fulfillment set
up costs
|
Square Chain
Corporation will acquire the worldwide sales and marketing rights for the product to be sold for the initial test program and,
assuming success of the initial test, will launch the product nationally and internationally through traditional DRTV sales and
marketing channels. These channels include infomercials, US TV shopping networks, international TV shopping networks, Facebook
and traditional retail stores.
The product
has been identified and is in the cookware product category. The proposed partner for this project has been a well-known participant
within the DRTV industry for over 30 years and has successfully managed many projects in this product category, as well as numerous
other categories. This deep experience, along with extensive industry contacts will help the company to mitigate some of the risks
associate with a traditional start-up company.
Upon funding
the parties will move rapidly to conclude negotiations and start both the blockchain white paper study and the actual DRTV product
launch.
The challenges
we will encounter with our initial project and beyond will include:
|
●
|
General
market acceptance of a potential DRTV blockchain application(s)
|
|
●
|
Identifying companies
willing to undertake the process of sharing their internal business processes in order to develop a blockchain benefits white
paper study
|
|
●
|
Hiring the right
blockchain developer for the specific task
|
|
●
|
Incorporating the
block chain application into the existing business model may be costly and disruptive in the beginning
|
|
●
|
Our partner companies
will need to have the proper staff to solve roadblocks as we launch the application
|
Blockchain
Incubator
As part of
the Company’s business plan to identify key talent and emerging blockchain concepts, the company will continue to participate
in blockchain related networking opportunities. There is a growing and thriving community of blockchain application developers
in our local market looking to associate themselves with a company such as Square Chain to complete product development and bring
these products to market.
At present,
the Company is working closely with a local blockchain incubator to identify developers looking for employment opportunities in
blockchain software and app development. The incubator is a blockchain technology education, co-work and development center. It
is their mission to provide an amazing space for innovation in the world’s most exciting and fast-moving industry. They
are a collaborative space for blockchain technology educators, innovators, and startups.
The company
plans to develop a network of entrepreneurs, advisors, and limited partners who are on the front lines of this fast-moving sector
of Fintech. Management firmly believes that Blockchain technology is a profound invention that offers a better, faster, cheaper
way to move money and exchange assets without counterparty risk.
In-House
Blockchain Application Development
Concurrent
to becoming a member of the incubator, the Company will conduct an extensive search for in-house Ethereum blockchain software
application developers. The company intends to develop in-house applications to take advantage of the ever-expanding opportunities
for blockchain platforms in several industries as highlighted below.
One of the
Company’s conceptual blockchain applications is focused on the construction industry.
The
construction industry lags behind other industries in research and development (R&D) investment. R&D investments for mature
US companies are typically around 3.5% of sales. For some industries such as aerospace that number can be 7% to 14%. However,
the construction industry only reinvests 0.5% of sales. The reasons for the low reinvestment vary but are generally due to costs
and complexity. Most construction firms are small (less than 10 employees) and operate on thin profit margins. So, technology
spending is often seen as an unaffordable luxury.
The
Company’s conceptual construction blockchain application will be an integrated family of software applications that support
the entire building lifecycle from conception, to construction, to facility management. The suite will support the needs of small
contractors by offering: online collaboration, digital takeoff, estimating, and project and property management capabilities,
all presented in a format that’s easy to understand and use.
Upon funding,
the company plans to hold discussions with business leaders in industry categories where we feel blockchain can have the most
immediate impact, like our DRTV project. Our approach working within other industries will likely mirror our outcome with the
DRTV project. This unique approach will allow for revenues to be derived from both the opportunities created by developing blockchain
applications for sale within the target industry, plus the more traditional revenue streams of the existing business models. To
help minimize risks, the company will partner with reputable and successful partners with a long history of working within the
targeted industries and will utilize their management expertise.
Third
Party Blockchain Application Development
The Company
may elect to co-develop, fund late stage development or acquire certain blockchain applications. There are currently several blockchain
software applications being developed utilizing the Ethereum open-source, public, blockchain-based distributed computing platform
and operating system featuring smart contract functionality. As these applications approach their final stages of development,
we will conduct a comprehensive business analysis of each to determine which we feel best suits our company goals.
One such product
under current review is dedicated to payment systems that allows users to take advantage of blockchain’s invaluable traits.
The history of being able to purchase, receive and use blockchain based tokens has been a difficult and bumpy one. Though much
progress has been made, there are still only a few on-ramps (exchanges, word of mouth) into owning blockchain tokens. Not only
that, but those who seek to purchase tokens from exchanges are a self-selecting group - generally technical and early adopters.
The vision
for this product is to make it as easy as possible to create applications that use cryptocurrency, particularly for mobile. As
a result, above the protocol layer, the team will build an open source mobile iOS and Android SDK. These SDK’s will be built
with a plugin system in mind - since it is infeasible for the team to support every cryptocurrency, the aim is to make it as simple
as possible to add your own.
This way,
developers will have easy access to the infrastructure provided by this program. There will be a well defined set of interfaces
in the mobile SDK’s that developers will have to adhere to. This includes methods like createWallet(), createTransaction(),
signTransaction() and sendTransaction(). The networking of accessing Relay Nodes will be taken care of, and the developer can
focus on building their mobile application that leverages whichever cryptocurrency they wish.
The Relay
Node software is also part of the middleware layer. This includes easy creation of a REST API endpoint to receive and relay transactions
sent by the mobile SDK’s. It will be a simple npm install and run on a server of your choice.
To generate
revenue from this type of investment, Square Chain would have to negotiate a royalty-based fee paid upon each software license
the application developer sells or monetize the investment through the liquidation of its ownership stake sometime in the future.
As part of
its investment in third party application developers, Square Chain Corporation will endeavor to negotiate a board of director’s
position, advisory board position or other type of management oversight role to help ensure the success of these opportunities.
This can be accomplished by seeking out and retaining, through our various networks, the appropriate subject matter experts to
oversee the investments we anticipate.
Risks to Our Business Model
A common risk
of our multi-faceted business model is being able to identify products that will sell and create revenue for Square Chain Corporation.
Our approach to working with managers and software developers with many years of experience and a deep understanding of their
respective areas of expertise, including the ability to identify successful products and emerging trends, will help us to mitigate
certain risks associated with our strategy. We will not move forward on developing a software application, an investment in a
third-party software developer, or a DRTV product launch unless we feel very confident of the product or the partners we may seek
to establish a relationship with for future or current projects.
Retaining
Key Personnel
Upon funding,
the Company will look to retain key personnel that fit into the culture of the company. Positions to be filled include software
developers, marketing and sales, executive assistant, graphic artists and a Treasurer.
In addition,
the Company will form an Advisory Committee to be filled by leaders within the blockchain sector. The Company is in discussion
with several forward thinking blockchain advocates well known on the lecture circuit.
Acquisitions
As part of
the Company’s growth strategy, it will seek to identify investment and acquisition candidates that will be immediately accretive
to earnings. In looking at potential “target” companies, the Company:
|
●
|
Will
look to identify companies whereby the Company can accelerate market access for the Target’s products
|
|
|
|
|
●
|
Can improve the
target company’s performance through cost reductions to improve margins and improve cash flow
|
|
|
|
|
●
|
Can remove excess
capacity in the industry through an acquisition
|
|
|
|
|
●
|
Can gain skills
or technologies faster or at a lower cost than through in-house development
|
|
|
|
|
●
|
Can pick early stage
winners early in the development process and further assist in the development
|
Target
Markets
Square Chain
Corporation’s investment strategy will focus on best in class software applications utilizing blockchain technology platforms.
Our focus will be across several industry sectors that are incorporating blockchain technology into their business practices and
processes. According to a 2015 World Economic Forum survey of 800 executives and information and communications technology sector
experts, 57.9 percent of the respondents believe that 10 percent of the global GDP information will be stored on blockchain technology
by 2025, thus creating significant long-term investment opportunities for Square Chain Corporation.
The blockchain
market size is expected to grow from USD 241.9 Million in 2016 to USD 7,683.7 Million by 2022, at a Compound Annual Growth Rate
(CAGR) of 79.6%. The major growth drivers of the market include the increasing demand for distributed ledger technology, reduced
total cost of ownership, rising cryptocurrencies market cap and initial coin offerings, increasing demand for simplified business
processes and creating transparency and immutability, faster transactions and increasing adoption of Blockchain-as-a-Service.
Examples of
target markets include:
DRTV
Applications
for Blockchain in Ecommerce
The blockchain
ecommerce marketplace is becoming an economic ecosystem in its own right. As the online sales industry continues to both grow
and adopt distributed ledger technology, the number of ways sellers can serve their customers — and their bottom line —
will multiply. For now, here are just a few applications for blockchain technology in ecommerce.
Smart Contracts
Smart contracts
represent the most popular add-on feature of any blockchain. Basically, a smart contract is a relatively small computer program
that can be stored on a blockchain, and which can automate certain tasks according to preset rules.
The power
if these special blocks of code makes it easy to automate nearly any ecommerce-related process, freeing up staff to market and
grow the business.
Inventory
Control
One application
that can use smart contracts is inventory control. By incorporating smart contracts into the blockchain, not only can inventory
items be decremented from inventory as with some standard shopping carts, but replacement stock can be ordered when pre-defined
thresholds are reached. A host of other functions can be automated to ensure that an online store never runs out of product, and
at the same time ensuring that excess inventory is not accumulated.
Product
Description Database
Making product
descriptions and related images available to customers is a time-consuming and costly part of running an online store. Blockchain
technology allows this information to be efficiently shared between suppliers, your online store, and with content creators.
Loyalty
Rewards Software
Again, thanks
to the power and versatility of smart contracts, customer loyalty reward programs can be totally automated within a blockchain.
Since records of every purchase are stored in the chain, it is easy to have a smart contract offer a discount, or to issue reward
points to customers as they surpass certain spending thresholds.
Supply
Chain Tracking
An online
store can live or die depending on the reliability of its supply chain. Not only does the store operator need to know what stock
is in the pipeline and when it will arrive, but it is also crucial for them to make sure vendors are supplying the exact products
ordered. The problem of fraud in the supply chain can result in inferior products being delivered, or even those with safety-related
issues.
By using the
blockchain to track the supply chain, ecommerce companies can ensure that vendors do not substitute products without notice, and
that transparency is maintained throughout the process.
Advantages
of Blockchain in Ecommerce
Cyberthreats,
stifling competition, and ever changing user expectations are daily realities for every online retailer. For all but the largest
sellers, the battle can not only become one of profitability, but survival. Ecommerce sites that are still standing in the years
ahead will be those that adapted to these challenges early on — like now.
Although there
is no shortage of ecommerce solutions on the market, blockchain technology is uniquely suited to solve many of the ills facing
e-retailers. Let’s look at three of the greatest advantages blockchain offers the ecommerce industry, before we move on
to see how these can be applied in real applications.
Security
Distributed
ledger technology (DLT) offers the highest level of security available for online database platforms. Although there have been
instances where vulnerabilities in smart contact coding resulted in fraud, there have been no verified breaches of a major blockchain
backbone framework.
Since one
data breach can cost an online retailer millions in revenue, and loss of future market share, blockchain offers a level of security
that retailers cannot afford to do without.
Integration
with Business Processes
Blockchain
is not limited to processing online payments. Part of the reason for the growth of DLT is its power to interface with new and
existing systems. For the ecommerce vendor, this can mean tie-ins between the online store and a multitude of internal and external
systems, processes, and partners.
By providing
a shared ledger that serves the company, the online store, and external entities, a wealth of opportunities becomes available
for the vendor that are only possible with blockchain.
Cost Reduction
Cost reduction
has become a buzzword for selling just about everything from software to socks, but blockchain delivers on this promise.
The ability
to combine payment processing, inventory management, product images and descriptions, with other business processes means fewer
systems to maintain, less need for IT support staff, and fewer administrative tasks to be performed.
Maintaining
even a small online store is a 24/7/365 job. The power of blockchain enables online vendors to spend more time running their business
and less time running their online store.
Real
Estate
Technology
and real estate experts alike say blockchain technology has an important place in the commercial real estate market (CRE) with
its ability to streamline processes, reduce fraud and cut costs (and middlemen). Real Estate is the largest asset class in the
world, and also one of the most inefficient. Our aim is to seek out best in class applications and technology solutions serving
the $217+ trillion global real-estate market with 2017 volume of $1.4 trillion.
Until recently,
blockchain was known more as the technology powering Bitcoin. However, industry players now realize that blockchain-based smart
contracts can play a much larger role in CRE, potentially transforming core CRE operations such as property transactions (purchase,
sale, financing, leasing, and management). Over time, blockchain adoption can have a broader impact, as it can be linked to public
utility services such as smart parking, waste, water, and energy billing, and also enable data-driven city management.
According
to Goldman Sachs estimates, blockchain driven property records could drive up to $4bn in cost savings due to reductions in headcount
and actuarial risk in the US alone.
Finance
What blockchain
can do for the financial and banking industry:
Blockchain
technology can potentially disrupt the financial industry that we know and use today. Here are just a few examples of how blockchain
technology can transform the finance and banking industry.
Fraud Reduction
Even though
blockchain is new technology, its potential to reduce fraud in the financial world is getting a lot of attention since 45% of
financial intermediaries such as stock exchanges and money transfer services suffer from economic crime every year. Most banking
systems around the world are built on a centralized database that is more vulnerable to cyberattack because it has one point of
failure rather than many—once hackers breach the one system they have full access. The blockchain is essentially a distributed
ledger where each block contains a timestamp and holds batches of individual transactions with a link to a previous block. This
technology would eliminate some of the current crimes being perpetuated online today against our financial institutions.
Payments
Blockchain
disruption could be highly transformative in the payments process. It would enable higher security and lower costs for banks to
process payment between organizations and their clients and even between banks themselves. In the current reality, there are a
lot of intermediaries in the payment processing system, but blockchain would eliminate the need for a lot of them.
Trading
Platforms
It’s
exciting to contemplate the changes that might occur with our trading platforms if they relied on blockchain-based technology.
There’s no doubt that the risk of operational errors and fraud would be dramatically reduced. NASDAQ and the Australian
Securities Exchange are already exploring blockchain solutions to reduce costs and improve efficiencies.
Logistics
and Transportation
Blockchain,
the technology behind the digital asset and payment system Bitcoin - has the potential to transform the supply chain. From conducting
payment and audits to tracking inventory and assets, blockchain technology will enable greater supply chain efficiency than ever
before.
How Will
Blockchain Technology Affect the Supply Chain?
If blockchain
technology allows us to more securely and transparently track all types of transactions, imagine the possibilities it presents
across the supply chain.
Every time
a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale.
This could dramatically reduce time delays, added costs, and human error that plague transactions today.
