FLYWHEEL ADVANCED TECHNOLOGY, INC. ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The Acquisition
On
QBS System provides Internet of Things ("IoT") solutions and services to assist
its clients to build applications using available IoT devices, sensors,
frameworks, and platforms, integrate hardware and software solutions with
clients existing landscape, or implement new IoT solutions for enterprises. With
QBS System as its subsidiary, the Company will continue to provide a full range
of IoT services comprising consulting, development and implementation,
analytics, support, and evolution. QBS System has a business portfolio
consisting of IoT integration solution services, IoT maintenance and support
services, IoT projects and ventures, Business Process Outsourcing ("BPO")
services, and approximately twelve years of experience in
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QBS System's wholly owned subsidiary,
Pursuant to the terms of the Share Exchange Agreement, all of the issued and outstanding ordinary shares of QBS System, which were held by the Shareholder, were exchanged for the Exchange Shares.
As a result of the Share Exchange, the Shareholder owns approximately 33.5% of the issued and outstanding shares of Common Stock.
? The stockholders of the Company prior to the Share Exchange held 17,751,564
shares of Common Stock issued and outstanding; and
? The Shareholder now holds 8,939,600 shares of Common Stock, approximately
33.5% of the issued and outstanding shares of the Common Stock.
After the issuance of the Exchange Shares there are 26,691,164 issued and outstanding shares of Common Stock of the Company.
The Share Exchange Agreement contains representations, warranties, and covenants that are customary for transactions of this type.
In connection with the Share Exchange, the Company entered into a lock-up and leak-out agreement ("Lock-Up Agreement") with the Shareholder. The Lock-Up Agreement covers the Exchange Shares and provides that the Exchange Shares are subject to a 12-month lock-up from the date of the Share Exchange Agreement (the "Lock-Up Period"). The Lock-Up Period is subject to early termination upon certain corporate events and transactions and allows for certain limited permitted transfers where the recipient takes shares subject to the restrictions in the Lock-Up Agreement.
For a period of one year after the end of the Lock-Up Period, the Exchange Shares are subject to a one-year leak-out restriction for public resales of five percent of the trailing ten (10) day average trading volume of the Common Stock. The Company may waive these restrictions.
The preceding summary of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the Form Lock-Up Agreement, a copy of which is filed as Exhibit 10.4 hereto and is incorporated herein by reference.
In connection with the Share Exchange,
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
The Exchange
On
DESCRIPTION OF BUSINESS
QBS System's Business
Prior to the Closing, the Company was a shell company (as defined in Rule 12b-2 of the Exchange Act) with no operations. At the Closing and as a result of the Share Exchange, the business of QBS System became the business of the Company.
QBS System launched in
? IoT;
? IoT related solution services - integration solutions services, IoT
maintenance & support services and IoT business process outsourcing services;
and
? IoT products - location-based services, video analytics and asset management.
QBS System's Business Service Portfolio
IoT Integration Solution Services
QBS System's IoT Integration Solution Service helps clients to build applications using available IoT devices, sensors, framework and platform, to integrate the available hardware and software solution with clients existing landscape or to implement a new IoT solution for enterprises.
The applications of the QBS System's IoT Integration Solution Service includes Enterprise IoT and Industrial IoT, the essential component of Industry 4.0.
QBS System provides full-range of services under its IoT Integration Solution Service program such as consulting, development and implementation, analytics, support, and evolution.
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QBS System's IoT Integration Solution Service focuses on researching and developing technologies to improve and enhance the quality of life for clients and find a faster, more economical, and easier ways to solve problems. The list below shows certain of the technologies developed and utilized by QBS System's IoT Integration Solution Services in the following industries:
? Low Carbon Property Management - carbon management involves understanding the
carbon footprint of an entity or an individual by collecting and analyzing a
massive volume of data. Carbon footprint benchmarking assesses and manages
carbon emissions. This technology saves operating costs, reduces carbon
emissions, slows climate change, improves air quality, and benefits human
health.
? Energy Management - energy management is the key to conserving energy and
saving money. It provides an opportunity to optimize energy costs by
understanding energy flow, procurement, and economics of energy and reducing
its harmful impact on our environment. This technology monitors energy
consumption resulting in savings and reduction in carbon emissions for greater
corporate social responsibility;
? Stock Management - stock management enables real-time stock information and
facilitates warehouse and retail operation activities, a critical supply chain
element. Stock management aims to have the right product in the right place at
the right time without creating excess inventory. This technology offers a
timely, efficient, and cost savings solution, especially for retail
businesses;
? GreenTech Management - GreenTech management monitors, for example, planting
requirements based on dynamic environmental data captured. This technology
helps those growing houseplants or vegetation to reduce sound level and carbon
footprint in the house, improve indoor air quality, and use resources more
efficiently; and
? Enhanced Lifestyle Management - Enhanced Lifestyle Management facilitates the
hospitality industry to be more efficient and reduce operating costs. This
technology also improves the wellness, comfort, and safety of individuals.
IoT Maintenance and Support Service
Following the completion of a QBS System's IoT Integration Solution Service for a client, QBS System can provide ongoing maintenance and support services, as well as maintenance and support services on consumable hardware and software (license) purchased by the client. QBS System's maintenance and support services . . .
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The information set forth in Item 1.01 and 2.01 above is incorporated herein by reference.
The issuance of the Exchange Shares in connection with the Share Exchange was
not registered under the Securities Act, in reliance upon the exemption from
registration provided by Section 4(a)(2) of the Securities Act, which exempts
transactions by an issuer not involving any public offering, and Regulation S
promulgated by the
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ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
The information set forth in Items 1.01 and 2.01 above is incorporated herein by reference, including, without limitation, the information regarding the departure of directors of the Company as of the Closing, and the biographical, related party, executive compensation and other information regarding the Company's directors and executive officers.
