10-Q 1 f10q0919_rebelgroupinc.htm QUARTERLY REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

☐ 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 charter)

Florida		45-3360079
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7500A Beach Road, Unit 12-313, The Plaza Singapore 199591		199591
(Address of principal executive offices)		(Zip Code)

+6562941531

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 November 19, 2019, there were 52,437,271 shares of common stock, $0.0001 par value, issued and outstanding.

INDEX

		Page
		Number
PART I

ITEM 1.	Financial Statements (unaudited)	1

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26

ITEM 4.	Controls and Procedures	26

PART II

ITEM 1.	Legal Proceedings	27

ITEM 1A.	Risk Factors	27

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

ITEM 3.	Defaults Upon Senior Securities	27

ITEM 4.	Mine Safety Disclosures	27

ITEM 5.	Other Information	27

ITEM 6.	Exhibits	28

Signatures		29

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REBEL GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Stated in US Dollars)

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	395,456		$	41,321
Deposits		9,741			10,124
Trade and other receivables, net		178,436			35,702
Due from related party		41,937			-
Total current assets		625,570			87,147

Property and equipment, net		13,627			23,846
Intangible assets, net		64,265			83,667
Long-term investment		-			1,326,831
TOTAL ASSETS	$	703,462		$	1,521,491
COMMITMENTS AND CONTINGENCIES

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Convertible loans	$	1,433,468		$	449,600
Short-term loans		146,516			296,576
Accrued expenses		86,867			102,237
Trade and other payables		803,376			1,185,207
Due to related parties		48,350			190,850
Due to shareholders		2,333,734			2,658,560
Income taxes payable		80,642			60,653
Total current liabilities		4,932,953			4,943,683
Deferred tax liabilities		-			278,634
TOTAL LIABILITIES	$	4,932,953		$	5,222,317

STOCKHOLDERS’ DEFICIT
Preferred stock ($0.0001 par value; authorized 100,000,000 shares, none issued and outstanding at September 30, 2019 and December 31, 2018)		-			-
Common stock ($0.0001 par value; authorized 500,000,000 shares, 52,237,271 and 48,319,986 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)		5,224			4,832
Additional paid-in capital		13,717,847			11,384,592
Accumulated deficit		(18,078,426	)		(8,370,529	)
Accumulated other comprehensive income (loss)		125,864			(6,719,721	)
Total shareholders’ deficit		(4,229,491	)		(3,700,826	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	703,462		$	1,521,491

See accompanying notes to unaudited condensed consolidated financial statements

REBEL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Stated in US Dollars)

	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenues, net	$	139,834		$	-		$	139,834		$	223,783

Operating expenses
Cost of sales		(587,143	)		(40,352	)		(608,909	)		(1,902,667	)
Depreciation and amortization expenses		(5,727	)		(10,124	)		(28,377	)		(29,744	)
General and administrative expenses		(1,916,150	)		(1,175,553	)		(3,334,198	)		(3,591,624	)
Loss from operations		(2,369,186	)		(1,226,029	)		(3,831,650	)		(5,300,252	)

Other income (expenses)
Convertible loan interest		(10,921	)		(11,108	)		(33,934	)		(31,686	)
Bank loan interest		7,921			(35,475	)		(34,639	)		(47,825	)
Interest income		5			2,962			11			8,980
Recognized loss from changes in fair value as a result of investment disposition		-			-			(5,766,462	)		-
Other income (expenses)		28,841			(4,107	)		(21,223	)		(4,107	)
Total other income (expenses)		25,846			(47,728	)		(5,856,247	)		(74,638	)

Loss before income tax expenses (benefits)		(2,343,340	)		(1,273,757	)		(9,687,897	)		(5,374,890	)
Income tax		-			(20,927	)		(20,000	)		(20,927	)
Net loss		(2,343,340	)		(1,294,684	)		(9,707,897	)		(5,395,817	)

Other comprehensive income (loss)
Foreign currency translation adjustments		28,639			(204,116	)		111,782			(81,826	)
Change in fair value related to long-term investment, net of tax of $2,475,843 and $680,925 for the nine and three months ended September 30, 2018		-			(3,501,161	)		-			(9,313,887	)
Other comprehensive income (loss)		28,639			(3,705,277	)		111,782			(9,395,713	)

Total comprehensive loss	$	(2,314,701	)	$	(4,999,961	)	$	(9,596,115	)	$	(14,791,530	)

Loss per share
Basic and diluted loss per common share	$	(0.045	)	$	(0.027	)	$	(0.193	)	$	(0.117	)
Basic and diluted weighted average common shares outstanding		51,779,013			47,083,630			50,375,304			46,115,724

See accompanying notes to unaudited condensed consolidated financial statements

REBEL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(Stated in US Dollars)

	For the three and nine months ended September 30, 2019
											Accumulated
					Additional						Other
	Common Stock				Paid-in			Accumulated			Comprehensive
	Shares		Amount		Capital			Deficit			Income			Total

Balance, December 31, 2018		48,319,986	$	4,832	$	11,384,592		$	(8,370,529	)	$	(6,719,721	)	$	(3,700,826	)
Cumulative effect of changes in accounting principles related to financial instruments		-		-		-			(5,766,462	)		6,733,803			967,341
Net loss		-		-		-			(1,107,211	)		-			(1,107,211	)
Issuance of shares for cash		1,560,000		156		1,462,744			-			-			1,462,900
Issuance of shares for services		340,000		34		339,966			-			-			340,000
Foreign currency adjustment		-		-		-			-			(26,893	)		(26,893	)
Balance, March 31, 2019 (unaudited)		50,219,986	$	5,022	$	13,187,302		$	(15,244,202	)	$	(12,811	)	$	(2,064,689	)

Net loss		-		-		-			(490,884	)		-			(490,884	)
Issuance of shares for cash		101,334		10		126,990			-			-			127,000
Transfer of long-term investment to shareholders		-		-		(2,015,538	)		-			-			(2,015,538	)
Foreign currency adjustment		-		-		-			-			110,036			110,036
Balance, June 30, 2019 (unaudited)		50,321,320	$	5,032	$	11,298,754		$	(15,735,086	)	$	97,225		$	(4,334,075	)

