Image Chain Group Limited, Inc. - FORM 10-K

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EX-32 - Image Chain Group Limited, Inc.	ex-32.htm
EX-31 - Image Chain Group Limited, Inc.	ex-31.htm
EX-21 - Image Chain Group Limited, Inc.	ex-21.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X]

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

For the fiscal year ended December 31, 2016

[ ]

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: 000-55326

IMAGE CHAIN GROUP LIMITED, INC.

(Exact name of registrant as specified in its charter)

Nevada		46-4333787
(State or other jurisdiction of incorporation or organization)		IRS Employer (Identification No.)

Room 503, 5F, New East Ocean Centre, 9 Science

Museum Road,

Kowloon, Hong Kong, China

N/A

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (852) 3188-2700

Securities registered pursuant to Section 12(b) of the Act: None

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

Common Stock, $.001 par value

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]

Indicate by checkmark whether the registrant has (1) 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 [X]

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

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2016 was approximately $25 million based on the closing price on June 30, 2016.

The number of shares of common stock, par value $0.001 (the “Common Stock”), outstanding as of April 17, 2017 is 395,000,000.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I

Item 1.	Business	3

Item 2.	Properties	5

Item 3.	Legal Proceeding	5

Item 4.	Mine Safety Disclosures	5

PART II

Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	6

Item 6.	Selected Financial Data	6

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 8.	Financial Statements and Supplementary Data	10

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	10

Item 9A.	Controls and Procedures	11

Item 9B.	Other Information	12

PART III

Item 10.	Directors and Executive Officers and Corporate Governance	12

Item 11.	Executive Compensation	14

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	14

Item 13.	Certain Relationships and Related Transactions, and Director Independence	15

Item 14.	Principal Accounting Fees and Services	15

PART IV

Item 15.	Exhibits, Financial Statements Schedules	16

PART I

Item 1. Business.

Company History and Recent Developments

Image Chain Group Limited, Inc. (formerly Have Gun Will Travel Entertainment, Inc.) (“ICGL”, “we”, “us” or the “Company”) was incorporated under the laws of Nevada on December 18, 2013. From inception through the date of the Share Exchange as defined below, we were an emerging forward-thinking full-service television pre-production company dedicated to the creation of original concepts and programming with a bold and innovative edge in the reality television space for sale, option and licensure to independent producers, cable television networks, syndication companies, and other entities. On June 11, 2015, the Company amended its Articles of Incorporation with the State of Nevada in order to change its name to Image Chain Group Limited, Inc. and to increase the authorized shares of common stock from 70,000,000 to 400,000,000 (the “Amendments”). The name change was undertaken in order to more closely align with the operations of the Company’s wholly-owned subsidiary, Fortune Delight Holdings Group Ltd (“FDHG”). The increase in authorized shares was undertaken to allow the Company to utilize the newly available shares to raise capital. The board of directors and the stockholders of the Company approved the Amendments on May 8, 2015.

On May 5, 2015, ICGL entered into a share exchange agreement (the “Exchange Agreement”) with FDHG and Wu Jun Rui, on behalf of himself and certain other individuals who are to receive shares of ICGL pursuant to the Exchange Agreement (the “Shareholders”). On the terms and subject to the conditions set forth in the Exchange Agreement, on May 5, 2015, Wu Jun Rui transferred all 50,000 shares of FDHG common stock, consisting of all of the issued and outstanding shares of FDHG, to ICGL in exchange for the issuance to the shareholders of 59,620,000 shares of the Company’s common stock, par value $.001 per share and 5,000,000 shares of the Company’s preferred stock, par value $.001 per share. The preferred stock was issued to Mr. Xinyuan Yang. Because the Company’s original articles of incorporation did not specifically designate the preferred stock as “preferred stock,” and did not designate the rights and privileges of the preferred stock, on February 13, 2017 the Company filed with the Secretary of State of the State of Nevada a Certificate of Correction (the “Certificate of Correction”), authorized under Chapter 78.0296 of the Nevada Revised Statutes, which revised the originally filed articles of incorporation of the Company to designate the Additional Shares as preferred stock, par value $0.001 per share, which changes were retroactively effective as of the original filing date of the Company’s articles of incorporation. Concurrently with the filing of the Certificate of Correction, the Company also entered into a Stock Settlement and Release Agreement (the “Release Agreement”) with Mr. Yang in which the Company agreed to issue to Mr. Yang 5,000,000 shares of common stock in exchange for (i) the transfer to the Company and cancellation of the 5,000,000 shares of preferred stock issued to Mr. Yang in connection with the Exchange Agreement and (ii) an agreement by Mr. Yang to release the Company from any and all liability in connection with prior transactions between the Company and Mr. Yang, including but not limited to the Exchange Agreement.

As a result of the closing of the Exchange Agreement, FDHG became the Company’s wholly owned subsidiary. At the closing, FDHD was the parent company of Silver Channel Industrial Ltd., a Hong Kong company. Heyuan Image Machinery Import and Export Co., Ltd., a P.R.C. company, is the wholly-owned subsidiary of Silver Channel Industrial Ltd. (“Silver Channel”). Guangzhou Image Agricultural Technology Ltd., a Guangzhou company (“Guangzhou Image”), is the wholly-owned subsidiary of Heyuan Image Machinery Import and Export Co., Ltd. (“Heiyuan Image”). Guangzhou Image Agricultural Technology Ltd. owns 100% of the capital stock of Yunnan Image Tea Industrial Ltd. (“Yunnan Image”). Through the aforementioned companies, ICGL altered its business plan to manufacture and sell “Image Tea”-branded tea products from its tea garden in Yunnan Province.

On or about November 15, 2016, the Company’s subsidiary FDHG disposed of its ownership in Silver Channel, which include all of the assets and liabilities of Silver Channel, Heiyuan Image, Guangzhou Image, and Yunnan Image (the “Disposition Event”). All of the Company’s substantial operations were conducted through these subsidiaries of FDHG. The disposition was carried out by the sole director of both FDHG and Silver Channel. Following the closing of the Disposition Event, ICGL became a shell company, as defined in Rule 12b-2 under the Exchange Act. The Disposition Event is evidenced by a bought and sold note stamped by the Inland Revenue Department of Hong Kong, which we believe is a legally binding document. Because ICGL does not currently have any substantial operations, we are currently reviewing potential acquisition targets.

On February 14, 2017, the Company entered into a share exchange agreement (the “ICSML Agreement”) with Image Convenience Store Management Limited, a company registered under the laws of the British Virgin Islands (“ICSML”), and Wang Fa Sung, the sole shareholder of ICSML (the “Seller”). Pursuant to the ICSML Agreement, the Company agreed to acquire one share of ICSML, representing 100% of ICSML’s issued and outstanding stock, from the Seller in exchange for the issuance of 200,000,000 shares of the Company’s common stock, after giving effect to a 1-for-100 reverse stock split (the “Reverse Stock Split”) and other transactions provided for in the ICSML Agreement (the “ICSML Exchange”). As of the date of filing of this Annual Report on Form 10-K, the Company has not yet effected the Reverse Stock Split and has not closed the ICSML Exchange. The closing of the ICSML Exchange was initially expected to occur no later than May 13, 2017, however we anticipate that we will need to amend the ICSML Agreement to postpone closing of the ICSML Exchange.

