Rebel Group, Inc. - Quarter Report: 2015 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number:  333-177786

REBEL GROUP, INC.

(Exact name of registrant as specified in its charter)

 7500A Beach Road, Unit 12-313, The Plaza

Singapore 199591

(Address of Principal Executive Offices)

Tel. +6562940423

 (Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☐  No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes ☐  No ☒

As of May 15, 2015, the registrant had 23,800,118 shares of common stock, par value $.0001 per share, issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REBEL GROUP, INC.

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(Stated in US Dollars)

INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

REBEL GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

*The number of shares of common stock has been retroactively restated to reflect the 1-for-5 reverse stock split effected on July 9, 2014, and reflect the 1-for-20 reverse stock split of its issued and outstanding common stock effected on December 5, 2014.

See accompanying notes to unaudited consolidated financial statements

REBEL GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Stated in US Dollars)

*The number of shares of common stock has been retroactively restated to reflect the 1-for-5 reverse stock split effected on July 9, 2014, and reflect the 1-for-20 reverse stock split of its issued and outstanding common stock effected on December 5, 2014.

See accompanying notes to unaudited consolidated financial statements

REBEL GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Stated in US Dollars)

*The number of shares of common stock has been retroactively restated to reflect the 1-for-5 reverse stock split effected on July 9, 2014, and reflect the 1-for-20 reverse stock split of its issued and outstanding common stock effected on December 5, 2014.

See accompanying notes to unaudited consolidated financial statements

REBEL GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS,

(Stated in US Dollars)

See accompanying notes to unaudited consolidated financial statements

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Rebel Group, Inc. (f/k/a Inception Technology Group, Inc., the “Company,” “we” or “us") was incorporated under the laws of the State of Florida on September 13, 2011. The Company organizes, promotes and hosts mixed martial arts (“MMA”) events featuring top level athletic talent. With assistance from contracted production crews, the Company also produces and distributes, through the internet and social media, and sells the rights to distribute to television stations, videos of its MMA events. The Company seeks to promote MMA in Asian countries through hosting events that attract talented fighters from all over the world.

On April 25, 2013, pursuant to a share exchange agreement, the Company completed a reverse acquisition of Moxian Group Limited, a company incorporated under the laws of British Virgin Islands (“Moxian BVI”) and its wholly-owned subsidiaries, including Moxian (Hong Kong) Limited (“Moxian HK”), Moxian Technologies (Shenzhen) Co., Ltd. (“Moxian Shenzhen”) and Moxian Malaysia SDN BHD (“Moxian Malaysia”). Since the incorporation of the business of Moxian BVI, the Company changed its business to develop a social network platform that integrates social media and business into one single platform.

On February 17, 2014, the Company incorporated a new wholly-owned subsidiary Moxian Intellectual Property Limited under the laws of Samoa (“Moxian IP”). On February 19, 2014, Moxian HK and Moxian Shenzhen entered into an Assignment and Assumption Agreement with Moxian IP, where Moxian HK and Moxian Shenzhen assigned and transferred all of the intellectual property rights that they respectively owned in connection with the Moxian business (the “IP Rights”) to Moxian IP for consideration of $1,000,000. As a result, the Company owns and controls such IP Rights through Moxian IP.

On February 19, 2014, the Company entered into a License and Acquisition Agreement (the “License and Acquisition Agreement”) with Moxian China, Inc. (“MOXC”), pursuant to which the Company agreed to sell 100% of the equity interests of Moxian BVI together with its subsidiaries to Moxian CN Group Limited, a wholly-owned subsidiary of MOXC (“Moxian CN Samoa”) in consideration of an aggregate of $1,000,000 (“Moxian BVI Transfer Price”).