Net loss		-		-		-			(2,343,340	)		-			(2,343,340	)
Issuance of shares for cash		706,667		71		1,209,930			-			-			1,210,001
Issuance of shares for services		1,209,284		121		1,209,163			-			-			1,209,284
Foreign currency adjustment		-		-		-			-			28,639			28,639
Balance, September 30, 2019 (unaudited)		52,237,271	$	5,224	$	13,717,847		$	(18,078,426	)	$	125,864		$	(4,229,491	)

See accompanying notes to unaudited condensed consolidated financial statements

REBEL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY/ (DEFICIT)

(Unaudited)

(Stated in US Dollars)

	For the three and nine months ended September 30, 2018
											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive
	Shares		Amount		Capital			Earnings			Income			Total

Balance, December 31, 2017		42,797,008	$	4,280	$	7,585,435		$	5,283,484		$	4,071,880		$	16,945,079
Net loss									(1,497,395	)					(1,497,395	)
Issuances of shares for cash		753,000		75		612,070			-			-			612,145
Issuances of shares for services		650,000		65		519,935			-			-			520,000
Issuances of shares for placements		1,453,860		145		(145	)		-			-			-
Unrealized loss on investment, net of tax of $653,668		-		-		-			-			(2,459,112	)		(2,459,112	)
Foreign currency adjustment		-		-		-			-			7,589			7,589
Balance, March 31, 2018 (unaudited)		45,653,868	$	4,565	$	8,717,295		$	3,786,089		$	1,620,357		$	14,128,306

Net loss		-		-		-			(2,603,738	)		-			(2,603,738	)
Issuances of shares for cash		350,000		35		349,965			-						350,000
Issuances of shares for services		276,000		28		275,972			-			-			276,000
Unrealized loss on investment, net of tax of $891,467		-		-		-			-			(3,353,614	)		(3,353,614	)
Foreign currency adjustment		-		-		-			-			114,701			114,701
Balance, June 30, 2018 (unaudited)		46,279,868	$	4,628	$	9,343,232		$	1,182,351		$	(1,618,556	)	$	8,911,655

Net loss		-		-		-			(1,294,684	)		-			(1,294,684	)
Issuances of shares for cash		1,519,609		152		1,647,034			-			-			1,647,186
Issuances of shares for services		74,333		7		74,326			-			-			74,333
Issuances of shares for placements		-		-		-			-			-			-
Unrealized loss on investment, net of tax of $891,467		-		-		-			-			(3,501,161	)		(3,501,161	)
Foreign currency adjustment		-		-		-			-			(204,116	)		(204,116	)
Balance, September 30, 2018 (unaudited)		47,873,810	$	4,787	$	11,064,592		$	(112,333	)	$	(5,323,833	)	$	5,633,213

See accompanying notes to unaudited condensed consolidated financial statements

REBEL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

	For the nine months ended September 30,
	2019			2018
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(9,707,896	)	$	(5,395,817	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation		1,549,284			870,333
Depreciation and amortization expense		28,377			29,744
Provision for doubtful accounts		21,473			-
Recognized loss from changes in fair value as a result of investment disposition		5,766,462			-
Changes in operating assets and liabilities:
Trade and other receivables		(142,723	)		(254,522	)
Accrued expenses		(15,370	)		53,486
Trade and other payables		(261,258	)		589,239
Trade and other receivables - related party		(42,500	)		746
Taxes payable		20,000			(7,855	)
Net cash used in operating activities		(2,784,151	)		(4,114,646	)

Cash flows from investing activities:
Purchases of equipment		(220	)		(20,403	)
Net cash used in investing activities		(220	)		(20,403	)

Cash flows from financing activities:
Proceeds from the issuances of common stock		2,799,901			2,609,332
Deposits		-			(30,000	)
Proceeds from convertible loans		990,594			-
Proceeds from term loan		58,621			210,404
Repayments of term loan		(256,060	)		-
Advances to directors		-			(766,675	)
Advances from related parties		(437,306	)		1,935,120
Net cash provided by financing activities		3,155,750			3,958,181

Decrease in cash and cash equivalents		371,379			(176,868	)

Effect of foreign currency translation		(17,244	)		171,838
Cash and cash equivalents at beginning of period		41,321			40,372
Cash and cash equivalents at end of period	$	395,456		$	35,342

Supplemental cash flow disclosures:
Cash paid for interest	$	15,933		$	79,511
Cash paid for income tax		-			-

Significant non-cash transactions:
Unrealized fair value loss on long-term investment	$	-		$	(11,789,730	)
Long-term investment distributed to shareholders		2,015,538			-

See accompanying notes to unaudited condensed consolidated financial statements

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

1.	Organization and nature of operations

Rebel Group, Inc. (f/k/a Inception Technology Group, Inc., also known as Rebel Fighting Championship, its trade name, the “Company”) 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 talents. 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 by hosting events that attract talented fighters from all over the world.

On June 21, 2017, Pure Heart Entertainment Pte Ltd. (“Pure Heart”) formed Rebel Shanghai Limited in Shanghai, China in order to acquire Qingdao Quanyao Sports Consulting Co., Ltd., a company organized under the laws of the PRC (“Qingdao Quanyao”) and to facilitate the Company’s planned business expansion in the southern part of the PRC.

On October 1, 2017, the Company entered into a Share Transfer Agreement (the “Share Transfer Agreement”) with Naixin Qi, who was the sole shareholder of Qingdao Quanyao.

Pursuant to the Share Transfer Agreement, Pure Heart, through a wholly foreign owned entity (the “WOFE”) agreed to acquire 100% of the outstanding equity interests of Qingdao Quanyao from the Shareholder for a purchase price of $7,000,000 (the “Purchase Price”) including: (i) the forgiveness of debt owed by Qingdao Quanyao Sports Consulting Co. Ltd, a company organized under the laws of PRC (“Quanyao), to Pure Heart as of October 1, 2017, in the amount of approximately $2,825,000 (the “Forgiven Debts”) and (ii) 12,000,000 shares (of common stock of the Company (“Common Stock”), par value $0.0001 per share (the “Shares”) (See Note 3 to the consolidated financial statements for further details).

