UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended ~~May~~February 3128, ~~2014~~2015

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

For the transition period ~~from~~from______to ~~to ______________~~______

Commission file number 001-34274

ADGS ADVISORY, INC. ~~(Exact name of Registrant as Specified in its Charter)~~

Delaware		42-1743717
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

(Exact name of Registrant as Specified in its Charter)

Units 2611-13A, 26/F
Delaware		42-1743717
113 Argyle Street, Mongkok
(State or other jurisdiction of incorporation or Identification No.)		(I.R.S. Employer organization)
Kowloon, Hong Kong, SAR		N/A
Units 2611-13A, 26/F 113 Argyle Street, Mongkok Kowloon, Hong Kong, SAR		N/A
(Address of principal executive offices)		(Zip Code)

(852) 2374-0002

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark whether the registrant (1) has filed all reports required~~ to ~~be filed by~~ Section ~~13 or 15~~12(db) 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 x No o:

~~Indicate~~Title ~~by check mark 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~~each ~~S-T~~class ~~(§232.405~~Trading ~~of this chapter~~Symbol(s) ~~during~~Name ~~the~~of ~~preceding~~each 12exchange ~~months~~on ~~(or~~which ~~for~~registered ~~such~~N/A ~~shorter~~N/A ~~period that the registrant was required to submit and post such files). Yes x No o~~N/A

Indicate by check mark whether the registrant is(1) ahas ~~large~~filed ~~accelerated~~all ~~filer,~~reports anrequired ~~accelerated~~to ~~filer,~~be afiled ~~non-accelerated~~by ~~filer,~~Section 13 or a15(d) ~~smaller~~of ~~reporting~~the ~~company.~~Securities ~~See~~Exchange Act of 1934 during the ~~definition~~preceding of12 ~~“large~~months ~~accelerated~~(or ~~filer”,~~for ~~“accelerated~~such ~~filer”~~shorter ~~and~~period ~~“smaller~~that ~~reporting~~the ~~company”~~registrant inwas ~~Rule~~required ~~12b-~~to file such reports), and (2) has ofbeen subject to such filing requirements for the ~~Exchange~~past ~~Act~~90 days. ~~(Check~~Yes ~~one):~~☒ No ☐

~~Large~~Indicate by ~~accelerated~~check ~~filer~~mark owhether ~~Accelerated~~the ~~filer~~registrant ohas ~~Non~~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-~~accelerated~~T ~~filer~~(§232.405 oof ~~Smaller~~this ~~reporting~~chapter) ~~company~~during xthe preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a ~~shell~~large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, ~~(as~~or ~~defined~~emerging bygrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act). ~~Yes o No x~~

~~State~~Large ~~the~~accelerated ~~number~~filer of☐ ~~shares~~Accelerated ~~outstanding~~filer of☐ ~~each~~Non-accelerated offiler ~~the~~☐ ~~Issuer’s~~Smaller ~~classes~~reporting ofcompany ~~common~~☒ ~~stock,~~Emerging asgrowth ofcompany ~~the latest practicable date: Common, $.0001 par value per share; 28,212,805 outstanding as of July 21, 2014.~~☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date: Common, $.0001 par value per share; 1,484,843,869 outstanding as of April 22, 2021.

ADGS ADVISORY, INC.

TABLE OF CONTENTS

		Pages	~~Pages~~
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	1		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2		5
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	10		15
Item 4.	Controls and Procedures.	10		15
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	11		16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	11		16
Item 3.	Default upon Senior Securities.	11		16
Item 4.	Mine Safety Disclosures.	11		16
Item 5.	Other Information.	11		16
Item 6.	Exhibits.	12		17
SIGNATURES		13		18

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ADGS ADVISORY, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~MAY~~FEBRUARY 3128, ~~2014~~2015 (UNAUDITED)

CONTENTS		Pages

Condensed Consolidated Balance Sheets as of February 28, 2015 (Unaudited) and August 31, 2014		F-1

Condensed Consolidated Statements of Operations for the Three and Six Months Ended February 28, 2015 and 2014 (Unaudited)		F-2

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended February 28, 2015 (Unaudited)		F-3

Condensed Consolidated Statements of Cash Flows for the Six Months Ended February 28, 2015 and 2014 (Unaudited)		F-4

Notes to Condensed Consolidated Financial Statements (Unaudited)		F-7 - F-31

~~ADGS ADVISORY, INC.~~1

~~CONDENSED~~ADGS ADVISORY ~~CONSOLIDATED FINANCIAL STATEMENTS~~INC.

~~FOR THE PERIOD ENDED 31 MAY, 2014 (UNAUDITED)~~BALANCE SHEETS

CONTENTS	Pages
Condensed Consolidated Balance Sheets as of May 31, 2014 (Unaudited) and August 31, 2013		F-1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended May 31, 2014 and 2013 (Unaudited)		F-2
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended May 31, 2014 and 2013 (Unaudited)		F-3
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended May 31, 2014 (Unaudited)		F-4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 2014 and 2013 (Unaudited)		F-5
Notes to Condensed Consolidated Financial Statements (Unaudited)		F-6 - F-32

(Unaudited)

	February 28,			August 31,
	2015			2014
ASSETS
Current assets
Cash	$	-		$	95,811
Restricted cash		-			258,968
Accounts receivable		-			1,461,876
Advance to third parties		-			841,803
Other receivables and prepaid expenses		-			290,617
Total current assets		-			2,949,075
Non-current assets
Property and equipment, net		-			1,999,545
Equity-method investment		-			357,870
Intangible assets		-			1,048,160
Other investment		-			1,935,459
Goodwill		-			153,128
Deposit paid for acquisition of a client list		-			258,061
Utility and other deposits		-			93,264
Total non-current assets		-			5,845,487
Total assets	$	-		$	8,794,562

LIABILITIES & STOCKHOLDERS’ DEFICIT
Current liabilities
Bank overdraft	$	253,738		$	253,738
Assets held under capital lease		10,843			10,843
Accrued liabilities and other payables		411,044			411,044
Due to a related party		663,011			663,011
Deposit received		43,942			43,942
Deferred revenue		145,159			145,159
Income tax payable		586,111			586,111
Bank loans - current portion		569,425			569,425
Total current liabilities		2,683,273			2,683,273

Non-current liabilities
Assets held under capital lease, net of current portion		20,987			20,987
Deferred revenue, net of current portion		290,319			290,319
Bank loans, net of current portion		3,557,314			3,557,314
Loan from a related party		645,268			645,268
Total non-current liabilities		4,513,888			4,513,888
Total liabilities		7,197,161			7,197,161

Commitments and contingencies		-			-
Stockholders’ equity
authorized, none issued and outstanding Common stock, $0.0001 par value per share, 50,000,000 shares authorized, 35,337,805 shares issued and outstanding as of August 31, 2014 and 25,000,000 shares issued and outstanding as of August 31, 2013		3,534			3,534
Subscription receivable		-			(3,092,458	)
Additional paid in capital		3,454,057			3,454,057
Retained earnings (deficit)		(10,654,752	)		1,399,062
Accumulated other comprehensive loss		-			(10,126	)
Total ADGS Advisory, Inc. stockholders’ equity		(7,197,161	)		1,754,069
Non-controlling interest		-			(156,668	)
Total equity		(7,197,161	)		1,597,401
Total liabilities and stockholders’ equity	$	-		$	8,794,562

~~ADGS~~The accompanying ~~ADVISORY,~~notes ~~INC.~~are ~~CONDENSED~~an ~~CONSOLIDATED~~integral ~~BALANCE~~part ~~SHEETS~~of ~~(UNAUDITED)~~these ~~(IN~~financial ~~US DOLLARS)~~statements.

	May 31, 2014			August 31, 2013
	(Unaudited)
Assets
Current assets
Cash	$	279,817		$	164,314
Restricted cash		258,892			129,312
Accounts receivable		770,930			564,773
Advance to a third party		1,460,778			130,835
Due from a related party		-			418,658
Other receivables and prepaid expenses		249,007			64,071
Total current assets		3,019,424			1,471,963
Non-current assets
Property and equipment, net		2,018,080			2,088,690
Equity-method investment		360,599			371,096
Intangible assets		801,632			793,840
Goodwill		475,605			-
Utility and other deposits		40,882			40,288
Total non-current assets		3,696,798			3,293,914
Total assets	$	6,716,222		$	4,765,877
Liabilities and stockholders' equity
Current liabilities
Bank overdraft	$	943,124		$	744,077
Assets held under capital lease		10,544			23,775
Accrued liabilities and other payables		284,754			218,242
Deposit received		74,449			-
Deferred revenue		145,118			145,114
Income tax payable		448,157			152,357
Bank loans – current portion		308,606			107,548
Total current liabilities		2,214,752			1,391,113
Non-current liabilities
Assets held under capital lease, net of current portion		28,257			88,306
Deferred revenue, net of current portion		326,516			435,343
Bank loans, net of current portion		2,278,188			2,179,237
Loan from a related party		645,055			750,726
Total non-current liabilities		3,278,016			3,453,612
Total liabilities		5,492,768			4,844,725
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.0001 par value per share, 2,000,000 authorized, none issued and outstanding		-			-
Common stock, $0.0001 par value per share, 50,000,000 shares authorized, 28,191,305 shares issued and outstanding as of May 31, 2014 and 25,000,000 shares issued and outstanding as of August 31, 2013		2,819			2,500
Subscription receivable		(690,521	)		-
Additional paid in capital		954,572			(2,500	)
Retained earnings		1,115,167			67,868
Accumulated other comprehensive loss		(6,428	)		(10,364	)
Total ADGS Advisory, Inc. stockholders’ equity		1,375,609			57,504
Non-controlling interest		(152,155	)		(136,352	)
Total equity		1,223,454			(78,848	)
Total liabilities and stockholders’ equity	$	6,716,222		$	4,765,877

See notes to condensed consolidated financial statements (unaudited).

F-1

ADGS ADVISORY, INC. ~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN US DOLLARS)~~

	For the Three Months Ended						For the Nine Months Ended
	May 31,						May 31,
	2014			2013			2014			2013
				(A)						(A)
Revenue	$	1,479,606		$	889,591		$	4,080,884		$	2,795,225
Direct cost of revenue		(717,283	)		(546,615	)		(1,849,110	)		(1,513,654	)
Gross profit		762,323			342,976			2,231,774			1,281,571
General and administrative expenses		(251,312	)		(178,974	)		(853,046	)		(665,329	)
Operating income		511,011			164,002			1,378,728			616,242
Other income		12,581			2,579			14,450			2,579
Interest expenses		(36,270	)		(36,247	)		(91,467	)		(99,022	)
Profit before income taxes		487,322			130,334			1,301,711			519,799
Less: Income tax expense		(185,234	)		(39,022	)		(270,214	)		(82,010	)
Net profit before allocation of non-controlling interest	$	302,088		$	91,312		$	1,031,497		$	437,789
Net loss attributable to non-controlling interest		4,868			5,676			15,802			17,021
Net income attributable to common stockholders	$	306,956		$	96,988		$	1,047,299		$	454,810
Earnings per share
- Basic and diluted	$	0.01		$	0.00		$	0.04		$	0.02
Weighted average common shares outstanding
- Basic and diluted		26,964,925			25,000,000			25,662,172			25,000,000

STATEMENTS OF OPERATIONS

(AUnaudited) ~~Represents the consolidated statement of operations of Almonds Kisses Limited and subsidiaries (the “Accounting Acquirer”) (See Note 1)~~

See notes to condensed consolidated financial statements (unaudited).

	Three Months		Three Months			Six Months			Six Months
	Ended		Ended			Ended			Ended
	February		February			February			February
	2015		2014			2015			2014

Revenue	$	-	$	1,441,268		$	-		$	2,601,278

Operating Expenses:
Direct cost of revenue				586,401						1,131,827
Administrative expenses		-		388,920			-			601,734
Total operating expenses		-		975,321			-			1,733,561
Income (loss) from operations		-		465,947			-			867,717
Other (income) expense
Other income				(327	)					(1,869	)
Loss on disposal of assets							12,053,814			-
Interest expense		-		26,913			-			55,197
Other (income) expense, net		-		26,586			12,053,814			53,328
Income (loss) before provision for income taxes		-		439,361			(12,053,814	)		814,389
Tax Provision		-		71,631			-			84,980
Net Income (Loss)	$	-		367,730		$	(12,053,814	)	$	729,409

Basic and diluted earnings(loss) per common share	$	-	$	0.01		$	(0.48	)	$	0.03

Weighted average number of shares outstanding		25,000,000		25,000,000			25,000,000			25,000,000

The accompanying notes are an integral part of these financial statements.

F-2

ADGS ADVISORY, INC. ~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ( IN US DOLLARS)~~

	For the Three Months Ended May 31,					For the Nine Months Ended May 31,
	2014		2013			2014		2013
			(A)					(A)
Net income	$	302,088	$	91,312		$	1,031,497	$	437,789
Other comprehensive income/(loss)
Foreign currency translation adjustment		2,663		(99	)		3,935		(219	)
Add: Comprehensive loss attributable to non-controlling interests		4,868		5,676			15,803		17,021
Comprehensive income attributable to ADGS Advisory, Inc.	$	309,619	$	96,889		$	1,051,235	$	454,591

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Aunaudited) ~~Represents the consolidated statement of comprehensive income of Almonds Kisses Limited and subsidiaries (the “Accounting Acquirer”) (See Note 1)~~

See notes to condensed consolidated financial statements (unaudited).

