gmes_ex231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Kou You Kai, Ltd.

(Exact name of Registrant as specified in its charter)

Wyoming		6719		83-0976154
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code)		(I.R.S. Employer Identification No.)

222 South Main Street

Suite 500

Salt Lake City, Utah 84111

(385)282-5041

(Address and Telephone Number of Registrant’s Principal Executive Offices and Principal Place of Business)

Mountain Business Center, LLC

690 South Highway 89, Suite 201

Box 10400

Jackson, WY 83002

(480) 275-7572

(Name, Address, and Telephone Number for Agent of Service)

Copies to:

BRUNSON CHANDLER & JONES, PLLC

Walker Center

175 S. Main Street, 14th Floor
Salt Lake City, UT 84111

Telephone: (801) 303-5730

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: x

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth 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.

Large accelerated filer	o	Accelerated Filer	o
Non-accelerated filer	o	Smaller reporting company	x
		Emerging growth company	x

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 to Section 7(a)(2)(B) of the Securities Act. ¨

Calculation of Registration Fee

Title of Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Aggregate Price Per Share			Proposed Maximum Aggregate Offering Price		Amount of Registration Fee

Common Stock, par value $0.001 ⁽¹⁾		2,000,000	$	0.40	⁽²⁾	$	800,000	$	463.60
Common Stock, par value $0.001 ⁽³⁾		500,000	$	0.40	⁽²⁾	$	200,000	$	63.74

Total		2,500,000				$	1,000,000	$	527.34

(1)____________________

⁽¹⁾	Newly issued shares of common stock to be registered as part of a Primary Offering (as hereinafter defined).
⁽²⁾	There is no current market for the securities. Although the registrant’s common stock has a par value of $0.001, the registrant believes that the calculations offered pursuant to Rule 457(f)(2) are not applicable, and, as such, the registrant has valued the common stock in good faith and for purposes of calculation of the registration fee. In the event of a stock split, stock dividend or similar transaction involving the registrant’s common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
⁽³⁾	Shares of common stock currently issued and outstanding to be sold by certain Selling Security Holders (as hereinafter defined) as part of a Secondary Offering (as hereinafter defined).

The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE (KOU YOU KAI, LTD.), AS WELL AS THE SELLING SECURITY HOLDERS (DEFINED BELOW), MAY NOT

SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.

SUBJECT TO COMPLETION DATED October __, 2018

PRELIMINARY PROSPECTUS

Kou You Kai, Ltd.

2,000,000 Shares of Common Stock being sold at $0.40 per share pursuant to the Primary Offering

500,000 Shares of Common Stock being offered at $0.40 per share by the Selling Security Holders

This prospectus relates to the sale of 2,000,000 shares of common stock, par value $0.001 (“Common Stock”), of Kou You Kai, Ltd. (referred to herein as the “Company” or “Kou You Kai”), at a price of $0.40 per share (the “Primary Offering”). The Primary Offering terminates 12 months after commencement of this offering on October __, 2019. This is the initial offering of common stock of the Company. The Company is offering the shares on a self-underwritten, “best efforts” basis directly through its CEO and director, Tsunenobu Arai and its CFO, Fred McLauchlin. The total proceeds from the Primary Offering will not be escrowed or segregated but will be available to the Company immediately. Neither Mr. Arai nor Mr. McLauchlin has any experience conducting “best efforts” offerings, and there is no minimum amount of Common Stock required to be purchased, and, therefore, the total Primary Offering proceeds received by the Company might not be enough to fund the Company’s planned operations, or a market for the Common Stock may not develop. The Company needs $800,000 in gross proceeds to implement its business and marketing plan and support expanded operations over the next six months. No commission or other compensation related to the sale of Common Stock in the Primary Offering will be paid. For more information, see the section titled “Plan of Distribution” and “Use of Proceeds” herein.