Qingdao Quanyao holds 50% of the issued shares of Qingdao Leibo Sports Culture Co., Ltd. (“Leibo”).

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies

Basis of presentation and consolidation

The consolidated financial statements of the Company and its subsidiaries are prepared and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

All significant inter-company transactions and balances have been eliminated upon consolidation.

The unaudited interim financial information as of September 30, 2019 and for the nine months ended September 30, 2019 and 2018 have been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2018, which was filed with the SEC on September 3, 2019.

In the opinion of management, all adjustments (including normal recurring adjustments) necessary to present a fair statement of the Company's unaudited financial position as of September 30, 2019, its unaudited results of operations for the three and nine months ended September 30, 2019 and 2018, and its unaudited cash flows for the nine months ended September 30, 2019 and 2018, as applicable, have been made. The unaudited interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The Company’s unaudited condensed consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Liquidity and Going Concern

On September 30, 2019, the Company had a working capital deficit of $4,307,383 (unaudited) and cash on hand of $395,456 (unaudited), as compared to the working capital deficit of $4,856,536 and the cash on hand of $41,321 as of December 31, 2018.

Net cash used in operating activities for the nine months ended September 30, 2019 was $2,784,151 (unaudited), as compared to the net cash used in operating activities of $4,114,646 (unaudited) for the nine months ended September 30, 2018. The decrease in net cash used in operating activities was primarily due to a decrease in loss from operations.

Net cash provided by financing activities for the nine months ended September 30, 2019 was $3,155,750 (unaudited), as compared to that of $3,958,181 (unaudited) for the nine months ended September 30, 2018. The decrease in net cash provided by financing activities was primarily due to decreased advances from related parties.

As of September 30, 2019, our accumulated deficits was $18,078,426 (unaudited). Our operating results for future periods are subject to numerous uncertainties and it is uncertain if we will be able to maintain profitability and continued growth for the foreseeable future. If management is not able to increase revenue and manage operating expenses in line with revenue forecasts, the Company may not be able to maintain profitability.

The Company’s actions to improve operation efficiency, cost reduction, and develop core cash-generating business include the following: seeking advances from the major shareholders, pursuing additional public and/or private issuance of securities, and looking for strategic business partners to optimize our operations.

On September 13, 2019, the CEO of the Company and one third-party investor (“the Investor”) entered into an investment agreement to extend $3 million to the Company for hosting Rebel 10 event (“Rebel 10 event”) in December 2019. Based on the agreement, the funding is comprised of a $1.5 million 1-year convertible loan with an interest rate of 8% per annum. The investor may convert the entire principal amount into 1,500,000 shares of Company’s common stock at any time for the period commencing September 13, 2019 and ending on September 12, 2020. The Investor is expected to pay the other $1.5 million in exchange for such numbers of the Company’s common stock as determined pursuant to the terms and conditions of the investment agreement. The Company received the Investor’s payments of $1,000,000 on September 23, 2019 and $500,000 on October 19, 2019.

The Company also received financial support commitments from the Company’s related parties.

We believe that available cash and cash equivalents, together with actions as mentioned above, should enable us to meet anticipated cash needs for at least the next 12 months after the date that the financial statements of this Form 10-Q is issued. However, if we are unable to obtain the necessary additional capital on a timely basis and on acceptable terms, we will be unable to implement our current plans for expansion, repay debt obligations or respond to competitive market pressures. This will have negative influence upon our business, prospects, financial condition and results of operations and may raise substantial doubts about our ability to continue as a going concern. The unaudited condensed consolidated financial statements for the nine months ended September 30, 2019 and 2018 have been prepared on a going concern basis and do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the Company’s inability to continue as a going concern.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Revenue recognition

The Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“Topic 606”), as of January 1, 2018 using the modified retrospective transition method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605. Topic 606 prescribes a five-step model for recognizing revenue which includes (i) identifying contracts with customers; (ii) identifying performance obligations; (iii) determining the transaction price; (iv) allocating the transaction price, and (v) recognizing revenue.

The Company plans to derive revenues principally from the following sources: (i) advertising and sponsorship sales, (ii) live event ticket sales, and (iii) direct-to-consumer sales of merchandise at live event venues. The following paragraphs describe the revenue recognition policies in further details for each major revenue sources of the Company.

Advertising and sponsorships: through the advertising and sponsorship agreements with customers, the Company offers a full range of the promotional vehicles, which include online and print advertising, on-air announcements, and public appearance events led by our fighters. The Company allocates the transaction price to all performance obligations contained within a sponsorship and advertising arrangement based upon their relative standalone selling price. Revenues are recognized as each performance obligation is satisfied, which generally occurs when the sponsorship and advertising is aired, exhibited, performed or played on the applicable media platform.

Live event ticket sales: revenues from live events’ ticket sales are recognized upon the occurrence of the live events.

Direct-to-consumer venue merchandise sales: direct-to-consumer merchandise sales consist of merchandise sales at the live events. Revenues are recognized at the point of sale as control is transferred to the customer.

Currently, the Company’s revenues come from the following sources:

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
Sponsorships	$	139,612	$	-	$	139,612	$	222,271
Other		222		-		222		1,512
	$	139,834	$	-	$	139,834	$	223,783

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Use of estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the combined financial statements, and the reported amounts of revenues and expenses during the reporting period. Our significant estimates and assumption include depreciation, allowance for trade receivables and prepayments, stock-based compensation, and the valuation allowance relating to the Company’s deferred tax assets/liabilities. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist of bank deposits, which are unrestricted as to the Company’s withdrawal and use. The Company maintains relevant accounts at banks, which have original maturities of three months or less.

Allowance for doubtful accounts

An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable based on an assessment of specific evidence indicating doubtful collection, historical experience, account balance aging and prevailing economic conditions. Allowance is reversed when the underlying balance of doubtful accounts are subsequently collected. Accounts receivable balances are written-off after all collection efforts have been exhausted.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Fair value of financial instruments

Fair value information of financial instruments requires disclosure, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all nonfinancial assets and liabilities are excluded from fair value disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

Level 1

inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2

inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3

inputs to the valuation methodology are unobservable and significant to the fair value.