Corporate Structure

Prior to the Disposition Event, the Company, through its wholly owned operating subsidiaries, was in the business of promoting and distributing its owned branded teas that are grown, harvested, cured, and package in the People’s Republic of China (“PRC”). The Company products were sold in the PRC for domestic consumption.

FDHG is an investment holding company incorporated on January 8, 2015 and is domiciled in the British Virgin Islands. FDHG continues to be a wholly-owned subsidiary of ICGL.

As of the filing of this Annual Report on Form 10-K, ICGL is a shell company, as defined in Rule 12b-2 under the Exchange Act. As a shell company, ICGL does not own substantial operating assets.

Our Products, Services and Customers

Following the Disposition Event, ICGL is not engaged in the manufacture, marketing and selling of tea products or any other goods or services. We are currently considering corporate acquisition targets. We have identified a number of potential targets and have begun performing initial diligence. With the exception of the ICSML Agreement described above in this Item 1 to the Annual Report on Form 10-K, we have not entered into any definitive agreements with any potential investment targets.

Competition

We face substantial competition from private equity funds, strategic corporate acquirers, high net worth and ultra high net worth individuals, family wealth offices, sovereign wealth funds, public pension funds and any other entities or individuals looking to acquire performing assets in the Asian region. ICGL continues to seek performing assets in the consumer products industry serving the domestic PRC market. We believe that our history of manufacturing, marketing and selling quality tea products in the domestic PRC market provides us with the experience that we need to develop and maintain a competitive advantage in the sectors that we seek to enter.

Government and Industry Regulation

Consumer products being sold in the PRC are subject to central government regulation as well as provincial government regulation in the provinces in which products are sold. Business and product licenses must be obtained through application to the central, provincial and local governments. Business, company and product registrations are certified on a regular basis and companies must comply with the laws and regulations of the PRC, provincial and local governments and industry agencies.

If we enter the health foods and consumer product sectors that we are contemplating, we will be required to comply with applicable hygiene and food safety standards in relation to our production processes. Failure to pass these inspections, or the loss of or failure to renew our licenses and permits, could require us to temporarily or permanently suspend some or all of our production activities, which could disrupt our operations and adversely affect our business.

Employees

As of the date of this report, we have 8 employees. We have not experienced any strikes or shutdowns and have not been involved in any labor disputes.

Intellectual Property

We currently do not have any patents, trademarks, licenses, franchises, concessions, royalty agreements, or labor contracts.

Item 1A. Risk Factors

Not applicable.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties.

Our corporate headquarters are located at Room 503, 5F, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong, China, where we lease approximately 1900 square feet of office space under a lease that expires in October 31, 2017. Our monthly lease payment for this office space is approximately $90.40. We believe the leased premise is sufficient to meet the immediate needs of our business.

Item 3. Legal Proceedings.

As of the date of this annual report, we are not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial condition or operating results. Further, to the Company’s knowledge no such proceedings have been threatened against the Company.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issue Purchases of Equity Securities.

Market Information

Our common stock is quoted on the OTC Markets (“OTCQB”) under the symbol “ICGL”.

The table below sets forth the high and low closing prices of the Company’s Common Stock during the periods indicated as reported by the OTC Markets. The Company’s Common Stock was initially quoted on the OTCQB on January 3, 2015.

	Bid Price
	HIGH		LOW
Period ended April 13, 2017		5.00		5.00
First Quarter ended March 31, 2017	$	16.00	$	2.00
FISCAL YEAR 2016:				$
Fourth Quarter ended December 31, 2016	$	13.00	$	13.00
Third Quarter ended September 30, 2016	$	20.00	$	7.30
Second Quarter ended June 30, 2016	$	9.50	$	7.75
First Quarter ended March 31, 2016	$	10.00	$	7.00
FISCAL YEAR 2015:				$
Fourth Quarter ended December 31, 2015	$	9.00	$	6.99
Third Quarter ended September 30, 2015	$	8.00	$	5.00
Second Quarter ended June 30, 2015	$	6.25	$	0.55
First Quarter ended March 31, 2015	$	6.25	$	0.01

Holders

As of the date of this report there were approximately 264 holders of record of Company common stock. This does not include an indeterminate number of persons who hold our Common Stock in brokerage accounts and otherwise in “street name.”

Dividends

Holders of common stock are entitled to receive such dividends as may be declared by the Company’s Board of Directors. The Company did not declare or pay dividends during its fiscal years ended December 31, 2016 or 2015.

To the extent ICGL has any future earnings, it will likely retain earnings to expand corporate operations and not use such earnings to pay dividends.

Transfer Agent and Registrar

The transfer agent and registrar for ICGL’s common stock is Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725, telephone 813-344-4490.

Repurchases of Our Securities

None.

Recent Sales of Unregistered Securities

None.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statements

This Annual Report on Form 10-K (“Annual Report”) may contain “forward-looking statements,” as that term is used in federal securities laws, about Image Chain Group Limited, Inc.’s financial condition, results of operations and business. These statements include, among others:

	●	statements concerning the potential benefits that Image Chain Group Limited, Inc. (“ICGL,” “we,” “our,” “us,” the “Company,” “management”) may experience from its business activities and certain transactions it contemplates or has completed; and

	●	statements of ICGL’s expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Annual Report. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Annual Report. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause ICGL’s actual results to be materially different from any future results expressed or implied by ICGL in those statements. The most important facts that could prevent ICGL from achieving its stated goals include, but are not limited to, the following:

	(a)	volatility or decline of ICGL’s stock price;

	(b)	potential fluctuation of quarterly results;

	(c)	failure of ICGL to earn revenues or profits;

	(d)	inadequate capital to continue or expand its business, and inability to raise additional capital or financing to implement its business plans;

	(e)	decline in demand for ICGL’s products and services;

	(f)	rapid adverse changes in markets;

	(g)	litigation with or legal claims and allegations by outside parties against ICGL, including but not limited to challenges to ICGL’s intellectual property rights; and

	(h)	insufficient revenues to cover operating costs.

There is no assurance that ICGL will be profitable in the near future, ICGL may not be able to source and consummate attractive acquisitions and may not successfully develop, manage or market the products and services of future acquired companies, ICGL may not be able to attract or retain qualified executives and personnel, ICGL may not be able to obtain customers for products or services that it markets in the future, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of outstanding warrants and stock options, and other risks inherent in ICGL’s businesses.

Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. ICGL cautions you not to place undue reliance on the statements, which speak only as of the date of this Annual Report. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that ICGL or persons acting on its behalf may issue. ICGL does not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Annual Report, or to reflect the occurrence of unanticipated events.

