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    ADHG   US0342241058

ANDO HOLDINGS LTD.

(ADHG)
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ANDO : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/14/2020 | 01:27pm EDT

The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K dated January 16, 2020, for the year ended September 30, 2019 and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form S-1. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form 10-K dated January 16, 2020, in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.




Company Overview



Ando Holdings Ltd., formerly known as PC Mobile Media Corp. was formed in the state of Nevada on August 22, 2015. After thorough discussion and analysis on the mobile billboard industry, the Company has decided to terminate its plans in the industry. The Company is currently pursuing business opportunities in Hong Kong. The Company acquired 4 companies during the financial year of 2019, which were Ando Automobile Technology Limited, Ando Capital Investment Limited, Xian Ando Industrial Company Limited and Xian Ando Factoring Commercial Company Limited.

Our corporate structure is set forth below:

A list of our subsidiaries, affiliates and VIE entities together with a brief description of their business is set forth below:




Name (Domicile)                          Business
Ando Holdings Limited (Nevada,           Provides financial services and being an
United States)                           investment holding company

Ando Automobile Technology Limited Intends to develop in automobile agency (Hong Kong)

                              services

Ando Capital Investment Limited Provides insurance products of Sun Life (Hong Kong)

                              Hong Kong Limited

Xian Ando Industrial Company Limited Being an investment holding company to (Xian, China)

                            hold Xian Ando Commercial Factoring
                                         Company Limited
Xian Ando Commercial Factoring           Intends to develop in factoring business
Company Limited (Xian, China)            in Xian, China




On June 28, 2017 Mr. Paul Conforte, President and the holder of an aggregate of 8,000,000 shares of Common Stock of PC Mobile Media Corp., representing approximately 66.67% of the issued and outstanding Shares of the Company, sold all 8,000,000 Shares to 12 purchasers. On the same day Mr. Conforte resigned all positions, including Chairman of the Board. Lam Chi Kwong Leo was appointed Chairman of the Board and Chief Executive Officer. Lee Hiu Lan was appointed as Secretary, Treasurer, and Chief Financial Officer. Chan Tung Ngai and Hu Jiasheng were both appointed as a Director. The appointments were effective on June 28, 2017.

On September 5, 2017, the amendment to the Company's articles of incorporation was declared effective in the State of Nevada. The amendment changed the name of the Company from PC Mobile Media Corp. to Ando Holdings Ltd. While as of September 25, 2017, FINRA accepted the name change and issued a new trading symbol for the Company. The new trading symbol for the Company is ADHG.

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On November 29, 2018, the Company acquired Ando Automobile Technology Limited from Lam Chi Kwong Leo with a cash consideration of $1,282. The Company intends this fully owned subsidiary to operate as an automobile trading company, trading in foreign-made automobiles to be shipped to Chinese buyers directly. As of March 31, 2020, this subsidiary had no operation.

On February 1, 2019, the Company entered into a securities purchase agreement with accredited investors, Lin Su Hui, pursuant to which the Company issued promissory notes for an aggregate of $50,000, with an interest rate of 10% per annum. The outstanding balance of the Notes would be paid within one year beginning February 1, 2019, which is February 1, 2020. We filed a Form 8-K on February 5, 2019.

On September 30, 2019, the Company and Ando Capital Investment Limited, a limited liability company incorporated in Hong Kong ("ACIL") and Mr. Lam Chi Kwong Leo, a permanent Hong Kong resident, a major shareholder of the Company, our director and Chief Executive Officer and the sole shareholder of ACIL, entered into the a set of agreements, collectively named as the "Variable Interest Entity or VIE Agreements," pursuant to which the Company has contractual rights to control and operate the business of ACIL (the "VIE"). ACIL currently has insurance business and has been our VIE for our future business expansion and development in Hong Kong. ACIL has two wholly owned subsidiaries, namely Xian Ando Holdings Company Limited and Xian Ando Commercial Factoring Company Limited. We filed a Form 8-K on October 4, 2019.