In addition, there are 500,000 shares of Common Stock being registered by 50 Selling Security Holders (the “Secondary Offering”). The Selling Security Holders will be offering their shares of common stock at a price of $0.40 per share until a market develops and our shares are quoted on the OTC QB or another quotation board (such as the OTCQB) and thereafter at prevailing market prices or privately negotiated prices. The Company will not receive any of the proceeds from the sale of shares being sold by the Selling Security Holders. The existence of the Secondary Offering makes it less likely that we will sell all of the shares offered in the Primary Offering. No underwriting arrangements have been entered into by any of the Selling Security Holders. The Selling Security Holders and any intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the securities offered and any profits realized or commissions received may be deemed underwriting compensation.

There has been no market for our securities, and a public market may not develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement of which this prospectus forms a part, we hope to have a market maker file an application with the Financial Industry Regulatory Authority (“FINRA”), for our common stock to be eligible for trading on the OTC Bulletin Board or the OTCQB or OTCQX tiers of OTC Markets Group’s over-the-counter market, the OTC Link, LLC. We do not yet have a market maker who has agreed to file that application.

We are not a “blank check company,” and we have no plans or intentions to engage in a business combination following this offering. We are an “emerging growth company” under the federal securities laws and will therefore be subject to reduced public company reporting requirements.

Our business is subject to many risks, and investing in our securities involves a high degree of risk. See the section titled “Risk Factors” herein, beginning on page 7.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by us with the Securities and Exchange Commission. The Selling Security Holders and the Company may not sell these securities until the registration statement becomes effective. This prospectus is not an offer to sell these securities, and the Selling Security Holders and the Company are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.

The date of this prospectus is October __, 2018.

Table of Contents

PROSPECTUS SUMMARY5

RISK FACTORS7

Risks Relating to Our Common Stock14

Risks Associated with this Offering16

THE OFFERING18

USE OF PROCEEDS18

DETERMINATION OF OFFERING PRICE19

DIVIDEND POLICY20

MARKET FOR OUR COMMON STOCK20

FORWARD-LOOKING STATEMENTS21

DILUTION21

SELLING SECURITY HOLDERS21

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FISCAL CONDITION AND RESULTS OF OPERATION24

DESCRIPTION OF BUSINESS29

DESCRIPTION OF PROPERTY32

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS32

EXECUTIVE COMPENSATION34

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT35

PLAN OF DISTRIBUTION36

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS39

DESCRIPTION OF SECURITIES39

SHARES ELIGIBLE FOR FUTURE SALE40

LEGAL MATTERS41

EXPERTS43

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE43

WHERE YOU CAN FIND MORE INFORMATION43

INDEX TO AUDITED INTERIM FINANCIAL STATEMENTS45

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION56

ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES56

ITEM 16. EXHIBITS57

ITEM 17. UNDERTAKINGS57

SIGNATURES59

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The Selling Security Holders are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

PROSPECTUS SUMMARY

Except as otherwise indicated, as used in this prospectus, references to the “Company,” “Kou You Kai,” “we,” “us,” or “our” refer to Kou You Kai, Ltd.

The following summary highlights selected information contained in this prospectus, and it may not contain all of the information that is important for you to consider. Before making an investment decision in our shares, you should read the entire prospectus carefully, including the section titled “Risk Factors” and our financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.

Corporate Background

Kou You Kai, Ltd. was incorporated under the laws of the State of Wyoming on May 16, 2018 for the purpose of acquiring businesses. On June 29, 2018, the Company entered into a Stock Purchase Agreement through which it acquired Liquid Dynamics, Inc. (“Liquid Dynamics”), a Wyoming company, as a wholly-owned subsidiary. Since the acquisition, the Company has been operating as a holding company for Liquid Dynamics and its operations are primarily those of its operating subsidiary, although the Company may seek other acquisitions in the future.