Overview

Image Chain Group Limited, Inc. (formerly Have Gun Will Travel Entertainment, Inc.) (“ICGL”, “we”, “us” or the “Company”) was incorporated under the laws of Nevada on December 18, 2013, and initially sought to create reality television programming. On June 11, 2015, the Company amended its Articles of Incorporation in order to change its name to Image Chain Group Limited, Inc. and to increase the authorized shares of common stock from 70,000,000 to 400,000,000 (the “Amendments”). The name change was undertaken in order to more closely align with the operations of the Company’s wholly-owned subsidiary, Fortune Delight Holdings Group Ltd (“FDHG”). The increase in authorized shares was undertaken to allow the Company to utilize the newly available shares to raise capital.

As a result of the closing of the Exchange Agreement, FDHG became the Company’s wholly owned subsidiary. FDHD, through its subsidiaries, manufactured and sold “Image Tea”-branded tea products from its tea garden in Yunnan Province.

On or about November 15, 2016, FDHG disposed of its ownership of all operating assets, and as a result ICGL became a shell company, as defined by Rule 12b-2 under the Exchange Act (the “Disposition Event”). The Disposition Event is evidenced by a bought and sold note stamped by the Inland Revenue Department of Hong Kong, which we believe is a legally binding document. Because ICGL does not currently have any substantial operations, we are currently reviewing potential acquisition targets.

Results of Operations

As a result of the Disposition Event, the Company does not currently have any substantial operations and is a shell company, as such term is defined in Rule 12b-2 under the Exchange Act. Because of the Disposition Event, the Company has restated our 2015 financial statements to reflect accurate comparable financial data between the period ended December 31, 2016, and 2015. As of December 31, 2016, the Company had accumulated deficits of $59,396,596 due to the substantial losses incurred in operations that have been discontinued in 2016, and management’s previous plan to support the Company’s operations and maintain its business strategy by raising additional funds through public and private offerings, or loans from related parties, or to rely on officers and directors to perform essential functions with minimal compensation was unsuccessful.

Discontinued Operations Nine month Period Ended September 30, 2016 Compared to Fiscal year Ended December 31, 2015

Note 8 of Notes to the Financial Statements sets forth the financial information of the discontinued operations of the Company, for the nine months ended September 30, 2016, and for the fiscal year ended December 31, 2015. After taking into account the reduced time period for reporting the financial information for 2016, from the fiscal year ended December 31, 2015 to the nine month period ended September 30, 2016, the Company experienced a considerable 77% reduction in net sales, an increase of accrued liabilities from $2,321 to $578,799, and a 57% increase in inventories. We attribute these considerably divergent numbers to a lack of focus on the part of management of our operating subsidiaries, deterioration in the quality of inventories from water and moisture damage, and mismanagement of Company expenses at the operating subsidiary level.

Fiscal year Ended December 31, 2016 Compared to Fiscal year Ended December 31, 2015

As a result of the Disposition Event, the Company does not currently have any substantial operations and is a shell company, as such term is defined in Rule 12b-2 under the Exchange Act.

The Company’s operating loss from continuing operations was $51,821,967 for the fiscal year ended December 31, 2016, as compared to $7,128,165 for the same period in 2015. This is mostly attributable to a $41,661,015 write-off of subscription receivable, as the Company’s management determined that it would no longer pursue payment for shares issued but not yet paid up.

Liquidity and Capital Resources

The Company did not have cash or cash equivalents at December 31, 2016. As a shell company, our operating expenses are minimal, and we intend to finance future acquisitions by issuing shares of capital stock of the Company.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:

Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These accounts and estimates include, but are not limited to, the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

	●	Level 1 inputs to the valuation methodology are quoted prices 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

	●	Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

The Company’s financial instruments include other receivable, and balances due from and due to related parties. Management estimates the carrying amounts of the related party financial instruments approximate their fair values due to their short-term nature.

Valuation of Long-Lived Assets

The Company adopts Accounting Standards Codification (“ASC”) 360, “Accounting for the Impairment or Disposal of Long-Live Assets”, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360 which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Recoverability of assets to be held and used is determined by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the reporting periods, there was no impairment loss.

Recent Accounting Pronouncements

(See “Recent Accounting Pronouncements” in Note 2 of Notes to the Financial Statements.)

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data

The financial statements required by this item are set forth beginning in Item 15 of this Annual Report on Form 10-K, beginning on page F-1, and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On May 18, 2015, the Company and Sadler, Gibb & Associates LLC (“Sadler”) mutually agreed to terminate Sadler’s engagement as independent accountants to the Company because Sadler does not have an office in China or the ability to translate Chinese. The termination of Sadler was approved by the Company’s Board of Directors on May 7, 2015. There had been no disagreements with Sadler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

On April 20, 2015, the Company’s subsidiary, FDHG, engaged WWC, Professional Corporation Certified Public Accountants as its independent accountant to provide auditing services for FDHG for the periods prior to the date of the Exchange Agreement between the Company and FDHG, and on a going-forward basis for the Company and FDHG following the termination of Sadler’s services to the Company. Prior to such engagement, the Company had no consultations with WWC, Professional Corporation Certified Public Accountants. The decision to hire WWC, Professional Corporation Certified Public Accountants was approved by the Company’s Board of Directors.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information we are required to disclose is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Commission. Wenchang Gu, our Principal Executive Officer and our Principal Financial Officer, is responsible for establishing and maintaining our disclosure controls and procedures.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer has concluded that, as of December 31, 2016, these disclosure controls and procedures were not effective in ensuring that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

●	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

●	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

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

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Principal Executive Officer and Principal Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The framework our management uses to evaluate the effectiveness of our internal control over financial reporting is based on the guidance provided by the Committee of Sponsoring Organizations of the Treadway Commission in its 1992 report: INTERNAL CONTROL - INTEGRATED FRAMEWORK. Based on our evaluation under the framework described above, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2016.

The Company’s internal control over financial reporting is not effective due to a lack of sufficient resources to hire a support staff in order to separate duties between different individuals. The Company lacks the appropriate personnel to handle all the varying recording and reporting tasks on a timely basis.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the company’s registered public accounting firm.

Inherent Limitations over Internal Controls

ICGL’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within ICGL have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Our disclosure controls and procedures are designed to provide reasonable assurance of that our reports will be accurate. Our Principal Executive Officer and Principal Financial Officer concludes that our disclosure controls and procedures were not effective, as of the end of the period covered by this Form 10-K. Our future reports shall also indicate that our disclosure controls and procedures are designed for this reason and shall indicate the related conclusion by the Principal Executive Officer and Principal Financial Officer as to their effectiveness.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the last fiscal quarter of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Identification of Directors and Executive Officers:

As of the date of this Annual Report, Our Board of Directors consisted of one member. Our current director and executive officer is:

Name	Age	Position

Wenchang Gu	63	President, Treasurer, Secretary and Director

From 2006 to the present, Mr. Gu has been the Manager at Fuhai Tea Industrial Ltd., where he developed a tailor-made tea concept that became one of the top three daily trade tea products in the Chinese market. From 2013 until the Disposition Event described in Item 1 to this Annual Report on Form 10-K, Mr. Gu was the Business Development Manager at Yunnan Image Tea Industrial Ltd., where he developed the company’s business. Mr. Gu is the Commerce member of the Guangzhou Fujian Chamber and the committee member of Hainan Eaglewood Collection Association.