Some supply
chains are already using the technology, and experts suggest blockchain could become a universal “supply chain operating
system” before long. Consider how this technology could improve the following tasks:
●
|
Recording
the
quantity and transfer of assets - like pallets, trailers, containers, etc. - as they move between supply chain nodes
|
●
|
Tracking
purchase
orders, change orders, receipts, shipment notifications, or other trade-related documents
|
●
|
Assigning
or
verifying certifications or certain properties of physical products; for example; determining if a food product is organic
or fair trade
|
●
|
Linking
physical
goods to serial numbers, bar codes, digital tags like RFID, etc.
|
●
|
Sharing
information
about manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors
|
Benefits
in a Nutshell:
Regardless
of the application, blockchain offers shippers the following advantages:
●
|
Enhanced
Transparency.
Documenting a product’s journey across the supply chain reveals its true origin and touchpoints,
which increases trust and helps eliminate the bias found in today’s opaque supply chains. Manufacturers can also reduce
recalls by sharing logs with OEMs and regulators
|
●
|
Greater Scalability.
Virtually
any number of participants, accessing from any number of touchpoints, is possible
|
●
|
Better Security.
A
shared, indelible ledger with codified rules could potentially eliminate the audits required by internal systems and processes
|
●
|
Increased Innovation.
Opportunities
abound to create new, specialized uses for the technology as a result of the decentralized architecture.
|
Milestones
and Budget
We have the
created the following milestones and budgets. It is important to note that achievement of these milestones and their budget targets
is subject to substantial risk. Please
see
“
Risk Factors
” and “
Forward Looking Statements.”
Operational
Objectives August 1 , 2018 to October 31, 2018:
Expected
proceeds from Reg A offering
|
|
|
Operational
Objectives
|
$
|
50,000
|
|
|
Finalize white paper consulting
agreement with selected candidate(s), assemble advisory board and hire administrative assistant
|
|
30,000
|
|
|
Select initial target blockchain application
candidate, product development plan, marketing plan
|
|
70,000
|
|
|
Identify and hire (2) blockchain software developers
for product buildout, purchase IT equipment
|
|
150,000
|
|
|
Office, Admin, Regulatory, Salaries, Legal,
Accounting systems, Travel, Accrued expenses/invoices
|
|
150,000
|
|
|
Co-Develop, partner with application developers,
enter into collaborative product development and product marketing agreements
|
|
100,000
|
|
|
Cash reserve
|
|
|
|
|
|
$
|
550,000
|
|
|
Total
|
Operational
Objectives November 1, 2018 to January 31, 2019:
Expected
proceeds from Reg A offering
|
|
|
Operational
Objectives
|
$
|
65,000
|
|
|
Add to consulting team
|
|
40,000
|
|
|
Review and analyze new blockchain applications
|
|
70,000
|
|
|
Expand internal blockchain software capabilities,
BETA testing
|
|
75,000
|
|
|
Office, Admin, Regulatory, Salaries, Legal,
Accounting systems, Travel, Accrued expenses/invoices
|
|
200,000
|
|
|
Co-Develop, partner with application developers,
enter into collaborative product development and product marketing agreements
|
|
30,000
|
|
|
Hire internal or outsourced chief financial
officer
|
|
200,000
|
|
|
Identify and Acquire Strategic Assets and Partners
|
|
100,000
|
|
|
Cash reserves
|
|
|
|
|
|
$
|
780,000
|
|
|
Total
|
Operational
Objectives February 1, 2019 to April 30 , 2019:
Expected
proceeds from Reg A offering
|
|
|
Operational
Objectives
|
$
|
85,000
|
|
|
Add to consulting team
|
|
40,000
|
|
|
Review and analyze new blockchain applications
|
|
120,000
|
|
|
Expand internal blockchain software capabilities,
Continuing BETA tests
|
|
75,000
|
|
|
Office, Admin, Regulatory, Salaries, Legal,
Accounting systems, Travel, Accrued expenses/invoices
|
|
300,000
|
|
|
Co-Develop, partner with application developers,
enter into collaborative product development and product marketing agreements
|
|
35,000
|
|
|
Hire internal or outsourced chief financial
officer
|
|
300,000
|
|
|
Identify and Acquire Strategic Assets and Partners
|
|
100,000
|
|
|
Cash reserves
|
|
|
|
|
|
$
|
1,045,000
|
|
|
Total
|
Operational
Objectives May 1, 2019 to July 31, 2019:
Expected
proceeds from Reg A offering
|
|
|
Operational
Objectives
|
$
|
65,000
|
|
|
Add to consulting team
|
|
40,000
|
|
|
Review and analyze new blockchain applications
|
|
120,000
|
|
|
Expand internal blockchain software capabilities
|
|
75,000
|
|
|
Office, Admin, Regulatory, Salaries, Legal,
Accounting systems, Travel, Accrued expenses/invoices
|
|
400,000
|
|
|
Co-Develop, partner with application developers,
enter into collaborative product development and product marketing agreements
|
|
35,000
|
|
|
Hire internal or outsourced chief financial
officer
|
|
600,000
|
|
|
Identify and Acquire Strategic Assets and Partners
|
|
100,000
|
|
|
Cash reserves
|
|
|
|
|
|
$
|
1,435,000
|
|
|
Total
|
Competition
Square Chain
Corporation is pursuing a business strategy with unique characteristics compared to peer companies. Nevertheless, in addition
to Square Chain Corporation, there are several other companies developing blockchain applications; and acquiring blockchain application
developers.
Our potential
competitors may have greater resources, better access to capital, longer histories, more intellectual property and lower cost
operations.
They may secure
better terms during the investment negotiation process, make strategic decisions more quickly than us and devote more capital
to better performing investments than we do.
Other companies
also may enter into business combinations or alliances that strengthen their competitive positions.
Growth
Issues
Service
Delivery Controls
When awarded
contracts that require additional resources, Square Chain Corporation will utilize its list of available consultants with expertise
in the required areas. The collaborative nature of our professionals, coupled with our low overhead approach of hiring consultants
on an as- needed basis creates challenges in the delivery of quality services and deliverables. Square Chain Corporation realizes
that not everyone will share our vision, values, and methods.
In addition,
Square Chain Corporation understands that as more blockchain applications come online it becomes increasingly difficult to monitor
projects and communicate information to our consultants.
Because Square
Chain Corporation utilizes exhaustive interviewing, stringent candidate selection and referrals from trusted advisors there is
a reasonable confidence that the majority of our concerns will be eliminated through these processes. Square Chain Corporation
will enter into agreements with consultants and contractors who demonstrate a bold commitment to representing the core values
of Square Chain Corporation in an effective manner.
Scalability
The ability
to reproduce our proven system on a massive scale is a concern of Square Chain Corporation. Every site is unique and presents
different challenges. Such factors can negatively impact the growth and consistency of our methods and will ultimately challenge
our ability to replicate our initial success. This will directly impact how fast Square Chain Corporation can scale its operations.
Insufficient
Capital
Currently
Square Chain Corporation is confronted with the need to attract and retain a consistent investment source in order to grow our
operations rapidly. If Square Chain Corporation is not funded properly it will prevent us from capturing the majority of the market.
To maintain
our leadership role and first mover advantage in this space Square Chain Corporation is seeking funding from the capital markets
which may include debt and equity offerings.
Sales
Lead Time
Currently
lead time for each project is estimated at ten (10) months. This reflects permitting, equipment ordering and delivery of and installation.
Marketing
Strategy
Marketing
Square Chain Corporation’s blockchain applications will be done through several different strategies. We plan to utilize
third party software sales organizations primarily. For industry specific applications, we will incorporate industry trade show
participation into our marketing program.
Seasonality
We do not
expect any seasonality in our business.
Litigation
The Company
has no current, pending or threatened legal proceedings or administrative actions either by or against the Company issuer that
could have a material effect on the issuer’s business, financial condition, or operations and any current, past or pending
trading suspensions
Employees
As of September
30, 2018, we had one employee, including officers and directors. We believe that we have been successful in attracting experienced
and capable personnel. Our employee has entered agreements with us requiring him not to compete or disclose our proprietary information.
Our employee is not represented by any labor union. We believe that relations with our employee are excellent.
Legal Proceedings
We may from
time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to temporary
employee staffing business. These matters may include product liability, intellectual property, employment, personal injury cause
by our employees, and other general claims. We will accrue for contingent liabilities when it is probable that a liability has
been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion
of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an
adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Description
of Property
We maintain
an office in North Las Vegas, Nevada. We consider that this space is sufficient for our current needs.
Intellectual
Property
We may rely
on a combination of patent, trademark, copyright, and trade secret laws in the United States as well as confidentiality procedures
and contractual provisions to protect our proprietary technology, databases, and our brand. Despite these reliances, we believe
the following factors are more essential to establishing and maintaining a competitive advantage:
●
|
the
statistical and technological skills of our service operations and research and development teams;
|
●
|
the
Blockchain expertise and knowledge of our service operations and research and development teams;
|
●
|
the
real-time connectivity of our service offerings;
|
●
|
the
continued expansion of our proprietary technology; and
|
●
|
a continued
focus on the improved financial results of our clients.
|
We have a
policy of requiring key employees and consultants to execute confidentiality agreements upon the commencement of an employment
or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any
inventions made or conceived during their employment with us. In addition, we have a policy of requiring individuals and entities
with which we discuss potential business relationships to sign non-disclosure agreements. Our agreements with clients include
confidentiality and non-disclosure provisions.
Legal Proceedings
We may from
time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business.
These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other
general claims. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have
a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense
and settlement costs, diversion of management resources and other factors.
MANAGEMENT
The following
table sets forth information regarding our executive officers, directors and significant employees, including their ages as of
September 30 , 2018:
Name
and Principal Position
|
|
Age
|
|
Term
of Office
|
|
Approximate
hours per week
|
|
|
|
|
|
|
|
Jeffrey J Parker-President,
Director
|
|
56
|
|
Since March 6, 2018
|
|
40
|
Jeffrey
J Parker – President, Secretary, Principal Financial Officer and Director
Jeffrey J
Parker was appointed to the Board of Square Chain Corporation on March 6, 2018 and assumed the roles of President, Secretary and
Principal Financial Officer on March 6, 2018. Prior to this position with the Company, Mr. Parker served in various leadership
capacities in the high-tech industry, including Gemesis Corporation, Sterling Semiconductor and a partner in various small business
ventures. Mr. Parker is a results-oriented experienced professional providing leadership to sales and operations in the areas
of small business and startup environments. Mr. Parker has a proven ability to help nurture start-ups, develop and execute plans
into thriving organizations and effectively liaise with relevant shareholders to accomplish goals and resolve challenges. Mr.
Parker completed both his undergraduate education and graduation level entrepreneurship certificate at the University of South
Florida.
None of our
executive officers and board directors has been involved in any of the following proceedings during the past ten (10) years:
1. any bankruptcy
petition filed by or against any business of which such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
2. any conviction
in a criminal proceeding or being subject to a pending criminal proceedings (excluding traffic violations and other minor offenses);
3. being subject
to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking
activities; or
4. being found
by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Family
Relationships
There are
no family relationships between any of our officers and directors.
Involvement
in Certain Legal Proceedings
.
None of the
following events have occurred during the past five years and which are material to an evaluation of the ability or integrity
of any director or executive officer: (1) A petition under the federal bankruptcy laws or any state insolvency law was filed by
or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person,
or any partnership in which he was general partner at or within two years before the time of such filing, or any corporation or
business association of which he was an executive officer at or within two years before the time of such filing; or (2) Such person
was convicted in a criminal proceeding (excluding traffic violations and other minor offenses).
Board Composition
Our Board
of Directors currently consists of one member. Each director of the Company serves until the next annual meeting of stockholders
and until his successor is elected and duly qualified, or until his earlier death, resignation or removal. Our board is authorized
to appoint persons to the offices of Chairman of the Board of Directors, President, Chief Executive Officer, one or more vice
presidents, a Treasurer or Chief Financial Officer and a Secretary and such other offices as may be determined by the board.
We have no
formal policy regarding board diversity. In selecting board candidates, we seek individuals who will further the interests of
our stockholders through an established record of professional accomplishment, the ability to contribute positively to our collaborative
culture, knowledge of our business and understanding of our prospective markets.
Board Leadership
Structure and Risk Oversight
The Board
of Directors oversees our business and considers the risks associated with our business strategy and decisions. The board currently
implements its risk oversight function as a whole. Each of the board committees when established will also provide risk oversight
in respect of its areas of concentration and reports material risks to the board for further consideration.
Code of
Business Conduct and Ethics
Prior to one
year from the date of this Offering’s qualification, we will be adopting a written code of business conduct and ethics that
applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal
accounting officer or controller, or persons performing similar functions. We will post on our website a current copy of the code
and all disclosures that are required by law or market rules in regard to any amendments to, or waivers from, any provision of
the code.
EXECUTIVE
COMPENSATION
Employment
Agreements
Mr. Parker
has entered into an employment agreement with the Company for a term of five years. Pursuant to his employment agreement, he has
agreed to devote a substantial portion of his business and professional time and efforts to our business. The employment agreement
provides that he shall receive a salary determined by the Board of Directors commensurate with the development of the Company.
They may be entitled to receive, at the sole discretion of our Board of Directors or a committee thereof, bonuses based on the
achievement (in whole or in part) by the Company of our business plan and achievement by the employee of fixed personal performance
objectives.
The following
table represents information regarding the total compensation our officers and directors of the Company as of September 30 , 2018:
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
Jeffrey
J Parker - President, Director
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our employment
agreements also contain covenants (a) restricting the executive from engaging in any activities competitive with our business
during the terms of such employment agreements and one year thereafter, and (b) prohibiting the executive from disclosure of confidential
information regarding the Company.
Stock Options
Our stockholders
have approved our 2018 Stock Option Plan, as previously adopted by our Board of Directors (the “Plan”). Under this
Plan, our officers, directors, and/or key employees and/or consultants can receive incentive stock options and non-qualified stock
options to purchase up to an aggregate of 5,000,000 shares of our Common Stock. To date, no options have been issued.
With
respect to incentive stock options, the Plan provides that the exercise price of each such option must be at least equal to 100%
of the fair market value of the Common Stock on the date that such option is granted. The Plan requires that all such options
have an expiration date not later than that date which is one day before the tenth anniversary of the date of the grant of such
options (or the fifth anniversary of the date of grant in the case of 10% stockholders). However, with certain limited exceptions,
in the event that the option holder ceases to be associated with the Company, or engages in or is involved with any business similar
to ours, such option holder’s incentive options immediately terminate.
Pursuant
to the provisions of the Plan, the aggregate fair market value, determined as of the date(s) of grant, for which incentive stock
options are first exercisable by an option holder during any one calendar year cannot exceed $100,000. No such options have yet
been issued.
Bonus Plan
for Executive Officers
The Board
of Directors has established an annual Bonus Plan for Executive Officers (the “Bonus Plan.”) Under the Bonus Plan,
a Committee of the Board of Directors sets performance targets for key employees who are or may become executive officers. Such
executives are eligible for a bonus only if they meet the performance standards set in advance by the Committee. Aggregate bonuses
may not exceed ten percent of income before taxes and bonuses may not exceed $1 million per employee.