The VIE Agreements are as follows:

1) Exclusive Business Cooperation Agreement: Pursuant to the Exclusive Business Cooperation Agreement, ADHG serves as the exclusive provider of financial support, technical support, consulting services and management services to ACIL. In consideration of such services, ACIL has agreed to pay a service fee to ADHG, which is based on the time of services rendered multiplied by the corresponding rate, plus amount of the services fees or ratio decided by the board of directors of ADHG. The Agreement has a term of 10 years but may be extended ADHG in its discretion.

2) Loan Agreement: Pursuant to the Loan Agreement, ADHG granted interest-free loans of Hong Kong Dollars Seventy Eight Thousand ("HK$78,000"), which is equivalent to United States Dollars Ten Thousand ("US$10,000") to the shareholders of the ACIL for the sole purpose of increasing the registered capital of the ACIL. These loans are eliminated with the capital of ACIL during consolidation.

3) Share Pledge Agreement: Pursuant to the Share Pledge Agreement, the shareholders of ACIL pledged to ADHG a first security interest in all of their equity interests in ACIL to secure ACIL's timely and complete payment and performance of its obligations under the Exclusive Business Cooperation Agreement. During the term of the Share Pledge Agreement, the pledgors agreed, among other things, not to transfer, place or permit the existence of any security interest or other encumbrance on their interest in ACIL without the prior written consent of ADHG. The pledge shall remain in effect until 10 years after the obligations under the business cooperation agreement will have been fulfilled. However, upon the full payment of the consulting and service fees under the Exclusive Business Cooperation Agreement and upon the termination of ACIL's obligations under the Exclusive Business Cooperation Agreement, the Share Pledge Agreement shall be terminated and ADHG shall terminate this agreement as soon as reasonably practicable.

4) Power of Attorney: Pursuant to the Power of Attorney, Messrs. Lam Chi Kwong Leo, as the sole shareholder of ACIL, granted to the ADHG the right to (i) attend shareholders meetings of ACIL (ii) exercise all shareholder rights (including voting rights) with respect to such equity interests in ACIL and (iii) designate and appoint on behalf of such shareholders the legal representative, directors, supervisors, and other senior management members of ACIL. The Power of Attorney is irrevocable and is continuously valid from the date of execution of such Power of Attorney, so long as such persons remain shareholders of ACIL.

5) Exclusive Option Agreement: Pursuant to the Exclusive Option Agreement, the shareholders of ACIL granted to the ADHG an irrevocable and exclusive right and option to purchase all of their equity interests in ACIL. The purchase price shall be equal to the capital paid in by the shareholders, adjusted pro rata for the purchase of less than all of the equity interests. The Agreement is effective for a term of 10 years, and may be renewed at ADHG's election.

Ms. Lee Hiu Lan resigned from the position of Chief Financial Officer, Secretary and Treasurer on April 14, 2020, and our Chief Executive Officer, Mr. Lam Chi Kwong Leo took over all these position on the same date.

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Our principal executive offices are located at Room 1107, 11/F, Lippo Sun Plaza, 28 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong. Our telephone number is +852 23519122. We were incorporated under the laws of the State of Nevada on August 22, 2015. Our fiscal year end is September 30.



Results of Operation


For the three months period ended December 31, 2019 and 2018



Revenues


We have not generated any revenue for the three and six months ended March 31, 2020 and 2019.

General and administrative expenses

We incurred a total of $101,693 and $37,130 general and administrative expenses during the six months ended March 31, 2020 and 2019 respectively. The general and administrative expenses are mainly comprised of Form 10-Q review fee, consulting fee, legal fee, transfer agent fee and edgar filing fee, lease expense and wages. The increase of general and administrative expenses is due to increase in audit review fee, consulting fee, lease expense and wages.

We incurred a total of $51,214 and $11,420 general and administrative expenses during the three months ended March 31, 2020 and 2019 respectively. The general and administrative expenses are mainly comprised of Form 10-Q review fee, consulting fee, legal fee, transfer agent fee and edgar filing fee, lease expense and wages. The increase of general and administrative expenses is due to increase in audit review fee, consulting fee, lease expense and wages.