Liquid Dynamics is a new services company for the oil and gas industry with a primary focus to manufacture, purchase, manage, service and sell water filtration and purification services to process produced and flowback water. The design and distribution company is developing an “LD Unit,” an environmental solution system optimized with versatile enhancements that enable the purification and separation processes to be fabricated into mobile trailers or containers.

Typically, produced water used by oil and gas operations in exploration may contain a wide range of contaminants, in varying amounts. Most of the contaminants occur naturally, but some are added through the process of drilling, hydraulic fracturing, and pumping oil and gas. The range of contaminants found in produced water can include, but is not limited to:

·salts, which include chlorides, bromides, sulfides of calcium, magnesium, and sodium;

·metals, which include barium, manganese, iron, and strontium, among others;

·oil, grease, and dissolved organics, which include benzene and toluene,

·naturally occurring radioactive materials; and

production chemicals, which include friction reducers to help with water flow, biocides to prevent growth of microorganisms, and additives to prevent corrosion.

Federal and state regulations require that oil and gas operators dispose of the produced water, and operators often transport the water to other sites and treatment facilities, at great cost and effort. The LD Unit will offer a significant savings to oil and gas well operators and owner companies, as they can avoid the expensive and labor-intensive process of hauling water to and from the site locations and can instead process the water onsite with the LD Unit. Because it is located in a mobile trailer, the equipment can easily be relocated and is applicable across a wide range of industries, although use in the oil and gas industry will be the first application. The LD Unit will utilize gravity separation, filtration, advanced oxidation processes, and electrocoagulation – all technologies that have been accepted and operating for years in the oilfield—with updated technology and service offerings that aim to be more efficient and designed to significantly reduce the oil and gas operators’ operating expense per barrel.

The LD Unit will minimize chemical usage, lower the well’s operating cost per barrel, meet EPA and State requirements, provide mobile treatment or strategic placement of systems, and allow economic re-use and re-cycling of flowback and production waters. The ultimate goal of the Company is to address environmental concerns, provide a beneficial re-use for the “waste” water, and reduce the high costs of disposal and transportation.

The LD Unit could also be effective in water treatment, mining, industrial, and agriculture situations as well as global applications, although the Company’s primary focus is on the oil and gas industry at present.

We are a development stage company with a limited operating history, operations, and revenues. As of June 30, 2018, we had cash and cash equivalents of $166,455 and we will need to raise capital to implement our planned operations. If we are unable to do so, an entire investment in our stock could be lost.

Where You Can Find Us

Our offices are currently located at 222 South Main Street, Suite 500, Salt Lake City, Utah 84111. Our telephone number is (385)282-5041.

RISK FACTORS

You should carefully consider the risks described below before investing in our securities. Additional risks not presently known to us or that our management currently deems immaterial also may impair our business operations. If any of the risks described below were to occur, our business, financial condition, operating results, and cash flows could be materially adversely affected. In such an event, the trading price of our common stock could decline, and you could lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and related notes. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.

Risks Related to Our Business and Industry

We have a limited operating history, and our ability to generate revenue sufficient to support our operations is uncertain.

We were formed in May of 2018 and have only recently begun operations, and our subsidiary, Liquid Dynamics, Inc., has a limited operational history upon which you can evaluate our potential for future success. Additionally, we are subject to additional risks associated with early-stage businesses, many of which will be beyond our control. These risks include uncertainty about our ability to produce our revenues, our ability to limit our operational expenses, other operational difficulties, lack of sufficient capital, competition from more advanced companies selling similar services, and unanticipated problems, delays, and expenses relating to the implementation of our business plan. We cannot ensure that we will operate profitably in the future, or that we will have adequate working capital to meet our obligations as they become due.

We cannot guarantee successful development of our LD Unit or future sales of our products or services.

The Company’s business is focused on developing an LD Unit and providing mobile solutions for processing water for oil and gas operators on sites, and technologies underpinning the market for our products and services are changing rapidly. We cannot guarantee that the production of our LD Unit will be successful or that our services will be accepted or attractive to oil and gas operators once the LD Unit has been completed. Our products and services may become less attractive compared to competing products and services, our business would be harmed.