Management
Stock Option Plan
The Board
of Directors of the Company has adopted a Management Stock Bonus Plan. The Plan provides that the Company shall establish a reserve
of 5,000,000 shares of Common Stock to be awarded to eligible salaried officers and directors. The Management Stock Bonus Plan
Committee, composed of not less than three members, administers the Plan. The Board of Directors must review actions of the Committee.
The Plan awards restricted stock to key executives. During the restricted period, the owner of the stock may not transfer the
stock without first offering the Company the opportunity to buy back the stock at its issue price. In the first year of the restriction
period, the Company has the right to buy back all of the awarded stock. In the second year, the Company has the right to buy back
75% of the awarded stock. After two years and until the end of the restriction period, a maximum of three years, the Company has
the right to buy back 50% of the awarded stock. To date, the Company has not issued any Plan shares:
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
To
the best of our knowledge, from January 1, 2016 to September 30 , 2018, other than as set forth above, there were no material
transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to
which we were or are to be a party, in which the amount involved exceeds $120,000, and in which any director or executive officer,
or any security holder who is known by us to own of record or beneficially more than 5% of any class of our Common Stock, or any
member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors
in the ordinary course of business).
Statement
of Policy
We
have adopted a related-party transactions policy under which our executive officers, directors, nominees for election as a director,
beneficial owners of more than 5% of any class of our Common Stock, and any members of the immediate family of any of the foregoing
persons are not permitted to enter into a related-party transaction with us without the consent of our audit committee. If the
related party is, or is associated with, a member of our audit committee, the transaction must be reviewed and approved by another
independent body of our Board of Directors, such as our governance committee. Any request for us to enter into a transaction with
a related party in which the amount involved exceeds $120,000 and such party would have a direct or indirect interest must first
be presented to our audit committee for review, consideration and approval. If advance approval of a related-party transaction
was not feasible or was not obtained, the related-party transaction must be submitted to the audit committee as soon as reasonably
practicable, at which time the audit committee shall consider whether to ratify and continue, amend and ratify, or terminate or
rescind such related-party transaction. All of the transactions described above were reviewed and considered by, and were entered
into with the approval of, or ratification by, our Board of Directors.
PRINCIPAL
STOCKHOLDERS
The following
table sets forth certain information known to us regarding beneficial ownership of our capital stock as of September 30, 2018
for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be
the beneficial owner of more than ten percent (10%) of our capital stock. The percentage of beneficial ownership in the table
below is based on 206,248,501 shares of Common Stock.
Class A
Preferred Stock $0.001 par value
Name
of Beneficial Owner
|
|
Number
of Shares
Beneficially
Owned
|
|
|
|
|
Tan
Lung Lai
|
|
|
20,000
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
20,000
|
|
|
|
100.00
|
%
|
***The
Company’s 20,000 shares of Series A Preferred Stock are convertible into 20,000,000 shares of Common Stock.
Class B
Preferred Stock $0.001 par value
Name
of Beneficial Owner
|
|
Number
of Shares
Beneficially
Owned
|
|
|
|
|
Jeffrey
J. Parker
|
|
|
10,000
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,000
|
|
|
|
100.00
|
%
|
***The
Company’s 10,000 shares of Series B Preferred Stock are convertible into 0 shares of Common Stock.
Common Stock
$0.001 par value
Name
of Beneficial Owner
|
|
Number
of Shares Beneficially Owned
|
|
|
Percent
of Class Before Offering
|
|
|
Percent
of Class After Offering
|
|
Tan Lung Lai (1)(2)
|
|
|
20,991,951
|
|
|
|
11.1
|
%
|
|
|
7.3
|
%
|
Jeffrey J. Parker (3)(4)
|
|
|
7,500,000
|
|
|
|
4.0
|
%
|
|
|
2.6
|
%
|
All Executive Officers, Directors and 10% Shareholders
as a Group
|
|
|
29,491,951
|
|
|
|
15.8
|
%
|
|
|
10.3
|
%
|
(1)
|
Tan
Lung Lai was the President and Director of the Company until March 6, 2018. The shares included within Mr. Lai’s ownership
included 20,000,000 shares of Common Stock to be issued upon the conversion of the Company’s 20,000 shares of Series
A Preferred Stock outstanding and 991,951 shares of Common Stock held in Mr. Lai’s name.
|
(2)
|
The
address of Mr. Lai is 69-2 Jalan Taman Melaka Raya 25 Taman Melaka, Melaka, Malaysia 75000.
|
(3)
|
Mr.
Parker is the Company’s President, Principal Officer and Director. Mr. Parker was appointed to these roles with the
Company on March 6, 2018. The shares included in Mr. Parker’s ownership include 7,500,000 shares of common stock issued
to Mr. Parker on April 5, 2018.
|
(4)
|
The
principal address of Mr. Parker is P.O. Box 501, St. Petersburg, FL 33731.
|
INTEREST
OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
During the
quarter ended March 31, 2018, the Company’s President, CEO, CFO, Secretary and Chairman of the Board, Mr. Jeffrey J. Parker,
provided advances to the Company for working capital purposes for a total of $73,978 in related party advances currently outstanding
due upon demand. On March 27, 2018, the Company issued an 5% unsecured promissory note to Mr. Parker in the amount of $73,978.
As of June 7, 2018, $73,978 was outstanding with accrued interest of $719.51 which is reflected as accounts payable and notes
payable – related party in the accompanying unaudited balance sheets. Please
see
Note- 9.2 Related
party balances for further information.
On April 15,
2018, the Company issued 7,500,000 shares of its common stock to Jeffrey J. Parker for his acceptance of the roles of Chief
Executive Officer, Chief Financial Officer and Chairman of the Board. Mr. Parker was not required to purchase the shares thus
his cost basis is $0. On the date of issuance, the Company’s common stock closed at $.05, which equates to a valuation of
$375,000. If the same number of shares were to be purchased through the Company’s offering statement, the cost basis to
the purchaser would be $.05 per share for a total of $375.000.
Percentage
Ownership Not Including Certain Shares
Share
Structure
|
|
Number
of Shares Outstanding
|
|
|
Percent
of Class Before Offering
|
|
|
Percent
of Class After Offering
|
|
Shares outstanding prior
to offering (a)
|
|
|
178,748,501
|
|
|
|
100.00
|
%
|
|
|
69.35
|
%
|
Shares offered in offering (b)
|
|
|
100,000,000
|
|
|
|
0.00
|
%
|
|
|
30.65
|
%
|
Total shares
|
|
|
278,748,501
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
(a)
|
Shares
outstanding prior to the Offering Statement not including the 7,500,000 shares issued to Jeffrey J. Parker.
|
|
(b)
|
Total shares outstanding
after the offering equals 258,748,501 and assumes that all shares in the offering are sold.
|
Percentage
Ownership Including All Shares Issued and Outstanding
Share
Structure
|
|
Number
of Shares Beneficially Owned
|
|
|
Percent
of Class Before Offering
|
|
|
Percent
of Class After Offering
|
|
Shares outstanding prior
to offering (a)
|
|
|
178,748,501
|
|
|
|
95.97
|
%
|
|
|
61.4
|
%
|
Shares issued to Jeffrey J. Parker
|
|
|
7,500,000
|
|
|
|
4.03
|
%
|
|
|
2.7
|
%
|
Shares offered in offering (b)
|
|
|
100,000,000
|
|
|
|
0
|
%
|
|
|
35.9
|
%
|
Total shares
|
|
|
278,748,501
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
(a)
|
The
7,500,00 shares issued to Jeffrey J. Parker included in the Percent of Class Before and After Offering
|
|
(b)
|
Total shares outstanding
after the offering equals 278,748,501 and assumes that all shares in the offering are sold.
|
|
(c)
|
Purchasers of the
shares in the offering statement are diluted by 0.60% due to the 7,500,000 shares issued to Mr. Parker
|
DIVIDEND
POLICY
We have never
declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation
of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to
pay dividends on our capital stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend
on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our
Board of Directors considers relevant.
SECURITIES
OFFERED
Square Chain
Corporation (“Square Chain Corporation,” “We,” or the “Company”) is offering up to $4,000,000
total of Securities, consisting of Common Stock, $0.001 par value (the “Common Stock” or collectively the “Securities”).
DESCRIPTION
OF SECURITIES
Securities
Being Offered
The following
is a summary of the rights of our capital stock as provided in our articles of incorporation and bylaws. For more detailed information,
please see our articles of incorporation and bylaws, which have been filed as exhibits to the Offering Statement of which this
Offering Circular is a part.
General
Market capital
structure:
Preferred
stock
The Company
is authorized to issue 10,000,000 shares of Preferred stock, par value $.001. The Company has designated two series of Preferred
stock as of the date of this filing.
Series
A
On November
2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000
shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to
issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as
a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common
stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of
common stock.
Accounting
for the Series A Preferred Stock
The Series
A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of the holders. The
Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was an embedded derivative
requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A Preferred Stock is not required
to be bifurcated because the conversion feature is clearly and closely related to the host instrument. The Company believes the
economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embedded conversion feature
allows the Investor to convert into have similar economic risks and characteristics.
Series
B
On March 6,
2018, the Company’s Board of Directors approved the designation of a Series B Super Voting Preferred stock whose par value
is $.001. Under the terms of the designation, shares of Series B Super Voting Preferred stock, the Company is authorized to issue
10,000 shares. Holders of the Series B Super Voting Preferred stock have no conversion features. Holders of Series B Preferred
stock have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding
at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding
at the time of voting. All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s
Common Stock, par value $0.001 per share and any other class or series of capital stock of the Corporation hereafter created.
Common
Stock
The Company
is authorized to issue 990,000,000 shares of Common Stock, par value $.001.
On July 22,
2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual
purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock
to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption
provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out
outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.
Capitalization
Security
|
|
Par
Value
|
|
|
Authorized
|
|
|
Outstanding
|
|
|
Voting
Rights
|
|
|
Conversion
Into Shares of Common Stock
|
|
Series
B Preferred Stock
|
|
|
0.001
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
20:1
|
|
|
|
None
|
|
Common Stock
|
|
|
0.001
|
|
|
|
990,000,000
|
|
|
|
187, 248, 501
|
|
|
|
1
|
|
|
|
None
|
|
Series A Preferred
Stock
|
|
|
0.001
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
1000:1
|
|
|
|
1000
|
|
Preferred
Stock
The Company
has authorized 10,000,000 shares of Preferred Stock,” par value $0.001 per share. At the time of this filing, the Company
has two series of Preferred Stock outstanding.
Series
A
On November
2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000
shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to
issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as
a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common
stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of
common stock.
Accounting
for the Series A Preferred Stock
The Series
A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of the holders. The
Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was an embedded derivative
requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A Preferred Stock is not required
to be bifurcated because the conversion feature is clearly and closely related to the host instrument. The Company believes the
economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embedded conversion feature
allows the Investor to convert into have similar economic risks and characteristics.
Series
B
On March 6,
2018, the Company’s Board of Directors approved the designation of a Series B Super Voting Preferred stock whose par value
is $.001. Under the terms of the designation, shares of Series B Super Voting Preferred stock, the Company is authorized to issue
10,000 shares. Holders of the Series B Super Voting Preferred stock have no conversion features. Holders of Series B Preferred
stock have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding
at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding
at the time of voting. All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s
Common Stock, par value $0.001 per share and any other class or series of capital stock of the Corporation hereafter created.
Common
Stock
Voting
Rights
. The holders of the Company’s Common Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the shareholders, except as otherwise provided by law.
Dividends
.
Subject to preferences that may be granted to any then outstanding preferred stock, holders of common stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds legally available therefore as well as any distributions
to the shareholders. The payment of dividends on the common stock will be a business decision to be made by our Board of Directors
from time to time based upon results of our operations and our financial condition and any other factors that our Board of Directors
considers relevant. Payment of dividends on the common stock may be restricted by loan agreements, indentures and other transactions
entered into by us from time to time.
Liquidation
Rights
. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably
in all of our assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock.
Absence
of Other Rights or Assessments
. Holders of common stock have no preferential, preemptive, conversion or exchange rights. There
are no redemption or sinking fund provisions applicable to the common stock. When issued in accordance with our articles of incorporation
and law, shares of our common stock are fully paid and not liable to further calls or assessment by us.
Conversion
Rights
. None
Nevada
Anti-Takeover Law
Certain provisions
of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a
shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does
not purport to be complete and is qualified in its entirety by reference to Nevada law.
The issuance
of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects
on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the issuance
of our Series A Convertible Preferred Stock if the option to acquire such shares is exercised would impede a business combination
by the voting and conversion rights that would enable a holder to block such a transaction. In addition, under certain circumstances,
the issuance of preferred stock could adversely affect the voting power of holders of our common stock.
Under Nevada
law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation,
does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his
discretion, may consider any of the following:
(i) The interests
of the corporation’s employees, suppliers, creditors and customers;
(ii) The economy
of the state and nation;
(iii) The
impact of any action upon the communities in or near which the corporation’s facilities or operations are located;
(iv) The long-term
interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued
independence of the corporation; and
(v) Any other
factors relevant to promoting or preserving public or community interests.
Because our
Board of Directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment
as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or
other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders
might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek
shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock
exchange rules.
Nevada’s
“Acquisition of Controlling Interest” statute applies to Nevada corporations that do business in the State of Nevada
directly or through an affiliate and which have 200 or more stockholders of record (at least 100 of which have record addresses
in Nevada), unless the articles of incorporation or bylaws specifically provide otherwise. If applicable, this statute generally
provides that any person acquiring certain statutorily defined “control” percentages (20%, 33.3% or a majority) of
a corporation’s outstanding shares in the secondary market is not entitled to vote those “control shares” unless
a majority of the other stockholders elects to restore such voting rights in whole or in part.
Nevada
Corporation Law generally provides that a Nevada corporation which has not “opted out” of coverage by this section
in the prescribed manner, such as the Company, may not engage in any “combination” with an “interested stockholder”
for a period of two years following the date that the stockholder became an “interested stockholder” unless prior
to that time the Board of Directors of the corporation approved either the “combination” or the transaction which
resulted in the stockholder becoming an “interested stockholder.”
DIVIDEND
POLICY
Since our
inception, we have not paid any dividends on our common stock, and we currently expect that, for the foreseeable future, all earnings
(if any) will be retained for the development of our business and no dividends will be declared or paid. In the future, our Board
of Directors may decide, at their discretion, whether dividends may be declared and paid, taking into consideration, among other
things, our earnings (if any), operating results, financial condition and capital requirements, general business conditions and
other pertinent facts.
Transfer
Agent
Our
Transfer Agent is Pacific Stock Transfer 6725 Via Austi Pkwy. Suite 300 Las Vegas, NV 89119 Telephone (800) 785-7782 Fax (702)
433-1979. The transfer agent is registered under the Exchange Act and operates under the regulatory authority of the SEC and FINRA.