											Subcriptions		Total
	Common Stock				Paid in			Retained			Receivable,		Stockholders’
	Shares		Value		Capital			Earnings			net		Equity
Balance, August 31, 2013		25,000,000	$	2,500	$	(2,500	)	$	(72,926	)	$	-	$	(72,926	)

Net loss									361,679					361,679

Balance, November 30, 2013		25,000,000	$	2,500	$	(2,500	)	$	288,753		$	-	$	288,753

Net profit									363,078					363,078

Balance, February 28, 2014		25,000,000	$	2,500	$	(2,500	)	$	651,831		$	-	$	651,831

	Common Stock				Paid in		Retained			Subcriptions Receivable,			Total Stockholders’
	Shares		Value		Capital		Earnings			net			Equity
Balance, August 31, 2014		35,337,805	$	3,534	$	3,454,057	$	1,399,062		$	(3,259,252	)	$	1,597,401

Change in subscription receivable											3,259,252			3,259,252

Net loss								(12,053,814	)					(12,053,814	)

Balance, November 30, 2014		35,337,805	$	3,534	$	3,454,057	$	(10,654,752	)	$	-		$	(7,197,161	)

Net loss								-

Balance, February 28, 2015		35,337,805	$	3,534	$	3,454,057	$	(10,654,752	)	$	-		$	(7,197,161	)

F-3

ADGS ADVISORY, INC. ~~CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (IN US DOLLARS)~~

	Preferred shares with US$0.0001 Par Value				Common Stock, with US$0.0001 Par Value				Additional paid-in						Accumulated Other					Non-
	Number of				Number of				capital			Subscription			Comprehensive			Retained		controlling			Total
	Shares		Amount		Shares		Amount		Amount			receivable			(loss)/income			Earnings		Interest			Equity
Balance as of August 31, 2013		-		-		25,000,000	$	2,500	$	(2,500	)	$	-		$	(10,364	)	$	67,868	$	(136,352	)	$	(78,848	)
Common stock issued		-		-		3,191,305		319		957,072			(690,521	)		-			-		-			266,870
Net profit/(loss)		-		-		-		-		-			-			-			1,047,299		(15,802	)		1,031,497
Foreign translation gain/(loss)		-		-		-		-		-			-			3,936			-		(1	)		3,935
Balance as of May 31, 2014		-		-		28,191,305	$	2,819	$	954,572		$	(690,521	)	$	(6,428	)	$	1,115,167	$	(152,155	)	$	1,223,454

STATEMENTS OF CASH FLOWS

~~See notes to condensed consolidated financial statements~~ (~~unaudited~~Unaudited)

	Six Months		Six Months
	Ended		Ended
	February 28		February 28
	2015		2014

Cash flows from operating activities:
Net profit/(loss)	$	-	$	729,409
		-		729,409
Adjustments to reconcile net profit/(loss) to net cash provided by operating activities:
Depreciation of property and equipment		-		53,431
Equity in loss of equity-method investment		-		5,455
Amortization of intangible assets		-		98,003
Changes in assets and liabilities:
Utility and other deposits		-		(32,315	)
Accounts receivable		-		(49,038	)
Other receivables		-		93,945
Prepaid expenses		-		64,051
Deposit received		-		2,870
Income tax payable		-		110,440
Accrued liabilities		-		(20,677	)
Deferred revenue		-		(72,534	)
Net cash provided by operating activities		-		983,040

Cash flows from investing activities:
Acquisition of an intangible asset, net of cash acquired		-		(116,104	)
Acquisition of subsidiary, net of cash acquired		-		(475,605	)
Cash paid for property and equipment		-		(18,066	)
Net cash used in investing activities		-		(609,775	)

Cash flows from financing activities:

Repayment of advances made and expenses paid on behalf of a related party		-		387,159
Receipt for shares issuable		-		154,988
Bank fixed deposit		-		(292	)
Proceeds from bank loans		-		86,132
Repayment of bank loans		-		(75,325	)
Repayment of capital lease		-		(11,754	)
Net increase in bank overdraft		-		34,582
Repayment of capital lease obligations		-
Net cash provided by / (used in) financing activities				575,490

Net increase in cash		-		948,755
Effect on change of exchange rates on cash		-		(407	)
Cash as of the beginning of the period		-		164,314
Cash as of the end of period	$	-	$	1,112,662
Supplemental disclosures of cash flow information:

Cash paid during the period for:
Bank loan interest paid	$	-	$	27,840
Capital lease interest paid	$	-	$	1,915

The accompanying notes are an integral part of these financial statements.

F-4

ADGS ADVISORY, INC. ~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN US DOLLARS)~~

	For the Nine Months Ended May 31,
	2014				2013
					(A)
Cash flows from operating activities:
Net income	$	1,047,299		$	454,591
Add: Net loss attributable to non-controlling interest		(15,802	)		(17,021	)
		1,031,497			437,570
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		85,199			27,791
Amortization of intangible assets		146,998			134,626
Loss on equity-method investment		8,182			8,137
Gain on disposal of fixed assets		(10,803	)		-
Changes in assets and liabilities:
Account receivables		(206,072	)		(373,137	)
Other receivables		48,731			-
Utility and other deposits		(593	)		718
Prepaid expenses		(156,322	)		(45,167	)
Deposit received		74,423			-
Accrued liabilities		66,483			130,395
Temporary receipts		-			186,366
Income tax payable		295,693			82,008
Deferred revenue		(108,801	)		-
Net cash provided by operating activities		1,274,615			589,307
Cash flows from investing activities:
Cash paid for property and equipment		(62,746	)		(133,376	)
Sale proceeds of property and equipment		58,957			-
Advances to a third party		(1,406,755	)		-
Net increase in restricted cash		(129,531	)		(128,546	)
Acquisition of an intangible asset, net of cash acquired		(154,789	)		-
Acquisition of a subsidiary, net of cash acquired		(475,605	)		(574,429	)
Net cash used in investing activities		(2,170,469	)		(836,351	)
Cash flows from financing activities:
Proceeds from issue of stock		266,870			-
Repayment of loan from a related party		(105,690	)		-
Advances made on behalf of a related party		-			(4,012,216	)
Proceeds from repayment of advances made on behalf of a related party		418,621			2,400,236
Proceeds from bank loans		1,343,246			1,223,187
Repayment of bank loans		(1,043,427	)		(138,232	)
Proceeds from capital lease		-			125,250
Repayment of capital lease		(73,282	)		(22,696	)
Net increase in bank overdraft		198,958			620,761
Net cash provided by financing activities		1,005,296			196,290
Net increase/(decrease) in cash		109,442			(50,754	)
Effect on change of exchange rates on cash		6,061			212
Cash as of Beginning of period		164,314			129,001
Cash as of End of period	$	279,817		$	78,459
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Capital lease additions	$	-		$	125,250
Bank loan interest paid	$	49,138		$	26,685
Capital lease interest paid	$	4,693		$	1,113

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(A) Represents the consolidated statement of cash flows of Almonds Kisses Limited and subsidiaries (the “Accounting Acquirer”) (See Note 1)

See notes to condensed consolidated financial statements (unaudited).

F-5

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

1.	Description of business and organization

Nature of operations

ADGS Advisory, Inc. (“the Company” or “ADGS”) was incorporated in the State of Delaware in September 2007 under the name Life Nutrition Products, Inc. Pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the State of Delaware and effective as of July 19, 2013, the Company changed its corporate name from “Life Nutrition Products, Inc.” to “ADGS Advisory, Inc.”.

~~On December 7, 2012, the~~ The Company ~~entered~~has ~~into~~been adormant ~~share~~since ~~exchange~~it ~~agreement~~filed ~~(the~~its ~~“Original~~Form ~~Exchange~~10-K ~~Agreement”)~~on ~~with~~February ~~ADGS Advisory Limited~~12, a2015 ~~Hong~~for ~~Kong~~period ~~corporation~~ended ~~(“ADGS~~August ~~Hong Kong”) and ADGS Advisory (Holding) Limited~~31, ~~a British Virgin Islands corporation (“ADGS Holding”)~~2014. ~~Pursuant~~For tofinancial ~~the Original Exchange Agreement~~statement purposes, aton ~~the~~subsequent ~~closing of the transaction contemplated thereunder (the “ADGS Transaction”)~~filings, ~~the~~all ~~Company~~assets ~~agreed~~on ~~to acquire 100% of~~ the ~~issued and outstanding capital stock of ADGS Hong Kong, making ADGS Hong Kong a wholly-owned subsidiary of the~~ Company.’s Onbalance ~~March~~sheet ~~28, 2013, the Company entered into an amendment (the “Amendment”) to the Original Exchange Agreement (the Original Exchange Agreement,~~ as ~~amended is referred to herein as the “Exchange Agreement”) pursuant to which the Company agreed to acquire all~~ of ~~the~~August ~~outstanding shares of Almonds Kisses Limited (BVI)~~31, a2014 ~~British~~were ~~Virgin~~considered ~~Islands~~disposed ~~company (“Almonds Kisses BVI”), from the eight shareholders~~ of ~~Almonds~~or written ~~Kisses~~down; ~~BVI~~and ~~(the~~all ~~“Shareholders”),~~liabilities ~~instead~~remained ~~of the shares of ADGS Hong Kong,~~ on the ~~same~~Company’s ~~terms~~balance ~~and conditions set forth in the Exchange Agreement~~sheet. ~~Almonds~~Therefore, ~~Kisses~~as ~~BVI~~result is the ~~owner~~Company’s ofauditors ~~100%~~have disclaimed of the ~~issued~~unaudited ~~and~~interim ~~outstanding~~financial ~~capital~~statements ~~stock~~included ~~of ADGS Hong Kong. The Original Exchange Agreement incorrectly indicated that such owner was ADGS Holding which error was corrected~~ in ~~the~~this ~~Amendment~~Report.

~~On April 12, 2013,~~ With the ~~ADGS~~exception ~~Transaction closed whereby the Company acquired all~~ of the ~~issued~~Going ~~and~~Concern ~~outstanding capital stock of Almonds Kisses BVI pursuant to the Exchange Agreement in exchange for an aggregate of 20~~footnote,~~155,000~~ ~~newly issued shares of~~ the ~~Company’s~~footnotes ~~common stock which were issued~~ to the ~~eight~~financial ~~former~~statements ~~shareholders~~have ofnot ~~Almonds~~been ~~Kisses~~updated ~~BVI. As a result, on April 12, 2013, Almonds Kisses BVI became the Company’s wholly-owned subsidiary~~ and ~~the~~all ~~former~~assets ~~shareholders~~accounts are ofconsidered ~~Almonds~~to ~~Kisses~~have ~~BVI~~a ~~became~~zero ~~the Company’s controlling shareholders~~balance, and ~~Almond Kisses BVI in turn owns~~ all ofliability ~~the~~account ~~issued~~balances ~~and~~as ~~outstanding capital stock~~ of ~~ADGS~~August ~~Hong~~31, ~~Kong.~~2014 ~~Almond~~remain ~~Kisses~~unchanged ~~(BVI)~~as ~~also owns all~~ of the ~~issued~~date ~~and outstanding capital stock~~ of ~~Vantage Advisory Limited, a Hong Kong corporation~~this Report. ADGS Hong Kong owns 80% of ADGS Tax Advisory Limited (“ADGS Tax”) which is a Hong Kong incorporated holding company, and ADGS Tax owns a 30% interest in Dynamic Golden Limited which is also a Hong Kong incorporated company and through Almonds Kisses owns its 30% effective on November 19, 2013.

The Company also acquired a property holding company, Motion Tech Development Limited, incorporated in British Virgin Islands. The transfer of shares was completed in August 29, 2013 and it is now 100% owned by Almond Kisses.

F-6

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

1. Description of business and organization (…../Cont’d)

Nature of operations (…../Cont’d)

In October 20, 2013, Almonds Kisses BVI further acquired 100% ownership of a Hong Kong incorporated company, T H Strategic Management Limited for purchase consideration of approximately $516,000 (HK$4,000,000). T H Strategic Management Limited is engaged in providing accounting, taxation, company secretarial and consultancy services.

ADGS Advisory, Inc. is a holding company and, through its subsidiaries and group company, engages in providing accounting, taxation, company secretarial, consultancy services and consultancy service for slope inspection. The Company together with its consolidated subsidiaries and its equity-method investment, are collectively referred to as the “Group”. The Share Exchange was accounted for as a "reverse merger", since the former stockholders of Almond Kisses own a majority of the outstanding shares of the Company's capital stock immediately following the Share Exchange.

Reorganization

Almond Kisses was incorporated on March 1, 2011 as a limited liability company in British Virgin Island. ADGS Hong Kong and its subsidiary and equity-method investment, were limited companies incorporated in Hong Kong had been wholly owned by the same group of shareholders until being acquired by Almonds Kisses pursuant to a reorganization (“Reorganization”) to prepare for the listing of the Company’s shares on a stock exchange. ADGS Tax provided the same type of services prior to the establishment of ADGS Hong Kong. ADGS Tax became a dormant holding company after ADGS Hong Kong was incorporated.

F-7

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

1. Description of business and organization (…/Cont’d)

Details of the Company’s subsidiaries and equity-method investment which are included in these consolidated financial statements are as follows:

Subsidiary’s name	Place and date of incorporation	Percentage of ownership by the Company	Principal activities
Almond Kisses Limited “Almond Kisses”	British Virgin Island March 1, 2011	100%	Holding company
ADGS Advisory Limited “ADGS Hong Kong”	Hong Kong, People's Republic of China (“PRC”) April 28, 2011	100% (though Almonds Kisses)	Engage in providing accounting, taxation, company secretarial, and consultancy services.
ADGS Tax Advisory Limited “ADGS Tax”	Hong Kong, PRC March 17, 2003	80% (through ADGS Hong Kong)	Holding company
Dynamic Golden Limited “Dynamic”	Hong Kong, PRC April 16, 2004	30% (through ADGS Tax, until November 19, 2013 and through Almonds Kisses thereafter)	Property holding company
Vantage Advisory Limited “Vantage”	Hong Kong, PRC March 6, 2008	100% (though Almonds Kisses)	Engage in providing accounting, taxation, company secretarial, and consultancy services.
Motion Tech Development Limited “Motion Tech”	British Virgin Islands October 3, 2007	100% (through Almonds Kisses effective on August 29, 2013)	Property holding company
T H Strategic Management Limited “T H Strategic”	Hong Kong, PRC March 16, 2010	100% (though Almonds Kisses effective on October 20, 2013)	Engage in providing accounting, taxation, company secretarial, and consultancy services.

The Company also operates branches in Shenzhen, PRC and Bangkok, Thailand, The branches are set up to attract potential clients to establish companies in Hong Kong. A full range of services could be provided to these clients.

On March 19, 2014, the Company issued 1,400,000 shares to twelve investors for the purchase of shares of Common Stock of the Company at $0.30 each with total proceeds of $420,000. On April 15, 2014, another 1,290,000 shares of Common Stock at $0.30 each were issued to one shareholder with proceed of $387,000. Further 591,305 shares of Common Stock at $0.30 each were issued to another nine shareholders on April 29, 2014, with proceed of $177,392. Subsequent to the period ended May 31, 2014, 21,500 shares of Common Stock at $0.30 each were issued to one shareholder on June 30, 2014. As of May 31, 2014, there was $690,521 of proceed not yet received from the shareholders.

F-8

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

2.	Summary of significant accounting policies

Basis of presentation

These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures for a fair presentation of these interim consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements ~~and accompanying footnotes of the Company for the year ended August 31, 2013, as filed in Form 10-K with the Securities and Exchange Commission on December 24, 2013~~.

The unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries as disclosed in Note 1. All material inter-company balances and transactions have been eliminated.