As of September 30, 2019 and December 31, 2018, financial instruments of the Company primarily consist of cash, cash equivalents, other receivables, and accrued expenses, of which the carrying amounts approximated their fair values due to their generally short maturities.

Foreign currency translation and transactions

The reporting currency of the Company is United States Dollars (“US$”), which is also the Company’s functional currency. The Singapore and PRC subsidiaries maintain their books and records in its local currency, the Singapore dollar (“SGD”) and Renminbi (“RMB”).

Transactions in foreign currencies other than functional currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

The Company translated the assets and liabilities into US dollars using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in investors’ equity as part of accumulated other comprehensive income.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Income taxes

Deferred tax assets and liabilities are recognized 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.

Entities should recognize in the 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.

Earnings (loss) per share

Basic earnings (loss) 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.

Employee equity share options, non-vested shares and similar equity instruments granted to employees are 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.

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:

Equipment

3 - 5 years

Intangible assets

Intangible assets, comprising trade mark and other intangible assets, which are separable from the fixed assets, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 10 years.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Impairment of long-lived assets

The Company reviews its long-lived assets, including property and equipment and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Company would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount.

Concentrations and risks

Foreign currency risk

A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

Our functional currency is the RMB and Singapore dollars in subsidiaries in China and Singapore, respectively, and our financial statements are presented in U.S. dollars. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.

To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.

Significant customers

For the nine months ended September 30, 2019 and 2018, one customer accounted for 100% and 99% of the Company’s total revenues, respectively.

Significant suppliers

For the nine months ended September 30, 2019, one supplier accounted for 15% of the Company’s total cost of sales.

Statement of Cash Flows

Cash flows from the Company’s operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

2.	Summary of principal accounting policies (continued)

Risks and Uncertainties

A significant portions of the Company’s business operations are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such conditions may not be indicative of its future results.

Recently Issued Accounting Guidance

The Company does not believe any recently issued but not yet effective accounting statements would have a material effect on the Company’s financial position or results of operations.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the accompanying unaudited condensed consolidated financial statements.

3.	Trade and other receivables

Trade and other receivables, net consisted of the following:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Trade and other receivables	$	460,657		$	307,166
Less: allowance for doubtful debts		(282,221	)		(271,464	)
Trade and other receivables, net	$	178,436		$	35,702

Movement of allowance for doubtful accounts was as follows:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Balance at beginning	$	271,464		$	-
Provision for doubtful accounts		21,473			282,356
Exchange rate effect		(10,716	)		(10,892	)
Balance at end	$	282,221		$	271,464

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

4.	Property and equipment

Property and equipment are comprised of:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Equipment	$	132,261		$	135,010
Less: accumulated depreciation		(118,634	)		(111,164	)
Total property and equipment, net	$	13,627		$	23,846

The depreciation expenses for the nine months ended September 30, 2019 and 2018 were $9,982 and $19,718, respectively. The depreciation expenses for the three months ended September 30, 2019 and 2018 were $2,046 and $6,850, respectively.

5.	Intangible assets

Intangible assets are comprised of:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Trademark	$	16,413		$	16,663
Other intangible assets		129,521			131,487
	$	145,934		$	148,150
Less: accumulated amortization		(81,669	)		(64,483	)
Total intangible assets, net	$	64,265		$	83,667

No significant residual value is estimated for these intangible assets. Amortization expenses for the nine months ended September 30, 2019 and 2018 were $18,394 and $10,026, respectively. Amortization expenses for the three months ended September 30, 2019 and 2018 were $3,680 and $3,176, respectively.

The following table represents the total estimated amortization of intangible assets for the five succeeding years:

	Estimated Amortization Expense
Twelve months ending September 30,	(Unaudited)
2020	$	14,789
2021		14,789
2022		14,789
2023		13,898
2024 and thereafter		6,000
	$	64,265

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

6.	Long-term investment

On January 30, 2015, MOXC issued a convertible promissory note to the Company for $7,782,000 (the “MOXC Note”). The MOXC Note was due and payable on October 30, 2015. Under the MOXC Note, MOXC had the option to convert any and all amounts due under the MOXC Note into the shares of MOXC’s shares of common stock (the “MOXC Common Stock”) at the conversion price of $1.00 per share (“Conversion Price”), if the volume weighted average price (“VWAP”) of MOXC Common Stock for 30 trading days immediately prior to the date of conversion is higher than the Conversion Price. MOXC also has a right of first refusal to purchase the shares issuable upon conversion of the MOXC Note at the price of 80% of the VWAP of MOXC Common Stock for 30 trading days immediately prior to the date of the proposed repurchase by MOXC.

On August 14, 2015, due to the VWAP of the MOXC Common Stock for 30 trading day prior to August 14, 2015 is higher than $1.00, which triggered the clause of conversion under the MOXC Note, MOXC notified the Company that it elected to convert the amount of $3,891,000 under the MOXC Note into 3,891,000 shares of the MOXC Common Stock at the conversion price of $1.00 (“August Conversion”). As a result of the August Conversion, the remainder amount of the MOXC Note is $3,891,000.

On September 28, 2015, MOXC notified the Company that it elected to convert the outstanding balance of the MOXC Note, of $3,891,000 into 3,891,000 shares of the MOXC Common Stock (“September Conversion”). After the August Conversion and the September Conversion, consequently, all of the MOXC Note was converted into an aggregate of 7,782,000 shares of the MOXC Common Stock, and as a result, no amount of the MOXC Note was outstanding as of December 31, 2015.

On June 20, 2016, MOXC has approved a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-2. As a result, 3,891,000 shares of the MOXC Common Stock were outstanding as of December 31, 2018.

On April 22, 2019, MOXC has approved a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-5. As a result, 778,200 shares of the MOXC Common Stock were outstanding as of April 22, 2019.

On May 1, 2019, MOXC has requested an oral hearing to appeal the decision of the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) to delist MOXC’s securities from Nasdaq. The hearing was scheduled for June 6, 2019. On May 22, 2019, MOXC announced that it has been notified by Nasdaq that its bid price deficiency had been cured, and that MOXC is now in compliance with all applicable listing standards.