SHARES ELIGIBLE
FOR FUTURE SALE
Prior to this
Offering, there has been a limited market for our Common Stock. Future sales of substantial amounts of our Common Stock, or securities
or instruments convertible into our Common Stock, in the public market, or the perception that such sales may occur, could adversely
affect the market price of our Common Stock prevailing from time to time. Furthermore, because there will be limits on the number
of shares available for resale shortly after this Offering due to contractual and legal restrictions described below, there may
be resales of substantial amounts of our Common Stock in the public market after those restrictions lapse. This could adversely
affect the market price of our Common Stock prevailing at that time.
Rule 144
In general,
a person who has beneficially owned restricted shares of our Common Stock for at least twelve months, in the event we are not
a reporting company under the Exchange Act, or at least six months, in the event we have been a reporting company under the Exchange
Act for at least 90 days before the sale, would be entitled to sell such securities, provided that such person is not deemed to
be an affiliate of ours at the time of sale or to have been an affiliate of ours at anytime during the 90 days preceding the sale.
A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled
to sell within any three-month period only a number of shares that does not exceed the greater of the following:
●
|
1% of
the number of shares of our Common Stock then outstanding; or
|
●
|
the
average weekly trading volume of our Common Stock during the four calendar weeks preceding the filing by such person of a
notice on Form 144 with respect to the sale;
|
provided that,
in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale.
Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.
LEGAL MATTERS
Certain legal
matters with respect to the shares of common stock offered hereby will be passed upon by Lux Law, pa of Washington, D.C.
EXPERTS
The consolidated
financial statements of the Company appearing elsewhere in this Offering Circular have been prepared by management and have not
been reviewed by an independent accountant.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed
with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock
offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information
set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the common
stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained
in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering
Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of
such contract or other document filed as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be
required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act
of 1934. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including
us, that file electronically with the SEC. The address of this site is
www.sec.gov
.
INDEX TO
FINANCIAL STATEMENTS
Consolidated Balance Sheets
– As of March 31, 2018 and March 31, 2017 (Unaudited)
|
F-2
|
Consolidated Statements of Operations and Comprehensive
Loss – For the Years ended March 31, 2018 and 2017 (Unaudited)
|
F-3
|
Consolidated Statement of Changes in Stockholders’
Deficit – For the Years ended March 31, 2018 and 2017 (Unaudited)
|
F-4
|
Consolidated Statements of Cash Flows –
For the Years ended March 31, 2018 and 2017 (Unaudited)
|
F-5
|
Notes to Consolidated Financial Statements –
For the Years ended March 31, 2018 and 2017 (Unaudited)
|
F-6
|
SQUARE CHAIN
CORPORATION
CONSOLIDATED
BALANCE SHEETS
(Stated in
US Dollars)
(Unaudited)
|
|
March 31,
|
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Other receivables
|
|
|
—
|
|
|
|
—
|
|
Total current assets
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation
|
|
|
—
|
|
|
|
2,644,762
|
|
Total non-current assets
|
|
|
—
|
|
|
|
2,644,762
|
|
Total assets
|
|
$
|
—
|
|
|
$
|
2,644,762
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses and other payables
|
|
$
|
2,000
|
|
|
$
|
86,172
|
|
Deferred tax liabilities
|
|
|
—
|
|
|
|
8,692
|
|
Related parties payables
|
|
|
—
|
|
|
|
3,078,390
|
|
Note payable-Officer
|
|
|
73,978
|
|
|
|
—
|
|
Mortgage loans – current portion
|
|
|
—
|
|
|
|
157,791
|
|
Total current liabilities
|
|
|
75,978
|
|
|
|
3,331,045
|
|
Mortgage loans – non-current portion
|
|
|
—
|
|
|
|
1,204,856
|
|
Total liabilities
|
|
$
|
75,978
|
|
|
$
|
4,535,901
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock: par value $0.001 per share; 10,000,000 shares authorized, 20,000 shares issued and outstanding at March 31, 2018 and 2017
|
|
|
20
|
|
|
|
20
|
|
Common stock: $0.001 par value, 990,000,000 shares authorized; 177,748,501 and 177,748,501 shares issued and outstanding at March 31, 2018 and 2017, respectively
|
|
|
177,748
|
|
|
|
177,748
|
|
Capital in excess of par value
|
|
|
9,496,072
|
|
|
|
9,496,072
|
|
Accumulated deficits
|
|
|
(9,749,818
|
)
|
|
|
(11,601,672
|
)
|
Accumulated other comprehensive income
|
|
|
—
|
|
|
|
36,693
|
|
Total shareholders’ deficit
|
|
|
(75,978
|
)
|
|
|
(1,891,139
|
)
|
Total liabilities and shareholders’ deficit
|
|
$
|
—
|
|
|
$
|
2,644,762
|
|
See notes to
consolidated financial statements
SQUARE CHAIN
CORPORATION
CONSOLIDATED
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Stated in
US Dollars)
(Unaudited)
|
|
For the Years Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
134,823
|
|
Cost of sales
|
|
|
—
|
|
|
|
(74,168
|
)
|
Gross profit
|
|
|
—
|
|
|
|
60,655
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(81,040
|
)
|
|
|
(81,040
|
)
|
General and administrative
|
|
|
(75,978
|
)
|
|
|
(92,098
|
)
|
Total expenses
|
|
|
(157,018
|
)
|
|
|
(173,138
|
)
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(157,018
|
)
|
|
|
(112,483
|
)
|
|
|
|
|
|
|
|
|
|
Other income and expenses
|
|
|
|
|
|
|
|
|
Exchange gain
|
|
|
—
|
|
|
|
—
|
|
Gain on disposals
|
|
|
—
|
|
|
|
—
|
|
Interest income
|
|
|
—
|
|
|
|
16
|
|
Interest expenses
|
|
|
(108,336
|
)
|
|
|
(108,336
|
)
|
Total other income and expenses
|
|
|
(108,336
|
)
|
|
|
(108,320
|
)
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(265,354
|
)
|
|
|
(220,803
|
)
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
Net loss from continuing operations
|
|
|
(265,354
|
)
|
|
|
(220,803
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
—
|
|
|
|
15,504
|
|
Comprehensive loss
|
|
|
(265,354
|
)
|
|
|
(205,299
|
)
|
|
|
|
|
|
|
|
|
|
Discontinued operations (Note 11)
|
|
|
|
|
|
|
|
|
Gain on disposition of discontinued operations, net
|
|
|
2,080,515
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,815,161
|
|
|
$
|
(205,299
|
)
|
|
|
|
|
|
|
|
|
|
Lo Loss per share: (continuing operations)
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
177,748,501
|
|
|
|
177,748,501
|
|
See notes to
consolidated financial statements
SQUARE CHAIN
CORPORATION
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ DEFICIT
For the Years
Ended March 31, 2018 and 2017
(Stated in
US Dollars)
(Unaudited)
|
|
Preferred stock
|
|
Common stock
|
|
Capital in
excess of
|
|
Accumulated
|
|
Accumulated other
comprehensive
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
par value
|
|
deficit
|
|
income
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2015
|
|
|
20,000
|
|
|
$
|
20
|
|
|
|
177,748,501
|
|
|
$
|
177,748
|
|
|
$
|
9,496,072
|
|
|
$
|
(10,024,085
|
)
|
|
$
|
4,106
|
|
|
$
|
(346,139
|
)
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,356,784
|
)
|
|
|
—
|
|
|
|
(1,356,784
|
)
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,083
|
|
|
|
17,083
|
|
Balance as of March 31, 2016
|
|
|
20,000
|
|
|
|
20
|
|
|
|
177,748,501
|
|
|
|
177,748
|
|
|
|
9,496,072
|
|
|
|
(11,380,869
|
)
|
|
|
21,189
|
|
|
|
(1,685,840
|
)
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(220,803
|
)
|
|
|
—
|
|
|
|
(220,803
|
)
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,504
|
|
|
|
15,504
|
|
Balance as of March 31, 2017
|
|
|
20,000
|
|
|
$
|
20
|
|
|
|
177,748,501
|
|
|
$
|
177,748
|
|
|
$
|
9,496,072
|
|
|
$
|
(11,601,672
|
)
|
|
$
|
36,693
|
|
|
$
|
(1,891,139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,815,161
|
|
|
|
|
|
|
|
1,815,161
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,693
|
|
|
|
(36,693
|
)
|
|
|
—
|
|
Balance as of March 31, 2018
|
|
|
20,000
|
|
|
$
|
20
|
|
|
|
177,748,501
|
|
|
$
|
177,748
|
|
|
$
|
9,496,072
|
|
|
$
|
(9,749,818
|
)
|
|
$
|
—
|
|
|
$
|
(75,978
|
)
|
See notes to
consolidated financial statements
SQUARE CHAIN
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Years
Ended March 31, 2018 and 2017
(Stated in
US Dollars)
(Unaudited)
|
|
For the Years Ended March 31,
|
|
|
2018
|
|
2017
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,815,161
|
|
|
$
|
(220,803
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
81,040
|
|
|
|
81,040
|
|
Gain from discontinued operations
|
|
|
(2,080,515
|
)
|
|
|
—
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in other receivables
|
|
|
—
|
|
|
|
22,185
|
|
Increase (decrease) in tax payable
|
|
|
—
|
|
|
|
(275
|
)
|
Increase (decrease) in accrued expenses and other payables
|
|
|
110,336
|
|
|
|
81,094
|
|
Net cash used in operating activities
|
|
|
(73,978
|
)
|
|
|
(36,759
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Sale of property and equipment
|
|
|
—
|
|
|
|
—
|
|
Net cash provided by investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Loan advance from related parties
|
|
|
—
|
|
|
|
39,495
|
|
Funds from note payable-officer
|
|
|
73,978
|
|
|
|
—
|
|
Repayment to related parties
|
|
|
—
|
|
|
|
(9,790
|
)
|
Repayment of loan
|
|
|
—
|
|
|
|
(36,959
|
)
|
Net cash provided (used) by financing activities
|
|
|
73,978
|
|
|
|
(7,254
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
—
|
|
|
|
(1,579
|
)
|
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents
|
|
|
—
|
|
|
|
(45,592
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
—
|
|
|
|
45,592
|
|
Cash and cash equivalents at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
$
|
108,336
|
|
|
$
|
108,336
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
See notes to
consolidated financial statements
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1:
Organization and principal activities
Square Chain
Corporation (formerly Asia Travel Corporation) (the “Company” or “Square Chain Corp”) was incorporated
under the laws of the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November
22, 1996, the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on
a basis of approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. The Company ceased to
actively pursue its business operations relating to the publishing of interactive media software in July 1999.
On January
9, 2008, the Company filed a Certificate of Amendment to its Articles of Incorporation designating 100,000 shares of preferred
stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 100,000 shares of the
Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class
with the common stock with each share of Series A Preferred Stock equal to 50 shares of common stock for voting purposes. The
stock is redeemable by the Company at $.05/share.
On October
28, 2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to
Piranha Ventures, Inc.
During December
2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly Realgold Venture Pte Limited)
(“Asia Travel (Hong Kong)”).
On May 17,
2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, increasing the number
of authorized common shares to 100,000,000 and authorized preferred shares 10,000,000. In addition, the Company completed a 1:10
reverse stock split.
On November
2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000
shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to
issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as
a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common
stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of
common stock.
On November
21, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name
of the corporation to Realgold International, Inc.
On May 23,
2012, the Board of Directors of the Company adopted an Amendment to the Articles of Incorporation to increase authorized stock
from 10,000,000 preferred shares and 99,000,000 common shares to 10,000,000 preferred shares and 990,000,000 common shares.
On November
22, 2012, Asia Travel (Hong Kong) entered into a Lease Management Agreement (“Lease Management Agreement”) with Zhuhai
Tengfei Investment Co., Ltd. (“Tengfei Investment”), a limited liability company formed under the laws of the People’s
Republic of China (“China” or “PRC”). Under the Lease Management Agreement, Tengfei Investment leased
the managerial and operating rights of Zhuhai Tengda International Travel Agency Co., Ltd. (“Tengda Travel”), a wholly
owned subsidiary of Tengfei Investment, to Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20
years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048
(RMB100,000) per year.
On November
25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with
Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the
ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 (approximately
$64,192).
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1:
Organization and principal activities (continued)
On November
29, 2012, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of
Tengda Hotel to Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation
approved this ownership transfer.
Tengda Hotel
and Tengda Travel are wholly owned subsidiaries of Tengfei Investment. They are considered as entities under common control. Accordingly,
the financial statements for Tengda Hotel and Tengda Travel have been consolidated for all periods presented, similar to a pooling-of-interests.
Tengda Travel
is a limited liability company formed under the laws of the People’s Republic of China on December 23, 2011. As of March
31, 2013, Tengda Travel had registered capital of RMB 300,000, or approximately $47,662 based on the exchange rate as of March
31, 2013. Tengda Travel’s principal activity is to provide packaged tours, air ticketing, reservation of hotel rooms and
golf courses and organize corporate conferences, exhibitions and show events for its customers.
Tengda Hotel,
formerly named Zhuhai Meihua Hotel Co., Ltd., is a limited liability company formed under the laws of the People’s Republic
of China on January 16, 2006. Tengda Hotel had registered capital of RMB 500,000, or approximately $79,403 based on the exchange
rate as of March 31, 2013. Tengda Hotel is a three-star hotel with 59 guest rooms, including 24 Standard Rooms, 24 Deluxe Rooms,
10 Business Rooms and 1 Luxury Suite, with many other amenities including fitness club, gym, business center, gift shop, meeting
room, ballroom, game room, and a large parking lot.
Upon the completion
of the said ownership transfer, Tengda Hotel became the wholly owned subsidiary of Asia Travel (Hong Kong).
On May 16,
2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name
from Realgold International, Inc. to Asia Travel Corporation.
On November
6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui
Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the
ownership of Tengfei Investment for a total transfer price of RMB5,000,000 (approximately $820,309).
On January
22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of
Tengfei Investment to Tengda Hotel.
Upon the completion
of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement
would be automatically terminated on January 22, 2014.
On September
27, 2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting
company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
On March 5,
2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County,
Nevada.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1:
Organization and principal activities (continued)
On March 6,
2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers
and directors were terminated from their position for abandonment of the Company.
On March 7,
2018, the Company filed its Reinstatement with the State of Nevada and its Annual list of officers and directors.
On March 7,
2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new series of
preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the designation, the
Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has voting rights equal
to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting,
plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting.
On March 8,
2018, the Company filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square
Chain Corporation.
On March 9,
2018, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority for
the name change to Square Chain Corporation, and for a new trading symbol.
Stock Split
On June 13,
2011, the Company effected a reverse stock split of the issued and outstanding shares of the Company on a ten (10) to one (1)
basis with all fractional shares rounded up to the nearest whole share. The capital stock accounts, all share data and earnings
per share data give effect to the stock split, applied retrospectively, to all periods presented.