Other income and expense


For the three months ended March 31, 2020, we have earned $48,058 interest income from the loan to Ando Credit Limited, at 12% per annum, while we have incurred $42,675 finance cost to the promissory notes issued at 10% per annum.

For the six months ended March 31, 2020, we have earned $56,532 interest income from the loan to Ando Credit Limited, at 12% per annum, while we have incurred $50,329 finance cost to the promissory notes issued at 10% per annum.



Net loss


We incurred a total net loss of $45,831 and $95,490 for the three and six months ended March 31, 2020 respectively, while we incurred a net loss of $11,420 and $37,130 for the three and six months ended March 31, 2019 respectively.

Liquidity and Capital Resources

Cash Used In Operating Activities

For the six months ended March 31, 2020 and 2019, the cash flows used in operating activities was $47,640 and $28,998 respectively, consists of net loss and change in assets and liabilities.

Cash Used In Financing Activities

For the six months ended March 31, 2020 and 2019, the cash flows provided by financial activities was $22,506 and $92,411 respectively, consists of proceeds from issuance of promissory note and advance to and from related party.

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Off-balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of March 31, 2020.



Contractual Obligations


On October 8, 2019, an employee of Xian Ando Factoring Commercial Company Limited, Mr. An Zhixu entered into a three-year tenancy agreement from November 1, 2019 to October 31, 2022, on behalf of Xian Ando Factoring Commercial Company Limited. The tenancy address is Room 1007 and 1008, Block B, Wang Zuo Qu Jiang, Qu Jiang New District, Xian, China. The monthly rental is CNY15,440, approximately $2,205.

On November 28, 2019, the Company entered into a securities purchase with an accredited investor, Tsai Ming Hsiu (the "Lender"), pursuant to which the Company issued promissory note for an aggregate of $50,000, with an interest rate of 10% per annum. The Note is to be paid within one year beginning from November 28, 2019. The Note mature on November 28, 2020 ("Maturity Date") and contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

In December 2019, the Company entered into several securities purchase agreements with a batch of accredited investors, pursuant to which the Company issued promissory notes for an aggregate of $1,070,000 (the "Outstanding Balance"), with an interest rate of 10% per annum (the "Note"). The Outstanding Balance of the Notes are to be paid within one year beginning from the effective dates of the notes ("Maturity Dates"). The Notes contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

In January 2020, the Company entered into several securities purchase agreements with a batch of accredited investors, pursuant to which the Company issued promissory notes for an aggregate of $310,000 (the "Outstanding Balance"), with an interest rate of 10% per annum (the "Note"). The Outstanding Balance of the Notes are to be paid within one year beginning from the effective dates of the notes ("Maturity Dates"). The Notes contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

In February 2020, the Company entered into several securities purchase agreements with a batch of accredited investors, pursuant to which the Company issued promissory notes for an aggregate of $405,000 (the "Outstanding Balance"), with an interest rate of 10% per annum (the "Note"). The Outstanding Balance of the Notes are to be paid within one year beginning from the effective dates of the notes ("Maturity Dates"). The Notes contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

In March 2020, the Company entered into several securities purchase agreements with a batch of accredited investors, pursuant to which the Company issued promissory notes for an aggregate of $670,000 (the "Outstanding Balance"), with an interest rate of 10% per annum (the "Note"). The Outstanding Balance of the Notes are to be paid within one year beginning from the effective dates of the notes ("Maturity Dates"). The Notes contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

On April 1, 2020, the Company entered into a securities purchase with an accredited investor, Lee Pei Hsuan (the "Lender"), pursuant to which the Company issued promissory note for an aggregate of $50,000, with an interest rate of 10% per annum. The Note is to be paid within one year beginning from April 1, 2020. The Note matures on April 1, 2021 ("Maturity Date") and contain an auto renewal clause for one year if the Lender fails to provide notice for redemption on or before 30 days from the Maturity Date.

© Edgar Online, source Glimpses

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