The provided content details the required filings with the Securities and Exchange Commission following Flywheel Advance Technology’s Share Exchange. The documents filed include financial statements of QBS System for the last two fiscal years ended March 31, 2022, as well as unaudited pro forma condensed consolidated financial statements for the fiscal year ended September 30, 2022. The report also lists several agreements and engagement letters made by QBS System Limited. The document concludes with the Company’s undertaking to furnish the SEC with a copy of any omitted schedule or exhibit upon request. The keywords for the content are “Share Exchange,” “QBS System,” “financial statements,” “engagement letters,” and “SEC filing.”
Flywheel Advanced Technology, Inc. Acquires QBS System
Flywheel Advanced Technology, Inc., a Nevada-based corporation, completed the Share Exchange transaction on March 22, 2023. The Share Exchange Agreement was made between Flywheel Advanced Technology, QBS System Limited (a Hong Kong-based limited company), and QBS Flywheel Limited (an Australian company). The agreement involved Flywheel acquiring all the issued and outstanding ordinary shares of QBS System. In exchange, QBS System received 8,939,600 newly issued shares of Flywheel’s common stock.
As a result of this agreement, QBS System will operate as a wholly-owned subsidiary of Flywheel. QBS System provides Internet of Things (IoT) solutions and services to its clients, enabling them to build applications using available IoT devices, sensors, frameworks, and platforms. The company specializes in integrating hardware and software solutions with clients’ existing landscape and implementing new IoT solutions for enterprises.
QBS System’s services include IoT integration solution services, IoT maintenance and support services, IoT projects and ventures, and Business Process Outsourcing (BPO) services. With twelve years of experience in Hong Kong providing IoT software and hardware engineering services, QBS System’s clientele ranges across various industries, such as logistics and supply chain management, food & beverage, automation, and smart buildings.
QBS System’s subsidiary, QBS System Pty Limited, is an Australian proprietary limited company that provides computer network systems design and integration services.
By acquiring QBS System, Flywheel will continue to provide a full range of IoT services, including consulting, development and implementation, analytics, support, and evolution. QBS System’s expertise in Enterprise IoT and Industrial IoT will be a valuable asset to Flywheel’s portfolio. Industrial IoT is the essential component of the fourth revolution of manufacturing, also known as “Industry 4.0.”
Flywheel Advanced Technology, Inc. completed a Share Exchange transaction on March 22, 2023, pursuant to the Share Exchange Agreement. As part of this agreement, all of the issued and outstanding ordinary shares of QBS System, held by the Shareholder, were exchanged for the newly issued Exchange Shares. The Shareholder now holds approximately 33.5% of the issued and outstanding shares of Common Stock, while the stockholders of the Company prior to the Share Exchange held 17,751,564 shares of Common Stock issued and outstanding. 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 Agreement with the Shareholder, which covers the Exchange Shares. The Exchange Shares are subject to a 12-month lock-up from the date of the Share Exchange Agreement, subject to early termination upon certain corporate events and transactions. The Lock-Up Agreement also 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.
In connection with the Share Exchange, Wong Chi Fung and Kwan Ping Yuen entered into three-year confidentiality, non-competition, and non-solicitation agreements with the Company. The agreements contain standard provisions, including that Mr. Wong and Mr. Kwan do not engage in any business that supplies the same product or services as, that competes with, or is similar to the business of the Company.
QBS System, now a wholly-owned subsidiary of Flywheel, provides Internet of Things (IoT) solutions and services to assist its clients to build applications using available IoT devices, sensors, frameworks, and platforms. The company specializes in integrating hardware and software solutions with clients’ existing landscape and implementing new IoT solutions for enterprises. Its services include IoT integration solution services, IoT maintenance and support services, IoT projects and ventures, and Business Process Outsourcing (BPO) services.
QBS System has over twelve years of experience in Hong Kong providing IoT software and hardware engineering services. Its clients range across various industries, such as logistics and supply chain management, food & beverage, automation, and smart buildings. The company’s applications of IoT solutions include connected equipment in the enterprise (“Enterprise IoT”) and industrial assets such as machines and robots (“Industrial IoT”), the essential component of the fourth revolution of manufacturing or “Industry 4.0”.
Additionally, QBS System’s subsidiary, QBS System Pty Limited, is an Australian proprietary limited company that provides computer network systems design and integration services.