Note 2:
Summary of significant accounting policies
Basis of
presentation
The Company
maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The consolidated
financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally
accepted accounting principles in the United States of America and have been consistently applied in the presentation of consolidated
financial statements. These financial statements include all adjustments that, in the opinion of management, are necessary in
order to make them not misleading.
Principles
of consolidation
The consolidated
financial statements give effect to the Share Exchange Transaction as if occurred at the beginning of the periods presented and
include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions
have been eliminated in consolidation.
Use of
estimates
The preparation
of the financial statements in conformity with generally accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from these estimates. Significant estimates include the useful life of property and equipment,
and assumptions used in assessing impairment of long-term assets.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2:
Summary of significant accounting policies (continued)
Fair value
of financial instruments
The Company
adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify
the inputs used in measuring fair value as follows:
●
|
Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
|
|
|
●
|
Level 2-Inputs are
unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets
and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from
or corroborated by observable market data.
|
|
|
●
|
Level 3-Inputs are
unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best available information.
|
The carrying
amounts reported in the balance sheets for cash, due from related parties, other assets, accrued expenses, other payables, and
due to related parties approximate their fair market value based on the short-term maturity of these instruments. The Company
did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of March 13, 2018
and 2017.
ASC 825-10
“Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities
at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable,
unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that
instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value
option to any outstanding instruments.
Cash and
Cash Equivalents
For purposes
of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. Management believes that Company’s cash and cash equivalents held by major banks
located in the PRC are of high credit quality as of March 31, 2018.
Credit
risk
The Company
may be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimated irrecoverable
amounts determined by reference to past default experience and the current economic environment.
Property
and equipment
Property and
equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated
residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major
replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are
removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines
the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their
recorded value may not be recoverable.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2: Summary of significant
accounting policies (continued)
The estimated useful lives are
as follows:
Buildings
|
50 years
|
Leasehold improvements
|
20 years
|
Impairment
of long-lived assets
In accordance
with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment
loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment
is measured as the difference between the asset’s estimated fair value and its book value.
Revenue
Recognition
Revenue derived
from hotel services is recognized when the rooms are occupied and the services are performed. Travel agency services revenues
are recognized when the travel-related service, golf package service or transportation is provided, or when the organization service
of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of deposits paid in advance is
recognized as revenue when the services are performed for hotels and upon commencement of travel agency services.
Employment
benefits
The Company
does not provide any other post-retirement or post-employment benefits.
Income
Taxes
The Company
is governed by the Income Tax Law of US, Hong Kong and PRC. The Company accounts for income tax using the liability method prescribed
by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference
between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the
year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets
if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets
will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that
includes the enactment date.
The Company
applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification
related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods
remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute
of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such
adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part,
upon the results of operations for the given period. As of March 31, 2018 and 2017, the Company had no uncertain tax positions,
and will continue to evaluate for uncertain positions in the future.
Foreign
currency translation
The accompanying
consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is
the USD. The functional currency of EETA is Renminbi dollars (“RMB”). For the subsidiaries whose functional currencies
are the USD or RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and
liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange
rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree
with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating
the local currency financial statements into U.S. dollars are included in determining comprehensive income.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2:
Summary of significant accounting policies (continued)
All of the
Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction
in foreign currencies and, accordingly, transaction gains or losses have not had, and are not expected to have, a material effect
on the results of operations of the Company.
Earnings
per share
ASC 260 “Earnings
per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.
Basic net
income per share is computed by dividing net income available to common shareholders by the weighted average number of shares
of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average
number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Accumulated
other comprehensive loss
Comprehensive
loss is comprised of net loss and all changes to the statements of stockholders’ deficit, except those due to investments
by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the years
ended March 31, 2018 and 2017 included net loss and unrealized loss from foreign currency translation adjustments.
Related
party transactions
A related
party is generally defined as (i) any person that holds 10% or more of the Company’s securities including such person’s
immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions
of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations
between related parties.
Recent
accounting pronouncements
The Company
has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material
impact on results of operations, financial condition, or cash flows, based on current information.
Note 3:
Going concern
As shown in
the accompanying consolidated financial statements, the Company has generated a net loss from continuing operations of $265,354
and an accumulated deficit of $9,749,818 as of March 31, 2018. The Company also experienced insufficient cash flows from operations
and will be required continuous financial support from the shareholders. The Company will need to raise capital to fund its operations
until it is able to generate sufficient revenue to support the future development. Moreover, the Company may be continuously raising
capital through the sale of debt and equity securities
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 3:
Going concern (continued)
The Company’s
ability to achieve these objectives cannot be determined at this stage. If the Company is unsuccessful in its endeavors, it may
be forced to cease operations. These consolidated financial statements do not include any adjustments that might result from this
uncertainty which may include adjustments relating to the recoverability and classification of recorded asset amounts or amounts
and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 obtain adequate financing or achieve profitability. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Note 4:
Property, plant and equipment
Property,
plant and equipment consisted of the following:
|
|
Years Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Buildings
|
|
$
|
—
|
|
|
$
|
2,203,310
|
|
Leasehold improvements
|
|
|
—
|
|
|
|
848,034
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
—
|
|
|
|
3,051,344
|
|
Less: accumulated depreciation
|
|
|
—
|
|
|
|
(406,582
|
)
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment, net
|
|
$
|
—
|
|
|
$
|
2,644,762
|
|
The Company
discontinued operations as of March 5, 2018. Please
see
Note 11: Discontinued Operations
for further
information.
Note 5:
Mortgage loans
|
|
Years Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Mortgage loans - wholly repayable in year 2024
|
|
$
|
—
|
|
|
$
|
1,362,647
|
|
Less: current maturities of mortgage loans
|
|
|
—
|
|
|
|
(157,791
|
)
|
|
|
|
|
|
|
|
|
|
Non-current maturities of mortgage loans
|
|
$
|
—
|
|
|
$
|
1,204,856
|
|
The Company
discontinued operations as of March 5, 2018. Please
see
Note 11: Discontinued Operations
for further
information.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 6:
Capital Stock
Preferred
Stock
The Company
is authorized to issue 10,000,000 shares of its preferred stock, par value $.001. As of March 31, 2018 and March 31, 2017, the
Company has 30,000 and 20,000 shares of preferred stock issued and outstanding, respectively.
Series
A Preferred Stock
On November
2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000
shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to
issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as
a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common
stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of
common stock. As of March 31, 2018 and March 31, 2017, the Company had 20,000 and 20,000 shares issued and outstanding, respectively
Series
B Preferred Stock
On March 7,
2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new series of
preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the designation, the
Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has voting rights equal
to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting,
plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting.
As of March 31, 2018 and March 31, 2017, the Company had 10,000 and 0 shares issued and outstanding, respectively
Stock-Based
Compensation
The Company
accounts for stock-based compensation under FASB ASC subtopic 718-10, Compensation – Stock Compensation: Overall. Under
FASB Subtopic 718-10, the Company measures the cost of the employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award and recognizes the cost over the requisite service periods.
Common
Stock
The Company
is authorized to issue 990,000,000 shares of its common stock, par value $.001. As of March 31, 2018 and March 31, 2017, the Company
has 177,748,501 and 177,748,501 shares of common stock issued and outstanding, respectively.
On July 22,
2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual
purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock
to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption
provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out
outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.
On September
16, 2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting
company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 7:
Income Taxes
Square Chain
Corporation is incorporated in the United States and subject to income taxes on an entity basis on income arising in, or derived
from, the tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax
expense or tax liability for the years ended March 31, 2018 and 2017.
The Company
evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties)
based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years ended March
31, 2018 and 2017, the Company had no unrecognized tax benefits.
The Company
does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company
will classify interest and penalties related to income tax matters, if any, in income tax expense.
|
|
|
Years Ended March 31,
|
|
|
|
2018
|
|
|
|
2017
|
|
Income tax expense is comprised of:
|
|
|
|
|
|
|
|
|
Current income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred income tax
|
|
|
—
|
|
|
|
—
|
|
Total provision for income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred income
taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements at each year-end and tax loss carryforwards. Deferred income tax was measured using
the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences
that give rise to the following approximate deferred tax assets and liabilities as of March 31, 2018 and 2017 are presented below:
|
|
|
Years Ended March 31,
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Operating loss carryforward
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued tax expense
|
|
|
—
|
|
|
|
—
|
|
Deferred tax liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Note 8:
Loss per share
The following
table presents a reconciliation of basic and diluted net loss per share:
|
|
Years Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Net loss available to common stockholders for basic and diluted net loss per share of common stock
|
|
$
|
(265,354
|
)
|
|
$
|
(220,803
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Basic
|
|
|
177,748,501
|
|
|
|
177,748,501
|
|
Conversion of preferred stock
|
|
|
20,000,000
|
|
|
|
20,000,000
|
|
Anti-dilutive effect of preferred stock
|
|
|
(20,000,000
|
)
|
|
|
(20,000,000
|
)
|
Weighted average common stock outstanding – diluted
|
|
|
177,748,501
|
|
|
|
177,748,501
|
|
|
|
|
|
|
|
|
|
|
Loss per common stock – basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 9:
Related parties transactions/Note Payable-Officer
The Company
discontinued previous operations as of March 5, 2018. All related party loans were forgiven by all parties. Please
see
Note
11: Discontinued Operations
for further information. On March 6, 2018, the Custodian of the Company appointed Jeffrey
J Parker as the Company’s sole officer and director. All past officers and directors were terminated from their position
for abandonment of the Company.
On March 27,
2018, Mr. Parker executed a demand note to the Company in the amount of $73,978 at 5% interest due August 1, 2018.
9.1 Previous
Related parties
|
Name of related parties
|
Relationship with the
Company
|
|
Mr. Tan Lung Lai
|
Shareholder of the Company
|
|
Mr. Li Guo Hua
|
Shareholder of the Company
|
|
Ms. Zhou Hui Juan
|
Shareholder of the Company
|
|
Ms. Yu Li Ying
|
Mother-in-law of shareholder of the Company
|
9.2 Related
party balances
The Company
had the following related party balances at March 31, 2018 and 2017:
|
|
Years Ended March 31,
|
|
|
2018
|
|
2017
|
Loan from Mr. Tan Lung Lai
|
|
$
|
—
|
|
|
$
|
1,215,321
|
|
Loan from Mr. Li Guo Hua
|
|
|
—
|
|
|
|
678,360
|
|
Loan from Ms. Zhou Hui Juan
|
|
|
—
|
|
|
|
624,672
|
|
Loan from Ms. Yu Li Ying
|
|
|
—
|
|
|
|
560,037
|
|
Total related party payables
|
|
|
$
|
|
|
$
|
3,078,390
|
|
Note payable-officer
|
|
$
|
73,978
|
|
|
$
|
—
|
|
Total notes payable
|
|
$
|
73,978
|
|
|
$
|
—
|
|
Note 10:
Commitments and contingencies
Legal Proceeding
For the year
ended March 31, 2016, the Company received the summons and complaint filed by Allison Carr (“Plaintiff”) in the Judicial
District Court for Salt Lake County, State of Utah. The Company was named as one of the defendants by the Plaintiff. The Plaintiff
was the ex-wife of Curtis S. Olsen, a former officer of the Company. The Plaintiff claimed that Curtis Olsen and Kip Eardley,
another former officer of the Company, wrongfully transferred the shares of the Company held by Curtis Olsen. The Plaintiff claimed
that the shares in question were transferred to an entity controlled by Kip Eardley below the fair value. The Plaintiff alleged
that Curtis Olsen and Kip Eardley transferred the shares with intention to hide the assets from the Plaintiff amid the divorce
proceedings. The Company had engaged a Utah counsel to represent them in the lawsuit. This lawsuit was ended as the Plaintiff
filed a motion to dismiss to end the lawsuit and the court granted such motion. There was no damage caused to the Company.
There has
been no other legal proceeding in which the Company is a party as of March 31, 2018.
Square Chain
Corporation
Notes to Consolidated
Financial Statements
For the years
ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 11:
Discontinued Operations
The Company
previously operated a travel agency, hotel and Tengfei through direct ownership in China. These operations were discontinued and
abandoned:
On March 5,
2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County,
Nevada.
On March 6,
2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers
and directors were terminated from their position for abandonment of the Company.
The gain on
disposition of these discontinued operations was calculated as follows:
Fair value as of March 2018:
|
|
|
|
|
|
Accrued expenses
|
|
$
|
196,508
|
|
Deferred tax liabilities
|
|
|
8,692
|
|
Related party payables
|
|
|
3,078,390
|
|
Mortgage loans
|
|
|
1,362,647
|
|
Property and equipment book value
|
|
|
(2,563,722
|
)
|
Gain on disposition of discontinued operations
|
|
$
|
2,080,515
|
|
Note 12:
Subsequent Events
None
Note 13.
Change in Management
On March 5,
2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County,
Nevada.
On March 6,
2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers
and directors were terminated from their position for abandonment of the Company.