Under the License and Acquisition Agreement, the Company also agreed to grant MOXC the exclusive right to use our IP Rights in Mainland China, Hong Kong, Taiwan, Malaysia, and other countries and regions where we conduct business and the exclusive right to promote Moxian products and services for five years (the “License”). In exchange for such License, MOXC agreed to pay to the Company: (i) $1,000,000 as license maintenance royalty each year commencing from the second year from the date of the License and Acquisition Agreement; and (ii) 3% of the gross profit of distribution and sale of its products and services as an earned royalty.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

On July 9, 2014, the Company implement a 1-for-5 reverse split of its issued and outstanding Common Stock.

On December 5, 2014, the Company implemented a 1-for-20 reverse stock split of its issued and outstanding Common Stock.

On January 30, 2015, we completed the acquisition of Rebel Holdings Limited (“Rebel FC”) pursuant to a Share Exchange Agreement. (“Share Exchange Agreement,” such transaction, the “Share Exchange Transaction”), whereby the Company issued to the Rebel FC Stockholder an aggregate of 20,700,000 shares of its Common Stock, in exchange for 100% of the equity interests of Rebel FC held by the Rebel FC Stockholder. The shares of our Common Stock received by the Rebel FC Stockholder in the Share Exchange Transaction constitute approximately 90% of our issued and outstanding Common Stock giving effect to the issuance of shares pursuant to the Share Exchange Agreement. As a result of the Share Exchange Transaction, Rebel FC, together with its subsidiaries, Pure Heart Entertainment Pte Ltd. (“Pure Heart”) and SCA Capital Limited (“SCA Capital”), became the Company’s wholly-owned subsidiaries. The acquisition was accounted for as a reverse merger and recapitalization effected by the Share Exchange Transaction. Rebel FC is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

Simultaneously with the consummation of the Share Exchange Transaction, on January 30, 2015, we entered into an Equity Transfer Agreement (the “Equity Transfer Agreement,” such transaction, the “Equity Transfer Transaction”) with MOXC to sell all the equity interests of Moxian IP for $6,782,000 (the “Moxian IP Transfer Price”). Under the Equity Transfer Agreement, the Company and MOXC agreed to terminate the License and Acquisition Agreement. As a result, the liabilities of MOXC and the rights of the Company thereunder, other than the Moxian BVI Transfer Price, were terminated. Pursuant to the Equity Transfer Agreement, MOXC shall repay the Moxian IP Transfer Price and the Moxian BVI Transfer Price in the aggregate of $7,782,000 in the form of a convertible promissory note (the “Note”) issued by MOXC.

Rebel FC, which utilizes the trade name of Rebel Fighting Championship, was incorporated on October 28, 2014 in British Virgin Islands and engages in hosting and promoting MMA events since its corporation.

Pure Heart was incorporated under the laws of the Singapore on August 24, 2000 under the laws of Singapore. On June 7, 2013. As of October 30, 2014, it became a wholly owned subsidiary of Rebel FC. Pure Heart is an operating subsidiary of the Company and is dedicated to hosting and promoting MMA events.

SCA Capital, a British Virgin Islands company, was incorporated on January 7, 2011 and holds the intellectual property rights relating to the Rebel FC business. On October 28, 2014, SCA Capital became the wholly-owned subsidiary of Rebel FC.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Fair value of financial instruments

The carrying values of the Company’s financial instruments, including cash and cash equivalents, trade and other receivable, deposits, trade and other payables approximate their fair values due to the short-term maturity of such instruments. The carrying amounts of borrowings approximate their fair values because the applicable interest rates approximate current market rates.

Income taxes

The Company utilizes FASB Accounting Standard Codification Topic 740 (“ASC 740”) “Income taxes” (formerly known as SFAS No. 109, “Accounting for Income Taxes”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the combined financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 “Income taxes” (formerly known as Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of Statement of Financial Accounting Standards No. 109 (“FIN 48”)) clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the unaudited consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the statements of operations. The adoption of ASC 740 did not have a significant effect on the unaudited consolidated financial statements.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Earnings per share

Basic earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share.  The average market price during the year is used to compute equivalent shares.

FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share.

Plant and equipment

Plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

Comprehensive income

The Company has adopted FASB Accounting Standard Codification Topic 220 (“ASC 220”) “Comprehensive income” (formerly known as SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Recently issued accounting pronouncements

The FASB has issued Accounting Standards Update (ASU) No. 2014-06, Technical Corrections and Improvements Related to Glossary Terms. The amendments in this ASU relate to glossary terms and cover a wide range of Topics in the FASB’s Accounting Standards Codification™ (Codification). These amendments are presented in four sections:

1. Deletion of Master Glossary Terms (Section A) arising because of terms that were carried forward from source literature (e.g., FASB Statements, EITF Issues, and so forth) to the Codification but were not utilized in the Codification.

2. Addition of Master Glossary Term Links (Section B) arising from Master Glossary terms whose links did not carry forward to the Codification.

3. Duplicate Master Glossary Terms (Section C) arising from Master Glossary terms that appear multiple times in the Master Glossary with similar, but not identical, definitions.

4. Other Technical Corrections Related to Glossary Terms (Section D) arising from miscellaneous changes to update Master Glossary terms.

The amendments do not have transition guidance and are effective upon issuance for both public entities and nonpublic entities.

The FASB has issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP.

Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment.

In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations.

The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Recently issued accounting pronouncements (Continued)

The amendments in this ASU enhance convergence between U.S. GAAP and International Financial Reporting Standards (IFRS). Part of the new definition of discontinued operation is based on elements of the definition of discontinued operations in IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations.

The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. For most nonpublic organizations, it is effective for annual financial statements with fiscal years beginning on or after December 15, 2014. Early adoption is permitted.

The FASB has issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The issue is the result of a consensus of the FASB Emerging Issues Task Force.

The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.

The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities.

Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. In addition, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Recently issued accounting pronouncements (Continued)

The FASB has issued Accounting Standards Update (ASU) No. 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. The amendments in this ASU will apply to a reporting entity that is required to consolidate a collateralized financing entity under the Variable Interest Entities guidance when: (1) the reporting entity measures all of the financial assets and the financial liabilities of that unaudited consolidated collateralized financing entity at fair value in the unaudited consolidated financial statements based on other Codification Topics; and (2) the changes in the fair values of those financial assets and financial liabilities are reflected in earnings.

The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. For entities other than public business entities, the amendments are effective for annual periods ending after December 15, 2016, and interim periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of an annual period.

The fair value of the financial assets of a collateralized financing entity, as determined under GAAP, may differ from the fair value of its financial liabilities even when the financial liabilities have recourse only to the financial assets. Before this ASU, there was no specific guidance in GAAP on how a reporting entity should account for that difference.

The amendments in this ASU provide an alternative to Topic 820 Fair Value Measurement for measuring the financial assets and the financial liabilities of a unaudited consolidated collateralized financing entity to eliminate that difference. When the measurement alternative is not elected for a unaudited consolidated collateralized financing entity within the scope of this ASU, the amendments clarify that: (1) the fair value of the financial assets and the fair value of the financial liabilities of the unaudited consolidated collateralized financing entity should be measured using the requirements of Topic 820; and (2) any differences in the fair value of the financial assets and the fair value of the financial liabilities of that unaudited consolidated collateralized financing entity should be reflected in earnings and attributed to the reporting entity in the unaudited consolidated statement of income (loss).

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.

Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

Recently issued accounting pronouncements (Continued)

Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures.

This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes.

The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued.

Under the License and Acquisition Agreement dated February 19, 2014, the Company sold 100% of the equity interests of Moxian BVI together with its subsidiaries to Moxian CN Samoa in consideration of an aggregate of $1,000,000.