Employment Agreements

We currently do not have employment agreements with Mr. Gu.

Family Relationships

There are no family relationships between any of our directors or executive officers.

Term of Office

All directors hold office for a one (1) year period and have been duly elected and qualified. There is no agreement with respect to the election of directors. The Company has not compensated its directors for service on the Board of Directors of ICGL or any of its subsidiaries or any committee thereof. Any non-employee director of ICGL or its subsidiaries will be reimbursed for expenses incurred for attendance at meetings of the Board of Directors and any committee of the Board of Directors, although no such committee has been established. Each executive officer of ICGL is appointed by and serves at the discretion of the Board of Directors.

None of the officers or directors of ICGL is currently an officer or director of a company required to file reports with the Securities and Exchange Commission, other than ICGL.

Involvement in Certain Legal Proceedings

To our knowledge, no director, nominee for director, or executive officer of the Company has been a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.

Board Committees

Audit committee

We do not have a separately-designated standing audit committee. The Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board of Directors when performing the functions that would generally be performed by an audit committee. The Board of Directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board of Directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

Compensation and Nominations Committees

We currently have no compensation or nominating committee or other board committee performing equivalent functions. Currently, the member of our Board of Directors participates in discussions concerning executive officer compensation and nominations to the Board of Directors.

Shareholder communications

The Company does not have a process for security holders to send communications to the board of directors due to the fact that minimal securities are traded on a stock exchange.

Code of Conduct and Ethics

We have adopted a Code of Ethics, as required by sections 406 and 407 of the Sarbanes-Oxley Act of 2002. It has been filed as an Exhibit to our registration statement on Form S-1 on February 5, 2014.

Item 11. Executive Compensation.

Executive Compensation

No officer or director has received annual compensation since the inception of the Company. There has been no compensation awarded to, earned by, or paid to the named executive officer or director. As we source and acquire performing assets, we hope to generate sufficient revenues to hire and begin paying salaries to officers and directors.

Stock option plan

We do not have a stock option plan and we have not issued any warrants, options or other rights to acquire our securities.

Employee Pension, Profit Sharing or other Retirement Plans

We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.

Outstanding Equity Awards at Fiscal year-End

The company has not issued any equity awards during fiscal years 2016 and 2015.

Director’s Compensation

No director has received any compensation for his or her role on the Board.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Beneficial Ownership of officers, directors and persons holding more than 5% of any class of ICGL’s voting securities.

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our shares of common stock by (i) each executive officer and director, (ii) all executive officers and directors as a group, and (iii) beneficial owners of 5% or more of the outstanding common stock of the Company. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Common stock subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on 395,000,000 shares issued and outstanding as of April 17, 2017. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The Company does not maintain any equity compensation plans.

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned		Percentage of Class (2)
Wenchang Gu (1)		0		0
All Executive Officers and Directors as a Group		0		0
(one persons)
Image Industrial Development Ltd. (3)		78,853,000		20	%
Shenzhen Qianhai Ronggan Investment Management Co. Ltd (4)		50,000,000		12.7	%

(1)	In care of Image Chain Group limited, Inc. Room 503, 5F, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong, China.

(2)	Indicates shares of common stock, par value $0.001 per share.

(3)	Image Industrial Development Ltd. business address is RM C, 15/F, Full Win Comm CTR, 573 Nathan Rd., Mongkok, KLN Hong Kong, China. Mr. Ping Wu holds the voting and dispositive power over the securities held by Image Industrial Development Ltd.

(4)	Shenzhen Qianhai Ronggan Investment Management Co. Ltd business address is Block A, Room 201, Shenzhen Qianhai Deep Harbor Morden Service Industry, Hezuoqu Management Ju, Qianhai, Shenzhen, PRC.

Change in Control Arrangements

As of December 31, 2016, there are no arrangements that would result in a change in control of the Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Related Party Transactions

The Company operates its principal office under a sublease with Image Industrial Development Ltd., an entity that owns 20% of the issued and outstanding common equity of the Company. Under our sublease, we pay approximately $90.40 per month in rental payments, which represents a substantial discount to the prevailing market rental rates for comparable office space.

Director Independence

We adhere to the NASDAQ listing standards in determining whether a director is independent. Our board of directors consults with its counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The NASDAQ listing standards define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Consistent with these considerations, and considering his position as an executive officer of the Company, we have determined that Mr. Gu does not qualify as an independent director. We do not maintain a compensation, nominating or audit committee.

Item 14. Principal Accounting Fees and Services.

The following table sets forth the aggregate fees paid during the year ended December 31, 2016 for professional services rendered by WWC, Professional Corporation Certified Public Accountants.:

Accounting Fees and Services

	2016		2015
Audit Fees	$	50,000	$	30,000
Audit Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
TOTAL	$	50,000	$	30,000

The category of “Audit Fees” includes fees for our annual audit and services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents.

The category of “Audit-related Fees” includes employee benefit plan audits, internal control reviews and accounting consultation.

All above audit services and audit-related services were pre-approved by the Board of Directors, which concluded that the provision of such services by all parties was compatible with the maintenance of the respective firm’s independence in the conduct of its audits.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

a) The following documents are filed as part of this Annual Report on Form 10-K:

1. Financial Statements

CONTENTS		PAGES

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM		F-1

CONSOLIDATED Balance Sheets		F-2

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE income		F-3

CONSOLIDATED STATEMENTS OF CASH FLOWS		F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY		F-5

Notes to CONSOLIDATED financial statements		F-6 – F-18

2. Financial Statement Schedules

All other schedules are omitted because they are not required or the required information is included in the financial statements or notes thereto.

3. The following exhibits are filed as part of this Annual Report on Form 10-K

Exhibit No.		Title

3.1		Articles of Incorporation(1)
3.2		Certificate of Amendment(2)
3.3		Bylaws(1)
21		Subsidiaries of the Registrant
31		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32+		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document

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

(1)	Incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed on February 5, 2014.

(2)	Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on June 12, 2015.

+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	IMAGE CHAIN GROUP LIMITED, INC.

April 17, 2017	By:	/s/ Wenchang Gu
		Wenchang Gu
		President, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer) and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date

/s/ Wenchang Gu
Wenchang Gu	President, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer), Director	April 17, 2017

INDEX TO FINANCIAL STATEMENTS

IMAGE CHAIN GROUP LIMITED, INC.

CONTENTS		PAGES

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM		F-1

CONSOLIDATED Balance Sheets		F-2

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE income		F-3

CONSOLIDATED STATEMENTS OF CASH FLOWS		F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY		F-5

Notes to CONSOLIDATED financial statements		F-6 – F-18

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

To:	The Board of Directors and Stockholders of
	Image Chain Group Limited, Inc.

We have audited the accompanying consolidated balance sheets of Image Chain Group Limited, Inc. as of December 31, 2016 and 2015 and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Image Chain Group Limited, Inc. as of December 31, 2016 and 2015 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had incurred substantial losses in previous years and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As detailed in Note 1 to the financial statements, during the year ended December 31, 2016, the Company disposed of all its substantial operations. Management did not assert that as part of the disposition procedures of such operations that a fair value for those assets was obtained by a third-party assessor. It was not clear to us, as auditor, that the management was able to exercise diligence on the transaction or the buyer of the discontinued operations.