We are subject to competing in highly competitive industries.

Providing services for the oil and gas industry is very competitive, and there are numerous manufacturers and providers or water treatment solutions worldwide. There are a substantial number of traditional operations that will compete directly and indirectly with the Company, many of which have significantly greater financial resources, higher revenues, and greater economies of scale than those of the Company. New alternative competitive technology may be developed in the future which will compete with the Company’s approach, and such competition from alternative substances may already exist. The Company will attempt to distinguish itself from its competitors, but there can be no assurance that the Company will be able to penetrate the markets it is targeting for expansion. There is no assurance that the Company will compete successfully with existing or future competitors in these industries in either its new target markets.

We are subject to government regulation which will increase operating costs.

The Company’s business is subject to various national and local laws affecting businesses in general, the oil and gas industry, including those governing the protection of the environment. These environmental regulations include those related to the use, storage, handling, discharge and disposal of chemicals found in the produced water that we will be processing through our mobile LD Units. Because the public is focusing more attention on the environmental impact of the operations in the oil and gas industry, these requirements may become more stringent in the future and

could adversely impact our business. Failure to comply with environmental laws could subject the Company to substantial liability or force the Company to change its operations significantly. In addition, under some of these laws and regulations, the Company could be held financially responsible for remedial measures if the Company’s services fail or are not completed properly. Compliance with applicable regulatory requirements is subject to continual review and is monitored through periodic inspections and other review and reporting mechanisms. Kou You Kai’s business is also subject to government laws and regulations governing working conditions, employee relations, wrongful termination, wages, taxes and other matters applicable to businesses in general. Failure of Kou You Kai to comply with applicable government rules or regulations could have a material adverse effect on its financial condition and business operations.

We may incur significant debt to finance our operations.

There is no assurance that the Company will not incur debt in the future, that it will have sufficient funds to repay its indebtedness, or that the Company will not default on its debt, jeopardizing its business viability. Furthermore, the Company may not be able to borrow or raise additional capital in the future to meet the Company’s needs or to otherwise provide the capital necessary to conduct its business.

The Company is dependent on the performance of certain personnel.

The Company’s success depends substantially on the performance of its CFO and key employee, Fred McLauchlin, as well as its subsidiary’s sales and operational staff. Given the Company’s relatively early stage of development, the Company is dependent on its ability to retain and motivate high quality personnel. Although the Company believes it will be able to engage qualified personnel for such purposes, an inability to do so could materially adversely affect the Company’s ability to market, sell, and enhance its products. While Mr. McLauchlin and other employees are currently devoting their full-time working efforts to the Company, other employees of the Company may only be available to the Company on a part-time basis. The loss of one or more of its key employees or the Company’s inability to hire and retain other qualified employees, including but not limited to research and development staff, sales staff, field staff, and corporate office support staff, could have a material adverse effect on the Company’s business.

The Company has not established consistent methods for determining the consideration paid to management.

The consideration being paid by the Company to its officers and its subsidiary’s officers has not been determined based on arm’s length negotiation. While management believes that the current compensation arrangement is fair for the work being performed, there is no assurance that the consideration to management reflects the true market value of the services. Additionally, in the future, the Company may grant net profits interests to its executive officers in addition to stock options, which may further dilute shareholders’ ownership of the Company.

There is no guarantee that the Company will pay dividends to its shareholders.

The Company does not anticipate declaring and paying dividends to its shareholders in the near future. It is the Company’s current intention to apply net earnings, if any, in the foreseeable future to increasing its capital base and marketing. Prospective investors seeking or needing dividend income or liquidity should therefore not purchase the Shares. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of the Company’s Common Stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the Company’s Board of Directors.

A small group of Company employees and their related parties hold a majority of the control of the Company.