Pursuant to the Equity Transfer Agreement dated January 30, 2015, we transferred 100% of the equity interests of Moxian IP to MOXC for $6,782,000. MOXC shall repay the Moxian IP Transfer Price and the Moxian BVI Transfer Price in the aggregate of $7,782,000 in the form of a convertible promissory note (the “Note”) issued by MOXC. The maturity date for the Note is October 30, 2015 with 1% interest per annum, and all sums due under this Note can be converted at the conversion price of $1.00 per share (“Conversion Price”) at the option of MOXC, if the volume weighted average price (“VWAP”) of MOXC’s common stock for a period of thirty (30) trading days immediately prior to the date of conversion is higher than the Conversion Price. Under the Note, MOXC has a right of first refusal to purchase the shares issuable upon conversion at the price of 80% of the VWAP for 30 trading days immediately prior to the date of the proposed repurchase by MOXC.

 

	Gain on disposal of subsidiary:
	Consideration transferred		$	6,782,000
	Less: fair value of identifiable net assets acquired			-
			$	6,782,000

 

4.	Property and equipment

 

			As of
			March 31, 2015				December 31, 2014
	Equipment		$	80,454			$	84,260
	Less:  accumulated depreciation and amortization			22,852				19,797
	Total property and equipment, net		$	57,602			$	64,463

 

The depreciation expenses for the three months ended March 31, 2015 and 2014 were $4,731 and $4,855, respectively.

 

5.

Bank loan

 

			As of
			March 31, 2015				December 31, 2014
	Repayable within one year		$	11,655			$	12,595
	Repayable after one year			20,922				23,587
	Total bank loan		$	32,577			$	36,182

 

13

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

The interest expenses for the three months ended March 31, 2015 and 2014 were $1,045 and nil, respectively.

 

On August 15, 2014, Pure Heart and DBS Bank entered into a banking facility (the “Banking Facility”), pursuant to which DBS Bank disbursed Singapore dollar $50,000 to Pure Heart for working capital. The interest rate of the loan is 6.00% per annum on monthly outstanding balance. The term for the banking facility is three years. Pure Heart shall repay in 36 installments for Singapore dollar $1,522 each month. Mr. Leong Khian Kiee and Mr. Leong Aan Yee, Justin, the directors of Pure Heart personally guaranteed the Banking Facility jointly and severally.

 

6.	Due to related party

 

As of March 31, 2015, the company owed in the amount of $279,823 to Mr. Leong Khian Kiee, a director of the Company and as of December 31, 2014, the company owed $227,779 to Mr. Leong Aan Justin, our CEO and President. The loans to the officers and directors is unsecured, interest free and has no fixed terms of repayment.

 

7.	Shareholders’ equity

 

Prior to April 16, 2013, the authorized capital stock of the Company consisted of 250,000,000 shares of Common Stock with a par value of $0.0001. The Company issued 9,000,000 shares of our Common Stock to Marilyn Stark (the “Stark”), our former CEO and former sold Director, on September 13, 2011 for cash in the amount of $9,000 (per share price of $0.001).

 

The Company sold 2,500,000 shares of Common Stock to a group of Investors on March 14, 2012 for cash in the amount of $37,500 (per share price of $0.015).

 

On February 27, 2013, Stark entered into a Securities Purchase Agreement with (the “Purchase Agreement”) with three investors (the “Purchasers”), pursuant to which Stark sold to the Purchasers her 9,000,000 shares of Common Stock of the Company.

 

On April 16, 2013, the Company amended its Articles of Incorporation to implement a 20-for-1 Forward Split. As a result of the Forward Split, the number of outstanding Common Stock increased from 11,500,000 shares to 230,000,000 shares and the par value of Common Stock remains the same.

 

On April 25, 2013, the Company entered into a share exchange agreement with Moxian BVI and Medicode Group Limited, the sole stockholder of Moxian BVI (the “Moxian Stockholder”). Since the incorporation of the business of Moxian BVI, the Company changed its business to develop social network platform that integrates social media and business into one single platform.

 

On July 9, 2014, the Company amended its Articles of Incorporation (the “Amendments”) to implement a 1-for-5 reverse split of its issued and outstanding common stock (the “Reverse Split”).