SQUARE
CHAIN CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
(Stated
in US Dollars)
ASSETS
|
|
September 30,
2018
|
|
March 31,
2018
|
Current assets:
Cash and cash equivalents
|
|
|
16,084
|
|
|
|
—
|
|
Total current assets
|
|
|
16,084
|
|
|
|
—
|
|
Total assets
|
|
$
|
16,084
|
|
|
$
|
—
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Accounts payables
|
|
$
|
41,593
|
|
|
$
|
2,000
|
|
Accrued expenses Related parties’ payables: Note payable-Officer
|
|
|
63,312
73,978
|
|
|
|
-73,978
|
|
Total current liabilities
|
|
|
178,883
|
|
|
|
75,978
|
|
Long term liabilities: Convertible debentures payable
|
|
|
10,000
|
|
|
|
—
|
|
Total liabilities
|
|
$
|
188,883
|
|
|
$
|
75,978
|
|
SHAREHOLDERS' DEFICIT
Preferred stock: par value $0.001 per share; 10,000,000 shares authorized, 30,000 and 20,000 shares issued and outstanding at September 30, 2018 and March 31, 2018, respectively.
|
|
|
30
|
|
|
|
20
|
|
Common stock: $0.001 par value, 990,000,000 shares authorized; 187,248,501 and 177,748,501 shares issued and outstanding at September 30, 2018 and March 31,
2018, respectively.
|
|
|
187,248
|
|
|
|
177,748
|
|
Capital in excess of par value
|
|
|
9,961,562
|
|
|
|
9,496,072
|
|
Accumulated deficits Treasury Stock, at cost
|
|
|
(10,321,639
|
)-
|
|
|
(9,749,818
|
)-
|
Total shareholders' deficit
|
|
|
(172,799
|
)
|
|
|
(75,978
|
)
|
Total liabilities and shareholders' deficit
|
|
$
|
16,084
|
|
|
$
|
—
|
|
See
notes to unaudited condensed consolidated financial statements
SQUARE
CHAIN CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (unaudited)
(Stated
in US Dollars)
For the six months
ended September 30,
|
|
|
2018
|
|
|
|
2017
|
|
Revenue Cost of sales Gross profit
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating expenses Depreciation
|
|
|
—
|
|
|
|
40,520
|
|
Stock issued for professional services
|
|
|
425,000
|
|
|
|
—
|
|
General and administrative
|
|
|
143,509
|
|
|
|
—
|
|
Total expenses
|
|
|
538,509
|
|
|
|
40,520
|
|
Loss from operations
|
|
|
(568,509
|
)
|
|
|
(40,520
|
)
|
Other income and expenses Interest income
|
|
|
—
|
|
|
|
—
|
|
Interest expenses
|
|
|
(3,312
|
)
|
|
|
(54,168
|
)
|
Total other income and expenses
|
|
|
(3,312
|
)
|
|
|
(54,168
|
)
|
Loss before income taxes Income tax expense
|
|
|
(571,821
|
)-
|
|
|
(94,688
|
)-
|
Net loss
|
|
$
|
(571,821
|
)
|
|
$
|
(94,688
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Weighted average common stock outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
186,281,834
|
|
|
|
177,748,501
|
|
|
|
|
|
|
|
|
|
|
See
notes to unaudited condensed consolidated financial statement
SQUARE
CHAIN CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Stated
in US Dollars)
|
|
For
the six months ended September 30,
|
|
|
2018
|
|
2017
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(571,821
|
)
|
|
$
|
94,688
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
—
|
|
|
|
—
|
|
Depreciation
|
|
|
—
|
|
|
|
40,520
|
|
Issuance of stock for professional services Changes in assets and liabilities:
Increase (decrease) in accrued expenses and other payables
|
|
|
425,000
102,905
|
|
|
|
54,168
|
|
Net cash used in operating activities
|
|
|
(43,916
|
)
|
|
|
—
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities
|
|
|
—
|
|
|
|
—
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
Loan advance from related parties
|
|
|
—
|
|
|
|
—
|
|
Issuance of common stock-Reg A
|
|
|
50,000
|
|
|
|
—
|
|
Borrowings from convertible debentures
|
|
|
10,000
|
|
|
|
—
|
|
Net cash (used in) provided by financing activities
|
|
|
60,000
|
|
|
|
—
|
|
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
|
|
|
16,084-
|
|
|
|
—
|
|
Cash and cash equivalents at end of period
|
|
$
|
16,084
|
|
|
$
|
—
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
$
|
3,312
|
|
|
$
|
54,168
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
See
notes to unaudited condensed consolidated financial statement
SQUARE
CHAIN CORPORATION
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Six
Months Ended September 30, 2018 and 2017
Note 1: Basis of Presentation
and Summary of Significant Accounting Policies
The interim
condensed consolidated financial statements included herein, presented in accordance with United States generally accepted accounting
principles and stated in US dollars, have been prepared by the Company, without audit. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the
information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which,
in the opinion of management, are necessary for fair presentation of the information contained therein. The Company follows the
same accounting policies in the preparation of interim reports.
Organization
Square Chain
Corporation (formerly Asia Travel Corporation) (the “Company” or “Square Chain”) was incorporated under
the laws of the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996,
the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of
approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. The Company ceased to actively pursue
its business operations relating to the publishing of interactive media software in July 1999.
Our Common Stock is quoted
on the OTC Markets’ Pink Open Market under the symbol “SQCC.” The Company’s previous trading symbol was
“ATSR.”
On October 28,
2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to Piranha
Ventures, Inc.
During December
2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly Realgold Venture Pte Limited)
(“Asia Travel (Hong Kong)”).
On May 17, 2011,
the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, increasing the number of authorized
common shares to 100,000,000 and authorized preferred shares 10,000,000. In addition, the Company completed a 1:10 reverse stock
split.
On November 2,
2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares
of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue
up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate
and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for
voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
On November 21, 2011,
the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation
to Realgold International, Inc.
On May 23, 2012,
the Board of Directors of the Company adopted an Amendment to the Articles of Incorporation to increase authorized stock from
10,000,000 preferred shares and 99,000,000 common shares to 10,000,000 preferred shares and 990,000,000 common shares.
On November
22, 2012, Asia Travel (Hong Kong) entered into a Lease Management Agreement (“Lease Management Agreement”) with Zhuhai
Tengfei Investment Co., Ltd. (“Tengfei Investment”), a limited liability company formed under the laws of the People’s
Republic of China (“China” or “PRC”). Under the Lease Management Agreement, Tengfei Investment leased
the managerial and operating rights of Zhuhai Tengda International Travel Agency Co., Ltd. (“Tengda Travel”), a wholly
owned subsidiary of Tengfei Investment, to Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20
years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048
(RMB100,000) per year.
On November 25,
2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei
Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership
of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 (approximately
$64,192).
On
November 29, 2012, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer
of Tengda Hotel to Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation
approved this ownership transfer.
Tengda
Hotel and Tengda Travel are wholly owned subsidiaries of Tengfei Investment. They are considered as entities under common control.
Accordingly, the financial statements for Tengda Hotel and Tengda Travel have been consolidated for all periods presented, similar
to a pooling-of-interests.
Tengda Travel is
a limited liability company formed under the laws of the People’s Republic of China on December 23, 2011. As of March 31,
2013, Tengda Travel had registered capital of RMB 300,000, or approximately $47,662 based on the exchange rate as of March 31,
2013. Tengda Travel’s principal activity is to provide packaged tours, air ticketing, reservation of hotel rooms and golf
courses and organize corporate conferences, exhibitions and show events for its customers.
Tengda Hotel,
formerly named Zhuhai Meihua Hotel Co., Ltd., is a limited liability company formed under the laws of the People’s Republic
of China on January 16, 2006. Tengda Hotel had registered capital of RMB 500,000, or approximately $79,403 based on the exchange
rate as of March 31, 2013. Tengda Hotel is a three-star hotel with 59 guest rooms, including 24 Standard Rooms, 24 Deluxe Rooms,
10 Business Rooms and 1 Luxury Suite, with many other amenities including fitness club, gym, business center, gift shop, meeting
room, ballroom, game room, and a large parking lot.
Upon the completion
of the said ownership transfer, Tengda Hotel became the wholly owned subsidiary of Asia Travel (Hong Kong).
On May 16, 2013, the
Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold
International, Inc. to Asia Travel Corporation.
On November 6,
2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan
and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership
of Tengfei Investment for a total transfer price of RMB5,000,000 (approximately $820,309).
On January 22,
2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei
Investment to Tengda Hotel.
Upon the completion
of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement
would be automatically terminated on January 22, 2014.
On September
27, 2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting
company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
On March 5, 2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark
County, Nevada.
On March 6,
2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers
and directors were terminated from their position for abandonment of the Company.
On March 7, 2018, the
Company filed its Reinstatement with the State of Nevada and its Annual list of officers and directors.
On March
7, 2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new
series of preferred stock titled Series B Super Voting Preferred Stock whose par value is
$.001. Under the terms of
the designation, the Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock
has voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and
outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and
outstanding at the time of voting.
On March 8, 2018,
the Company filed a Certificate of Amendment to its Articles of Incorporation with the State of Nevada to effectively change the
name of the Company to Square Chain Corporation.
On March 9, 2018,
the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority for the
name change to Square Chain, Inc. and for a new trading symbol.
On April 5, 2018,
the Company entered into a legal representational agreement with John E. Lux, Esq. for the purpose of preparing the documents
to be submitted for its Offering Statement on Form 1-A..
On April 10, 2018,
the Financial Industry Regulatory Authority (“FINRA”) informed the Company that it had sufficient information to pass
on the Company’s submitted corporate action for a name change and new trading symbol. The Company’s new trading symbol
is “SQCC”.
On April 17, 2018,
the Company entered issued a Convertible Promissory Note in the amount of Ten Thousand and no/100 dollars ($10,000) to Tri-Bridge
Ventures, LLC for funds received.
On May 4, 2018,
the Company filed an Offering Statement on Form 1-A with the Securities and Exchange Commission. The Company is registering 80,000,000
shares at a price of $.05.
On May 11, 2018,
the Company filed an application for registration in the State of New York to be approved to issue securities in New York state.
The application has been approved and was deemed effective as of the filing date of May 11, 2018.
On May 18, 2018,
the Company entered into an agreement with Pacific Stock Transfer for their transfer agency services.
On August 21, 2018,
the Company entered into common stock subscription agreement with Tri-Bridge Venture LLC for the sale of 1,000,000 shares of common
stock priced at $.05 per share. This subscription agreement is within the Reg A offering document which was deemed effective by
the Securities and Exchange Commission on August 17, 2018.
On August 21, 2018, the
Company entered into an escrow agreement with Tri-Bridge Ventures LLC and Benjaman
L. Bunker pertaining
to the sale of 1,000,000 shares of common stock to Tri-Bridge Ventures LLC.
On August 21, 2018,
the Company entered into an office lease agreement with STAR-TEC Enterprises in the amount of $470.00 per month for new corporate
office space.
On September 7,
2018, the Company entered into an agreement with Spotlight Growth for Investor Relations Services.
On September 11,
2018, the Company filed a registration form with the State of Florida for a foreign profit corporation to transact business in
Florida.
On September 24, the
Company authorized the issuance of 1,000,000 shares of common stock, in consideration for
$50,000, to Tri-Bridge
Ventures, LLC as part of its Reg A offering.
Business Model
Under
its most recently discontinued business model, the Company carried out business operations through its prior wholly owned Hong
Kong subsidiary Asia Travel Ltd (Hong Kong) (formerly named “Realgold Venture Pte Limited”) and its affiliated entities
in China including Zhuhai Tengda International Travel Agency Co., Ltd and Zhuhai Tengda Business Hotel Co., Ltd. Through its subsidiary
and affiliated entities, Square Chain Corporation provided travel related services throughout Asia, including online travel platforms
and services, online hotel and flights booking and reservation services, managing and operating hotels including Zhuhai Tengda
Business Hotel and Tengda Mansion. Asia Travel Corporation’s business model is unique as it generates revenues from diverse
revenue streams by providing various travel services and acquiring various assets, which distinguishes Asia Travel Corporation
from other travel service providers and put it at the competitive edge.
In
March 2018, the Board of Directors elected to shift the Company’s business model to concentrate on business opportunities
the can benefit from blockchain technology. Square Chain has designed a hybrid business model to take advantage of opportunistic
business ventures that have short to medium term revenue opportunities and, in addition, operational processes that can possibly
be improved upon by utilizing blockchain technology.
Square
Chain Corporation believes it can develop direct business relationships and opportunities to participate in operating projects
that have the potential to benefit from blockchain technology.
Unlike
most companies pivoting into the blockchain space, Square Chain Corporation is not pursuing ownership in cryptocurrencies or tokens.
Likewise, Square Chain has no plans to pursue, or participate, in any type of an ICO. We do not have the management systems in
place to manage the custodial obligations coins and tokens present. Furthermore, the Company has no plans to enter the increasingly
crowded arena of cryptocurrency mining.
Our
revenue will be derived from participating in traditional business ventures with short to medium term revenue opportunities that
have the potential to utilize longer term block chain technologies to improve upon their business processes.
The
company has identified an industry that has the potential to take advantage of the capabilities and attributes of blockchain technology.
We have had preliminary discussions with an expert and current 30-year participant in the direct response television industry
(DRTV) to conduct a study to determine potential blockchain applications that can solve operational pain points in the business,
as well as the industry in general.
|
●
|
International
Distribution
|
Within
these areas of interest of a successful DRTV program,
we
will be particularly interested
in the areas of inbound call centers and the integrity of the ordering process, customer data integrity, fulfillment logistics,
including inventory management, global supply chain issues and payment systems.
Square
Chain is also in exploratory discussions with the local identified company to participate in a DRTV product and product launch.
This would allow us to actively participate in the entire DRTV process, offering us the insight to know the industry needs inside
and out, and increasing the likelihood of a successful blockchain application(s) product(s) roll out to the industry.
Upon adequate
funding, we will commence a white paper study project by hiring a blockchain consulting group already identified to conduct a
thorough review of the DRTV business mentioned above. The study will include extensive discussions with the DRTV’s management
team to gain a detailed perspective about their business operations, including in depth details of particular pain points that
can be improved upon through blockchain technology. We have determined that this white paper study will take 75 to 90 days and
cost an estimated $12,000 -$18,000.
If
the study concludes that blockchain technology applications can be developed to address these operational challenges, then we
would begin the process of hiring a blockchain applications developer to develop an application, or multiple applications, and
then incorporating the solutions. If the application(s) proves to be successful, then Square Chain could market the product(s)
to other industry participants.
The
estimated cost for a DRTV project is $275,000. The components of this investment would include:
|
●
|
Infomercial
production costs
|
|
●
|
Media
time slot purchases
|
|
●
|
Initial
inventory costs
|
|
●
|
Ecommerce
product website costs
|
|
●
|
Call
center set up costs
|
|
●
|
Fulfillment
set up costs
|
Square
Chain Corporation will acquire the worldwide sales and marketing rights for the product to be sold for the initial test program
and, assuming success of the initial test, will launch the product nationally and internationally through traditional DRTV sales
and marketing channels. These channels could include infomercials, US TV shopping networks, international TV shopping networks,
Facebook and traditional retail stores.
The
proposed partner for this project has been a well-known participant within the DRTV industry for over 30 years and has successfully
managed many projects in various product categories. This deep experience, along with extensive industry contacts will help the
company to mitigate some of the risks associate with a traditional start-up company.
Upon
funding the parties will move rapidly to conclude negotiations and start both the blockchain white paper study and the actual
DRTV product launch.
The challenges we will
encounter with our initial project and beyond will include:
|
●
|
General
market acceptance of a potential DRTV blockchain application(s)
|
|
●
|
Identifying
companies willing to undertake the process of sharing their internal business processes
in order to develop a blockchain benefits white paper study
|
|
●
|
Hiring
the right blockchain developer for the specific task
|
|
●
|
Incorporating
the block chain application into the existing business model may be costly and disruptive
in the beginning
|
|
●
|
Our
partner companies will need to have the proper staff to solve roadblocks as
we
launch the application
|
Blockchain Incubator
As
part of the Company’s business plan to identify key talent and emerging blockchain concepts, the company will continue to
participate in blockchain related networking opportunities. There is a growing and thriving community of blockchain application
developers in our local market looking to associate themselves with a company such as Square Chain to complete product development
and bring these products to market.
At
present, the Company is working closely with a local blockchain incubator to identify developers looking for employment opportunities
in blockchain software and app development. The incubator is a blockchain technology education, co-work and development center.
It is their mission to provide an amazing space for innovation in the world’s most exciting and fast-moving industry. They
are a collaborative space for blockchain technology educators, innovators, and startups.