~~The~~As both ~~acquisition~~the ~~has~~Company ~~been~~and ~~accounted~~its ~~for~~subsidiaries, asADGS ~~a reverse merger~~ and ~~recapitalization~~ADGS ~~since~~Tax ~~the~~are ~~shareholders~~under ofcommon ~~Almond~~control, ~~Kisses (i) own a majority of~~ the ~~outstanding~~financial ~~capital~~statements ~~stock~~ of ~~ADGS immediately following~~ the ~~completion~~Company ~~of the transaction, and (ii)~~ have ~~significant~~been presented ~~influence~~as ~~and~~if the ~~ability~~receipt ~~to elect or appoint or to remove a majority~~ of ~~the~~assets ~~members~~and ofliabilities ~~the governing body~~ of the ~~combined~~subsidiaries ~~entity,~~at ~~and~~their ~~Almond~~net ~~Kissess~~carrying ~~senior~~amount ~~management~~been ~~dominates~~entered ~~the~~into ~~management~~as of ~~the~~March 1, ~~consolidated~~2011 ~~entity immediately following the completion of the transaction~~ in accordance with ~~the provision of Financial Accounting Standards Board Accounting Standards Codification (~~ASC) ~~Topic~~ 805 ~~Business Combinations~~-50-15-6. Accordingly, ~~Almond~~financial ~~Kisses~~information isrelated ~~deemed~~to ~~the~~periods ~~accounting~~prior ~~acquirer~~to in the ~~transaction and, consequently, the transaction is treated as a recapitalization of Almond Kisses. Accordingly, the~~ assets and liabilities are ~~and the historical operations~~ that ~~are reflected in the financial statements are those~~ of ~~Almond Kisses and its subsidiaries and are recorded at~~ the ~~historical~~Company’s ~~cost~~operating ~~basis of Almond Kisses and its~~ subsidiaries. ~~ADGSs assets, liabilities and results of operations are consolidated with the assets, liabilities and results of operations of Almond Kisses and its subsidiaries subsequent to the acquisition.~~

Certain reclassifications have been made to the comparative period amounts to conform with that of the current period.

~~Use of estimates~~Going concern

The accompanying ~~preparation of the~~ consolidated financial statements inare ~~conformity~~presented ~~with~~on ~~U.S.~~a ~~GAAP~~going ~~requires~~concern ~~management~~basis. ofAlthough the Company tohas ~~make~~ a ~~number~~working ofcapital ~~estimates and assumptions relating to the reported amounts~~ surplus of ~~assets~~$7,197,161 ~~and liabilities and the disclosure of contingent assets and liabilities~~ at ~~the~~February ~~date~~28, of2015, ~~the~~management ~~financial~~plans ~~statements~~to ~~and~~continue ~~the~~its ~~reported~~efforts ~~amounts of revenues and expenses during the years. Significant items subject~~ to ~~such~~raise ~~estimates~~funds ~~and~~through ~~assumptions~~debt ~~include~~or ~~the~~equity ~~recoverability~~in of the ~~carrying~~near ~~amount~~ future and ~~the~~increase ~~estimated~~its ~~useful~~profitability ~~lives~~to ofsustain ~~long-live~~its ~~assets; valuation allowances for receivables, and realizable values for inventories~~operations. ~~Accordingly, actual results could differ from those estimates.~~

F-95

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

Foreign currency translation

The Group uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in their respective functional currency, Hong Kong dollars (“HK$”), being the lawful currency in Hong Kong. Assets and liabilities of the subsidiaries are translated from H.K. Dollars into U.S. Dollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of income and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’ equity section of the balance sheets. The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:

	May 31, 2014	August 31, 2013
	February 28, 2014	August 31, 2013
	(Unaudited)
Balance sheet items, except for equity accounts	HK$7.~~7523~~7608=$1	HK$7.7525=$1

	May 31,	May 31,
	February 28,	February 28,
	2014	2013
	(Unaudited)	(Unaudited)
Items in statements of income and cash flows for the three months ended	HK$7.~~7558~~7566=$1	HK$7.~~7991~~7993=$1
Items in statements of income and cash flows for the nine months ended	HK$7.7553=$1	HK$7.7993=$1
Items in statements of income and cash flows for the six months ended	HK$7.7550=$1	HK$7.7994=$1

Revenue recognition

The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.

(i) Revenue generates from providing accounting, taxation, company secretarial and consultancy services is recognized when persuasive evidence of an arrangement exists, the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured. The Group generates its revenues from providing professional services under fixed-fee billing arrangements. In fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee in monthly installments over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

In fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee in monthly installments over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

(ii)

Consultancy service for slope inspection represents under fixed price contract is recognized when the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured.

(iii)

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

F-106

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

Revenue recognition (…/Cont’d)

(iv)

The Company recognizes the management fee income when service is provided. Services include providing administration support service or accounting service to companies.

Direct cost of revenue

Direct costs of revenues generated from providing accounting, taxation, company secretarial and consultancy services consists primarily of billable employee compensation and related payroll benefits, the cost of consultants assigned to revenue generating activities and direct expenses billable to clients. Direct cost of revenues does not include an allocation of overhead costs.

Direct costs from providing consultancy service for slope inspections under fixed price contracts are recognized, as the related contact costs are incurred.

Cash

Cash represents cash in banks and cash on hand.

The Group considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Substantially all of the cash deposits of the Group are held with financial institutions located in the Hong Kong, PRC. Management believes these financial institutions are of high credit quality. The group held no cash equivalents at ~~May~~February 3128, 2014 and August 31, 2013.

Restricted cash

Restricted cash represents cash in banks were restricted and deposited in certain banks as security for installment loans payable to the banks.

~~Account receivables~~Accounts receivable

~~Account~~Accounts receivable ~~receivables~~ are recorded at invoiced amounts, net of allowances for doubtful accounts and discounts. The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable. Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions. The Group historically has been able to collect all of its receivable balances.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers.

~~Other receivables and advance to a third party~~F-7

Other receivables represent non-trade receivables from non-related third parties, and are recognized initially at fair value.

Advance to a third party is recorded as a loan advance to a non-related third party for a potential investment opportunity. Outstanding balances are reviewed for collectability.

The advances are non-interest bearing, unsecured and shall be repaid within the next twelve months.

F-11

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

Deferred revenue

The Company entered into a contract with a third party to provide corporate advisory and consulting services. The agreement has a fixed term of four years, and is renewable upon maturity. These fees are deferred and are amortized to income as earned over the term of the agreement. Deferred revenue that will be recognized in next fiscal year is classified within current liabilities.

Property and equipment

Property and equipment are recorded at cost less accumulated depreciation. Maintenance, repairs and minor renewals are expensed as incurred; major renewals and improvements that extend the lives or increase the capacity of plant assets are capitalized.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the reporting period of disposition.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets after taking into account their respective estimated residual value.

The estimated useful lives of the assets are as follows:

		Estimated Life
Investment property		Over the unexpired term of the lease
Leasehold improvement		5 years
Furniture and fixtures		5 years
Office equipment		5 years
Motor vehicles		5 years

Equity-method investment

Affiliated companies, in which the Company has significant influence, but not control, are accounted for equity-method investment. Equity-method investment adjustments include the Company’s proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, adjustments to recognize certain differences between the Company’s carrying value and the Company’s equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Gain or losses are realized when such investments are sold.

Non-controlling interest

Non-controlling interests represents the 20% interest in ADGS Tax not owned by Almonds Kisses.

F-128

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

~~Intangible~~Purchased intangible assets

The Group assesses the useful lives and possible impairment of existing recognized intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

-● significant underperformance relative to historical or projected future operating results; -● significant changes in the manner of use of the acquired assets or the strategy for our overall business; -● identification of other impaired assets within a reporting unit; -● disposition of a significant portion of an operating segment; -● significant negative industry or economic trends;

The intangible assets are amortized using the straight line method over a period of 10 years.

~~Goodwill~~Purchased goodwill

InAll business ~~accordance~~combinations ~~with~~are ~~U.S.~~accounted ~~GAAP, the Company tests goodwill~~ for ~~impairment~~by ~~annually~~applying ~~and~~the ~~whenever~~purchase ~~events or circumstances make it more likely than not that impairment may have occurred~~method. ~~The~~Goodwill ~~Company~~represents ~~reviews~~the ~~goodwill~~difference ~~for~~between ~~impairment~~the ~~based~~cost ~~on its identified reporting units, which are defined as reportable segments or groupings~~ of ~~businesses~~the ~~one~~acquisition and ~~level below~~ the ~~reportable~~fair ~~segment~~value ~~level.~~of ~~In September 2011,~~ the ~~FASB~~net ~~issued~~identifiable ~~guidance~~assets onacquired. ~~testing~~Identifiable ~~goodwill~~intangibles ~~for~~are ~~impairment.~~those ~~The~~which ~~guidance~~can ~~provides~~be ~~entities~~sold ~~with~~separately anor ~~option~~which arise tofrom ~~perform~~legal arights ~~qualitative~~regardless ~~assessment~~of ~~to determine~~ whether ~~further~~those ~~quantitative~~rights ~~impairment~~are ~~testing is necessary~~separable.

~~In accordance with the guidance, the Company reviews~~ Positive goodwill ~~for~~arising ~~impairment~~on byacquisitions ~~first~~is ~~assessing~~stated ~~qualitative~~at ~~factors~~cost ~~to determine whether the existence of events or circumstances made it more likely than not that the fair value of a reporting unit is~~ less ~~than~~any ~~its~~accumulated ~~carrying~~impairment ~~amount~~losses. IfGoodwill ~~the Company determines it~~ is ~~more~~allocated ~~likely~~to ~~than~~cash-generating ~~not~~units and ~~that the fair value of a reporting unit~~ is ~~less~~not ~~than~~amortized ~~its~~but ~~carrying amount, goodwill~~ is ~~further~~ tested annually for impairment by comparing the carrying value to the estimated fair value of its reporting units, determined using externally quoted prices (if available) or a discounted cash flow model and, when deemed necessary, a market approach. Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, such estimates as projected business results, growth rates, the Company’s weighted-average cost of capital, royalty and discount rates.

~~Impairment~~Decreases in goodwill resulting from the non-payment of ~~long~~contingent consideration are recognized in the period when non-~~lived~~payment ~~assets~~occurs.

~~The~~Negative goodwill ~~Company~~arising ~~evaluates~~on when events or circumstances indicate that the carrying amount of long-lived assets to be held and used might not be recoverable, the expected future undiscounted cash flows from the assets are estimated and compared with the carrying amount of the assets. If the sum of the estimated undiscounted cash flows was less than the carrying amount of the assets, an ~~impairment~~acquisition ~~loss~~is ~~would~~recognized bedirectly ~~recorded.~~in ~~The~~profit ~~impairment~~or loss ~~would be measured on a location by location basis by comparing the fair value of the asset with its carrying amount~~. Long-lived assets that are held for disposal are reported at the lower of the assets’ carrying amount or fair value less costs related to the assets’ disposition. No impairment has been recognized.

The Group assesses the useful lives and possible impairment of existing goodwill when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

	●	significant underperformance relative to historical or projected future operating results;
	●	significant changes in the manner of use of the acquired assets or the strategy for our overall business;
	●	identification of other impaired assets within a reporting unit;
	●	disposition of a significant portion of business;
	●	significant negative industry or economic trends;

Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an accrual basis or when indications of impairment exist.

Assets under capital lease

Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Depreciation expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.

F-139

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

Comprehensive income

Comprehensive income includes net income and also considers the effect of other changes to stockholders'’ equity that are not included in the determination of net income, but rather are reported as a separate component of stockholders'’ equity. The Group reports foreign currency translation adjustments and unrealized gains and losses on investments (those which are considered temporary) as components of comprehensive income.

Earnings per share

Basic ~~net~~ earnings ~~(loss)~~ per ~~common~~ share is computed byon ~~dividing~~the ~~net~~basis ~~earnings~~of ~~(loss) applicable to common shareholders by~~ the weighted-average number of shares of the Company’s common ~~shares~~stock outstanding during the ~~period~~fiscal years. Diluted ~~net~~ earnings ~~(loss)~~ per ~~common~~ share is ~~determined~~computed ~~using~~on the basis of the weighted-average number of ~~common~~ shares ~~outstanding~~of ~~during~~ the ~~period,~~common ~~adjusted~~stock plus ~~for~~any ~~the dilutive~~ effect of ~~common~~dilutive ~~stock~~potential ~~equivalents,~~common ~~consisting of~~ shares ~~that~~outstanding ~~might~~during bethe ~~issued~~period ~~upon~~using ~~exercise~~the ofif-converted ~~common stock options~~method.

Income taxes

The Group accounts for income taxes under FASB ASC Topic 740 "“Income Taxes"”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

The Group records uncertain tax positions when it is more likely than not that the tax positions will not be sustained upon examination by the respective tax authority.

The Group recognizes interest and penalty related to income tax matters as income tax expense. For the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013, there was no penalty or interest recognized as income tax expenses.

F-1410

ADGS ADVISORY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN US DOLLARS)

2.	Summary of significant accounting policies (…/Cont’d)

Employee benefits

Salaries, wages, annual bonuses, paid annual leave and staff welfare are accrued in the year in which the associated services are rendered by employees of the Group. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

ii) Contributions to appropriate local contribution retirement schemes pursuant to the relevant labor rules and regulations in Hong Kong which are charged to the cost of sales and general and administrative expenses in the statement of operation as and when the related employee service is provided. The Group incurred $1031,~~768~~859 and $1119,~~263~~659 for the three months period ended ~~May~~February 3128, 2014 and 2013; $2750,~~902~~551 and $2637,~~268~~218 for the ~~nine~~six months period ended ~~May~~February 3128, 2014 and 2013 respectively.

Fair value measurements

InFASB ASC ~~January~~Topic ~~2010~~820, ~~the Financial Accounting Standards Board (~~“~~FASB”) issued Accounting Standards Update “ASU 2010-06” “~~Fair Value ~~Measurements~~Measurement and Disclosures”. ~~The~~defines ~~new~~fair ~~guidance~~value, ~~clarifies~~the ~~two~~methods ~~existing~~used ~~disclosure~~to ~~requirements~~measure ~~and~~fair ~~requires~~value ~~two~~and ~~new~~the expanded disclosures asabout ~~follows:~~fair ~~(1)~~value ameasurements. ~~“gross”~~Fair ~~presentation~~value ofis ~~activities~~the ~~(purchases,~~price ~~sales,~~that ~~and~~would ~~settlements)~~be ~~within~~received ~~the~~to ~~Level~~sell 3an ~~rollforward~~asset ~~reconciliation,~~or ~~which~~paid ~~will~~to ~~replace~~transfer a ~~the~~liab ~~“net”~~i ~~presentation~~lity ~~format;~~in ~~and~~an ~~(2)~~orderly ~~detailed~~transaction ~~disclosures~~between ~~about~~ the ~~transfers~~buyer in and ~~out~~the ofseller ~~Level~~at 1the ~~and~~measurement ~~2 measurements~~date. ~~This~~In ~~guidance~~determining isfair ~~effective~~value, ~~for~~ the valuation ~~first~~techniques ~~interim~~consistent orwith ~~annual~~the ~~reporting~~market ~~period~~approach, ~~beginning~~income ~~after~~approach ~~December~~and ~~15,~~cost ~~2009,~~approach ~~except~~shall ~~for~~be ~~the~~used ~~gross~~to ~~presentation~~measure offair ~~the~~value. ~~Level~~FASB ASC 3Topic ~~rollforward~~820 ~~information,~~establishes ~~which~~a isfair ~~required~~value hierarchy for ~~annual~~inputs, ~~reporting~~which ~~periods~~represent ~~beginning~~the ~~after~~assumptions ~~December~~used ~~15,~~by ~~2010,~~the buyer and ~~for~~seller ~~interim~~in ~~reporting~~pricing the ~~periods~~asset ~~thereafter~~or liability. ~~The~~These ~~Company~~inputs ~~adopted~~are ~~the~~further ~~amended~~defined ~~fair~~as ~~value~~observable ~~disclosures~~and ~~guidance~~unobservable ~~on January 1, 2012~~inputs. AsObservable ofinputs ~~May~~are ~~31,~~those ~~2014~~that buyer and ~~August~~seller ~~31,~~would ~~2013,~~use ~~none~~in ofpricing the ~~Company’s~~asset ~~financial~~or ~~assets~~liability orbased ~~liabilities~~on ~~were~~market ~~measured~~data atobtained ~~fair~~from ~~value~~sources onindependent aof ~~recurring~~the ~~basis~~Group. AsUnobservable inputs ofreflect ~~May~~the ~~31,~~Group’s ~~2014~~assumptions ~~and~~about ~~August~~the ~~31,~~inputs ~~2013,~~that ~~none~~the ofbuyer ~~the~~and ~~Company’s~~seller ~~non-financial~~would ~~assets~~use orin ~~liabilities~~pricing ~~was~~the ~~measured~~asset ator ~~fair~~liability ~~value~~developed based on athe ~~nonrecurring~~best ~~basis~~information available in the circumstances.