On June 20, 2019, the Board of Directors of the Company approved a distribution of 778,200 shares of MOXC’s common stock, $0.001 par value per share held by the Company. MOXC’s common stock will be distributed to the shareholders of the Company who were shareholders of the Company as of January 29, 2015. As a result, the Company have not held any shares of the MOXC’s common stock since June 25, 2019.

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Cost	$	7,782,000		$	7,782,000
Fair value adjustment		(5,766,462	)		(6,455,169	)
Distribution to certain shareholders		(2,015,538	)		-
Total long-term investment	$	-		$	1,326,831

For the nine months ended September 30, 2019, the loss of MOXC’s disposal was $5,766,462.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

7.	Convertible and short-term loans

	As of
	September 30, 2019		December 31, 2018
	(Unaudited)
Convertible loans-repayable within one year	$	1,433,468	$	449,600
Short-term loans-repayable within one year		146,516		296,576
Total	$	1,579,984	$	746,176

The interest expenses for convertible loans for the nine months ended September 30, 2019 and 2018 were $33,934 and $31,686, respectively. The interest expenses for convertible loans for the three months ended September 30, 2019 and 2018 were $10,921 and $11,108, respectively.

The interest expenses for short-term loans for the nine months ended September 30, 2019 and 2018 were $34,639 and $47,825, respectively. The interest expenses for short-term loans for the three months ended September 30, 2019 was $(7,921) due to the reversal of over-accrued interest expenses, compare to the interest expenses for short-term loans of $35,474 for the three months ended September 30, 2018.

On March 24, 2017, the Company, the Chairman of the Board of Directors, and one unrelated third-party individual entered into an agreement to document the loan of S$200,000 ($142,856) that the unrelated third-party individual advanced to the Company on March 24, 2017, which was repayable on March 23, 2018 (“Maturity Date”), with an interest of 10% per annum. The unrelated third-party individual shall have the option to extend the term of the loan from the Maturity Date to March 23, 2019 (“Extended Maturity Date”). The unrelated third-party individual may convert all of the principal amount, into shares of Company’s common stock (“Conversion Right”) at any time for the period commencing on March 24, 2017 and ending on March 23, 2019 (“Conversion Period”). In the event that the Conversion Right is exercised within seven Business Days immediately following the Maturity Date, the conversion will be based on the share price of $0.50. In the event that the Conversion Right is exercised after the Maturity Date but within seven Business Days immediately following the Extended Maturity Date, the conversion will be based on the share price of $0.60. The Company repaid S$100,000 ($73,404) on August 23, 2018. As of September 30, 2019, the $100,000 was past due.

On May 5, 2017, the Company, the Chairman of the Board of Directors, and one independent director of the Company entered into an agreement to document the loan of $300,000 that the independent director advanced to the Company on May 5, 2017, and was repayable on May 4, 2018 (“Maturity Date”), with an interest of 10% per annum. The independent director shall have the option to extend the term of the loan from the Maturity Date to May 4, 2019 (“Extended Maturity Date”). The independent director may convert all of the principal amount, into shares of Company’s common stock (“Conversion Right”) at any time for the period commencing on May 5, 2017 and ending on May 4, 2019 (“Conversion Period”). In the event that the Conversion Right is exercised within seven Business Days immediately following the Maturity Date, the conversion will be based on the share price of $0.50. In the event that the Conversion Right is exercised after the Maturity Date but within seven Business Days immediately following the Extended Maturity Date, the conversion will be based on the share price of $0.60. As of September 30, 2019, the term loan was overdue.

On September 13, 2019, the CEO of the Company and one third-party investor (“the Investor”) entered into an investment agreement to extend $3 million to the Company for hosting Rebel 10 event (“Rebel 10 event”) in December 2019. Based on the agreement, the funding is comprised of a $1.5 million 1-year convertible loan with an interest rate of 8% per annum. The investor may convert the entire principal amount into 1,500,000 shares of Company’s common stock at any time for the period commencing September 13, 2019 and ending on September 12, 2020. The Company received the Investor’s payments of $1,000,000 on September 23, 2019 and $500,000 on October 19, 2019.

On April 11, 2018, the Company, the Chairman of the Board of Directors, and one independent director of the Company entered into an agreement to document the loan of Singapore Dollars (“S$”) 100,000 ($73,404) that the unrelated third-party individual advanced to the Company on April 11, 2018, and was repayable on April 18, 2019 (“Repayment Date”), with an interest of 10% per annum. The unrelated third-party individual may convert all of the principal amount into 75,750 shares of Company’s common stock after the Repayment Date. In the event that the Conversion Right is exercised within seven Business Days immediately following the Maturity Date, the conversion will be based on the share price of $1.00.

On April 25, 2018, the Company, the Chairman of the Board of Directors and the Company’s CEO and two financial institutions entered into agreements to advance to the Company two short term loans of S$360,000 ($271,368) and S$100,000 ($75,380) respectively. The two short term loans of S$360,000 and S$100,000 are guaranteed by two directors of the Company and bear an effective interest rate of 1.25% and 4% per month, respectively, with 12 equal monthly repayment terms. As of November 14, 2019, S$105,061 ($75,965) was past due for the short term loan with the principal of S$360,000; and the Company has fully repaid the other short term loan with the principal of S$100,000.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

7.	Convertible and short-term loans (continued)

On October 24, 2018 and November 7, 2018, the Company, the Chairman of the Board of Directors and the Company’s CEO and another financial institution entered into two separate agreements to advance to the Company two short term loans of S$32,900 ($24,800) and S$17,100 ($12,890) respectively. The two short term loans of S$32,900 and S$17,100 are guaranteed by a director of the Company and bear an effective interest rate of 2% and 2% per month, with 12 and 6 equal monthly repayment terms, respectively. As of November 14, 2019, S$58,667 ($42,420) in aggregate was past due for the two short term loans.

On September 5, 2019, the Chairman of the Company, the CEO of the Company, and the Company entered into an agreement to advance S$70,000 to the Company as a loan, with such amount repayable on October 4, 2019 and bearing no interest rate. On October 5, 2019, the Company repaid the full amount of the loan.