In-House
Blockchain Application Development
Concurrent
to becoming a member of the incubator, the Company will conduct an extensive search for in-house Ethereum blockchain software
application developers. The company intends to develop in-house applications to take advantage of the ever-expanding opportunities
for blockchain platforms in several industries as highlighted below.
Upon
funding, the company plans to hold discussions with business leaders in industry categories where we feel blockchain can have
the most immediate impact, like our DRTV project. Our approach working within other industries will likely mirror our outcome
with the DRTV project. This unique approach will allow for revenues to be derived from both the opportunities created by developing
blockchain applications for sale within the target industry, plus the more traditional revenue streams of the existing business
models. To help minimize risks, the company will partner with reputable and successful partners with a long history of working
within the targeted industries and will utilize their management expertise.
Third
Party Blockchain Application Development
The
Company may elect to co-develop, fund late stage development or acquire certain blockchain applications. There are currently several
blockchain software applications being developed utilizing the Ethereum open-source, public, blockchain-based distributed computing
platform and operating system featuring smart contract functionality. As these applications approach their final stages of development,
we
will conduct a comprehensive business analysis of each to determine which we feel
best suits our company goals.
One
such product under current review is dedicated to payment systems that allows users to take advantage of blockchain’s invaluable
traits. The history of being able to purchase, receive and use blockchain based tokens has been a difficult and bumpy one. Though
much progress has been made, there are still only a few on-ramps (exchanges, word of mouth) into owning blockchain tokens. Not
only that, but those who seek to purchase tokens from exchanges are a self-selecting group - generally technical and early adopters.
The
vision for this product is to make it as easy as possible to create applications that use cryptocurrency, particularly for mobile.
As a result, above the protocol layer, the team will build an open source mobile iOS and Android SDK.
These
SDK’s will be built with a plugin system in mind - since it is infeasible for the team to support every cryptocurrency,
the aim is to make it as simple as possible to add your own.
This
way, developers will have easy access to the infrastructure provided by this program. There will be a well defined set of interfaces
in the mobile SDK’s that developers will have to adhere to. This includes methods like createWallet(), createTransaction(),
signTransaction() and sendTransaction(). The networking of accessing Relay Nodes will be taken care of, and the developer can
focus on building their mobile application that leverages whichever cryptocurrency they wish.
The
Relay Node software is also part of the middleware layer. This includes easy creation of a REST API endpoint to receive and relay
transactions sent by the mobile SDK’s. It will be a simple npm install and run on a server of your choice.
To
generate revenue from this type of investment, Square Chain would have to negotiate a royalty-based fee paid upon each software
license the application developer sells or monetize the investment through the liquidation of its ownership stake sometime in
the future.
As
part of its investment in third party application developers, Square Chain Corporation will endeavor to negotiate a board of director’s
position, advisory board position or other type of management oversight role to help ensure the success of these opportunities.
This can be accomplished by seeking out and retaining, through our various networks, the appropriate subject matter experts to
oversee the investments we anticipate.
Risks
to Our Business Model
A
common risk of our multi-faceted business model is being able to identify products that will sell and create revenue for Square
Chain Corporation. Our approach to working with managers and software developers with many years of experience and a deep understanding
of their respective areas of expertise, including the ability to identify successful products and emerging trends, will help us
to mitigate certain risks associated with our strategy. We will not move forward on developing a software application, an investment
in a third-party software developer, or a DRTV product launch unless we feel very confident of the product or the partners we
may seek to establish a relationship with for future or current projects.
Retaining
Key Personnel
Upon funding,
the Company will look to retain key personnel that fit into the culture of the company. Positions to be filled include software
developers, marketing and sales, executive assistant, graphic artists and a Treasurer.
In addition, the Company
will form an Advisory Committee to be filled by leaders within the blockchain sector. The Company is in discussion with several
forward thinking blockchain advocates well known on the lecture circuit.
Basis of
presentation
The
Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The consolidated
financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally
accepted accounting principles in the United States of America and have been consistently applied in the presentation of consolidated
financial statements. These financial statements include all adjustments that, in the opinion of management, are necessary in
order to make them not misleading.
Principles of consolidation
The consolidated
financial statements give effect to the Share Exchange Transaction as if occurred at the beginning of the periods presented and
include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions
have been eliminated in consolidation.
Use of estimates
The preparation
of the financial statements in conformity with generally accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from these estimates. Significant estimates include the useful life of property and equipment,
and assumptions used in assessing impairment of long-term assets.
Fair value of financial
instruments
The Company adopted
the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition
of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used
in measuring fair value as follows:
|
•
|
Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities
available at the measurement date.
|
|
•
|
Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets,
quoted prices for identical or similar assets and liabilities in markets that are not
active, inputs other then quoted prices that are observable, and inputs derived from
or corroborated by observable market data.
|
|
•
|
Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions
on what assumptions the market participants would use in pricing the asset or liability
based on the best available information.
|
The carrying
amounts reported in the balance sheets for cash, due from related parties, other assets, accrued expenses, other payables, and
due to related parties approximate their fair market value based on the short-term maturity of these instruments. The Company
did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of September 30,
2018 and March 31, 2018.
ASC 825-10 “Financial
Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair
value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election
date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be
reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding
instruments.
Cash and Cash Equivalents
For purposes
of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Credit risk
The Company may
be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimated irrecoverable amounts
determined by reference to past default experience and the current economic environment.
Property and equipment
Property
and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective
estimated residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as
incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains or
losses are included in income in
the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or
changes in circumstances reflect the fact that their recorded value may not be recoverable.
The estimated useful
lives are as follows:
Buildings 50 years
Leasehold improvements 20
years
Impairment of long-lived
assets
In accordance with
ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be fully recoverable, or at least annually.
The Company recognizes
an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The
amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company
did not record any impairment charges for the three months ended June 30, 2018 and year ended March 31, 2018.
Revenue Recognition
Revenue derived
from hotel services is recognized when the rooms are occupied and the services are performed. Travel agency services revenues
are recognized when the travel-related service, golf package service or transportation is provided, or when the organization service
of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of deposits paid in advance is
recognized as revenue when the services are performed for hotels and upon commencement of travel agency services.
Employment benefits
The Company does not
provide any post-retirement or post-employment benefits.
Income Taxes
The Company was
governed by the Income Tax Law of US, Hong Kong and PRC prior to its former operations being discontinued. The Company accounts
for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities
using enacted tax rates that will be in effect in the year in which the differences are expected to reverse.
The Company records
a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that
some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized as income or loss in the period that includes the enactment date.
The Company applied
the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related
to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain
open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations
for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment
could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the
results of operations for the given period. As of September 30, 2018 and March 31, 2018, the Company had no uncertain tax positions,
and will continue to evaluate for uncertain positions in the future.
Foreign currency translation
The accompanying
consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is
the USD.
All
of the Company’s revenue transactions are transacted in U.S. dollars. The Company does not enter any material transaction
in foreign currencies and, accordingly, transaction gains or losses have not had, and are not expected to have, a material effect
on the results of operations of the Company.
Earnings per share
ASC 260 “Earnings
per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.
Basic net income
per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common
stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Accumulated other
comprehensive loss
Comprehensive loss
is comprised of net loss and all changes to the statements of stockholders’ deficit, except those due to investments by
stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the six months
ended September 30, 2018 and 2017 included net loss and unrealized loss from foreign currency translation adjustments.
Related party transactions
A related party
is generally defined as (i) any person that holds 10% or more of the Company’s securities including such person’s
immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions
of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations
between related parties.
Recently issued accounting
pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB"), which are
adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of
recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial
statements upon adoption.
In
September 2017, the FASB issued Accounting Standard Updates ("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.
This ASU codifies the text of the SEC announcement, as it relates to revenue recognition and leases. The ASU also rescinds certain
codified SEC announcements and comments that are no longer applicable upon adoption of ASU No. 2014-09 and ASU No. 2016- 02. These
recent accounting pronouncements related to revenue and leases are discussed later in this footnote.
In May 2017, the
FASB issued ASU No. 2017-09 Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting, which clarifies
when to account for a change to the terms or conditions of a share based payment award as a modification. Under the new ASU, an
entity should apply modification accounting unless the fair value, the vesting conditions, and the classification of the award
as equity or liability of the modified award all remain the same as the original award. The ASU should be adopted prospectively
for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early
adoption is permitted. This guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In
January 2017, the FASB issued ASU No. 2017-04 Intangibles- Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill
Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test where
the implied fair value of goodwill needs to be determined and compared to the carrying amount of that goodwill to measure the
impairment loss. The Company is required to adopt the amendments in this Update for its annual or any interim goodwill impairment
tests in fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company has early adopted the standard
in the first quarter of 2017. During the second quarter of 2017, the Company applied this new ASU to perform the goodwill impairment
analysis. See Note 6, Goodwill and intangible assets for more details.
In
January 2017, the FASB issued ASU No. 2017-01 Business Combination (Topic 805) - Clarifying the Definition of a Business, in an
effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether
transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for
annual periods beginning after December 15, 2017, including interim periods within those periods, and is not expected to have
a material impact on the Company's consolidated financial statements.
In
November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230) - Restricted Cash a consensus of the FASB Emerging
Issues Task Force. This new guidance requires that a statement of cash flows explain the change during the period in the total
of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts
generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when
reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective
for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019,
and is not expected to have a material impact on the Company's consolidated financial statements.
In
October 2016, the FASB issued ASU No. 2016-16 Income Tax (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory.
Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset
has been sold to an outside party. This new guidance eliminates this exception and requires the income tax consequences of an
intra-entity transfer of an asset other than inventory be recognized when the transfer occurs. ASU 2016-16 is effective for annual
reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods,
and should be applied on a modified retrospective basis through a direct cumulative-effect adjustment to retained earnings as
of the beginning of the period of adoption. The ASU is not expected to have a material impact on the Company's consolidated financial
statements.
Note 2: Property, plant
and equipment
Property, plant and
equipment consisted of the following:
|
|
|
|
|
September
30,
|
|
|
|
March
31,
|
|
|
|
|
|
|
2018
|
|
|
|
2018
|
|
Buildings
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Leasehold
improvements
|
|
|
|
|
—
|
|
|
|
—
|
|
Less:
accumulated depreciation
|
|
|
|
|
—
|
|
|
|
—
|
|
Total
property, plant and equipment
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
property, plant and equipment, net
|
|
|
|
$
|
—
|
|
|
|
—
|
|
The Company discontinued
prior operations as of March 5, 2018. Please see Note 11: Discontinued Operations for further information.
Note 3: Capital Stock
Preferred stock
The Company
is authorized to issue 10,000,000 shares of its preferred stock, par value $.001. As of September 30, 2018 and March 31, 2018,
the Company has 30,000 and 20,000 shares of preferred stock issued and outstanding, respectively.
Series A Preferred Stock
On November 2,
2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares
of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue
up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate
and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for
voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
As of September 30, 2018, there are 20,000 shares of Series A Preferred stock issued and outstanding.
Series B Super Voting
Preferred Stock
On March
7, 2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new
series of preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the
designation, the Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has
voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at
the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at
the time of voting. As of September 30, 2018, there are 10,000 shares of Series B Preferred stock issued and
outstanding.
Common Stock
The
Company is authorized to issue 990,000,000 shares of Common Stock, par value $.001. As of September 30, 2018 and March 31, 2018,
the Company has 187,248,501 and 177,748,501 shares of common stock issued and outstanding, respectively.
On
July 22, 2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US
individual purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of
common stock to Purchasers for a total price of $628,943 ($0.005 per share).
The
issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchasers is a US person
and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29,2013, 125,788,400 shares of common
stock have been issued.
On
May 4, 2018, the Company filed an Offering Statement on Form 1-A registering to sale 80,000,000 shares at a price of $.05. The
gross proceeds to the Company if all shares are sold will be $4,000,000. The number shares outstanding after the offering will
be 266,248,501, if the maximum number of shares are sold.
On August 21, 2018,
the Company entered into common stock subscription agreement with Tri-Bridge Venture LLC for the sale of 1,000,000 shares of common
stock priced at $.05 per share. This subscription agreement is within the Reg A offering document which was deemed effective by
the Securities and Exchange Commission on August 17, 2018.
On September 24, the
Company authorized the issuance of 1,000,000 shares of common stock, in consideration for $50,000, to Tri-Bridge Ventures, LLC
as part of its Reg A offering
Voting Rights.
The holders of the Company’s Common Stock are entitled to one vote for each share held of record on all matters submitted
to a vote of the shareholders, except as otherwise provided by law.
Dividends.
Subject to preferences that may be granted to any then outstanding preferred stock, holders of common stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds legally available therefore as well as any distributions
to the shareholders. The payment of dividends on the common stock will be a business decision to be made by our Board of Directors
from time to time based upon results of our operations and our financial condition and any other factors that our Board of Directors
considers relevant. Payment of dividends on the common stock may be restricted by loan agreements, indentures and other transactions
entered into by us from time to time.
Liquidation
Rights. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all
of our assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock.
Absence
of Other Rights or Assessments. Holders of common stock have no preferential, preemptive, conversion or exchange rights. There
are no redemption or sinking fund provisions applicable to the common stock. When issued in accordance with our articles of incorporation
and law, shares of our common stock are fully paid and not liable to further calls or assessment by us.
Conversion Rights. None
On September 27,
2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting
company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
Stock-Based Compensation
The Company accounts
for stock-based compensation under FASB ASC subtopic 718-10, Compensation – Stock Compensation: Overall. Under FASB Subtopic
718-10, the Company measures the cost of the employee services received in exchange for an award of equity instruments based on
the grant-date fair value of the award and recognizes the cost over the requisite service periods.
Note 4: Income Taxes
Square Chain Corporation
is incorporated in the United States and subject to income taxes on an entity basis on income arising in, or derived from, the
tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax expense
or tax liability for the six months ended September 30, 2018 and 2017.
The Company evaluates
the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on
the technical merits, and measures the unrecognized benefits associated with the tax positions. For the three months ended September
30, 2018 and 2017, the Company had no unrecognized tax benefits.
The Company does
not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will
classify interest and penalties related to income tax matters, if any, in income tax expense.
Income tax expense is
comprised of:
|
|
|
Six Months Ended September 30,
|
|
|
|
2018
|
|
|
|
2017
|
|
Current income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred income tax
|
|
|
—
|
|
|
|
—
|
|
Total provision for income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred income
taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements at each year-end and tax loss carryforwards. Deferred income tax was measured using
the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences
that give rise to the following approximate deferred tax assets and liabilities as of September 30, 2018 and March 31, 2018 are
presented below:
|
|
|
September 30,
|
|
|
|
|
2018
|
|
Operating loss carryforward
|
|
$
|
—
|
|
Accrued tax expense
|
|
|
—
|
|
Deferred tax liabilities
|
|
$
|
—
|
|
Note 5: Loss per share
The loss per share for
the six months ended September 30, 2018 is ($.00).