As of June 30, 2018, the Company’s President, Mr. Arai, owns approximately 58% of the Company’s outstanding Common Stock. By virtue of such stock ownership, Mr. Arai is able to control the election of the members of the Company’s Board of Directors and to generally exercise control over the affairs of the Company. Such concentration of ownership could also have the effect of delaying, deterring or preventing a change in control of the Company that might otherwise be beneficial to stockholders. There can be no assurance that conflicts of interest will not arise with respect to such management or that such conflicts will be resolved in a manner favorable to the Company.

Management cannot guarantee that its relationship with the Company does not create conflicts of interest.

The relationship of management and its affiliates to the Company could create conflicts of interest. While management has a fiduciary duty to the Company, it also determines its compensation from the Company. Management’s compensation from the Company has not been determined pursuant to arm’s-length negotiation.

The Company may sustain losses that cannot be recovered through insurance or other preventative measures.

There is no assurance that the Company will not incur uninsured liabilities and losses as a result of the conduct of its business. The Company plans to maintain comprehensive liability and property insurance at customary levels. The Company will also evaluate the availability and cost of business interruption insurance. However, should uninsured losses occur, the Shareholders could lose their invested capital.

We may be subject to liabilities that are not readily identifiable at this time.

The Company may have liabilities to affiliated or unaffiliated lenders. These liabilities would represent fixed costs we would be required to be pay, regardless of the level of business or profitability experienced by the Company. There is no assurance that the Company will be able to pay all of its liabilities. Furthermore, the Company is always subject to the risk of litigation from customers, suppliers, employees, and others because of the nature of its business. Litigation can cause the Company to incur substantial expenses and, if cases are lost, judgments, and awards can add to the Company’s costs.

In the course of business, the Company may incur expenses beyond what was anticipated.

The Company may incur substantial cost overruns in the operations of its operating subsidiary (and any other subsidiaries hereafter acquired), including the creation of the Liquid Dynamics prototype and the operation of the water treatment device. Management is not obligated to contribute capital to the Company. Unanticipated costs may force the Company to obtain additional capital or financing from other sources, or may cause the Company to lose its entire investment in the Company if it is unable to obtain the additional funds necessary to implement its business plan. There is no assurance that the Company will be able to obtain sufficient capital to implement its business plan successfully. If a greater investment is required in the business because of cost overruns, the probability of earning a profit or a return of shareholder investment in the Company is diminished.

The Company may be subject to liens if it is unable to pay its debts.

If the Company fails to pay for materials and services for its business on a timely basis, the Company’s assets could be subject to materialman’s and mechanic’s liens. The Company may also be subject to lender liens in the event that it defaults on loans from its lenders.

The Company will rely on management to execute the business plan and manage the Company’s affairs.

Under applicable state corporate law and the By-Laws of the Company, the officers and directors of the Company have the power and authority to manage all aspects of the Company’s business. Shareholders must be willing to entrust all aspects of the Company’s business to its directors and executive officers.

There is no assurance the Company will always have adequate capital to conduct its business.

The Company will have limited capital available to it, to the extent that the Company raises capital from the Primary Offering. If the Company’s entire original capital is fully expended and additional costs cannot be funded from borrowings or capital from other sources, then the Company’s financial condition, results of operations and business performance would be materially adversely affected.

The Company is required to indemnify its directors and officers.

The Company’s By-Laws provide that the Company will indemnify its officers and directors to the maximum extent permitted by Wyoming law. If the Company were called upon to indemnify an officer or director, then the portion of its assets expended for such purpose would reduce the amount otherwise available for the Company’s business.

Oil and Gas Price Fluctuations in the Market May Adversely Affect the Results of Our Operations.

Our profitability and cash flows are highly dependent upon the market prices of oil and natural gas because our customers will be primarily oil and gas companies

Historically, the oil and natural gas markets have proven cyclical and volatile as a result of factors that are beyond our control. Any additional declines in oil and natural gas prices or any other unfavorable market conditions could have a material adverse effect on our financial condition.