San Mateo, California	WWC, P.C.
April 17, 2017	Certified Public Accountants

F-1

IMAGE CHAIN GROUP LIMITED, INC.

Audited consolidated Balance sheets

AS OF DEcember 31, 2016 AND 2015

	December 31, 2016			December 31, 2015
				(Restated)
ASSETS
Current asset
Other receivables, net		-			-
Due from related parties		49,328			874,338
Current liabilities of discontinued operations		-			2,188,680
TOTAL ASSETS		49,328			3,063,018

COMMITMENTS AND CONTINGENCIES

Current liabilities
Accrued liabilities		35,675			28,478
Due to related parties		-			63,854
Current liabilities of discontinued operations		-			3,320,511
TOTAL LIABILITIES		35,675			3,412,843

STOCKHOLDER’S EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, issued and outstanding as of December 31, 2016 and 2015, respectively		5,000			5,000
Common stock, US$0.001 par value, 400,000,000 shares authorized, 395,000,000 and 70,000,000 shares issued and outstanding as of December 31, 2016 and 2015, respectively		395,000			395,000
Subscription receivable		-			(41,964,356	)
Additional paid in capital		59,010,250			49,563,863
Accumulated deficit		(59,396,596	)		(8,783,563	)
Accumulated other comprehensive income		-			77,103
TOTAL STOCKHOLDERS’ EQUITY		13,653			(349,825	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		49,328			3,063,018

See Notes to Fianancial Statements and Accountants’ Report

F-2

IMAGE CHAIN GROUP LIMITED, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

FOR THE years ENDED DEcember 31, 2016 AND 2015

	For the years ended December 31,
	2016			2015
				(Restated)
Net sales		-			-
Cost of sales		-			-
Gross profit		-			-

Selling, general and administrative expenses		9,466,267			5,547,189

Loss from operations		9,466,267			5,547,189

Other income (expense):
Write-off of other receivables		-			(1,680,976	)
Write-off of subscription receivable		(41,661,015	)		-
Write-off of amounts due from related parties		(694,685	)		-
		(42,355,700	)		(1,680,976	)

Loss before income taxes for continuing operation		(51,821,967	)		(7,128,165	)

Provision for income tax		-			-

Loss from continuing operations		(51,821,967	)		(7,128,165	)

Discontinued Operations:
Income (loss) from discontinued operations		611,789			(746,728	)
Gain on disposal of subsidiaries		597,144			-
Net gain from discontinued operations, net of taxes		1,208,933			(746,728	)

Net loss		(50,613,034	)		(7,847,893	)

Other comprehensive income		-			35,972

Comprehensive loss		(50,613,034	)		(7,838,921	)

Loss per share
Basic		(0.13	)		(0.04	)
Diluted		(0.13	)		(0.04	)

Weighted average number of common shares outstanding
Basic		395,000,000			207,091,563
Diluted		395,000,000			207,091,563

F-3

IMAGE CHAIN GROUP LIMITED, INC.

Consolidated Statements of cash Flows

FOR THE years ENDED DEcember 31, 2016 AND 2015

	For the years ended December 31,
	2016			2015
				(Restated)
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss		(50,613,034	)		(7,874,893	)

Loss from discontinued operations		(1,208,933	)		746,728
Gain on disposal
Stock compensation		9,363,637			4,681,819
Write-off of other receivables		-			1,680,976
Write-off of subscription receivable		41,661,015
Write-off of amounts due from related parties		700,652			-
Changes in operating assets and liabilities:
Accrued liabilities		7,197			28,478
Net cash used in operating activities		89,466			(736,892	)

CASH FLOWS USED IN FROM INVESTING ACTIVITIES
Cash increase from prior acquisition of discontinued operations		-			-
Net cash used in investing activities		-			-

CASH FLOWS FROM FINANCING ACTIVITIES
Related party advances, net		(213,875	)		(810,484	)
Receipt of proceeds from share allotments in 2015		303,341			1,520,246
Net cash provided by financing activities		89,466			709,762

Effect of exchange rate changes on cash and cash equivalents		-			(3,685	)

Net increase in cash and cash equivalents		-			-

Cash and cash equivalents, beginning balance		-			-
Cash and cash equivalents, ending balance		-			-

SUPPLEMENTAL DISCLOSURES:
Interest received		-			-
Interest paid		-			-
Income tax paid		-			-

Non-cash investing activities:
Reclassification of assets and liabilities held for disposal, net		-			1,131,831
Non-cash financing activities:
Forgiveness of debt by related party		82,750			-

F-4

IMAGE CHAIN GROUP LIMITED, INC.

CONSolidated Statements of stockholders’s equity

FOR THE years ENDED DEcember 31, 2016 AND 2015

(stated in us dollars)

	Number of Preferred Stock		Preferred Stock		Number of Common Stock		Common Stock		Subscription receivable			Additional paid in capital		Accumulated deficit			Accumulated other comprehensive income			Total
Balance, January 1, 2015		5,000,000		5,000		70,000,000		70,000		-			-		(551,542	)		41,131			(435,411	)
Prior Period Adjustment															(1,107,822	)					(1,107,822	)
Net loss		-		-		-		-		-			-		(6,767,071	)		-			(6,767,071	)
Issuance of common stock for cash		-		-		58,575,000		58,575		-			3,157,267		-			-			3,215,842
Issuance of share based compensation		-		-		62,975,000		62,975		-			4,618,844		-			-			4,681,819
Share allotment		-		-		203,450,000		203,450		(41,964,356	)		41,787,752		-			-			26,846
Foreign currency translation adjustment		-		-		-		-		-			-		-			35,972			35,972
Balance, December 31, 2015		5,000,000		5,000		395,000,000		395,000		(41,964,356	)		49,563,863		(8,426,435	)		77,103			(349,825	)

Balance, January 1, 2016		5,000,000		5,000		395,000,000		395,000		(41,964,356	)		49,563,863		(8,426,435	)		77,103			(349,825	)
Net loss															(50,970,162	)					(50,970,162	)
Forgiveness of debt by related party													82,750								82,750
Amortization of share based compensation													9,363,637								9,363,637
Receipt of proceeds from share allotments in 2015										303,341											303,341
Write-off of subscription receivable										41,661,015											41,661,015
Foreign currency translation adjustment reversal for disposal of foreign operations																		(77,103	)		(77,103	)
Balance, December 31, 2016		5,000,000		5,000		395,000,000		395,000		-			59,010,250		(59,396,597	)		-			13,653

F-5

IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

Business

Image Chain Group Limited, Inc. (formerly Have Gun Will Travel Entertainment, Inc.) (“ICGL” or the “Company”) was incorporated under the laws of Nevada on December 18, 2013. From inception through the date of the Share Exchange as defined below, the Company was an emerging forward-thinking full-service television pre-production company dedicated to the creation of original concepts and programming with a bold and innovative edge in the reality television space for sale, option and licensure to independent producers, cable television networks, syndication companies, and other entities. On June 11, 2015, the Company amended its Articles of Incorporation with the State of Nevada in order to change its name to Image Chain Group Limited, Inc. and to increase the authorized shares of common stock from 70,000,000 to 400,000,000 (the “Amendments”). The name change was undertaken in order to more closely align with the operations of the Company’s wholly-owned subsidiary, Fortune Delight Holdings Group Ltd (“FDHG”). The increase in authorized shares was undertaken to allow the Company to utilize the newly available shares to raise capital. The board of directors and the stockholders of the Company approved the Amendments on May 8, 2015.