There are no arrangements or understandings pursuant to which any of the Company's current directors were appointed as a director.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS.
Prior to the Share Exchange, we were a "shell company" (as such term is defined
in Rule 12b-2 under the Exchange Act). As a result of the Share Exchange, the
Company has ceased to be a shell company. The information contained in this
Current Report, together with the information contained in our Annual Report on
Form 10-K for the fiscal year ended
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
In accordance with Item 9.01(a), the audited consolidated financial
statements of QBS System for the last two fiscal years ended March 31, 2022
and March 31, 2021 , and the accompanying notes, and the unaudited
consolidated financial statements of QBS System for the nine months ended
December 31, 2022 and December 31, 2021 with the accompany notes are included
in this Current Report and attached hereto as Exhibit 99.2.
(b) Pro Forma Financial Information.
In accordance with Item 9.01(b), the unaudited pro forma condensed
consolidated financial statements for the fiscal year ended September 30,
2022 , and as of, and for, the three months ended December 31, 2022 and the
accompanying notes are included in in this Current Report and attached hereto
as Exhibit 99.3.
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(d) Exhibits
Exhibit No. Description
3.1.1 Articles of Incorporation, filed as Exhibit 3.1 to Registration
Statement on Form S-1, filed with the Securities and Exchange
Commission on May 27, 2010 .
3.1.2 Certificate of Amendment, effective April 26, 2013 , filed as
Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities
and Exchange Commission on May 1, 2013 .
3.1.3 Certificate of Amendment to the Articles of Incorporation filed
with the Secretary of State of Nevada , filed as Exhibit 3.10 to
Quarterly Report on Form 10-Q, for the period ended March 31, 2022 ,
filed with the Securities and Exchange Commission on May 13, 2022 .
3.2 Bylaws, filed as Exhibit 3.2 to Registration Statement on Form
S-1, filed with the Securities and Exchange Commission on May 27,
2010 .
3.4.1 Series A Convertible Preferred Stock Certificate of Designations,
effective September 24, 2012 , filed as Exhibit 3.1 to Registration
Statement on Form S-1, filed with the Securities and Exchange
Commission on September 26, 2012 .
3.4.2 Amendment to the Certificate of Designation of the Series A-1
Preferred Stock as filed with the Secretary of State of the State of
Nevada on September 15, 2022 , filed as Exhibit 3.1 to Current Report
on Form 8-K, filed with the Securities and Exchange Commission on
September 22, 2022 .
3.4.3 Series B Non-Convertible Preferred Stock Certificate of
Designations, effective November 8, 2012 , filed as Exhibit 3.1 to
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on November 9, 2012 .
3.4.4 Amended and Restated Series C Preferred Stock Certificate of
Designation, effective October 18, 2013 , filed as Exhibit 3.1 to
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on October 18, 2013 .
3.4.5 Series D Convertible Preferred Stock Certificate of Designations,
filed on October 16, 2012 , filed as Exhibit 3.1 to Current Report on
Form 8-K, filed with the Securities and Exchange Commission on
October 17, 2013 .
10.1 Shareholder Agreement dated December 7, 2022 , by and among
Flywheel Advance Technology, Inc. , So Ha Tsang , and Sau Ping Leung,
filed as Exhibit 10.1 to Current Report on Form 8-K, filed with the
Securities and Exchange Commission on December 12, 2022 .
10.2 Agency Agreement, dated December 7, 2022 , by and between
International Supply Chain Alliance Co., Ltd. and Blue Print Global,
Inc. , filed as Exhibit 10.2 to Current Report on Form 8-K, filed
with the Securities and Exchange Commission on December 12, 2022 .
10.3 Share Exchange Agreement, dated December 15, 2022 , by and among
Flywheel Advance Technology, Inc. , QBS System Limited , and QBS
Flywheel Limited ., filed as Exhibit 10.3 to Current Report on Form
8-K, filed with the Securities and Exchange Commission on December
16, 2022
10.4 Form of Lock-Up Agreement.*
10.5 Form of Non-Disclosure and Non-Compete Agreement.*
10.6 Engagement Letters, dated April 1, 2022 , between QBS System
Limited and [redacted] for System IoT Business Process Outsourcing
Services.*
10.7** Engagement Letter, dated December 11, 2020 , between QBS System
Limited and [redacted] Security and Monitoring Services.*
10.8 Facility Letter, dated April 27, 2020 , from the Bank of China
(Hong Kong) Limited to QBS System*
10.9 Facility Letter, dated October 10, 2020 , from the Bank of China
(Hong Kong) Limited to QBS System*
10.10 Facility Letter, dated June 28, 2021 , from the Bank of China (Hong
Kong) Limited to QBS System*
99.1 Notice of Entry of Order Barring Claims and Terminating
Custodianship, filed as Exhibit 99.1 to Current Report on Form 8-K,
filed with the Securities and Exchange Commission on July 20,
2020 .
99.2 Audited Consolidated Financial Statements of QBS System for the
last two fiscal years ended March 31, 2022 and March 31, 2021 , and
the accompanying notes and the unaudited consolidated financial
statements of QBS System for the nine months ended December 31, 2022
and December 31, 2021 with the accompany notes.*
99.3 Unaudited Pro Forma condensed consolidated financial statements
for the fiscal year ended September 30, 2022 and as of and for the
three months ended December 31, 2022 and the accompanying notes*
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Filed herewith.
** Upon request by the
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