 

On July 23, 2014, the Financial Industry Regulatory Authority approved and declared the Amendments to be effective. As a result, 230,000,000 shares of Common Stock prior to the Reverse Split decreased and without any further action from the Company’s stockholders, to 46,000,000 shares of common stock. The Reverse Split will not alter the total number of the authorized shares or the par value of the shares of the Company.

 

On December 5, 2014, the Company implemented a 1-for-20 reverse stock split of its issued and outstanding common stock, par value $0.0001 per share. As a result, the number of total outstanding shares become 2,300,118.

14

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

7.	Shareholders’ equity (Continued)

 

On January 30, 2015, the Company, Rebel FC and the stockholder of Rebel FC who owned 100% of Rebel FC (the “Rebel FC Stockholder”) entered into and consummated transactions pursuant to a Share Exchange Agreement, whereby the Company issued to the Rebel FC Stockholder an aggregate of 20,700,000 shares of its Common Stock, in exchange for 100% of the equity interests of Rebel FC held by the Rebel FC Stockholder. The shares of our Common Stock received by the Rebel FC Stockholder in the Share Exchange Transaction constitute approximately 90% of our issued and outstanding Common Stock giving effect to the issuance of shares pursuant to the Share Exchange Agreement. As a result of the Share Exchange Transaction, Rebel FC, together with its subsidiaries, Pure Heart and SCA Capital, became the Company’s wholly-owned subsidiaries.

 

As of the date of this report, there were 23,000,118 shares of common stock issued and outstanding.

 

There are no warrants or options outstanding to acquire any additional shares of common stock of the Company.

 

8.	Earnings per share

 

			For the three months ended March 31,
			2015				2014
	Net income (loss) attributable to ordinary shareholders for computing basic net loss per ordinary share		$	6,658,331			$	(34,544	)
	Weighted-average shares of common stock outstanding in computing net loss per common stock of the Company
	Basic			23,000,118				20,700,000
	Dilutive shares			-				-
	Diluted			23,000,118				20,700,000
	Basic earnings per share		$	0.29				(0.00	)
	Diluted earnings per share		$	0.29				(0.00	)

 

*The number of shares of common stock has been retroactively restated to reflect the 1-for-5 reverse stock split effected on July 9, 2014, and reflect the 1-for-20 reverse stock split of its issued and outstanding common stock effected on December 5, 2014.

15

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

9.	Income taxes

 

Rebel Group, Inc. was incorporated in Florida and is subject to income tax under the state laws of Florida and federal income tax of the U.S.

 

Rebel FC and SCA Capital are incorporated in the British Virgin Islands and are not subject to income taxes under the current laws of the British Virgin Islands.

 

Pure Heart was incorporated in Singapore and is subject to Singapore corporate income tax at 17%. No income tax expenses for the three months ended March 31, 2015 and 2014.

 

10.	Commitments and contingencies

 

Operating Lease

 

Significant commitment as at March 31, 2015 are as follows:

 

	Twelve months ended March 31,
	2016		$	30,079
	2017			2,423
	2018			-
	Thereafter			-
	Total minimum lease payments		$	32,502

 

Legal Proceeding

 

There has been no legal proceeding in which the Company is a party for the three months ended March 31, 2015.

 

16

 

REBEL GROUP, INC.

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

11.	Subsequent events

 

There were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our Financial Statements for the three months ended March 31, 2015.

 

17

 

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.

 

Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

The "Company", "we," "us," and "our," refer to the combined business of (i) Rebel Group, Inc., a Florida corporation (“REBL”), (ii) Rebel Holdings Limited, a company incorporated under the laws of British Virgin Island sand a wholly-owned subsidiary of REBL (“Rebel FC”); (iii) Pure Heart Entertainment Pte. Ltd., a company incorporated under the laws of Singapore and a wholly-owned subsidiary of Rebel FC (“Pure Heart”); and (iv) SCA Capital Limited, a company incorporated under the laws of British Virgin Island and a wholly-owned subsidiary of Rebel FC (“SCA Capital”).