On September 6, 2019, the Company and one third-party individual entered into an agreement to advance S$50,000 to the Company as a loan, with such amount repayable on September 17, 2019 (the “Maturity Date”) with an interest of 12%. On September 23, 2019, the Company repaid the principal and interest in total of S$56,000 as satisfaction for the full amount of the loan.

On September 6, 2019, the Company and another third-party individual entered into an agreement to advance S$60,000 to the Company as a loan, with such amount repayable on October 6, 2019, with an interest of 5% per month. On October 4, 2019, the Company repaid the principal and interest in total of S$63,000 as satisfaction for the full amount of the loan.

On September 7, 2019, the Company and one third-party individual entered into an agreement to advance S$30,000 to the Company as a loan, with such amount repayable on October 7, 2019 with an interest of 5% per month. On September 23, 2019, the Company repaid the principal and interest of S$30,125 as satisfaction for the full amount of the loan.

All the above convertible loans and short-term loans are non-collateral loans.

8.	Due to related parties

As of September 30, 2019 and December 31, 2018, the amounts due to certain related parties are $48,350 and $190,850 respectively and are unsecured, interest free.

A summary of changes in the amount due to two directors of the Company is as follows:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Beginning of period	$	190,850		$	-
(Repayment) Advances for the period, net		(142,500	)		190,850
End of period	$	48,350		$	190,850

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

9.	Stockholders’ deficit

During the nine months ended September 30, 2018, the Company issued 2,622,609 shares of common stock to 27 individuals for net cash consideration of $2,609,331. The Company issued 1,433,460 shares of common stock with total value of $1,130,448 to two placement agents. The Company issued 20,400 shares of common stock with total value of $16,320 to one agent for consultancy services provided to the Company. The Company issued 1,000,333 shares of common stock with total value of $870,333 to seven individuals as payments for professional services related to public relations and marketing, director fees, and employment benefits. The value of shares of common stock issued for consideration other than cash was determined by referring to the fair value of common stock issued in connection with prior cash consideration.

During the nine months ended September 30, 2019, the Company issued 2,368,001 shares of common stock for net cash consideration of $2,799,901. The Company also issued 1,549,284 shares of common stock with total value of $1,549,284 to six individuals as payments for professional services related to public relations and marketing, director fees, and employment benefits. The value of shares of common stock issued for consideration other than cash was determined by referring to the fair value of shares of common stock recently issued for cash consideration.

10.

Taxation

The Company and its subsidiaries file separate income tax returns.

The United States of America

Rebel Group, Inc. is incorporated under the laws of the State of Florida in the U.S., and is subject to U.S. federal corporate income tax. The State of Florida imposes corporate state income tax at 5.5%. As of September 30, 2019, future net operating losses of approximately $18.1 million are available to offset future operating income through 2038.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

10.

Taxation (continued)

The 2017 Tax Act also created a new requirement that, for the periods beginning after January 1, 2018, certain income (referred to as global intangible low taxed income or “GILTI”) earned by foreign subsidiaries in excess of a deemed return on tangible assets of foreign corporations must be included in U.S. taxable income.

The GILTI income is eligible for a deduction, which lowers the effective tax rate to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. Under U.S. GAAP, companies are allowed to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which a company is subject to the rules – the period cost method, or (ii) account for GILTI in a company’s measurement of deferred taxes – the deferred method. The Company elected to account for GILTI in the period the tax is incurred. The Company did not generate any GILTI during the nine month ended September 30, 2019.

British Virgin Islands

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.

Singapore

Pure Heart was incorporated in Singapore and is subject to Singapore corporate income tax at 17%.

People of Republic China (“PRC”)

Rebel Shanghai and Qingdao Quanyao were incorporated in PRC and are subject to statutory Enterprise Income Tax rate of the PRC at 25%.

The Company has a number of open tax years which include the tax years ended December 31, 2014, 2015, 2016, 2017 and 2018 that have not been filed. While it is often difficult to predict the final outcome or the timing of uncertain tax position, the Company believes that the accruals for the income taxes reflect the most likely outcome for the unfiled tax years. The Company had approximately $80,000 and $60,000 of interest and penalties accrued at September 30, 2019 and December 31, 2018, respectively.

Based upon management’s assessment of all available evidence, the Company believes that it is more-likely-than-not that the deferred tax assets, primarily for certain of the subsidiaries net operating loss carry-forwards will not be realizable; and therefore, a full valuation allowance is established for net operating loss carry-forwards. The valuation allowance for deferred tax assets was $5,895,522 and $3,867,226 as of September 30, 2019 and December 31, 2018, respectively.

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

10.

Taxation (continued)

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

	For the nine months ended
	September 30, 2019		September 30, 2018
Income tax expense is comprised of:	(Unaudited)		(Unaudited)
Current income tax	$	20,000	$	20,297
Deferred income tax expense (benefit)		-		-
Total income taxes expense	$	20,000	$	20,297

The Company’s effective income tax rates were 0% for the nine month ended September 30, 2019 and 2018, respectively. Income tax mainly consists of foreign income tax at statutory rates and the effects of permanent and temporary differences.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate as of September 30, 2019 and December 31, 2018.

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
U.S. statutory rates		21	%		21	%
Foreign income not recognized in the U.S.		(21	)%		(21	)%
Effect of permanent difference (1)
Effective income tax rates		0	%		0	%

(1)	Permanent difference consisted of mainly income tax non-deductible items, income tax penalty and interest.

Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred income tax was measured using the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise to the following approximate deferred tax liabilities as of September 30, 2019, and December 31, 2018 are presented below:

	As of
	September 30, 2019		December 31, 2018
	(Unaudited)
Unrealized fair value gains on long-term investment	$	-	$	278,634

The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets are as follows:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Net operating loss carryforwards in the PRC	$	1,912,078		$	1,663,913
Net operating loss carryforwards in Singapore		452,898			210,046
Net operating loss carryforwards in the US		3,530,546			1,993,267
Less: valuation allowance		(5,895,522	)		(3,867,226	)
End of period	$	-		$	-

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

11.

Shareholder transactions

As of September 30, 2019 and December 31, 2018, amounts due to shareholders were $2,333,734 and $2,658,560 respectively which are unsecured, interest free due on demand and do not have a fixed repayment date.