The carrying values of the Company’s financial assets and liabilities, including accounts receivable, other receivables, other current assets, bank loans, accounts payable, and accrued liabilities and other payables, are a reasonable estimate of fair value ~~because~~hierarchy ~~of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. It~~ is ~~not~~categorized ~~practicable~~into tothree ~~estimate~~levels ~~the~~based ~~fair~~on ~~values of advance to and advance from related parties because of~~ the ~~related~~inputs ~~party~~as ~~nature of such advances.~~follows:

~~Recent~~Level ~~issued~~1 ~~accounting~~- ~~standards~~Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

~~There~~Level ~~are~~2 no- ~~new~~Valuations ~~significant~~based ~~accounting~~on ~~standards~~(i) ~~applicable~~quoted toprices ~~the~~in ~~Company~~active ~~that~~markets ~~have~~for ~~been~~similar ~~issued~~assets ~~but~~and liabilities, (ii) quoted prices in markets that are not ~~yet~~active ~~adopted~~for byidentical ~~the~~or ~~Company~~similar asassets, of(iii) ~~May~~inputs 31other than quoted prices for the assets or liabilities, ~~2014~~or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.

FLevel 3 -15 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Group’s financial instruments consist principally of cash, accounts receivable, accounts payable, bank loans, and accrued liabilities. Pursuant to ASC 820, the fair value of the Group’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Group believes that the carrying amounts of all of the Group’s other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

F-11

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.	BUSINESS SEGMENTS

~~The Company has three (3~~A) ~~reportable~~Business ~~business~~segment ~~segments:~~reporting ~~accounting and corporate services, corporate restructuring and insolvency and multi~~-~~disciplinary~~ advisory. The Company evaluates performance based on net operating profit. Administrative functions are centralized however, where applicable, portions of the administrative function expenses are allocated between the operating segments. In the event any services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The administrative expenses are captured discretely within each segment. The Company’s property and equipment, and accounts receivable are captured and reported discretely within each operating segment.product

The Company ~~following~~has ~~tables~~three ~~show~~(3) ~~the~~reportable ~~operations~~business segments: providing accounting, taxation, company secretarial, consultancy services, and consultancy service for slope inspection . The Company evaluates performance based on net operating profit. Administrative functions are centralized however, where applicable, portions of the administrative function expenses are allocated between the operating segments. In the event any services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The administrative expenses are captured discretely within each segment. The Company’s property ~~reportable~~and ~~segments:~~equipment, and accounts receivable are captured and reported discretely within each operating segment.

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi-Disciplinary Advisory			Corporate & Other Income		Total
Three months ended May 31, 2014
Segment revenue
Revenue from external Customer	$	677,061		$	38,439		$	764,106		$	-	$	1,479,606
Direct cost of revenue		(222,929	)		(168,894	)		(368,009	)		42,549		(717,283	)
Administrative expense		(114,999	)		(6,529	)		(129,784	)		-		(251,312	)
Gross profit/(loss)		339,133			(136,984	)		266,313			42,549		511,011
Other income		5,757			327			6,497			-		12,581
Finance cost		(16,597	)		(942	)		(18,731	)		-		(36,270	)
Income/(loss) before income taxes		328,293			(137,599	)		254,079			42,549		487,322
Income tax		(84,762	)		(4,812	)		(95,660	)		-		(185,234	)
Net income/(loss)	$	243,531		$	(142,411	)	$	158,419		$	42,549	$	302,088

The following tables set forth the Company’s four main segments:

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi- Disciplinary Advisory			Corporate & Other Income		Total
Total assets	$	1,729,640		$	101,631		$	2,498,838		$	2,386,113	$	6,716,222
Three months ended February 28, 2014
Total liabilities	$	1,968,347		$	111,433		$	2,204,694		$	1,208,294	$	5,492,768
Segment revenue
Revenue from external customer	$	417,329		$	26,166		$	997,773		$	-	$	1,441,268
Direct cost of revenue		(159,613	)		(34,526	)		(392,262	)		-		(586,401	)
Administrative expense		(112,614	)		(7,061	)		(269,245	)		-		(388,920	)
Gross profit/(loss)		145,102			(15,421	)		336,266			-		465,947
Other income		95			6			226			-		327
Finance cost		(7,793	)		(489	)		(18,631	)		-		(26,913	)
Income/(loss) before income taxes		137,404			(15,904	)		317,861			-		439,361
Income tax		(20,742	)		(1,300	)		(49,589	)		-		(71,631	)
Net income/(loss)	$	116,662		$	(17,204	)	$	268,272		$	-	$	367,730

F-16

	Accounting & Corporate Services		Corporate Restructuring & Insolvency		Multi- Disciplinary Advisory		Corporate & Other Income		Total

Total assets	$	1,716,361	$	47,056	$	3,278,687	$	696,486	$	5,738,590

Total liabilities	$	955,529	$	60,465	$	2,711,268	$	1,359,497	$	5,086,759

~~ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~F-12

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.	BUSINESS SEGMENTS (…../Cont’d)

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi-Disciplinary Advisory			Corporate & Other Income		Total
Three months ended May 31, 2013
Segment revenue
Revenue from external customer	$	583,605		$	69,454		$	236,532		$	-	$	889,591
Direct cost of revenue		(230,124	)		(250,838	)		(65,653	)		-		(546,615	)
Administrative expense		(117,414	)		(13,973	)		(47,587	)		-		(178,974	)
Gross profit		236,067			(195,357	)		123,292			-		164,002
Other income		1,692			201			686			-		2,579
Finance cost		(23,779	)		(2,830	)		(9,638	)		-		(36,247	)
Income before income taxes		213,980			(197,986	)		114,340			-		130,334
Income tax		(25,600	)		(3,046	)		(10,376	)		-		(39,022	)
Net income	$	188,380		$	(201,032	)	$	103,964		$	-	$	91,312

Business segment reporting - by product (…../Cont’d)

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi- Disciplinary Advisory			Corporate & Other Income		Total
Total assets	$	3,387,689		$	311,848		$	816,986		$	893	$	4,517,416
Three months ended February 28, 2013
Total liabilities	$	3,111,605		$	287,998		$	1,350,166		$	23,337	$	4,773,106
Segment revenue
Revenue from external customer	$	251,079		$	832,770		$	212,186		$	-	$	1,296,035
Direct cost of revenue		(125,032	)		(438,706	)		(39,870	)		-		(603,608	)
Administrative expense		(53,459	)		(177,309	)		(45,178	)		-		(275,946	)
Gross profit		72,588			216,755			127,138			-		416,481
Other income		-			-			-			-		-
Finance cost		(6,460	)		(21,428	)		(5,460	)		-		(33,348	)
Income before income taxes		66,128			195,327			121,678			-		383,133
Income tax		(8,328	)		(27,622	)		(7,038	)		-		(42,988	)
Net income	$	57,800		$	167,705		$	114,640		$	-	$	340,145

F-17

	Accounting & Corporate Services		Corporate Restructuring & Insolvency		Multi- Disciplinary Advisory		Corporate & Other Income		Total

Total assets	$	856,599	$	3,036,888	$	168,687	$	-	$	4,062,174

Total liabilities	$	805,813	$	2,856,836	$	746,428	$	-	$	4,409,077

~~ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~F-13

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.	BUSINESS SEGMENTS (…../Cont’d)

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi-Disciplinary Advisory			Corporate & Other Income		Total
Nine months ended May 31, 2014
Segment revenue
Revenue from external customer	$	1,407,278		$	89,129		$	2,584,477		$	-	$	4,080,884
Direct cost of revenue		(551,706	)		(231,225	)		(1,108,728	)		42,549		(1,849,110	)
Administrative expense		(298,088	)		(18,254	)		(536,704	)		-		(853,046	)
Gross profit/(loss)		557,484			(160,350	)		939,045			42,549		1,378,728
Other income		-			1,091			13,359			-		14,450
Finance cost		(31,409	)		(2,047	)		(58,011	)		-		(91,467	)
Income/(loss) before income taxes		526,075			(161,306	)		894,393			42,549		1,301,711
Income tax		(108,816	)		(6,403	)		(154,995	)		-		(270,214	)
Net income/(loss)	$	417,259		$	(167,709	)	$	739,398		$	42,549	$	1,031,497

Business segment reporting - by product (…../Cont’d)

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi- Disciplinary Advisory			Corporate & Other Income		Total
Total assets	$	1,729,640		$	101,631		$	2,498,838		$	2,386,113	$	6,716,222
Six months ended February 28, 2014
Total liabilities	$	1,968,347		$	111,433		$	2,204,694		$	1,208,294	$	5,492,768
Segment revenue
Revenue from external customer	$	696,971		$	50,690		$	1,853,617		$	-	$	2,601,278
Direct cost of revenue		(327,310	)		(62,331	)		(742,186	)		-		(1,131,827	)
Administrative expense		(165,795	)		(11,725	)		(424,214	)		-		(601,734	)
Gross profit/(loss)		203,866			(23,366	)		687,217			-		867,717
Other income		8,729			763			(7,623	)		-		1,869
Finance cost		(14,813	)		(1,104	)		(39,280	)		-		(55,197	)
Income/(loss) before income taxes		197,782			(23,707	)		640,314			-		814,389
Income tax		(24,054	)		(1,591	)		(59,335	)		-		(84,980	)
Net income/(loss)	$	173,728		$	(25,298	)	$	580,979		$	-	$	729,409

F-18

	Accounting & Corporate Services		Corporate Restructuring & Insolvency		Multi- Disciplinary Advisory		Corporate & Other Income		Total

Total assets	$	1,716,361	$	47,056	$	3,278,687	$	696,486	$	5,738,590

Total liabilities	$	955,529	$	60,465	$	2,711,268	$	1,359,497	$	5,086,759

~~ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~F-14

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

3.	BUSINESS SEGMENTS (…../Cont’d)

AC) Business segment reporting - by product (…../Cont’d)

	Accounting & Corporate Services			Corporate Restructuring & Insolvency			Multi- Disciplinary Advisory			Corporate & Other Income		Total
Nine months ended May 31, 2013
Six months ended February 28, 2013
Segment revenue
Revenue from external customer	$	1537,~~121,233~~628		$	1,~~150~~081,~~511~~057		$	~~523~~286,~~481~~949		$	-	$	21,~~795~~905,~~225~~634
Direct cost of revenue		(~~508~~278,~~172~~048	)		(~~849~~598,~~477~~639	)		(~~156~~90,~~005~~352	)		-		(1967,~~513,654~~039	)
Administrative expense		(~~269~~152,~~778~~364	)		(~~276~~263,~~981~~008	)		(~~118~~70,~~570~~983	)		-		(~~665~~486,~~329~~355	)
Gross profit		~~343~~107,~~283~~216			24219,~~053~~410			~~248~~125,~~906~~614			-		~~616~~452,~~242~~240
Other income		~~1,692~~-			~~201~~-			~~686~~-			-		~~2,579~~-
Finance cost		(4420,~~072~~293	)		(3633,~~243~~413	)		(189,~~707~~069	)		-		(9962,~~022~~775	)
Income/(loss) before income taxes		300,903			(11,989	)		230,885			-		519,799
Income before income taxes		86,923			185,997			116,545			-		389,465
Income tax		(338,~~928~~328	)		(3027,~~669~~622	)		(177,~~413~~038	)		-		(8242,~~010~~988	)
Net income	$	~~266~~78,~~975~~595		$	~~(42~~158,~~658~~375	)	$	~~213~~109,~~472~~507		$	-	$	~~437~~346,~~789~~477

Accounting & Corporate Services

Corporate Restructuring & Insolvency

Multi- Disciplinary Advisory

Corporate & Other Income

Total

Total assets

3856,~~387,689~~599

~~311~~3,~~848~~036,888

~~816~~168,~~986~~687

~~893~~-

4,~~517~~062,~~416~~174

Total liabilities

3805,~~111,605~~813

~~287~~2,~~998~~856,836

1746,~~350,166~~428

~~23,337~~-

4,~~773~~409,~~106~~077

F-1915

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

4.	ACQUISITION OF SUBSIDIARY

Almonds Kisses Limited (“Almonds Kisses”), ~~BVI~~a wholly owned subsidiary of ADGS Advisory Inc. (the “Company”) entered into a ~~share~~ purchase and sale agreement (the "“Purchase Agreement"”) dated October 20, 2013 which was previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2013. Pursuant to the Purchase Agreement, the Company agreed to purchase all shares of T H Strategic Management Limited (“T H Strategic”), a Hong Kong, People’s Republic of China incorporated company (the "“Acquisition"”) for purchase consideration of approximately $516,000 (HK$4 million). ~~The~~ ~~acquisition is to expand its market share in the Hong Kong accounting service industry. Almonds Kisses BVI has fully paid the consideration of acquisition before the end of February 2014.~~ T H Strategic Management Limited is engaged in providing accounting, taxation, company secretarial and consultancy services. ~~On October 20, 2013, the acquisition was consummated pursuant to the terms of Purchase Agreement and T H Strategic became a wholly owned subsidiary of Almonds Kisses BVI.~~

In consideration for acquisition of the issued and outstanding shares of TH Strategic, Almonds Kisses has agreed to pay the seller the sum of about $516,000 (HK$4 million), payable in four equal monthly installments of about $129,000 (HK$1 million) each. Almonds Kisses has fully paid the consideration of acquisition before the end of February 2014.

The following table summarizes the estimated fair values of tangible assets acquired and liabilities assumed as of the date of the Merger:

	Assets/(liabilities)
	Assets /(liabilities)
Cash	$	16,189
Account receivables		89,685
Accrual and other payables		(17,544	)
Tax payables		(25,469	)
Due to a related party		(22,504	)
Total identifiable net assets	$	40,357
Goodwill		475,605
Consideration	$	515,962

As the purchase price exceeds the fair value of assets and liabilities acquired or assumed, goodwill will be recognized. Goodwill is calculated as the difference between the Acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill is not expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist. No acquisition related costs incurred in this acquisition.