 

Overview

 

Immediately after the completion of the Share Exchange Transaction, as defined below, by and among REBL, Rebel FC, and the sole stockholder of Rebel FC on January 5, 2015 as well as the Equity Transfer Transaction, as defined below, by and among REBL and Moxian China, Inc., a Nevada corporation (“MOXC”), the Company discontinued its social media business and changed its business to producing dynamic mixed martial arts (“MMA”) fighting events and promoting the sport of MMA fighting in China, Singapore, and Australia. The Company is engaged in the business of organizing, promoting and hosting MMA events featuring top level athletic talent. We also contract with various production crews which enable us to produce and distribute videos of our MMA events through social media as well as the internet at large. We also sell the rights to distribute videos of our events to interested televisions stations.

 

On January 30, 2015, we entered into a Share Exchange Agreement with Rebel FC and its sole stockholder (the “Share Exchange Transaction”), whereby we acquired 100% equity interests of Rebel FC in exchange of issuance of 20,700,000 shares of our Common Stock to Rebel FC’s stockholder. Our acquisition of Rebel FC and its subsidiaries pursuant to the Share Exchange Agreement was accounted for as a reverse merger and recapitalization effected by a share exchange.

 

Simultaneously with the consummation of the Share Exchange Transaction, on January 30, 2015, we entered into an Equity Transfer Agreement (the “Equity Transfer Agreement,” such transaction, the “Equity Transfer Transaction”) with MOXC to sell all the equity interests of Moxian Intellectual Property Limited (“Moxian IP”) for $6,782,000 (the “Moxian IP Transfer Price”). Under the Equity Transfer Agreement, the Company and MOXC agreed to terminate the License and Acquisition Agreement dated February 19, 2014, which provided that the Company agreed to transfer Moxian Group Limited (“Moxian BVI”) to MOXC for $1,000,000 (“Moxian BVI Transfer Price”) and grant the intellectual property rights owned by Moxian IP for loyalty fees. As a result, the liabilities of MOXC and the rights of the Company thereunder, other than the Moxian BVI Transfer Price, were terminated. Pursuant to the Equity Transfer Agreement, MOXC shall repay the Moxian IP Transfer Price and the Moxian BVI Transfer Price in the aggregate of $7,782,000 in the form of a convertible promissory note (the “Note”) issued by MOXC.

 

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Recent Development

 

We plan to host two MMA events in China in 2015. Our first fight event is scheduled to be held on June 27, 2015 in Qingdao, China. Another event we plan to host will be in Beijing, China in November 2015. We have held press conferences in promoting the events in China and we are in the process of finalizing the partnership with a domestic company in China in hosting the events to comply with local laws. We are also in the application process for permits to host the events in China.

 

Plan of Operations

 

The Company plans to continue to host live events in which highly skilled fighters from different martial arts backgrounds compete at different weight classes. We also plan to integrate the introduction of background information and narrative stories of the competing athletes into the broadcasting of fighting events.

 

The Company seeks to select fighters with a distinguished career for a planned event. After a careful selection process, we plan to market our MMA events by posting on social media or broadcasting through TV channels, video journals and interviews of the fighters.

 

The Company aims to penetrate into China and Australia MMA market in 2015. We anticipate entering into contracts with free-to-air and cable channels, pay-per-view channels and sports-oriented channels in Singapore, China and Australia. We believe we can acquire sponsorships to promote our events in China and Australia. We also plan to establish a fan club online to create brand loyalty for Rebel’s future events.

 

Results of Operations

 

For the three months ended March 31, 2015 compared with the three months ended March 31, 2014

 

Gross Revenues

 

The Company received sales revenues of $157 in the three months ended March 31, 2015 compared to $0 in the three months ended March 31, 2014. The revenue for the three months ended March 31, 2015 is from refunds received from a ticketing agent.