A summary of changes in the amount due to the chairman of the Company is as follows:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Beginning of period	$	1,956,390		$	1,028,719
(Repayment) Advances for the period, net		(111,661	)		927,671
End of period	$	1,844,729		$	1,956,390

A summary of changes in the amount due to the CEO of the Company is as follows:

	As of
	September 30, 2019			December 31, 2018
	(Unaudited)
Beginning of period	$	702,170		$	149,956
(Repayment) Advances for the period, net		(213,165	)		552,214
End of period	$	489,005		$	702,170

12.

Commitments and contingencies

Operating Lease

The Company’s subsidiaries lease administrative office space under various operating lease rent expense amounted to $79,717 and $191,156 for the nine months ended September 30, 2019 and 2018, respectively. The rental expense for the three months ended September 30, 2019 and 2018 were $34,686 and $61,347, respectively.

Further minimum lease payment under non-cancelable operating leases are as follows:

Twelve months ending September 30,
2020		$	9,442

REBEL GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

12.

Commitments and contingencies (continued)

Legal Proceeding

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

On November 5, 2018, the Company was served a summon for a complaint filed by Ofsink, LLC (“Ofsink”) on September 13, 2018, in the Supreme Court of the City of New York County of New York against the Company. By filing the complaint, Ofsink alleged, among other claims, that the Company failed to pay for its legal services rendered in the amounts set forth on uncontested invoices in the amount of $252,822, and that it sustained damages in the sum of $252,822 plus interest and attorney’s fees as a result of the non-payment of the invoices rendered. The complaint seek, among other reliefs, compensatory damages and plaintiff’s counsel’s fees. On December 18, 2018, Ofsink voluntarily dismissed its lawsuit against the Company without prejudice. Ofsink informed the Company that it had planned to sell a promissory note approximately the amount Company owed to a third party. The Company may expect the third party entitled to receive payment of such an instrument to enforce the promissory note.

On November 12, 2017, Rebel signed a tenancy contract with Shanghai Konghui Property Development Co., Ltd. for the rooms in Grand Gateway Tower 1, NO.1 Hongqiao Rd., Xuhui District, Shanghai with a start date on November 15, 2017. The rental contract was terminated on July 12, 2018. Due to lapses in rental payment, the latter froze the bank account of Rebel and brought Rebel to the People’s Court of Shanghai Xuhui District (the “Court”). On April 24, 2019, the Court ruled Rebel to pay a net amount of RMB 164,865.86 (net of deposit RMB 268,957.47), inclusive of late payment interests. On June 18, 2019, the Court ordered a legal proceeding to extract the payment amount from Rebel’s bank account. On July 12, 2019, the Court unfroze Rebel’s bank account. On Nov 7, 2019, the Court declared that the Company has performed all payment obligations and the case was closed.

On October 12, 2019, a legal search of outstanding litigation matters revealed that a claim had been filed by Shanghai iResearch Co., Ltd. in a Shanghai court claiming a sum of RMB159,155. The Company has paid off the balance on November 15, 2019. However, as of the date of this quarterly report on Form 10-Q, Shanghai iResearch Co., Ltd. has yet to properly file a notice of dismissal with the court.

13.

Subsequent events

On September 13, 2019, the CEO of the Company and one third-party investor (“the Investor”) entered into an investment agreement to extend $3 million to the Company for hosting Rebel 10 event (“Rebel 10 event”) in December 2019. Based on the agreement, the funding is comprised of a $1.5 million 1-year convertible loan with interest of 8% per annum. The Investor may convert all of the principal amount of the loan into 1,500,000 shares of the Company’s common stock at any time through September 12, 2020. Pursuant to the terms of the Investment Agreement, the Investor paid the Company $1,000,000 on September 23, 2019 and $500,000 on October 19, 2019.

On November 1, 2019, the Company issued 200,000 shares of common stock with a total value of $100,000 to one consultant for consultancy services provided to the Company. The value of shares of common stock issued for consideration other than cash was determined by referring to the fair value of common stock issued in connection with prior cash consideration.

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

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” We assume no obligation to update any of these forward-looking statements.

The “Company”, “we,” “us,” and “our,” in this Management’s Discussion and Analysis of Financial Condition and Plan of Operation refer to the combined business of (i) Rebel FC; (ii) Pure Heart; (iii) SCA Capital; (iv) Rebel Shanghai; and (v) Qingdao Quanyao.

Business Overview

The Company, through Rebel FC, organizes, promotes and hosts Mixed Martial Arts (“MMA”) events featuring athletic talents with assistance from contracted production crews. The Company also seeks to produce and distribute videos of its MMA events, through the internet, social media, and selling the rights to such videos to distribute to television stations.

The Company seeks to promote MMA in China through hosting quality matches, live TV broadcast and inspiring reality series that attract talented fighters from all over the world. MMA is unarmed combat involving combinations of techniques from different disciplines of martial arts, including, without limitation, grappling, submission holds, kicking and boxing. The styles of martial arts range from Brazilian Jiu-Jitsu, Judo, Karate, Boxing, Muay Thai, Wrestling, Jeet Kune Do, Taekwondo, Sanshou and various other forms of martial arts. While boxers can strike only with their fists and target only above the belt, MMA fighters can use punches, kicks, elbows, knee strikes, takedowns and submissions to win a contest.

The Company has successfully hosted the most recent MMA event, Return of the Champion, on September 7, 2019 at Hongkou Indoor Stadium, Shanghai, China, with its online digital viewership of 21.75 million exceeding the average viewership of REBEL FC’s two events in 2018 of 13 million (digital and broadcast viewership combined). In addition to the 21.75 million viewership from major online platforms such as Yizhibo, PP Sports, QiE Live, iQiyi, Gedoumi and Baidu Sports, the company also garnered a viewership of 3.7 million on TV stations such as Qinghai Satellite TV and Shenzhen TV 5 (Sports Health Channel). In all, Return of the Champion gathered 25.45 million viewership from both TV and digital platforms, a 96 percent increase from the average viewership of its two events in 2018.

Results of Operations

For the three months ended September 30, 2019 and September 30, 2018

Gross Revenues

The Company generated revenues of $139,834 (unaudited) during the three months ended September 30, 2019 and that of $0 (unaudited) during the three months ended September 30, 2018.