FDHG, through its wholly-owned operating subsidiaries, is in the business of promoting and distributing its own branded teas that are grown, harvested, cured, and packaged in the People’s Republic of China (“PRC”). The Company’s headquarters is located in Guangzhou, Guangdong Province, PRC. Currently, the Company’s products are sold in the PRC for domestic consumption.

Share Exchange

On May 5, 2015, ICGL entered into a share exchange agreement (the “Exchange Agreement”) with FDHG and Wu Jun Rui, on behalf of himself and certain other individuals who were to receive shares of ICGL pursuant to the Exchange Agreement (the “Shareholders”). On the terms and subject to the conditions set forth in the Exchange Agreement, on May 5, 2015, Wu Jun Rui transferred all 50,000 shares of FDHG common stock, consisting of all of the issued and outstanding shares of FDHG, to ICGL in exchange for the issuance to the shareholders of 59,620,000 shares of the Company’s common stock, par value $.001 per share and 5,000,000 shares of the Company’s preferred stock, par value $.001 per share. The preferred stock is not convertible nor mandatorily redeemable; it does not pay dividends or carrying any voting rights.

As a result of the closing of the Exchange Agreement, FDHG became the Company’s wholly owned subsidiary. FDHG is an investment holding company incorporated and domiciled in the British Virgin Islands. FDHG wholly owns Silver Channel Industrial Limited, a limited company incorporated, registered, and domiciled in Hong Kong.

The securities purchase agreement transaction is referred to hereafter as the “reverse-merger transaction.” The share exchange transaction has been accounted for as a recapitalization of ICGL where ICGL (the legal acquirer) is considered the accounting acquiree and FDGH (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, ICGL is deemed to be a continuation of the business of FDDG.

Accordingly, the accompanying consolidated financial statements are those of the accounting acquirer, FDGH. The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

Organization History of Silver Channel Industrial Limited and its subsidiaries

On January 28, 2011, Silver Channel incorporated Heyuan Image Equipment Import Export Co., Ltd. (“Heyuan Image”) as a wholly foreign owned enterprise (“WFOE”) registered in Heyuan City, Guangdong Province, PRC. Heyuan Image was dormant for the year ended December 31, 2015 and 2014. Heyuan Image is wholly owned by Silver Channel. Heyuan Image has a registered capital of HKD 4,000,000 of which HKD 3,380,000 has been paid up.

F-6

IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 18, 2014, the Company, through its subsidiary Heyuan Image, acquired 100% equity of Guangzhou Image Agricultural Technology Co., Ltd. (“Guangzhou Image”). Guangzhou Image is a limited liability company registered in Guangzhou City, Guangdong Province, PRC. Guangzhou Image has not yet engaged in operating activities since its incorporation. Guangzhou Image is wholly owned by Heyuan Image. Guangzhou Image has a registered capital of RMB 10 million of which is still outstanding.

On February 16, 2015, Guangzhou Image entered into an equity transfer agreement with all the shareholders of Yunnan Image Tea Industry Co., Ltd. (“Yunnan Image”). Guangzhou Image paid RMB 3,000,000 to all the shareholders of Yunnan Image for 100% equity interest in Yunnan Image. Yunnan Image is a limited liability company registered in Xishuangbanna, Yunnan Province PRC. Yunnan Image was incorporated on August 23, 2013. Yunnan Image is the primary operating entity to carry out the Company’s core business activities of selling and marketing its own branded teas. Yunnan Image is wholly-owned by Guangzhou Image. Yunnan Image had a registered capital of RMB 3 million. The capital has been paid up in its entirety.

Disposal of Silver Channel and its subsidiaries

On or about November 15, 2016, the Company’s subsidiary FDGH disposed of its ownership in Silver Channel which include all of the assets and liabilities of Silver Channel, Heiyuan Image, Guangzhou Image, and Yunnan Image. All of the Company’s substantial operations were conducted through the above four mentioned subsidiaries. The disposition was carried out by, Zheng Zewu, whom is the Director of both FDGH and Silver Channel. Silver Channel was sold to Hong Kong Private Medical Services Limited for nominal value as indicated by the bought and sold note stamped by the Inland Revenue Department of Hong Kong. The Company recorded a net gain on disposal, as those subsidiaries were a net liability to the Company. The Company did not retain special counsel or appraisers to determine a fair value for the disposition of Silver Channel and its subsidiaries. Silver Channel’s subsidiaries: Heiyuan Image, Guangzhou Image, and Yunnan Image, which are located in the PRC, were primarily managed by Mr. LinQishui whom is the authorized legal representative. It is unclear that the Company’s management would have been able to exercise diligence in determining a fair value for the sale of those subsidiaries located in the PRC, as they were primary components of the value of Silver Channel. Financial information regarding those subsidiaries were poorly kept and physical assets did not appear to be properly safeguarded. Limited inspections of the Company’s inventory indicated significant moisture on its tea products which would render their value to be impaired. The Company’s management did not find evidence that the management of the PRC subsidiaries made efforts to recover accounts or other receivables and employ proper controls over the Company’s bank and cash. Silver Channel was the owner of a luxury motor vehicle with dual license to operate in both in the mainland PRC and Hong Kong; there was no evidence to support that the value of the vehicle and the license were included in the determination of fair value for Silver Channel at the time it was disposed. Any previous net balances owed to the Company or FDGH by Silver Channel, Heiyuan Image, Guangzhou Image, and Yunnan Image have been determined as uncollectible by the Company’s management; accordingly, they have been written off.

As of the date of this report, after the disposal of Silver Channel, the Company does not currently have any substantial operations. The Company is currently reviewing potential acquisition targets.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Method of Accounting

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

(b)

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

F-7

IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c)

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

As of December 31, 2015, the detailed identities of the consolidating subsidiaries are as follows:

Name of company	Place of incorporation	Attributable equity interest%			Registered capital
Fortune Delight Holdings Group Limited	British Virgin Islands		100	%	$	50,000
Silver Channel Industrial Limited	Hong Kong		100	%		-
Heyuan Image Equipment Import Export Co., Ltd.	P.R.C.		100	%		515,849
Guangzhou Image Agricultural Technology Co., Ltd.	P.R.C.		100	%		1,636,902
Yunnan Image Tea Industry Co., Ltd.	P.R.C.		100	%		491,071

As of December 31, 2016, the Company’s only subsidiary was FDHG.

(d)

Economic and Political Risks

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.