 

Operating Expenses

 

Operating expenses for the three months ended March 31, 2015 and three months ended March 31, 2014 were $114,346 and $29,689, respectively. The expenses consisted of filing fees, professional fees, payroll and benefits and other general expenses.

 

We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth of our business.

 

Other Income

 

Other income for the three months ended March 31, 2015 and three months ended March 31, 2014 were $6,794,792 and nil, respectively. Other income mainly consists of gain on disposal of Moxian IP of $6,194,792.

 

Net Income

 

Net income for the three months ended March 31, 2015 and three months ended March 31, 2014, were $6,658,331 and ($34,544), respectively. The net income for the three months ended March 31, 2015 was due to an income derived from a gain from disposal of Moxian IP, a subsidiary of the Company. Basic and diluted net income (loss) per share amounted to $0.29 and ($0.00) respectively for the three months ended March 31, 2015 and three months ended March 31, 2014.

 

Liquidity and Capital Resources 

 

At March 31, 2015, we had working capital of $7,575,629 which comprised of an note receivable of $7,782,000 and cash on hand of $13,917 as compared to working capital deficit of ($97,977) and cash on hand of $135,034 as of December 31, 2014.

 

Net cash provided by (used in) operating activities for the three months ended March 31, 2015 was ($179,579) as compared to net cash used in operating activities of ($57,994) for the three months ended March 31, 2014. The cash used in operating activities is mainly for filing fees, professional fees, payroll and benefits and general expenses.

 

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Net cash provided by financing activities for the three months ended March 31, 2015 was $48,716 as compared to $48,419 for the three months ended March 31, 2014.

 

We will require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results. The cash required for our operation varies from month to month depending on whether we will conduct any marketing activities for the fighting events. The burn rate is low for months when we are in the planning stage of the events and we only have to sustain the monthly overhead such as salaries, benefits and other office administrative expenses and professional fees. The burn rate is higher in the period when we prepare and host the events.

 

Critical Accounting Policies and Estimates

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted 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 liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation and the fair value of our stock, stock-based compensation, debt discount and the valuation allowance relating to the Company’s deferred tax assets.

 

Recently Issued Accounting Pronouncements

 

Reference is made to the “Recent Accounting Pronouncements” in Note 2 to the Financial Statements included in this Report for information related to new accounting pronouncement, none of which had a material impact on our consolidated financial statements, and the future adoption of recently issued accounting pronouncements, which we do not expect will have a material impact on our consolidated financial statements.

 

Off-Balance Sheet Arrangements

 

As of March 31, 2015, we did not have any off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1). 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosures Control and Procedures

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

 

●

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 

●

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

 

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●

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

  

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

As of March 31, 2015, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

 

(1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and

 

(2) the company required outside assistance in preparing financial disclosure due to its limited history as a public company.

 

The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of March 31, 2015.

 

Management believes that the material weaknesses set forth at (2) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Management’s Remediation Initiatives

 

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We intend to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

  

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

 

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We anticipate that these initiatives will be at least partially, if not fully, implemented by December 2015. Additionally, we plan to test our updated controls and remediate our deficiencies by December 2015.

 

Changes in internal controls over financial reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

  

PART II - OTHER INFORMATION

 

ITEM 1.     LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A.  RISK FACTORS.

 

Not applicable to a smaller reporting company.

 

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4.     MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

Not applicable.

 

ITEM 6.     EXHIBITS.

 

31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive and financial officer
32.1	Section 1350 Certification of principal executive officer and principal financial and accounting officer
101*	XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.

 

* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	Rebel Group, Inc.
Date: May 15, 2015	By:	/s/ Aan Yee Leong, Justin
		Aan Yee Leong, Justin
		President, Chief Executive Officer, Director
		Principal Executive Officer,
		Principal Financial and Accounting Officer

 

 

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