In conclusion, Flywheel’s acquisition of QBS System has allowed the company to expand its range of IoT services, including consulting, development and implementation, analytics, support, and evolution. The acquisition also adds QBS System’s expertise in Enterprise IoT and Industrial IoT to Flywheel’s portfolio.
Flywheel Advanced Technology, Inc. was a shell company with no operations before the Share Exchange. On March 22, 2023, the business of QBS System became the business of Flywheel as a result of the Share Exchange, which involved the acquisition of all the issued and outstanding ordinary shares of QBS System.
QBS System launched in Hong Kong under the Company Ordinance on April 14, 2011. Its business service portfolio includes IoT integration solution services, IoT maintenance and support services, IoT projects and ventures, BPO services, and IoT software and hardware engineering services. QBS System primarily operates in three reportable segments across various industries: IoT, IoT-related solution services, and IoT products.
IoT Integration Solution Services
QBS System’s IoT Integration Solution Service helps clients 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 QBS System’s IoT Integration Solution Service include Enterprise IoT and Industrial IoT, the essential component of Industry 4.0. QBS System provides a full range of services under its IoT Integration Solution Service program, such as consulting, development and implementation, analytics, support, and evolution.
QBS System focuses on researching and developing technologies to improve and enhance the quality of life for clients and find faster, more economical, and easier ways to solve problems. The list below shows certain technologies developed and utilized by QBS System’s IoT Integration Solution Services in various industries:
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Low Carbon Property 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.
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Energy Management – 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.
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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 to increase efficiency and reduce costs.
QBS System’s IoT-related solution services include integration solutions services, IoT maintenance and support services, and IoT business process outsourcing services. These services are designed to help clients integrate their existing systems and processes with IoT devices to improve efficiency, lower costs, and increase profitability.
IoT Products
QBS System’s IoT products include location-based services, video analytics, and asset management. These products are designed to help clients improve asset utilization, reduce costs, and increase productivity.
In conclusion, the acquisition of QBS System has enabled Flywheel to expand its IoT services portfolio and add QBS System’s expertise in Enterprise IoT and Industrial IoT to its business. QBS System’s experience in Hong Kong and its business service portfolio make it a valuable addition to Flywheel.
Flywheel Advanced Technology, Inc. Completes Acquisition and Sale of Unregistered Equity Securities
On March 22, 2023, Flywheel Advanced Technology, Inc. completed the acquisition of QBS System Limited, a Hong Kong-based company providing Internet of Things (IoT) solutions and services. As a result of the share exchange agreement, Flywheel Advanced Technology, Inc. acquired all of the issued and outstanding ordinary shares of QBS System, and QBS System continues to operate as a wholly owned subsidiary of the company.
QBS System’s Business Service Portfolio
QBS System offers a range of IoT services, including IoT integration solution services, IoT maintenance and support services, IoT projects and ventures, Business Process Outsourcing (BPO) services, and IoT software and hardware engineering services. Its clients come from diverse industries such as logistics and supply chain management, food & beverage, automation, and smart buildings.
IoT Integration Solution Services
Under QBS System’s IoT Integration Solution Services, clients can build applications using available IoT devices, sensors, frameworks, and platforms, integrate hardware and software solutions with their existing landscape, or implement new IoT solutions for enterprises. The company offers consulting, development and implementation, analytics, support, and evolution services. QBS System’s focus on researching and developing technologies aims to enhance the quality of life for clients, and it has developed technologies for carbon management, energy management, stock management, GreenTech management, and Enhanced Lifestyle Management.
IoT Maintenance and Support Service
Following completion of a QBS System’s IoT Integration Solution Service for a client, QBS System provides ongoing maintenance and support services, as well as maintenance and support services on consumable hardware and software (license) purchased by the client.
Unregistered Sale of Equity Securities
The issuance of 8,939,600 newly issued shares of common stock to the shareholders of QBS System in exchange for all of the issued and outstanding ordinary shares of QBS System was not registered under the Securities Act. The sale of equity securities was exempted from registration under 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 SEC under that section. The securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement and are subject to further contractual restrictions on transfer as described below.
Change in Shell Company Status
Prior to the share exchange, Flywheel Advanced Technology, Inc. was a shell company with no operations. However, following the completion of the share exchange, QBS System’s business became the business of the company.
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers
With the completion of the share exchange, there were changes to the company’s directors and principal officers. Additionally, certain officers have entered into confidentiality, non-competition, and non-solicitation agreements with the company.