Note 6: Related party
transactions:
Name
of related parties
|
Relationship
with the Company
|
Jeffrey
J. Parker
|
President,
Shareholder of the Company
|
|
7.2
|
Related
party balances
|
The Company had the following
related party balances at September 30, 2018 and March 31, 2018:
|
September
30, 2018
|
|
March
31, 2018
|
|
|
|
|
Jeffrey
J. Parker
|
$
73,978
|
|
$
73,978
|
Note 7: Commitments and
contingencies
Operating Lease
On August 21,
2018, the Company entered into an annual lease for office space, starting on September 1, 2018, with a termination option of a
30-day notice. The monthly rent is $470.00 inclusive of tax and parking.
Significant
commitment as at September 30, 2018 is as follows:
Six
months ended September 30, 2018
|
|
$
|
1,360
|
|
Total
future minimum lease payments
|
|
$
|
1410
|
|
Total rental
expense on the operating lease was $1,360 and $nil for the six months ended September 30, 2018 and 2017, respectively.
Legal Proceeding
There has been no legal
proceeding in which the Company is a party as of September 30, 2018.
Employment Agreement
On April 1,
2018, the Company executed an employment agreement with Jeffrey J. Parker to serve in the role as President, Treasurer, and Secretary
of the Company upon the terms and provisions and, subject to the conditions set forth in the Agreement, for a term of five (5)
years, commencing on April 1, 2018, and terminating on March 31, 2023, unless earlier terminated as provided in the Agreement.
Mr. Parker will receive an annual compensation of
$120,000 for the first year of the Agreement.
Note 8- Accrued Compensation
Accrued compensation
consists of the following at September 30, 2018:
|
|
9/30/2018
|
|
9/30/2017
|
Accrued
officers compensation
|
|
$
|
60,000
|
|
|
$
|
0
|
|
Accrued directors compensation
|
|
|
0
|
|
|
|
0
|
|
Accrued payroll taxes
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
60,000
|
|
|
$
|
0
|
|
Note 9 – Notes Payable
Notes
payable consist of the following at:
|
|
9/30/2018
|
|
3/31/2018
|
Notes
payable long term
|
|
$
|
73,978
|
|
|
$
|
—
|
|
Note 10 – Convertible
Debenture Payable
Convertible debentures
payable total $10,000 and $0 at September 30, 2018 and March 31, 2018, respectively. Convertible debentures payable consist of
the following:
On April 17, 2018,
the Company entered into a Convertible Promissory Note (“Promissory Note”) with Tri-Bridge Ventures, LLC in the amount
of Ten Thousand Dollars ($10,000). The Promissory Note has been fully funded. The Promissory Note is convertible, in whole or
in part, at any time from time to time, commencing on the Issuance Date of the note, into fully paid and non-assessable shares
of Common Stock of the Maker. The conversion price is equal to the lesser of (i) the lowest price of any public offering of the
Maker’s common Stock during the next 24 months or (ii) Fifty Percent (50%) of the lowest Trading Price during the Twenty
Trading Day period prior to the day the Holder delivers the Conversion Notice, and the Conversion Amount shall be the amount of
principal or interest electively converted in the Conversion Notice. The Convertible Note has a term of twelve (12) months and
accrues interest at a rate equal to Ten percent (10.0%) per annum. The balance owed as of September 30, 2018 is $10,000.
Note 11: Discontinued
Operations
The Company
previously operated a travel agency, hotel and Tengfei through direct ownership in China. These operations were discontinued and
abandoned:
On March 5, 2018,
Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
On March 6, 2018,
the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and
directors were terminated from their position for abandonment of the Company.
The gain on disposition
of these discontinued operations was calculated as follows:
Fair value as of March
2018:
Accrued expenses
|
|
$
|
196,508
|
|
Deferred tax liabilities
|
|
|
8,692
|
|
Related party payables
|
|
|
3,078,390
|
|
Mortgage loans
|
|
|
1,362,647
|
|
Property and equipment book value
|
|
|
(2,563,722
|
)
|
Gain on disposition of discontinued operations
|
|
$
|
2,080,515
|
|
Note 12. Change in
Management
On March 5, 2018,
Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
On March 6, 2018,
the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and
directors were terminated from their position for abandonment of the Company.
Management’s Discussion
and Analysis of Financial Condition and Results of Operations
Special Note Regarding
Forward-Looking Statements
This periodic report
contains certain forward-looking statements with respect to the Plan of Operation provided below, including information regarding
the Company’s financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive
positions, growth opportunities, and the plans and objectives of management. The statements made as part of the Plan of Operation
that are not historical facts are hereby identified as "forward-looking statements."
Management's Discussion
and Analysis or Plan of Operation
Overview
Square Chain Corporation
(formerly Asia Travel Corporation) (the “Company” or “Square Chain”) was incorporated under the laws of
the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996, the Company
reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately
242 shares of the Nevada corporation for each share of the Arizona corporation. The Company ceased to actively pursue its business
operations relating to the publishing of interactive media software in July 1999.
On January 9, 2008,
the Company filed a Certificate of Amendment to its Articles of Incorporation designating 100,000 shares of preferred stock as
Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 100,000 shares of the Series
A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with
the common stock with each share of Series A Preferred Stock equal to 50 shares of common stock for voting purposes. The stock
is redeemable by the Company at $.05/share.
On October 28,
2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to Piranha
Ventures, Inc.
During December
2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly Realgold Venture Pte Limited)
(“Asia Travel (Hong Kong)”).
On May 17, 2011,
the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, increasing the number of authorized
common shares to 100,000,000 and authorized preferred shares 10,000,000. In addition, the Company completed a 1:10 reverse stock
split.
On November 2,
2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares
of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue
up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate
and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for
voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
On November 21, 2011, the
Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation
to Realgold International, Inc.
On May 23, 2012,
the Board of Directors of the Company adopted an Amendment to the Articles of Incorporation to increase authorized stock from
10,000,000 preferred shares and 99,000,000 common shares to 10,000,000 preferred shares and 990,000,000 common shares.
On November 22,
2012, Asia Travel (Hong Kong) entered into a Lease Management Agreement (“Lease Management Agreement”) with Zhuhai
Tengfei Investment Co., Ltd. (“Tengfei Investment”), a limited liability company formed under the laws of the People’s
Republic of China (“China” or “PRC”). Under the Lease Management Agreement, Tengfei Investment leased
the managerial and operating rights of Zhuhai Tengda International Travel Agency Co., Ltd. (“Tengda Travel”), a wholly
owned subsidiary of Tengfei Investment, to Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20
years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048
(RMB100,000) per year.
On November 25,
2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei
Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership
of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 (approximately
$64,192).
On
November 29, 2012, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer
of Tengda Hotel to Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation
approved this ownership transfer.
Tengda
Hotel and Tengda Travel are wholly owned subsidiaries of Tengfei Investment. They are considered as entities under common control.
Accordingly, the financial statements for Tengda Hotel and Tengda Travel have been consolidated for all periods presented, similar
to a pooling-of-interests.
Tengda
Travel is a limited liability company formed under the laws of the People’s Republic of China on December 23, 2011. As
of March 31, 2013, Tengda Travel had registered capital of RMB 300,000, or approximately $47,662
based on the exchange
rate as of March 31, 2013. Tengda Travel’s principal activity is to provide packaged tours, air ticketing, reservation
of hotel rooms and golf courses and organize corporate conferences, exhibitions and show events for its customers.
Tengda Hotel,
formerly named Zhuhai Meihua Hotel Co., Ltd., is a limited liability company formed under the laws of the People’s Republic
of China on January 16, 2006. Tengda Hotel had registered capital of RMB 500,000, or approximately $79,403 based on the exchange
rate as of March 31, 2013. Tengda Hotel is a three-star hotel with 59 guest rooms, including 24 Standard Rooms, 24 Deluxe Rooms,
10 Business Rooms and 1 Luxury Suite, with many other amenities including fitness club, gym, business center, gift shop, meeting
room, ballroom, game room, and a large parking lot.
Upon the completion
of the said ownership transfer, Tengda Hotel became the wholly owned subsidiary of Asia Travel (Hong Kong).
On May 16, 2013, the
Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold
International, Inc. to Asia Travel Corporation.
On November 6,
2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan
and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership
of Tengfei Investment for a total transfer price of RMB5,000,000 (approximately $820,309).
On January 22,
2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei
Investment to Tengda Hotel.
Upon the completion
of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement
would be automatically terminated on January 22, 2014.
On September 27,
2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting
company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
On March 5, 2018,
Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
On March 6,
2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers
and directors were terminated from their position for abandonment of the Company.
On March 7, 2018, the
Company filed its Reinstatement with the State of Nevada and its Annual list of officers and directors.
On March
7, 2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new
series of preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the
designation, the Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has
voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at
the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at
the time of voting.
On March 8, 2018,
the Company filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square
Chain Corporation.
On March 9, 2018,
the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority for the
name change to Square Chain, Inc. and for a new trading symbol.
On April 5, 2018,
the Company entered into a legal representational agreement with John E. Lux, Esq. for the purpose of preparing a Regulation A
(Form 1-A) offering statement.
On April 10,
2018, the Financial Industry Regulatory Authority (“FINRA”) informed the Company that it had sufficient information
to pass on the Company’s submitted corporate action for a name change and new trading symbol.
On April 17, 2018,
the Company entered issued a Convertible Promissory Note in the amount of Ten Thousand and no/100 dollars ($10,000) to Tri-Bridge
Ventures, LLC for funds received.
On May 4, 2018,
the Company filed a Regulation A (Form 1-A) document with the Securities and Exchange Commission.
On May 11, 2018,
the Company filed an application for registration in the State of New York to be approved to issue securities in New York state.
The application has been approved and was deemed effective as of the filing date of May 11, 2018.
On May 18, 2018,
the Company entered into an agreement with Pacific Stock Transfer for their transfer agency services.
Results of Operations
and Business Outlook
Net sales decreased
by $0 for the six months ended September 30, 2018 from $0 for the six months ended September 30, 2017.
Cost of goods sold decreased
by $0 for the six months ended September 30, 2018 from $0 for the six months ended September 30, 2017.
Net loss increased
by $447,133 to $541,821 for the six months ended September 30, 2018 from $94,688 for the six months ended September 30, 2017.
Liquidity and capital
resources
We financed our
operations and expansion from cash flow from operations and contribution from our shareholders. The table below sets forth certain
items on our balance sheet reflecting the changes to our financial condition as of September 30, 2018 from our financial condition
as of March 31, 2018.
|
|
As of September 30, ,
|
|
As of March 31,
|
|
|
|
|
2018
|
|
2018
|
|
Change
|
Current assets
|
|
|
16,084
|
|
|
|
—
|
|
|
|
16,084
|
|
Non-current assets
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Current liabilities
|
|
|
148,883
|
|
|
|
75,978
|
|
|
|
72,905
|
|
Non-current liabilities
|
|
|
10,000
|
|
|
|
—
|
|
|
|
10,000
|
|
Critical Accounting Policies
Estimates
Management's
Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements,
which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Our significant
accounting policies are discussed in Note 2 "Summary of Significant Accounting Policies" in the notes to the consolidated
financial statements included in our 2018 Unaudited Annual Report for the year ended March 31, 2018, as filed with OTC Markets
on April 5, 2018. During the six months ended September 30, 2018 the Company did not change any of its critical accounting policies
or estimates.
Off-Balance Sheet
Arrangements
We have no off-balance
sheet arrangements.
PART III—EXHIBITS
Index to Exhibits
Exhibit
Number
|
|
Exhibit
Description
|
|
|
|
3.1
|
|
Certificate of Acceptance of Registered Agent Appointment (previously filed on Form 1-A/A on June 15, 2018)
|
3.2
|
|
Articles of Merger (previously filed on Form 1-A/A on June 15, 2018)
|
3.3
|
|
Certificate of Amendment to Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.4
|
|
Designation of Rights Series A Preferred Stock (previously filed on Form 1-A/A on June 15, 2018)
|
3.5
|
|
Certificate of Correction to Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.6
|
|
Restated Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.7
|
|
Amended and Restated Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.8
|
|
Certificate of Amendment (previously filed on Form 1-A/A on June 15, 2018)
|
3.9
|
|
Certificate of Designation Convertible Series A Preferred Stock (previously filed on Form 1-A/A on June 15, 2018)
|
3.10
|
|
Certificate of Amendment to Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.11
|
|
Certificate of Amendment to Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.12
|
|
Certificate of Amendment by Custodian (previously filed on Form 1-A/A on June 15, 2018)
|
3.13
|
|
Certificate of Designation of Series B Preferred Stock (previously filed on Form 1-A/A on June 15, 2018)
|
3.14
|
|
Certificate of Amendment to Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.15
|
|
Amended and Restated Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
3.16
|
|
Amendment Articles of Incorporation-Name Change (previously filed on Form 1-A/A on June 15, 2018)
|
3.17
|
|
Bylaws (previously filed on Form 1-A/A on June 15, 2018)
|
3.5
|
|
Amended Articles of Incorporation (previously filed on Form 1-A/A on June 15, 2018)
|
4.1
|
|
Certificate of Designation Series B Preferred Stock (previously filed on Form 1-A/A on June 15, 2018)
|
4.2
|
|
Subscription Agreement
|
6.1
|
|
Incentive Stock Option Plan (previously filed on Form 1-A/A on June 15, 2018)
|
6.2
|
|
Management Stock Bonus Plan (previously filed on Form 1-A/A on June 15, 2018)
|
6.3
|
|
Performance Bonus Plan (previously filed on Form 1-A/A on June 15, 2018)
|
6.4
|
|
Employment Agreement of Jeffrey J. Parker (previously filed on Form 1-A/A on June 15, 2018)
|
10.1
|
|
Promissory Note issued to Jeffrey J. Parker dated March 27, 2018 (previously filed on Form 1-A/A on June 15, 2018)
|
11.1
|
|
Consent of Lux Law, P.A. (included in Exhibit 12.1)
|
12.1
|
|
Opinion of Lux Law, P.A.
|
SIGNATURES
Pursuant to
the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Petersburg, State of Florida, on December 12, 2018.
(Exact name of issuer as
specified in its charter):
|
|
Square
Chain Corporation
|
This Offering
Statement has been signed by the following persons in the capacities and on the dates indicated.
By (Signature and Title):
|
|
/s/
Jeffrey J. Parker
|
|
|
Jeffrey J. Parker, Chief Executive Officer (Principal
Executive Officer).
|
(Date): December 12, 2018
/s/
Jeffrey J. Parker
|
Jeffrey J. Parker, Chief Financial Officer (Principal
Financial Officer, Principal Accounting Officer).
|
(Date): December 12, 2018
SIGNATURES OF DIRECTORS:
/s/
Jeffrey J. Parker
|
|
December
12, 2018
|
Jeffrey J. Parker, Director
|
|
Date
|
Square Chain (CE) (USOTC:SQCC)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Square Chain (CE) (USOTC:SQCC)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024