The following is a summary of revenues, expenses and net income of T H Strategic since the effective acquisition date (October 20, 2013) included in the consolidated results of operations for the Company during the period ended May 31, 2014:F-16

Revenue	$	53,767
Expenses		(43,551	)
Net income attributable to T H Strategic	$	10,216

ADGS ADVISORY, INC.

~~F-20~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED) (~~IN US DOLLARS)

4. ACQUISITION OF SUBSIDIARY (…./Cont’d)

The following pro forma consolidated statements of operations have been prepared assuming that the acquisition of T H Strategic occurred on September 1 of each of the periods presented.

	Pro Forma Consolidated For the nine month period Ended May 31, 2014			Pro Forma Consolidated For the nine month period Ended May 31, 2013
Revenue	$	237,951		$	217,271
Expenses		(133,816	)		(189,356	)
Pro Forma Net Income Attributable To Ordinary Shareholders	$	104,135		$	27,915
Pro Forma Net Income Per Share
Basic	$	0.004		$	0.001
Diluted	$	0.004		$	0.001
Weighted average shares outstanding
Basic		25,662,172			25,000,000
Diluted		25,662,172			25,000,000

CASH

Cash represents cash in bank and cash on hand. Cash as of ~~May~~February 3128, 2014 and August 31, 2013 consists of the following:

	May 31,		August 31,
	February 28,		August 31,
	2014		2013
	(Unaudited)
Bank balances and cash	$	~~279~~1,~~817~~112,662	$	164,314

All cash was maintained in Hong Kong, PRC. In Hong Kong, there are no rules or regulations mandating an obligatory insurance of bank accounts. Management believes these financial institutions are of high credit quality.

6.	RESTRICTED CASH

At February ~~May 31~~28, 2014 and August 31, 2013, $~~258,892 and $~~129,~~312~~465 of cash ~~respectively~~ was restricted and deposited in a bank as security for installment loans payable to the bank.

F-2117

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

7.	DUE FROM A RELATED PARTY

The amounts due from ~~Tong Wing Shan Michelle, Chief Financial Officer of~~ the ~~Company~~Group (“CFO”) are interest free, unsecured and repayable on demand. The Advances to the CFO were funded by Group bank loans. These bank loans were secured by real property owned by the CFO. The activity for such amounts due to ~~the~~shareholders ~~CFO~~ for the period/year ended ~~May~~February 3128, 2014 and August 31, 2013 is as follows:

	Period Ended May 31, 2014
	Period Ended February 28, 2014
	(Unaudited)
Balance due at September 1, 2013	$	418,658
Amount repaid during the period		(~~418~~387,~~621~~159	)
Foreign currency translation adjustment		(37	)
Exchange alignment		(449	)
Balance due at May 31, 2014	$	-
Balance due at February 28, 2014	$	31,050

	Year Ended August 31, 2013
Balance due at September 1, 2012	$	241,036
Amount advanced during the year		4,831,702
Amount repaid during the year		(4,655,559	)
Foreign currency translation adjustment		1,479
Exchange alignment		1,479
Balance due at August 31, 2013	$	418,658

8.	LOAN FROM A RELATED PARTY

The ~~amount of the~~ loan from ~~Tong~~a ~~Wing~~related ~~Shan~~party ~~Michelle, the Company’s CFO,~~ is interest free, unsecured and is due and payable on August 30, 2017. ~~A partial repayment was made by the Company in the third quarter of fiscal 2014~~

F-2218

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

9.	PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

	May 31,			August 31,
	February 28,			August 31,
	2014			2013
	(Unaudited)
Investment property	$	1,909,062		$	1,909,062
Leasehold improvement		~~134~~103,~~005~~414			85,345
Furniture and fixtures		5,632			5,632
Office equipment		6,730			6,730
Motor vehicle		87145,~~267~~407			145,407
		2,142,696			2,152,176
		2,170,245			2,152,176
Less: Accumulated depreciation		(~~124~~116,~~616~~916	)		(63,486	)
	$	2,~~018~~053,~~080~~329		$	2,088,690

Depreciation expense ~~expenses included in the general and administrative expenses~~ for the three months ended ~~May~~February 3128, 2014 and 2013 amounted to $3127,~~768~~613 and $128,~~548~~958; for the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013 amounted to $8553,~~199~~431 and $2715,~~791,~~243 respectively.

~~The~~Included in ~~residential~~motor ~~investment property~~vehicle ~~held~~of bythe ~~Motion~~Group, ~~Tech~~the isnet ~~collateral~~carrying ~~for~~amount aof ~~banking~~$105,646 ~~facility~~as of February 28, 2014 and $120,183 as of August 31, 2013 is under capital lease with athe ~~maximum~~related ~~amount~~depreciation charge for of $27,~~063~~267 and $4,~~850~~075 ~~(HK~~for the three months ended February 28, 2014 and 2013; $1614,537 and ~~million)~~$5,477 for the six months ended February 28, 2014 and 2013 respectively.

The residential property held by Motion Tech is collateral for a banking facility with a maximum amount of $2,063,850 (HK$16 million).

10.

ASSETS HELD UNDER CAPITAL LEASES

The Group leases a motor vehicle that is classified as capital lease. The cost of the motor vehicle under capital leases is included in the Balance Sheets as property and equipment and was $50105,~~227~~646 (net of accumulated depreciation) at ~~May~~February 3128, 2014. Amortization of assets under capital leases is included in depreciation expense. The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of ~~May~~February 3128, 2014, are as follows:

	Amount
Year ending August 31,
2014 (Three months)	$	2,918
2014 (Six months)	$	13,658
2015		1127,~~673~~316
2016		1127,~~673~~316
2017		1127,~~673~~316
2018		210,~~918~~745
Thereafter		-
Total minimum lease payment		40106,~~855~~351
Less: Imputed interest		(26,~~054~~136	)
Present value of net minimum lease payments		38100,~~801~~215
Less: Current maturities of capital leases obligations		(1012,~~544~~004	)
Long-term capital leases obligations	$	2888,~~257~~211

F-2319

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

11.

INTANGIBLE ASSETS

Intangible assets consist of customer lists purchased from three unrelated parties pursuant to the agreements dated June 21, 2005, April 28, 2011 and September 30, 2013.

~~Intangible~~The intangible assets asare amortized using the straight line method over a period of ~~May~~10 31years. Amortization expenses for the three months ended February 28, 2014 and ~~August~~2013 31are $48,990 and $44,875; for the six months ended February 28, 2014 and 2013 ~~consist~~are $98,003 and $89,750 respectively. The future amortization as of ~~the~~February ~~following~~28, 2014 will be as follows:

	Client list 1		Client list 2		Client list 3		Total
	Amount
Amortized intangible assets:
Year ending August 31,
Gross carrying amounts
2014 (Six months)	$	97,928
Balance as of August 31, 2013	$	769,251	$	1,025,667	$	-	$	1,794,918
2015		194,191
Acquisition		-		-		154,789		154,789
2016		92,774
Balance as of May 31, 2014		769,251		1,025,667		154,789		1,949,707
2017		92,774
Accumulated amortization
2018		92,774
Balance as of August 31, 2013		179,949		821,128		-		1,001,077
Thereafter		280,186
Amortization expenses		58,025		77,368		11,605		146,998
	$	850,627
Balance as of May 31, 2014		237,974		898,496		11,605		1,148,075
Total amortized intangible assets	$	531,277		127,171	$	143,184		801,632

The intangible assets are amortized using the straight line method over a period of 10 years. Amortization expenses for the three months ended May 31, 2014 and 2013 are $48,995 and $44,877; for the nine months ended May 31, 2014 and 2013 are $146,998 and $134,626 respectively. The future amortization as of May 31, 2014 will be as follows:

	Amount
Year ending August 31,
2014 (Three months)	$	49,018
2015		194,248
2016		92,876
2017		92,876
2018		92,876
Thereafter		279,738
	$	801,632

F-24

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

12.

INCOME TAXES

The entities that comprise the Group file separate tax returns in the respective tax jurisdictions that they operate. The Company files income tax returns in the U.S. federal and state, and foreign jurisdictions such as Hong Kong, People’s Republic of China. The Inland Revenue Department of Hong Kong, People’s Republic of China would have a 7 year period that it could make changes on tax returns filed.

The Company is domiciled in the State of Delaware, U.S.A.. No provision for U.S.A. profits tax has been made as the Company has sustained losses.

The Company’s subsidiary, Almonds Kisses is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, ADGS Advisory Limited, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $~~257~~81,~~516~~195 and $8142,~~845~~823 has been made for the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013, respectively.

The Company’s subsidiary, ADGS Tax Advisory Limited, is domiciled in Hong Kong. No provision for Hong Kong profits tax has been made as the subsidiary sustained tax losses for the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013.

The Company’s subsidiary, Vantage Advisory Limited, is domiciled in Hong Kong. ~~Provision~~No provision for Hong Kong profits tax has been made as ~~for~~ the ~~nine~~subsidiary ~~months~~sustained ~~ended~~tax ~~May~~losses ~~31,~~for ~~2014~~the ~~and~~six ~~2013~~months ~~amounted~~ended toFebruary ~~$Nil~~28, ~~and $165 respectively~~2014.

F-20

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

12.

INCOME TAXES (…/Cont’d )

The Company’s subsidiary, Motion Tech is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets.

The Company’s subsidiary, T H Strategic Management Limited acquired on October 20, 2013, is domiciled in Hong Kong, and a provision for Hong Kong profits tax in the amount of $123,~~698~~785 has been made for the ~~nine~~six months ended ~~May~~February 3128, 2014.

~~F-25~~The Company’s income tax for the six months ended February 28, 2014 and 2013 can be reconciled to the income before income tax expenses in the statement of operations as follows:

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

	For the Three months ended February 28,						For the Six months ended February 28,
	2014			2013			2014			2013

Income before tax	$	439,361		$	383,133		$	814,389		$	389,465

Expected Hong Kong income tax expense at statutory tax rate of 16.5%	$	72,495		$	63,217		$	134,375		$	64,262
Temporary difference		(35,086	)		(3,528	)		(73,679	)		(3,240	)
Utilization of tax losses		-			(21,382	)		193			(27,394	)
Unrealised tax loss		34,222			4,681			24,091			9,360
Actual income tax expense	$	71,631		$	42,988		$	84,980		$	42,988

12Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. ~~INCOME~~Significant ~~TAXES~~components ~~(…/Cont~~of the Company’d)s deferred tax assets and liabilities are as follows:

The Company's income tax for the nine months ended May 31, 2014 and 2013 can be reconciled to the income before income tax expenses in the statement of operations as follows:

	February 28, 2014		August 31, 2013
	(Unaudited)
Deferred tax asset:
Unrecognized tax losses	$	-	$	-

Deferred tax liability:
Difference between book and tax depreciation	$	1,242	$	2,340

	For the Three months ended May 31,						For the Nine months ended May 31,
	2014			2013			2014			2013
Income before tax	$	487,322		$	130,334		$	1,301,711		$	519,799
Expected Hong Kong income tax expense at statutory tax rate of 16.5%	$	80,408		$	21,505		$	214,782		$	85,766
Tax effect of expenses not deductible for tax purpose		18,254			20,038			60,108			31,913
Tax effect of income not taxable for tax purpose		(1,783	)		-			(1,783	)		-
Tax effect of tax losses not recognised		(916	)		(2,060	)		(2,748	)		(6,808	)
Tax effect of temporary differences not recognised		89,271			(461	)		(5,973	)		(28,861	)
Unrealised tax loss		-			-			5,828			-
Actual income tax expense	$	185,234		$	39,022		$	270,214		$	82,010

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Other major temporary differences that give rise to the deferred tax assets and liabilities are net operating losses carry forwards. As the amounts are immaterial as of February 28, 2014 and August 31, 2013, no deferred taxes have been provided for in the accounts.

The Company is not aware of any income tax audits in various jurisdictions, including the United States. The tax periods open to examination by the major taxing jurisdictions to which the Company and are subject include fiscal years 1998 through 2013. The Company is not aware of any unrecorded tax liabilities which would impact the Company’s financial position or its result of operations as of May 31, 2014 and August 31, 2013.F-21

~~F-26~~ADGS ADVISORY, INC.

~~ADGS ADVISORY, INC.~~ NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ~~(IN US DOLLARS)~~

(IN US DOLLARS)

13.

BANK LOANS

The details of the bank loans outstanding as of ~~May~~February 3128, 2014 (unaudited) are as follows:

Name of bank

Outstanding loan amount

Current annualized interest rate

Nature of loans

Term of loans

Collateral

Outstanding loan

Current annualized

Hang Seng Bank ("HSB")

US$107,506 (HK$833,418)

HSB monthly rate of 0.38%

Term loan

June 27, 2012 to June 26, 2017

Property and personal guarantee from related party and third party

Name of bank

amount

interest rate

Nature of loans

Term of loans

Collateral

Hitachi Capital (HK) Ltd ("HC")

US$25,978 (HK$201,386)

HC annual rate of 2.14% flat

Term loan

January 27, 2014 to January 26, 2016

Personal guarantee from related party and third party

Shanghai Commercial Bank (“SCB”)

US$930,270 (HK$7,219,643)

SCB annual rate of 3%

Term loan

January 30, 2012 to December 31, 2035

Property and personal guarantee from related party and third party

Hitachi Capital (HK) Ltd (“HC”)

US$89,004 (HK$689,986)

HC annual rate of 8.57% effective

Term loan

April 11, 2014 to 12 April 2015

Personal guarantee from related party and third party

Hang Seng Bank (“HSB”)

US$117,276 (HK$910,153)

HSB monthly rate of 0.38%

Term loan

June 27, 2012 to June 26, 2017

Property and personal guarantee from related party and third party

DBS

US$1,173,262 (HK$9,095,474)

DBS annual rate of 2.75%

Term loan

November 12, 2012 to 12 October, 2037

Property and personal guarantee from related party

Hitachi Capital (HK) Ltd (“HC”)

US$29,737 (HK$230,779)

HC annual rate of 2.14% flat

Term loan

January 27, 2014 to January 26, 2016

Personal guarantee from related party and third party

Bank of East Asia (“BEA”)

US$30,098 (HK$233,332)

BEA monthly rate of 0.6%

Term loan

February 20, 2014 to February 20, 2015

Personal guarantee from related party

DBS

US$1,181,342 (HK$9,168,157)

DBS annual rate of 2.75%

Term loan

November 12, 2012 to 12 October, 2037

Property and personal guarantee from related party

Hang Seng Bank (“HSB”)

US$644,970 (HK$5,000,000)

HSB annual rate of 2.2%

Term loan

May 16, 2014 to May 16, 2034

Property and personal guarantee from related party

Bank of East Asia (“BEA”)

US$36,508 (HK$283,333)

BEA monthly rate of 0.6%

Term loan

February 20, 2014 to February 20, 2015

Personal guarantee from related party

Hang Seng Bank (“HSB”)

US$515,976 (HK$4,000,000)

HSB annual rate of 3.7%

Term loan

May 16, 2014 to May 15, 2021

Property and personal guarantee from related party

2,295,133

$ 2,586,794

The details of the bank loans outstanding as of August 31, 2013 are as follows:

Name of bank

Outstanding loan amount

Current annualized interest rate

Nature of loans

Term of loans

Collateral

Outstanding loan

Current annualized

Shanghai Commercial Bank ("SCB")

US$943,651 (HK$7,315,652)

SCB annual rate of 3%

Term loan

January 30, 2012 to December 31, 2035

Property and personal guarantee from related party and third party

Name of bank

amount

interest rate

Nature of loans

Term of loans

Collateral

Hang Seng Bank ("HSB")

US$136,863 (HK$1,061,028)

HSB monthly rate of 0.38%

Term loan

June 27, 2012 to June 26, 2017

Property and personal guarantee from related party and third party

Shanghai Commercial Bank (“SCB”)

US$943,651 (HK$7,315,652)

SCB annual rate of 3%

Term loan

January 30, 2012 to December 31, 2035

Property and personal guarantee from related party and third party

Hitachi Capital (HK) Ltd ("HC")

US$5,573 (HK$43,204)

HC annual rate of 6.98%

Term loan

June 29, 2012 to November 25, 2013

Personal guarantee from related party

Hang Seng Bank (“HSB”)

US$136,863 (HK$1,061,028)

HSB monthly rate of 0.38%

Term loan

June 27, 2012 to June 26, 2017

Property and personal guarantee from related party and third party

DBS

US$1,200,698 (HK$9,308,419)

DBS annual rate of 2.75%

Term loan

November 12, 2012 to 12 October, 2037

Property and personal guarantee from related party

Hitachi Capital (HK) Ltd (“HC”)

US$5,573 (HK$43,204)

HC annual rate of 6.98%

Term loan

June 29, 2012 to November 25, 2013

Personal guarantee from related party

$ 2,286,785

DBS

US$1,200,698 (HK$9,308,419)

DBS annual rate of 2.75%

Term loan

November 12, 2012 to 12 October, 2037

Property and personal guarantee from related party

2,286,785

F-2722

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

13.