The Company’s cost of revenue was $587,143 (unaudited) for the three months ended September 30, 2019, compared to that of $40,352 (unaudited) for the three months ended September 30, 2018. The Company held an MMA event during the three months ended September 30, 2019, which explains the increase in the Company’s cost of revenue.

Operating Expenses

Operating expenses for the three months ended September 30, 2019 and 2018 were $2,509,020 (unaudited) and $1,226,029 (unaudited), respectively. The operating expenses include filing fees, professional service fees, payroll and benefits, and other general expenses. The Company held an MMA event during the three months ended September 30, 2019, which explains the increase in the Company’s operating expenses.

Net Loss

Net loss for the three months ended September 30, 2019 and 2018 were $2,343,340 (unaudited) and $1,294,684 (unaudited), respectively. Basic and diluted net loss per share for the three months ended September 30, 2019 and 2018 were $0.045 (unaudited) and $0.027 (unaudited), respectively.

For the nine months ended September 30, 2019 and September 30, 2018

Gross Revenues

The Company generated revenues of $139,834 (unaudited) during the nine months ended September 30, 2019, compared to that of $223,783 (unaudited) during the nine months ended September 30, 2018.

The Company’s cost of revenue was $608,909 (unaudited) during the nine months ended September 30, 2019, compared to that of $1,902,667 (unaudited) during the nine months ended September 30, 2018. The decrease in our cost of revenue was mainly due to the Company’s effective cost control over the MMA event held during the nine months ended September 30, 2019.

Operating Expenses

Operating expenses for the nine months ended September 30, 2019 and 2018 were $3,971,484 (unaudited) and $5,524,035 (unaudited), respectively. The operating expenses include filing fees, professional fees, payroll and benefits, and other general expenses. The decrease in our operating expenses was mainly due to the Company’s effective cost control over the MMA event held during the nine months ended September 30, 2019.

Net Loss

Net loss for the nine months ended September 30, 2019 and 2018 were $9,707,897 (unaudited) and $5,395,817 (unaudited), respectively. Basic and diluted net loss per share were $0.193 (unaudited) and $0.117 (unaudited) for the nine months ended September 30, 2019 and 2018, respectively.

Liquidity and Capital Resources

On September 13, 2019, the CEO of the Company and a third-party investor entered into an investment agreement, extending $3 million to the Company for the Rebel 10 event to be held in December 2019. Based on the agreement, the fund extended is a 1-year convertible loan totaled $1.5 million with an interest rate of 8% per annum. The investor may convert the entire principal amount into 1,500,000 shares of Company’s common stock at any time for the period commencing September 13, 2019 and ending on September 12, 2020. The Company received $1,000,000 on September 23, 2019 and $500,000 on October 19, 2019 from the investor under the investment agreement.

The Company also received financial support commitments from the Company’s related parties.

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, allowance for trade receivables and prepayments, and the fair value of our stock, stock-based compensation, debt discount and the valuation allowance relating to the Company’s deferred tax assets/liabilities.

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 September 30, 2019, 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

Evaluation of Disclosure Control and Procedures.

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company’s management, including the Company’s Chief Executive Officer (“CEO”) (the Company’s principal executive officer) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation the Company’s CEO and CFO concluded that the material weaknesses disclosed in the Company’s Form 10-K for the year ended December 31, 2018 continue to exist and accordingly, the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. The principal basis for this conclusion is the lack of segregation of duties within our financial function and the lack of an operating Audit Committee.

Changes in internal control 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 2 - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On November 5, 2018, the Company was served a summon for a complaint filed by Ofsink, LLC (“Ofsink”) on September 13, 2018, in the Supreme Court of the City of New York County of New York against the Company. By filing the complaint, Ofsink alleged, among other claims, that the Company failed to pay for its legal services rendered in the amounts set forth on uncontested invoices in the amount of $252,822, and that it sustained damages in the sum of $252,822 plus interest and attorney’s fees as a result of the non-payment of the invoices rendered. The complaint seek, among other relief, compensatory damages and plaintiff’s counsel’s fees. On December 18, 2018, Ofsink voluntarily dismissed its lawsuit against the Company without prejudice. Ofsink informed the Company that it had planned to sell a promissory note approximately the amount Company owed to a third party. The Company may expect the third party entitled to receive payment of such an instrument to enforce the promissory note.

ITEM 1A. RISK FACTORS.

Not applicable to a smaller reporting company.

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

During January to September 2019, the Company issued 2,368,001 shares of common stock for a net cash consideration of $2,799,901. The Company also issued 1,549,284 shares of common stock with a total value of $1,549,284 to six individuals as payments for their professional services related to public relations and marketing, director fees, and employment benefits. The value of shares of common stock issued for consideration other than cash was determined by referring to the fair value of shares of common stock issued for cash consideration.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number		Description
3.1*		Articles of Incorporation of the Company filed on September 13, 2011 (incorporated by reference herein to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on November 7, 2011).

3.2*		Articles of Amendment to the Company’s Articles of Incorporation filed on March 12, 2013 (incorporated by reference herein to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2013)

3.3*		Articles of Amendment to the Company’s Articles of Incorporation filed on July 9, 2014 (incorporated by reference herein to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 24, 2014)

3.4*		Articles of Amendment to the Company’s Articles of Incorporation filed on December 1, 2013 (incorporated by reference herein to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 9, 2014).

3.5*		Bylaws (incorporated by reference herein to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the SEC on November 7, 2011)

31.1**		Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.2**		Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).

32.1***		Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

32.2***		Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

*	Previously filed
**	Filed herewith
***	In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

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.

Date: November 19, 2019	Rebel Group, Inc.

	By:	/s/ Aan Yee Leong, Justin
		Aan Yee Leong, Justin
		President, Chief Executive Officer, Director
		Principal Executive Officer,
		Principal Financial and Accounting Officer

Date: November 19, 2019	Rebel Group, Inc.

	By:	/s/ Khian Kiee Leong
		Khian Kiee Leong
		Chairman

Date: November 19, 2019	Rebel Group, Inc.

	By:	/s/ Chee Keong Teng
		Chee Keong Teng
		Member of Board of Directors