(e)

Use of Estimates

(f)

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. As of December 31, 2015, cash and cash equivalents were mainly denominated in RMB and were placed with banks in the PRC. These cash and cash equivalents may not be freely convertible into foreign currencies and the remittance of these funds out of the PRC may be subjected to exchange control restrictions imposed by the PRC government. The Company had no cash or cash equivalents in its continuing operations at December 31, 2016.

(g)

Accounts Receivable

The Company maintains allowances for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these allowances. Terms of sales vary. Allowances are recorded primarily on a specific identification basis.

As of December 31, 2015, no provision for allowance for doubtful accounts was provided.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(h) Other receivables

Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

(i) Inventories

Inventories are stated at the lower of cost or market value. Cost is computed using the first-in, first-out method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Market value is determined by reference to the sales proceeds of items sold in the ordinary course of business or estimates based on prevailing market conditions.

(j) Property, plant and equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Building			20 years
Computer			3 years
Motor vehicles			4 years

(k) Accounting for Impairment of Long-Lived Assets

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(l) Customer advance

Customer advance was received from customers in connection with orders of products to be delivered in future periods.

(m) Revenue Recognition

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin (“SAB”) 104, included in the Codification as ASC 605, Revenue Recognition. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

The Company does not allow its customers to return products. The Company’s customers can exchange products only if they are damaged in transportation.

Revenue reported is net of value added tax.

(n) Cost of Sales

The Company’s cost of sales is comprised of the inbound acquisition cost of packaged finished goods for resale, inbound shipping, value added tax and business taxes recognized upon sales of goods.

(o) Selling Expenses

Selling expenses are comprised of salaries for the sales force, client entertainment, commissions, advertising, and travel and lodging expenses.

(p) General & Administrative Expenses

General and administrative expenses include executive compensation, general overhead such as the finance department and administrative staff, depreciation, office rental and utilities.

(q) Foreign Currency Translation

The Company maintains its financial statements in the functional currencies on Chinese Renminbi (RMB) and Hong Kong Dollars (“HKD”). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

For financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net loss but are included in foreign exchange adjustment to other comprehensive loss, a component of stockholders’ equity.

Exchange Rates	12/31/2016		12/31/2015
Year end RMB : US$ exchange rate		6.9472		6.4907
Average year RMB : US$ exchange rate		6.6418		6.2175

Year end HKD : US$ exchange rate		7.7617		7.7504
Average year HKD : US$ exchange rate		7.7521		7.7521

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The HKD is freely convertible into other foreign currencies.

(r) Income Taxes

The Company adopts SFAS No. 109, Accounting for Income Taxes, included in the Codification as ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the 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.

On January 1, 2007, The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), included in the Codification as ASC 740, Income Taxes. The topic addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

(s) Statutory Reserve

Statutory reserve refers to the amount appropriated from the net income in accordance with PRC laws or regulations, which can be used to recover losses and increase capital, as approved, and, are to be used to expand production or operations. PRC laws prescribe that an enterprise operating at a profit, must appropriate, on an annual basis, from its earnings, an amount to the statutory reserve to be used for future company development. Such an appropriation is made until the reserve reaches a maximum equal to 50% of the enterprise’s registered capital.

(t) Fair Value of Financial Instruments

	●	Level 1 inputs to the valuation methodology are quoted prices 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

	●	Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

(u) Other Comprehensive Income

The Company’s functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in income.

The Company uses FASB ASC Topic 220, “Reporting Comprehensive Income”. Comprehensive loss is comprised of net loss and all changes to the statements of stockholders’ equity, except for changes in paid-in capital and distributions to stockholders due to investments by stockholders.

(v) Business combination

Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method the acquiring entity in a business combination recognizes 100 percent of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must also be recognized at fair value, if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the statement of earnings from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

(w) Recent Accounting Pronouncements

On January 5, 2016, the FASB issued ASU No. 2016-01 “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017.

On February 25, 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842)”, its new standard on accounting for leases. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized).

F-12

IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Furthermore, the ASU addresses other concerns related to the current leases model. For example, the ASU eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The new model represents a wholesale change to lease accounting. As a result, entities will face significant implementation challenges during the transition period and beyond, such as those related to:

	●	Applying judgment and estimating.
	●	Managing the complexities of data collection, storage, and maintenance.
	●	Enhancing information technology systems to ensure their ability to perform the calculations necessary for compliance with reporting requirements.
	●	Refining internal controls and other business processes related to leases.
	●	Determining whether debt covenants are likely to be affected and, if so, working with lenders to avoid violations.
	●	Addressing any income tax implications.

The new guidance will be effective for public business entities for annual periods beginning after December 15, 2018 (e.g., calendar periods beginning on January 1, 2019), and interim periods therein.

On March 15, 2016, the FASB issued ASU No. 2016-07 “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting”, which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. Consequently, when an investment qualifies for the equity method (as a result of an increase in the level of ownership interest or degree of influence), the cost of acquiring the additional interest in the investee would be added to the current basis of the investor’s previously held interest and the equity method would be applied subsequently from the date on which the investor obtains the ability to exercise significant influence over the investee. The ASU further requires that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity method.

The guidance in the ASU is effective for all entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years; early adoption is permitted for all entities. Entities are required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the ASU’s effective date. Additional transition disclosures are not required upon adoption.

On March 17, 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which amends the principal-versus-agent implementation guidance and illustrations in the Board’s new revenue standard (ASU 2014-09). The FASB issued the ASU in response to concerns identified by stakeholders, including those related to (1) determining the appropriate unit of account under the revenue standard’s principal-versus-agent guidance and (2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control principle. Among other things, the ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. As defined in the ASU, a specified good or service is “a distinct good or service (or a distinct bundle of goods or services) to be provided to the customer.” Therefore, for contracts involving more than one specified good or service, the entity may be the principal for one or more specified goods or services and the agent for others.

The ASU has the same effective date as the new revenue standard (as amended by the one-year deferral and the early adoption provisions in ASU 2015-14). In addition, entities are required to adopt the ASU by using the same transition method they used to adopt the new revenue standard.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 30, 2016, the FASB issued ASU No. 2016-09 “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods.

On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)”. Stakeholders indicated that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. As a result, the Company has elected to early adopt this Update prospectively. As of December 31, 2016 and prior periods retrospective adjustments have not been applied.

As of December 31, 2016, except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

(x) Contingencies

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

3.	GOING CONCERN UNCERTAINTIES

These financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

As of December 31, 2016, and 2015 (restated), the Company had accumulated deficits of $59,396,596 and 8,783,563 due to the substantial losses incurred in operations that have been discontinued in 2016. There was substantial doubt regarding the Company’s ability to continue as going concern at December 31, 2016, and management’s previous plan to support the Company’s operations and maintain its business strategy by raising additional funds through public and private offerings, or loans from related parties, or to rely on officers and directors to perform essential functions with minimal compensation was unsuccessful.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

If the Company does not raise additional money via public or private offerings or related party loans, the Company may be unable to continue as going concern. Additional financing may not become available on acceptable terms and there can be no assurance that any additional financing that the Company does obtain will be sufficient to meet its needs in the long term.