BANK LOANS (…../Cont’d)

Interest expenses for the three months ended ~~May~~February 3128, 2014 and 2013 are $2113,~~298~~177 and $26,~~685~~684; ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013 are $4927,~~138~~840 and $8255,~~629~~944 respectively.

Bank loans repayment schedule is as follows:

	May 31, 2014		August 31, 2013
	February 28, 2014		August 31, 2013
	(Unaudited)
Year ending August 31,
2014 (Three months)	$	78,002	$	107,548
2014 (Six months)	$	76,531	$	107,548
2015		~~284~~149,~~073~~718		114,303
2016		~~187~~119,~~759~~244		118,253
2017		~~153~~85,~~681~~557		90,382
2018		~~142~~74,~~108~~406		79,363
Thereafter		1,~~741~~789,~~171~~677		1,776,936
	$	2,~~586~~295,~~794~~133	$	2,286,785

The bank loans as outlined in the aforementioned tables are secured by the directors'’ and third parties'’ properties and personal guarantees.

14.

DEFERRED REVENUE

	May 31, 2014		August 31, 2013
	February 28, 2014		August 31, 2013
	(Unaudited)
Deferred revenue – current portion	$	~~145~~144,~~118~~959	$	145,114
Deferred revenue – net of current portion		~~326~~362,~~516~~398		435,343
	$	~~471~~507,~~634~~357	$	580,457

The Company has an agreement with a third party for consultancy services with a fixed fee and term of four years, renewable upon expiration. Deferred revenue to be recognized in next fiscal year (2014) is classified as current liabilities with the remaining balance classified as a non-current liabilities.

The total future revenue under such non-cancellable agreement with respect to consultancy service income as of May 31, 2014 is as follows:

	Revenue
Year Ending August 31,
2014 (Three months)	$	36,280
2015		145,118
2016		145,118
2017		145,118
Over five years		-
	$	471,634

F-28

ADGS ADVISORY, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)

15.

CONCENTRATIONS OF RISK

The Group'’s credit risk is somewhat limited due to a relatively large customer base. During the three- and ~~nine~~six- months ended ~~May~~February 3128, 2014 and 2013, the Group had no customer which accounted for 10% or more of total revenue or 10% or more of total accounts receivable at ~~May~~February 3128, 2014 or August 31, 2013.

F-23

ADGS ADVISORY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(IN US DOLLARS)

16.

RELATED PARTY TRANSACTIONS

Significant operating ~~related~~expenses ~~parties~~arising ~~transactions~~from ~~were~~transaction with a related company was as follows.

	For the three months ended May 31, 2014		For the three months ended May 31, 2013		For the nine months ended May 31, 2014		For the nine months ended May 31, 2013
	For the three months ended February 28, 2014		For the three months ended February 28, 2013		For the six months ended February 28, 2014		For the six months ended February 28, 2013
Revenue:-
Accounting & corporate services	$	35102,~~761~~121	$	~~21,156~~-	$	~~227~~176,~~503~~699	$	~~62,801~~-
Corporate restructuring & insolvency		1,558		-		1,558		-
Multi-disciplinary Advisory		515,542				973,002		-
Corporate & Other Income		65,035		-		50,014		-
	$	617,663	$	-	$	1,149,701	$	-
Multi-disciplinary Advisory		396,130		-		1,345,225		-
	$	498,484	$	21,156	$	1,624,300	$	62,801
Direct cost of revenue:-
Accounting & corporate services	$	7,980		-	$	19,183		-
Multi-Disciplinary Advisory	$	28,821	$	-	$	63,426	$	-
Corporate restructuring & insolvency		21,274		-		63,828		-
Multi-Disciplinary Advisory		49,253		-		51,831		-
	$	78,507	$	-	$	134,842	$	-

~~The~~ These balances ~~associated~~primarily ~~with~~represent ~~accounting~~revenue ~~& corporate services~~ and ~~corporate~~direct ~~restructuring~~cost &of ~~insolvency~~revenue, ~~primarily~~which ~~represent~~transactions ~~the~~related ~~fees~~to ~~or expense charged by~~ the Company'’s Chief Operating Officer and related parties ~~as they are the practitioners that are licensed to provide insolvency and liquidation services~~ for the three and ~~nine~~six months ended ~~May~~February ~~31,~~ 2014 and 2013.

Income and expenses derived from the Multi-disciplinary Advisory service mainly are from the slope detection business. There was agreement signed between ADGS Hong Kong and a company owned by the CEO which has been dormant since its incorporation, namely Rodney Environmental Protection (China) Company Limited (“Rodney China”). Rodney China has entered business slope detection business agreement with a non-related party. This non-related party later signed an assignment letter acknowledging that it would be ADGS Hong Kong which would be the contracting party in substance. The related party transaction under the Multi-disciplinary Advisory section disclosed in this note reflected this arrangement.

See Notes 7 and 8 for discussion of advances to and from related parties.

F-2924

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

~~17.~~NOTES ~~EQUITY-METHOD~~TO ~~INVESTMENT~~THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~The Company owns a 30% equity interest of Dynamic Golden Limited~~ (~~“Dynamic”),~~IN aUS Hong Kong incorporated company with limited liability and Dynamic is a property holding company. Dynamic has received no income since it acquired the property in 2008. The property was recorded at cost at about $1.46 million and depreciation was charged over its unexpired term of lease. The property has been used to secure a bank loan granted to ADGS Hong Kong with an outstanding balance of $1,173,262 as of May 31, 2014.DOLLARS)

1817. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies

(a) In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising within the normal course of businesses that relate to a wide range of matters. The Group records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, evidence and the specifics of each matter. The Group has not recognized a provision for claims or contingencies as of ~~May~~February 3128, 2014 and August 31, 2013.

(b) Rental expense amounted to $4340,~~762~~772 and $3239,~~636~~483 for the three months ended ~~May~~February 3128, 2014 and 2013; $~~127~~83,~~077~~315 and $~~113~~80,~~099~~463 for the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013 respectively. The total future minimum lease payments under non-cancellable operating leases with respect to premises as of ~~May~~February 3128, 2014 are payable as follows

Year Ending August 31,	Rental
2014 (Three months)	$	32,263
2014 (Six months)	$	66,191
2015		94,~~208~~156
2016		-
2017		-
2018		-
Over five years		-
	$	~~126~~160,~~471~~347

(c)

Deferred revenue amounted to $72,479 and nil for the six months ended February 28, 2014 and 2013 respectively. The total future revenue under non-cancellable agreement with respect to consultancy service income as of February 28, 2014 are receivable as follows:

Year Ending August 31,	Revenue

2014 (Six months)	$	72,480
2015		144,959
2016		144,959
2017		144,959
2018		-
Over five years		-
	$	507,357

Economic and political risks

(cd) The major operations of the Group are conducted in Hong Kong, the PRC. Accordingly, the political, economic, and legal environments in Hong Kong, the PRC, as well as the general state of Hong Kong'’s economy may influence the business, financial condition, and results of operations of the Company.

Among other risks, the Group'’s operations are subject to the risks of restrictions on: changing taxation policies; and political conditions and governmental regulations.

F-3025

ADGS ADVISORY, INC. ~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN US DOLLARS)~~

~~19. CONDENSED~~NOTES ~~PARENT~~TO ~~COMPANY~~THE ~~FINANCIAL~~CONDENSED ~~INFORMATION~~CONSOLIDATED OFFINANCIAL ~~ADGS~~STATEMENTS ~~ADVISORY LIMITED~~(UNAUDITED)

~~These~~(IN ~~supplemental~~US condensed parent company financial statements should be read in conjunction with the notes to the Company’s Consolidated Financial Statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.DOLLARS)

As18. ofSUBSEQUENT August 31, 2013, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except as separately disclosed in the Company’s Consolidated Financial Statements.EVENT

~~CONDENSED~~On March ~~BALANCE~~19, ~~SHEETS~~2014, the Company issued 1,400,000 shares of common stock to 12 investors for the purchase price of $0.30 per share or $420,000 in the aggregate which shares were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the U.S. Securities Act of 1933, as amended, and Regulation S thereunder. All investors represented and warranted that they were non-U.S. persons with the meaning of Regulation S.

	May 31, 2014		August 31, 2013
Assets
Investment in subsidiary	$	1,414,116	$	66,533
Total assets	$	1,414,116	$	66,533
Liabilities and stockholders' equity
Current liabilities
Accrued expenses	$	38,507	$	9,029
Total current liabilities		38,507		9,029
Total liabilities		38,507		9,029
Total equity and due from shareholders		1,375,609		57,504
Total liabilities and stockholders' equity	$	1,414,116	$	66,533

On April 15, 2014, the Company issued 1,290,000 shares of common stock to a director for the purchase price of $0.30 per share or $387,000 in the aggregate which shares were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the U.S. Securities Act of 1933, as amended, and Regulation S thereunder. Such investor represented and warranted that he was a non-U.S. person with the meaning of Regulation S.

F-3126

CONDENSED STATEMENT OF INCOME

	For the nine months period ended May 31, 2014			For the nine months period ended May 31, 2013
General and administrative expenses	$	(29,877	)	$	(2,727	)
Equity in income of subsidiary		1,061,374			440,516
	$	1,031,497		$	437,789

F-32

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

The following should be read in conjunction with the consolidated financial statements of the Company included elsewhere herein. All amounts are in U.S. Dollars unless other noted.

Forward-Looking Statements

This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Company Overview

Unless the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to the combined business of ADGS Advisory, Inc., formerly known as Life Nutrition Products, Inc., a Delaware corporation, and its direct and indirect wholly-owned subsidiaries, Almonds Kisses Limited (BVI), a British Virgin Islands company, ADGS Advisory Limited, a Hong Kong corporation, Vantage Advisory Limited, a Hong Kong corporation, Motion Tech Development Limited, a British Virgin Islands company, and TH Strategic Management Limited, a Hong Kong corporation, as well as ADGS Tax Advisory Limited, a Hong Kong corporation which is an 80% owned subsidiary, and Dynamic Golden Limited, a Hong Kong corporation which until November 19, 2013 was 30% owned by ADGS Tax Advisory Limited and has since been 30% owned by Almonds Kisses Limited (BVI). Pursuant to a Certificate of Amendment to the its Certificate of Incorporation filed with the State of Delaware and effective as of July 19, 2013, the Company changed its corporate name from “Life Nutrition Products, Inc.” to “ADGS Advisory, Inc.”.

We are primarily engaged in providing accounting, taxation, company secretarial, general corporate and consultancy services in Hong Kong.

On April 12, 2013, we acquired 100% of the issued and outstanding capital stock of Almonds Kisses Limited (BVI) (“Almonds Kisses BVI”) in exchange for 20,155,000 shares of our common stock, representing in the aggregate approximately 80.1% of our issued and outstanding shares of common stock.

Almonds Kisses BVI was incorporated on March 1, 2011 as a limited liability company in the British Virgin Islands. ADGS Advisory Limited (“ADGS Hong Kong”) is a Hong Kong corporation which was incorporated on April 28, 2011 and had been wholly owned by the same group of shareholders until being acquired by Almonds Kisses BVI pursuant to a reorganization completed in 2012 to prepare for the Transaction. Vantage Advisory Limited is a Hong Kong corporation which was incorporated on March 6, 2008 which has been wholly owned by Almonds Kisses BVI since January 2013. Motion Tech is a British Virgin Islands company which was incorporated on October 7, 2007 and has been wholly owned by Almonds Kisses BVI since August 2013. Motion Tech is a property holding company which owns a residential property. TH Strategic Management Limited is a Hong Kong corporation which was incorporated on March 16, 2010 which has also been wholly owned by Almonds Kisses BVI since October 2013. ADGS Hong Kong owns 80% of ADGS Tax Advisory Limited (“ADGS Tax”) which is a Hong Kong incorporated holding company. Dynamic Golden Limited which is also a Hong Kong incorporated company, which was 30% owned by ADGS Tax until November 19, 2013 and has since been 30% owned by Almonds Kisses BVI, owns an investment in residential real property located in Tuen Mun, New Territories, Hong Kong.

The chart below presents our corporate structure as of the date of this report:

ADGS Advisory, Inc.

(formerly Life Nutrition Products, Inc.),

a Delaware corporation

ê 100%

Almonds Kisses Limited (BVI),

a British Virgin Islands company

ê 100%	ê 100%	ê 100%	ê 100%	ê 30%
ADGS Advisory Limited	Vantage Advisory Limited,	TH Strategic Management Limited,	Motion Tech ~~Developmenta~~Development	Dynamic Golden Limited,
a Hong Kong corporation	a Hong Kong corporation	~~Limited,~~ a Hong Kong corporation	Limited, a British Virgin Islands ~~company~~	~~Limited,~~ a Hong Kong ~~corporation~~
	corporation		company
ê 80%
ADGS Tax Advisory Limited a Hong Kong corporation
ADGS Tax Advisory Limited
a Hong Kong corporation

Critical Accounting Policies ~~and Estimates~~

While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

Basis of presentation

The accompanying interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures for a fair presentation of these interim consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes of the Company for the year ended August 31, 2013, as filed in Form 10-K with the Securities and Exchange Commission on December 24, 2013.

The unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries as disclosed in ~~Note~~note 1. All material inter-company balances and transactions have been eliminated.

As both the Company and its subsidiaries, ADGS ~~Hong Kong~~ and ADGS Tax are under common control, the financial statements of the Company have been presented as if the receipt of assets and liabilities of the subsidiaries at their net carrying amount been entered into as of March 1, 2011 in accordance with ASC 805-50-15-6. Accordingly, financial information related to periods prior to the assets and liabilities are that of the Company’s operating subsidiaries.

Certain reclassifications have been made to the comparative period amounts to conform with that of the current period.

~~Use of estimates~~Going concern

The accompanying ~~preparation of the~~ consolidated financial statements inare ~~conformity~~presented ~~with~~on ~~U.S.~~a ~~GAAP~~going ~~requires~~concern ~~management~~basis. Although of the Company tohas ~~make~~ a ~~number~~working capital ofsurplus ~~estimates and assumptions relating to the reported amounts~~ of ~~assets~~$255,542 ~~and liabilities and the disclosure of contingent assets and liabilities~~ at ~~the~~February ~~date~~28, of2014, ~~the~~management ~~financial~~plans ~~statements~~to ~~and~~continue ~~the~~its ~~reported~~efforts ~~amounts of revenues and expenses during the years. Significant items subject~~ to ~~such~~raise ~~estimates~~funds ~~and~~through ~~assumptions~~debt ~~include~~or ~~the~~equity ~~recoverability~~in of the near ~~carrying~~future ~~amount~~ and ~~the~~increase ~~estimated~~its ~~useful~~profitability ~~lives~~to ofsustain ~~long-live~~its ~~assets; valuation allowances for receivables, and realizable values for inventories~~operations. ~~Accordingly, actual results could differ from those estimates.~~

Revenue recognition

The Company generates revenue primarily from providing accounting, taxation, company secretarial, consultancy services, consultancy service for slope inspection and rental income.

(ii) Consultancy service for slope inspection represents under fixed price contract is recognized when the related services are provided and when the collection is probable, the price is fixed or determinable and collectability is reasonably assured.

(iii) Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

(iv) The Company recognizes the management fee income when service is provided. Services include providing administration support service or accounting service to companies.

~~Intangible~~Purchased intangible assets and goodwill

The Company assesses the useful lives and possible impairment of existing recognized intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

- significant underperformance relative to historical or projected future operating results; - significant changes in the manner of use of the acquired assets or the strategy for our overall business; - identification of other impaired assets within a reporting unit; - disposition of a significant portion of an operating segment; - significant negative industry or economic trends;

- significant changes in the manner of use of the acquired assets or the strategy for our overall business;

- identification of other impaired assets within a reporting unit;

- disposition of a significant portion of an operating segment;

- significant negative industry or economic trends;

The intangible assets are amortized using the straight line method over a period of 10 years.

Goodwill

In accordance with U.S. GAAP, the Company tests goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. The Company reviews goodwill for impairment based on its identified reporting units, which are defined as reportable segments or groupings of businesses one level below the reportable segment level. In September 2011, the FASB issued guidance on testing goodwill for impairment. The guidance provides entities with an option to perform a qualitative assessment to determine whether further quantitative impairment testing is necessary.

In accordance with the guidance, the Company reviews goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances made it more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, goodwill is further tested for impairment by comparing the carrying value to the estimated fair value of its reporting units, determined using externally quoted prices (if available) or a discounted cash flow model and, when deemed necessary, a market approach. Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, such estimates as projected business results, growth rates, the Company’s weighted-average cost of capital, royalty and discount rates.

Income taxes

The Company accounts for income taxes under FASB ASC Topic 740 “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

The Company records uncertain tax positions when it is more likely than not that the tax positions will not be sustained upon examination by the respective tax authority.

The Company recognizes interest and penalty related to income tax matters as income tax expense. For the ~~nine~~six months ended ~~May~~February 3128, 2014 and 2013, there was no penalty or interest recognized as income tax expenses.

Economic and political risks

The major operations of the Company are conducted in Hong Kong, the PRC. Accordingly, the political, economic, and legal environments in Hong Kong, the PRC, as well as the general state of Hong Kong’s economy may influence the business, financial condition, and results of operations of the Company.

Among other risks, the Company'’s operations are subject to the risks of restrictions on: changing taxation policies; and political conditions and governmental regulations.

Recently issued accounting standards not yet adopted

~~There~~The Company ~~are~~has noreviewed ~~new~~all ~~significant~~recently issued, but not effective, accounting ~~standards~~pronouncements ~~applicable~~and todoes not believe the ~~Company~~future ~~that~~adoption ~~have~~of ~~been~~any such ~~issued~~pronouncements ~~but~~will ~~not~~cause ~~yet~~a ~~adopted~~material byimpact ~~the~~on ~~Company~~its asfinancial ofcondition ~~May~~or ~~31,~~the ~~2014~~result of its operation.

Trends and Uncertainties

Insofar that our revenues are mainly derived from providing professional services to our clients under fixed-fee billing arrangements, the number of clients we have at any given time and the fees billed are the Company’s key uncertainties. The recent growth in revenues was primarily due to the acquisition of customer lists and client bases in 2011 and, therefore, we cannot be certain that this growth represents a trend which will continue although we have recently made acquisitions and we plan to make additional acquisitions in the upcoming years and we are regularly exploring such opportunities which may benefit our business and increase our revenues. In the future, we expect that we will seek to purchase other customer lists and client bases as part of our overall growth strategy, although there can be no assurance that we will be able to do any of the foregoing on terms which will be acceptable to us.

Other key uncertainties include our high leverage and highly variable interest expense. To date, we have significantly relied upon debt financings to fund our operations. At ~~May~~February 3128, 2014 (unaudited) and August 31, 2013 (audited), we had outstanding bank loans (excluding bank overdrafts) in the principal amount of $2,~~586~~295,~~794~~133 and $2,286,785, respectively. We also had bank overdrafts of $~~943~~777,~~124~~837 as of ~~May 31~~February 28, 2014 compared with $744,077 as of August 31, 2013. Interest expense from bank loans and overdrafts (excluding capital lease interest) for the ~~nine~~six months ended ~~May~~February 3128, 2014 was $8652,~~387~~895 and for the ~~nine~~six months ended ~~May~~February 3128, 2013 was $9761,~~013~~879. Such loans are primarily term loans with maturity dates ranging from ~~May~~February 2014 to October 2037. Approximately $10.75 million of the bank loans are to be repaid over the next five years. While we have begun to achieve profitable operations during fiscal 2013, there can be no assurance that such profitability will continue or that revenues from our operations will be able to service these debt obligations. See “Risk Factors” elsewhere in this report for further discussion of these uncertainties and others.

In addition to the foregoing, as of ~~May~~February 3128, 2014, advances to a related party total ~~have been fully repaid~~$31,050. The ~~previous~~ advances to a the related party represent ~~represented~~ unsecured, non-interesting bearing loans without fixed repayment terms. Although most of such advances have ~~now~~ been repaid to the Company, such advances may have detrimentally affected our ability to do business insofar that such advances represented a major portion of the Company’s available cash. These advances were provided as a special accommodation to such related party whose personal properties were provided as collateral for bank loans obtained by the Company. Although ~~such~~there ~~advances~~is ~~are~~ no ~~longer~~binding ~~being~~obligation ~~made~~on the part of the shareholder to repay such ~~related party~~loans, such ~~advances~~shareholder ~~represented~~previously ~~another~~informally ~~key~~agreed ~~uncertainty~~to ~~insofar~~repay ~~that~~such amounts on or before November 1, ~~prior~~2013 but has since revised such date to ~~repayment~~May 31, ~~there~~2014. ~~was~~The foregoing represents another key uncertainty since no assurance can be made that such advances ~~would~~will be repaid on or before May 31, 2014 or at all. In addition, although such advances ~~did~~are ~~not~~no ~~generate~~longer ~~any~~being made to such shareholder, such advances have not generated income to the Company and may have detrimentally affected our ability to grow the business for the benefit of all of the shareholders.

Principal Components of Our Income Statement

Revenue

Our revenue is derived from providing professional services to our clients under fixed-fee billing arrangements. The most significant factors that affect our revenue are number of clients and our fees billed. In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a pre-determined set of professional services. Generally, our client agrees to pay a fixed-fee every month over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term.

Operating expenses

Our operating expenses consist of direct cost of revenue, general and administrative expenses.

Direct cost of revenue

Our direct cost of revenue primarily consists of commission paid, consultant fees, legal and professional fees, management fees, salaries, secretarial fees and sub-contractor fees.

General and administrative expenses

Our general and administrative expenses include advertising and exhibitions, computer fee, depreciation of property and equipment, motor vehicles, rent, rates and building management fee and other miscellaneous expenses related to our administrative activities.

Our operating expenses are positively correlated to our revenue, with the anticipated expansion of our Company, we anticipate the absolute dollars of the operating expenses will increase accordingly.

Other comprehensive income

Other comprehensive income reflects foreign currency translation adjustment according to our accounting policies.

~~Results~~For the ofThree ~~Operations~~Months Ended February 28, 2014 and February 28, 2013 and For the Six Months Ended February 28, 2014 and February 28, 2013 (unaudited)

The following table presents the consolidated statements of operations of the Company for the three months ended ~~May~~February 3128, 2014 as compared to the results of operations for the three months ended ~~May~~February 3128, 2013 and for the ~~nine~~six months ended ~~May~~February 3128, 2014 as compared to the results of operations for the ~~nine~~six months ended ~~May~~February 28, 2013.

	For the Three Months Ended May 31,						For the Nine Months Ended May 31,
	For the Three Months Ended February 28,						For the Six Months Ended February 28,
	2014			2013			2014			2013
	2014 (unaudited)			2013 (unaudited)			2014 (unaudited)			2013 (unaudited)
	(unaudited)			(unaudited) (A)			(unaudited)			(unaudited) (A)
				(A)						(A)
Revenue	$	1,~~479~~441,~~606~~268		$	~~889~~1,~~591~~296,035		$	42,~~080~~601,~~884~~278		$	21,~~795~~905,~~225~~634
Direct cost of revenue		(717,283	)		(546,615	)		(1,849,110	)		(1,513,654	)
Less: Operating expenses
Gross Profit		762,323			342,976			2,231,774			1,281,571
Direct cost of revenue		(586,401	)		(603,608	)		(1,131,827	)		(967,039	)
General and administrative expenses		(~~251~~388,~~312~~920	)		(~~178~~275,~~974~~946	)		(~~853~~601,~~046~~734	)		(~~665~~486,~~329~~355	)
Operating profit		~~511~~465,~~011~~947			~~(164~~416,~~002~~481	)		1867,~~378,728~~717			~~616~~452,~~242~~240
Other income		~~12,581~~327			~~2,579~~-			141,~~450~~869			~~2,579~~-
Other expenses		(3626,~~270~~913	)		(3633,~~247~~348	)		(9155,~~467~~197	)		(9962,~~022~~775	)
Net profit		~~487~~439,~~322~~361			~~130~~383,~~334~~133			1814,~~301,711~~389			~~519~~389,~~799~~465
Income tax expenses		(~~185~~71,~~234~~631	)		(3942,~~022~~988	)		(~~270~~84,~~214~~980	)		(8242,~~010~~988	)
Other comprehensive income/(loss)		2(4,~~663~~652	)		(9967	)		31,~~935~~270			(~~219~~115	)
Total comprehensive income		~~304~~363,~~751~~078			91340,~~213~~078			1730,~~035,432~~679			~~437~~346,~~570~~362
Comprehensive loss attributable to non-controlling interests		45,~~868~~160			5,~~676~~674			1510,~~803~~934			1711,~~021~~345
Comprehensive income attributable to ADGS Advisory, Inc.	$	~~309~~368,~~619~~238		$	96345,~~889~~752		$	1741,~~051,235~~613		$	~~454~~357,~~591~~707

____________

(A)	Represents the consolidated statement of comprehensive income of Almonds Kisses Limited and subsidiaries (the “Accounting Acquirer”)

106

Revenue

For the ~~Nine~~Six Months Ended ~~May~~February 3128, 2014 and ~~May~~February 3128, 2013

Our business for the ~~nine~~six months ended ~~May~~February 3128, 2014 expanded rapidly. We recorded revenue of $42.6 million for the ~~nine~~six months ended ~~May 31~~February 28, 2014, representing an increase of $10.37 million as compared to the results of $21.89 million for the same period ended ~~May~~February 3128, 2013. The increase was primarily due to the increase of revenue stream in ~~multi-disciplinary~~corporate ~~advisory services~~restructuring, ~~mainly~~insolvency ~~from~~services ~~the~~and ~~increase~~multi-disciplinary advisory ofservices ~~the surveyors consultancy fee income (consultancy fee for slope inspection)~~ and a steady growth in accounting and corporate services.

For the Three Months Ended ~~May~~February 3128, 2014 and ~~May~~February 3128, 2013

We recorded revenue of $1.54 million for the three months ended ~~May~~February 3128, 2014, representing an increase of $0.61 million as compared to $01.93 million for the same period ended ~~May~~February 3128, 2013. Due to the large increase of the surveyors consultancy fee income (consultancy fee for slope inspection) and a steady growth in accounting and corporate services, the total revenue for the three months ended May 31, 2014 has increased by 66% as compared to the same period of 2013.

Direct cost of revenue

For the Nine Months Ended May 31, 2014 and May 31, 2013

In line with the business growth during the nine months ended May 31, 2014, the direct cost of revenue was $1.8 million for the nine months ended May 31, 2014, representing an increase of $0.3 million as compared to the direct cost of revenue of $1.5 million for the same period ended May 31, 2013. Most of the direct cost increase was in line with the business growth and there was surveying cost incurred in some of the new projects for the nine month period ended May 31, 2014. Although there was increase in the actual amount, the gross profit margin improved from 45.8% in the nine month period ended May 31, 2013 as compared with 54.7% in the nine month period ended May 31, 2014.

For the Three Months Ended May 31, 2014 and May 31, 2013

In line with the business growth during the three months ended May 31, 2014, the direct cost of revenue was $0.7 million for the three months ended May 31, 2014, representing an increase of $0.2 million as compared to the direct cost of revenue of $0.5 million for the same period ended May 31, 2013. Most of the direct costs increased was in line with the business growth and there was surveying cost incurred in some of the new projects in the three month period ended May 31, 2014. Although there was increase in the actual amoun, the gross profit margin improved from 38.6% in the three month period ended May 31, 2013 as compared with 51.5% in the three month period ended May 31, 2014.