The share exchange agreement includes customary representations, warranties, and covenants, and the Lock-Up Agreement covers the Exchange Shares and provides for a 12-month lock-up period subject to early termination and limited permitted transfers. The Exchange Shares are subject to a one-year leak-out restriction for public resales of five percent of the trailing ten-day average trading volume of the Common Stock. The company may waive these restrictions.
Overall, the acquisition of QBS System by Flywheel Advanced Technology, Inc. expands the latter’s range of IoT services and products and promises to bring significant value to clients from various industries.
QBS System Ceases to Be a “Shell Company”
QBS System, which launched in Hong Kong on April 14, 2011, was a “shell company” prior to the Share Exchange. As a result of the Share Exchange, QBS System’s business services became those of the Company. As a non-shell company, the Current Report, together with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022, fulfill the current “Form 10 information” required to meet Rule 144(i)(2) conditions under the Securities Act.
Financial Statements and Exhibits
The following financial statements and exhibits are included in this Current Report:
(a) Financial Statements of Businesses Acquired.
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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
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Unaudited consolidated financial statements of QBS System for the nine months ended December 31, 2022 and December 31, 2021, and the accompanying notes
(b) Pro Forma Financial Information.
- 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
(d) Exhibits
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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
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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
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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
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Bylaws, filed as Exhibit 3.2 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on May 27, 2010
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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
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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
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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
Flywheel Advance Technology, Inc: List of Exhibits
This is a list of exhibits filed by Flywheel Advance Technology, Inc. with the Securities and Exchange Commission. The exhibits include agreements, financial statements, and other important documents related to the company’s operations.
Series C and D Preferred Stock Certificate of Designations
Exhibits 3.4.4 and 3.4.5 refer to the Amended and Restated Series C Preferred Stock Certificate of Designation, filed in 2013, and the Series D Convertible Preferred Stock Certificate of Designations, filed in 2012, respectively. These certificates describe the terms and conditions of the preferred stock issued by the company.
Exhibits 10.1 and 10.2 are copies of the Shareholder Agreement and Agency Agreement, respectively. The former, dated December 7, 2022, outlines the agreement between Flywheel Advance Technology, Inc. and shareholders So Ha Tsang and Sau Ping Leung. The latter, also dated December 7, 2022, is an agreement between International Supply Chain Alliance Co., Ltd. and Blue Print Global, Inc.
Exhibit 10.3 is the Share Exchange Agreement, dated December 15, 2022. The agreement outlines the terms of the acquisition of QBS System Limited and QBS Flywheel Limited by Flywheel Advance Technology, Inc.
Lock-Up and Non-Disclosure Agreements
Exhibits 10.4 and 10.5 are blank forms of the Lock-Up Agreement and Non-Disclosure and Non-Compete Agreement, respectively. These documents are typically used in business transactions to ensure confidentiality and prevent insider trading.
Engagement Letters
Exhibits 10.6 and 10.7 are engagement letters between QBS System Limited and two different service providers. Exhibit 10.6 is between QBS System Limited and a redacted company for System IoT Business Process Outsourcing Services. Exhibit 10.7 is between QBS System Limited and another redacted company for Security and Monitoring Services.
Facility Letters
Exhibits 10.8, 10.9, and 10.10 are facility letters from the Bank of China (Hong Kong) Limited to QBS System Limited. These letters outline the terms and conditions of the loans provided to QBS System Limited by the bank.
Financial Statements
Exhibit 99.2 contains the audited consolidated financial statements of QBS System for the last two fiscal years, ended March 31, 2022 and March 31, 2021, as well as the unaudited consolidated financial statements for the nine months ended December 31, 2022 and December 31, 2021. Exhibit 99.3 contains 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.
Other Exhibits
Exhibit 99.1 is a notice of Entry of Order Barring Claims and Terminating Custodianship, filed in July 2020. Exhibit 104 is the Cover Page Interactive Data File, embedded within the Inline XBRL document.
All of these exhibits provide important information for investors and other stakeholders interested in the operations and financial performance of Flywheel Advance Technology, Inc.
Upon request by the SEC, the Company agrees to provide a copy of any omitted schedule or exhibit to such agreement. However, the Company may request confidential treatment for any schedule or exhibit provided, pursuant to Rule 24b-2 of the Exchange Act.
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