The accompanying financial statements have been adjusted to the expected recoverable amounts. Management believes no further adjustments for recoverability and classification of assets or liabilities are necessary.

4.	INCOME TAX

The Company is subject to US Income taxes.

The Company’s subsidiary Fortune Delight Holdings Group Limited was incorporated in the British Virgin Islands. The British Virgin Islands is an income tax free jurisdiction.

Silver Channel, the Company former indirectly subsidiary was incorporated in Hong Kong and is subject to the Inland Revenue Ordinance of Hong Kong. Hong Kong adopted a uniform tax rate of 16.5% for all enterprises.

The Company’s former indirectly held subsidiaries that were incorporated in the PRC and are governed by the Income Tax Law of the PRC and various local income tax laws. Effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises including foreign-invested enterprises.

For the years ended December 31, 2016 and 2015, the Company has not provided for income tax provision as it incurred substantial net operating loss during the years.

The Company’s management did not recognize any deferred tax assets at December 31, 2016 and 2015, as a result of the substantial net operating losses during the years ended December 31, 2016 and 2015 because the management was unable to determine when it would be able to generate taxable income to make use of such potential future tax assets.

5.	LOSS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share of common stock:

	For the years ended December 31,
	2016			2015
Basic loss per share:				(Restated)
Numerator:
Net loss used in computing basic earnings per share	$	(50,970,162	)	$	(7,874,893	)

Denominator:
Weighted average common shares outstanding		395,000,000			207,091,563
Basic loss per share	$	(0.13	)	$	(0.04	)

Diluted earnings per share:
Numerator:
Net loss used in computing diluted earnings per share	$			$	(6,167,071	)

Denominator:
Weighted average common shares outstanding		395,000,000			207,091,563
Diluted loss per share	$	(0.13	)	$	(0.04	)

Dilutive securities having an anti-dilutive effect on diluted (loss) earnings per share are excluded from the calculation.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	RELATED PARTY TRANSACTIONS

Amounts due from related parties consisted of the following:

	December 31,		December 31,
	2016		2015

Wu Junrui, former director of FDGH		49,328		49,328
Amount due from Silver Channel, a former subsidiary, to ICGL		-		825,010
	$	49,328	$	874,338

The amounts are unsecured, interest-free and due on demand.

Mr. Wu repaid $19,300 of the outstanding balance subsequent December 31, 2016 by paying certain professional service providers on behalf of the Company.

Amounts due to related parties consisted of the following:

	December 31,		December 31,
	2016		2015

Wu Ping, director of Yunnan Image, former subsidiary		-		5,029
Amount due to Silver Channel, former subsidiary, by FDGH		-		58,825
	$	-	$	63,584

The amounts are unsecured, interest-free and due on demand.

The Company’s registered office and principal place of business was provided by Image Industrial Development Ltd., a major shareholder of the Company. The terms of the lease agreement are for one year from November 1, 2016 through October 31, 2017. There was no rental deposit paid and the annual rental expense was $90 (HKD $700). These rates may be differ from fair market values.

7.	CONCENTRATION OF RISKS

The Company conducts business subsidiary is incorporated in the British Virgin Islands and it intends to conduct physical business in Hong Kong and the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in the British Virgin Islands, Hong Kong, and the PRC. Business operations conducted in these localities are subject to special considerations and significant risks not typically associated with companies in North America.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.	DISCONTINUED OPERATIONS

Financial Position:	At September 30, 2016			At December 31, 2015
	(Unaudited)
ASSETS
Current asset
Cash and cash equivalents		54,104			78,753
Account receivable, net		10,738			10,389
Advanced to suppliers		478,158			680,178
Inventories		703,661			447,972
Other deposits		-			48,920
Other receivables, net		410,807			430,433
Related party receivable					259,800
Prepaid tax		10,413			55
Total current assets		1,667,881			1,956,500

Non-current assets
Property, plant and equipment, net		207,933			232,180

TOTAL ASSETS		1,875,814			2,188,680

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable		159,133			491,643
Tax payable		457			1,730
Other payables		368,771			372,374
Accrued liabilities		578,799			2,321
Related party payable		76,975			888,646
Customer advance		1,536,564			1,563,798
TOTAL LIABILITIES		2,720,699			2,495,501
NET LIABILITIES		(884,885	)		(306,821	)

Results of Operations	For the nine months ended September 30, 2016		For the year ended December 31, 2015
	(unaudited)
Net sales		318,694		1,386,968
Cost of sales		158,799		941,748
Selling, general and administrative expenses		480,198		1,199,301

Other income (expenses)		932,101		7,353

Income tax		9		-

Income (loss) from discounted operations		611,789		(746,728	)

As detail in note 1, the Company disposed of Silver Channel and its subsidiaries on November 15, 2016.

The values presented above are management presentation of the consolidated financial position and results of operations at September 30, 2016. Management believes these values approximate the value of Silver Channel and its subsidiaries at the date of disposal. Those figures are unaudited and they are presented assuming that they will continue as going concerns. No adjustments for fair value, as no appraiser or valuator was hired, or liquidation value have been applied to those amounts.

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IMAGE CHAIN GROUP LIMITED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.	CORRECTION OF ERROR

The Company determined that other receivable, accrued liabilities, sales, and selling expenses were overstated for the year ended December 31, 2015, and accumulated deficit was understated for that same period. As a result of the figures at December 31, 2015 and for the year then ended being reclassified and restated as a result of the discontinuance of operations during 2016 material figures are presented in a narrative format, as part of continuing operations, as follows: Other receivable, accrued liabilities, sales, selling, general and administrative expenses were previously recorded as: $2,038,105, $375,065, $151,777, and $5,572,120 but have been adjusted to be $0, $28,479, $0, and $5,447,189, respectively. Accumulated deficit was increased by $1,680,977. The reason for the adjustment is that the Company recorded the funds received by a third party on the Company’s behalf, and related liability, for the commissions payable related to the sale of its shares. The funds were not received by the Company, but instead paid to the managers of the Company’s prior PRC subsidiaries. Upon discovery of this error, management has determined that the gross amount of these funds should be netted against commission expenses accrued as liabilities, and the expected net proceeds that were received by the managers of the PRC subsidiaries are no longer recoverable and should be written to the Company’s results of operations in 2015. The impact of the Company’s loss per share was an additional loss of $0.01.

10.

LOSS ON SUBSCRIPTION RECEIVABLE

The Company’s management determined that it would no longer pursue payment for shares issued but not yet paid up that have been accounted for as the equity contra-account subscription receivable. Accordingly, the Company has charged the remaining unpaid balance of $41,661,015 to its result from operations for the year ended December 31, 2016.

11.

SUBSEQUENT EVENT

On February 13, 2017, Xinyuan Yang, whom was transferred the right to the 5,000,000 shares of the Company's preferred stock that was originally entitled to Mr. Wu Jun Rui from the share exchange between the Company and FDGH and Mr. Wu, entered into an agreement with the Company to exchange his right to the preferred stock for common shares of the Company's stock.

F-18

Image Chain Group Limited, Inc. - FORM 10-K - April 18, 2017

Attached files

Image Chain Group Limited, Inc. Reports