General and administrative expenses

	For the Three Months Ended May 31,						%			For the Nine Months Ended May 31,						%
	For the Three Months Ended February 28,						%			For the Six Months Ended February 28,						%
	2014			2013			change			2014			2013			change
	(unaudited)			(unaudited)						(unaudited)			(unaudited)
Revenue	$	1,441,268		$	1,296,035			+11	%	$	2,601,278		$	1,905,634			+37	%
Revenue	$	1,479,606		$	889,591			+66	%	$	4,080,884		$	2,795,225			+46	%
Less: Operating expenses
Direct cost of revenue		(~~717~~586,~~283~~401	)		(~~546~~603,~~615~~508	)		~~+31~~-3	%		(1,~~849~~131,~~110~~827	)		(1967,~~513,654~~039	)		+2217	%
Gross profit		762,323			342,976			+122	%		2,231,774			1,281,571			+74	%
General and administrative expenses		(388,920	)		(275,946	)		+41	%		(601,734	)		(486,355	)		+24	%
General and administrative expenses		(251,312	)		(178,974	)		+41	%		(853,046	)		(665,329	)		+28	%
Operating profit	$	465,947		$	416,481			+12	%	$	867,717		$	452,240			+92	%
Operating profit	$	511,011		$	164,002			+211	%	$	1,378,728		$	616,242			+124	%

The significant increase in general and administrative expenses is mainly caused by the increase of revenue stream in our services which led to more general and administrative expenses incurred.

Other expense

Other expense represents the interest expense for the bank loans, bank overdrafts, capital lease and others of $3626,~~270~~913 for the three months ended ~~May~~February 3128, 2014 and $9155,~~467~~197 for the ~~nine~~six months ended ~~May~~February 3128, 2014 and $3633,~~247~~348 for the three months ended ~~May~~February 3128, 2013 and $9962,~~022~~775 for the ~~nine~~six months ended ~~May~~February 3128, 2013.

Other comprehensive income/(loss)

Other comprehensive income/(loss) represents the foreign currency translation adjustment of $24,~~663~~652 ~~gain~~loss for the three months ended ~~May 31~~February 28, 2014 and $31,~~935~~270 ~~gain~~ for the ~~nine~~six months ended ~~May~~February 3128, 2014 and $9967 loss for the three months ended ~~May~~February 3128, 2013 and $~~219~~115 loss for the six months ended ~~May~~February 3128, 2013.

Liquidity and Capital Resources

As of ~~May~~February 3128, 2014, we had cash on hand of $~~279~~1,~~817~~112,662, which represented an increase of $~~115~~948,~~503~~348 from $164,314 as of August 31, 2013, total current assets of $31,~~019~~923,~~424~~167, and total current liabilities of $21,~~214~~667,~~752~~625. Working capital at ~~May~~February 3128, 2014 was $~~804~~255,~~672~~542 and the ratio of current assets to current liabilities was 1.15 to 1~~.36~~ as of ~~May~~February 3128, 2014.

As of ~~May~~February 3128, 2014 we had long term debt of $3,~~278~~419,~~016~~134, which represented an decrease of $~~175~~34,~~596~~478 from $3,453,612 as of August 31, 2013; total assets of $65,~~716~~738,~~222~~590 as of ~~May~~February 3128, 2014 representing an increase of $1972,~~950,345~~713 from $4,765,877 as of August 31, 2013. The ratio of long term debts to total assets was 10.6 to ~~2.05~~1 as of ~~May~~February 3128, 2014.

These conditions raise doubt about the Company’s ability to continue as a going concern. The ~~following~~Company’s iscontinuation as a ~~summary~~going concern ofis ~~cash~~dependent ~~provided~~on byits orability ~~used~~to inmeet ~~each~~its ofobligations, ~~the~~to ~~indicated~~obtain ~~type~~additional offinancing ~~activities~~as ~~during~~may be required and ultimately to attain profitability. The financial statements do not include any adjustment that might result from the ~~nine~~outcome ~~months~~of ~~ended~~this ~~May~~uncertainty. ~~31,~~Our ~~2014~~management plans ~~and~~to ~~May~~continue ~~31,~~its ~~2013~~efforts to raise funds through debt or equity, ~~respectively:~~improve its profitability in the near future to sustain its operations.

	For the Nine Months Ended May 31,
	2014			2013
	(unaudited)			(unaudited)
Cash provided by/(used in):
Operating activities	$	1,274,615		$	589,307
Investing activities		(2,170,469	)		(836,351	)
Financing activities		1,005,296			196,290
Effect of change of exchange rates		6,061			212
Cash, beginning of period		164,314			129,001
Cash, end of period	$	279,817		$	78,459

~~Net~~The following ~~cash~~is ~~provided~~a bysummary ~~operating~~of ~~activities was $1,274,615 for the nine months ended May 31, 2014, as compared to net~~ cash provided by ~~operating~~or ~~activities~~used ofin ~~$589,307~~each ~~for same period ended May 31, 2013. The increase was mainly due to a net profit~~ of ~~$1,047,299,~~the ~~plus~~indicated ~~other~~type ~~receivables~~ of ~~$48,731,~~activities ~~deposit~~during ~~received~~the ofsix ~~$74,423,~~months ~~accrued~~ended ~~liabilities~~February ~~of $66~~28,~~483~~ 2014 and ~~income~~February ~~tax payable of $295~~28,~~693,~~ ~~offset by accounts receivable of $(206~~2013,~~072),~~ ~~prepaid expenses of $(156,322) and deferred revenue of $(108,801) due to the recognition of consultancy services provided to a third party with a fixed fee and term of four years.~~respectively:

Net cash used in investing activities was $2,170,469 for the nine months ended May 31, 2014, as compared to net cash used in investing activities of $836,351 for the nine months ended May 31, 2013. Such increase was mainly due to other receivables from non-related third parties and advances made to a non-related third party of $1.4 million.

	For the Six Months Ended February 28,
Cash provided by/(used in):	2014 (unaudited)			2013 (unaudited)
Operating activities	$	983,040		$	453,694
Investing activities		(609,775	)		(133,366	)
Financing activities		757,490			(104,018	)
Effect of change of exchange rates		(407	)		5

Cash, beginning of period		164,314			129,001
Cash, end of period	$	1,112,662		$	345,316

12Net cash provided by operating activities was $983,040 for the six months ended February 28, 2014, as compared to net cash provided by operating activities of $453,694 for same period ended February 28, 2013. The increase was mainly due to a net profit of $740,343, plus other receivables of $93,945, prepaid expenses of $64,051 and income tax payable of $110,440, offset by accounts receivable of $(49,038), utility and other deposits of $(32,315), accrued liabilities of $(20,677), and accrued expenses for the Company and deferred revenue of $(72,534) due to the recognition of consultancy services provided to a third party with a fixed fee and term of four years.

Net cash ~~provided~~used byin ~~financing~~investing activities was $1(609,~~005,296~~775) for the ~~nine~~six months ended ~~May~~February 3128, 2014, as compared to net cash used in ~~financing~~ investing activities of $~~196~~(133,~~260~~366) for the ~~nine~~six months ended ~~May~~February 3128, 2013. The increase was ~~primarily~~mainly ~~caused~~due ~~by repayment~~ to the ~~Company~~acquisition of ~~advances made on behalf of~~ a ~~related party of $418~~subsidiary,~~621,~~ TH ~~receipt~~Strategic ofManagement ~~proceeds of $266~~Limited,~~870~~ ~~for~~which ~~share~~amounted ~~issuances,~~to ~~and increase in bank loans and bank overdraft of~~ $1475,~~343,246~~605 ~~and~~paid ~~$198,958,~~during respectively, offset by repayment of bank loans of $(1,043,427), repayment of loan from a related party of $(105,690), repayment of capital lease of $(73,282) and net increase in restricted cash of $(129,531). As a result of the ~~repayment~~six ofmonths ~~$418,621~~ended toFebruary ~~the Company for advances made to a related party~~28, ~~such advances have now been fully repaid~~2014. ~~Such advances to a related party represented unsecured and non-interesting bearing loans.~~

~~The~~Net cash ~~Company~~provided ~~had~~by ~~bank~~financing ~~loans~~activities ~~with~~was ~~outstanding~~$757,490 ~~principal~~for ofthe ~~$2.6~~six ~~million~~months ended February 28, 2014, as compared to net cash used in financing activities of ~~May~~$104,018 31for the six months ended February 28, ~~2014~~2013. AThe ~~total~~increase ~~amount~~was primarily caused by repayment to the Company of ~~bank~~advances made ~~overdraft~~and expenses paid on behalf of a related party of $~~943~~387,~~124~~159, ~~has~~receipt ~~been~~of ~~utilized~~$154,988 asfor offuture ~~May~~share 31issuances, ~~2014.~~and ~~Maximum~~increase in bank loans and bank overdraft ~~granted~~of $86,132 and $34,582, respectively. The advances to ~~the~~shareholder ~~Company~~represented ~~was~~unsecured, ~~approximately~~non-interesting ~~$1.03~~bearing loans ~~million~~without fixed repayment terms. ~~Summary~~Although there is no binding obligation on the part of ~~total~~the ~~bank~~shareholder to repay such loans, ~~(excluding~~such shareholder ~~bank~~previously ~~overdraft)~~informally isagreed asto ~~follows:~~repay such amounts on or before November 1, 2013 but has since revised such date to May 31, 2014.

Nature of loans	Terms of loans	Outstanding loan amount		Current annualized interest rate	Collateral
Term loan	Ranging from 1 year to 25 years	$	2,586,794	Ranging from annual rate from 0.38% to 6.98%	Property and personal guarantee from related party and third party
		$	2,586,794

The Company had bank loans with outstanding principal of $2.3 million as of February 28, 2014. Summary of total bank loans is as follows:

The valuations for the above collaterals on August 15, 2013 were approximately $3.7 million while the total outstanding loan amount was approximately $2.4 million as of August 31, 2013.

Nature of loans	Terms of loans	Outstanding loan amount		Current annualized interest rate	Collateral

Term loan	Ranging from 1 year to 25 years	$	2,295,133	Ranging from annual rate from 0.38% to 6.98%	Property and personal guarantee from related party and third party

		$	2,295,133

The valuations ~~Company~~for ~~had~~the ~~assets~~above ~~held~~collaterals ~~under~~on ~~capital~~August ~~leases~~15, ~~which~~2013 ~~represent~~were ~~leases~~approximately ~~of motor vehicle~~$3.7m ~~The~~while ~~cost~~the oftotal ~~motor~~outstanding ~~vehicle~~loan ~~under~~amount ~~capital lease~~ was approximately $~~50,227 (net of accumulated depreciation) at May 31, 2014~~2. ~~The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of May 31, 2014, are as follows:~~3m.

	Amount
Year ending August 31,
2014 (three months)	$	2,918
2015		11,673
2016		11,673
2017		11,673
2018		2,918
Thereafter		-
Total minimum lease payment	$	40,855
Less: Imputed interest		(2,054	)
Present value of net minimum lease payments	$	38,801
Less: Current maturities of capital leases obligations		(2,594	)
Long-term capital leases obligations	$	36,207

13The Company had assets held under capital leases, which represent leases of motor vehicle. The cost of motor vehicle under capital lease was $105,646 at February 28, 2014. The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of February 28, 2014 are as follows:

	Amount
Year ending August 31,
2014 (Six months)	$	13,658
2015		27,316
2016		27,316
2017		27,316
2018		10,745
Thereafter		-
Total minimum lease payment	$	106,351
Less: Imputed interest		(6,136	)
Present value of net minimum lease payments	$	100,215
Less: Current maturities of capital leases obligations		(12,004	)
Long-term capital leases obligations	$	88,211

Material capital expenditure commitments

We anticipate that we will require a high level of capital expenditure in the foreseeable future to fund our future growth. We intend to fund our capital expenditures and future acquisitions out of internal sources of liquidity and/or through access to additional financing from external sources. Currently, the Company has not entered into any agreements for any potential acquisitions. As a result, there are no material capital expenditure commitments as of ~~May~~February 3128, 2014.

Contractual Obligations

The following table sets forth information regarding the Company'’s contractual payment obligations excluding the bank overdrafts of $0.9 8 million as of ~~May~~February 3128, 2014.

	~~Payment due by period~~		Payment due by period
Contractual obligations	Total		< 1 year		1 - 3 years		3 - 5 years		> 5 years
Borrowing:
- Capital lease	$	40106,~~855~~351	$	213,~~918~~658	$	2354,~~346~~632	$	1438,~~591~~0561	$	-
- Bank loan		2,586,794		78,002		471,832		295,789		1,741,171
Bank loan		2,295,133		76,531		268,962		159,963		1,789,677
- Loan from a related party		~~645~~749,~~055~~923		-		-		~~645~~749,~~055~~923		-
Operating lease obligation:
- Office rental		~~126~~160,~~471~~347		3266,~~263~~191		94,~~208~~156		-		-
Total	$	3,399,175	$	113,183	$	589,386	$	955,435	$	1,741,171
	$	3,311,750	$	156,380	$	417,750	$	947,943	$	1,789,677

Available Future Financing Arrangements

The Company intends to have new capital injected to increase its working capital needs and business growth. There is also plan to sell its property holding companies and repays its loan received from its related party.

Off-Balance Sheet Arrangement

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

We have not entered into any financial guarantees or commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us.

We may be exposed to interest rate risk in relation to the bank loans we maintain. The interest rate risk is managed by the Directors of the Company on an ongoing basis with the primary objective of limiting the extent to which interest expense could be affected by adverse movement in interest rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s post-tax profit for the ~~nine~~six months ended February ~~May 31~~28, 2014 would increase/decrease by $53,~~945~~843 as compared with the combined post-tax profit for the ~~nine~~six months ended ~~May~~February 3128, 2013 while the Company’s post-tax profit for the three months ended ~~May~~February 3128, 2014 would increase/decrease by $~~2,102~~230 as compared with the combined post-tax profit for the three months ended ~~May~~February 3128, 2013.

14Item 3. Quantitative and Qualitative Disclosures About Market Risk .

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. 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 have concluded that, as of ~~May~~February 3128, 2014, these disclosure controls and procedures were effective to ensure 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.

There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

1510

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not currently a party to any pending material legal proceeding nor is it aware of any proceeding contemplated by any individual, company, entity or governmental authority involving the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~During March 2014, the Company sold 1,400,000 shares of common stock to 12 investors for the purchase price of $0~~None.30 per share or $420,000 in the aggregate. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Regulation S thereunder. All investors represented and warranted that they were non-U.S. persons within the meaning of Regulation S.

During April 2014, the Company sold 1,791,305 shares of common stock to 10 investors for the purchase price of $0.30 per share or $537,391.50 in the aggregate. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Regulation S thereunder. All investors represented and warranted that they were non-U.S. persons within the meaning of Regulation S.

Of such proceeds, $266,870 has been paid by such investors during the third quarter of fiscal 2014, leaving a subscription receivable due of $690,521.50.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

1611

Item 6. Exhibits.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101*		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended ~~May~~February 3128, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statement of Changes in Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements

_______________

In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

1712

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ADGS ADVISORY, INC. (Registrant)
	ADGS ADVISORY, INC.
Dated: July 21, 2014	By:	/s/ Li Lai Ying
	(Registrant)
		Li Lai Ying,
Dated: May 3, 2021	By:	/s/ Xuye Wu
		Chief Executive Officer (Principal Executive Officer)
		Xuye Wu
		Principal Executive and Accounting Officer

Dated: July 21, 2014	By:	/s/ Tong Wing Shan
		Tong Wing Shan
		Chief Financial Officer (Principal Financial Officer)

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