We are Subject to Changing Laws and Regulations and Other Governmental Actions that Can Significantly and Adversely Affect Our Business.

Federal, state, local, territorial and foreign laws and regulations relating to tax increases and retroactive tax claims, disallowance of tax credits and deductions, expropriation or nationalization of property, mandatory government participation, cancellation or amendment of contract rights, and changes in import and export regulations, limitations on access to exploration and development opportunities, as well as other political developments may affect our operations.

The Price Of Oil And Natural Gas Has Historically Been Volatile. If It Were To Decrease Substantially, Our Projections, Budgets And Revenues Would Be Adversely Affected, Potentially Forcing Us To Make Changes In Our Operations.

Our future financial condition and results of operations will depend upon the market for oil and natural gas production as oil and gas companies will use our services more when they are busier. Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world geopolitical conditions. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control, and our customers’ control. These factors include:

·the level of consumer demand for oil and natural gas;

·the domestic and foreign supply of oil and natural gas;

·the ability of the members of the Organization of Petroleum Exporting Countries (“OPEC”) to agree to and maintain oil price and production controls;

·the price of foreign oil and natural gas;

·domestic governmental regulations and taxes;

·the price and availability of alternative fuel sources;

·weather conditions;

·market uncertainty due to political conditions in oil and natural gas producing regions, including the Middle East; and

·worldwide economic conditions.

These factors as well as the volatility of the energy markets generally make it extremely difficult to predict future demand for our services with any certainty.

We May Fail to Maintain or Increase Our Competitiveness and Adapt Our Business Model to Rapid Changes in Environment-Related Businesses.

Our business is highly competitive and requires substantial human and capital resources and cutting-edge technical expertise in numerous areas. Large international companies, local niche companies and companies whose overheads or profitability requirements are lower than ours may serve each of the markets in which we compete. Accordingly, we must constantly strive to reduce our cost structure to remain competitive and convince potential customers of the quality and value of our services. Otherwise, we may suffer the loss of existing contracts or a substantial fall in profitability on contract renewals or no longer have access to new contracts. We may also need to develop new technologies and services or decrease our overhead in order to maintain or increase our competitive position, which could result in significant costs.

We Incur Significant Costs of Compliance With Various Environmental, Health and Safety Laws and Regulations.

We have incurred and will continue to incur significant costs and other expenditures to comply with our environmental, health and safety obligations regarding wastewater for beneficial reuse. We are continuously required to incur expenditures to ensure that the machines that we operate comply with applicable legal, regulatory and administrative requirements, including specific precautionary and preventative measures, or to advise our customers so that they undertake the necessary compliance work themselves. Failure by the customer to meet its compliance obligations could be prejudicial to us as operator and adversely affect our reputation and growth capacity.

Furthermore, regulatory bodies have the power to launch proceedings which could lead to the suspension or cancellation of permits or authorizations held by us or injunctions to suspend or cease certain activities. These measures may be accompanied by fines and civil or criminal sanctions which could have a significant negative impact on our reputation, activities, financial position, results or outlook. If we are unable to recover this expenditure through higher prices, this could adversely affect our operations and profitability.

Our operations may become subject to stricter general or specific laws and regulations, and correspondingly incur greater compliance expenditures in the future. Moreover, the scope of application of environmental, health, safety and other laws and regulations is increasing constantly. As environmental laws and regulations are constantly being amended and tightened, these amendments can require significant compliance expenditures or investments that we may not be able to foresee.

Finally, actions by employees, agents and representatives, who do not comply with the specific ethics codes applicable to various activities, could expose us to civil or criminal penalties and adversely affect our reputation.

Our Operations and Activities May Cause Damage or Lead Us to Incur Liability That We Might be Required to Compensate or Repair.

Increasingly broad laws and regulations expose us to greater risks of liability, in particular environmental liability, including in connection with assets that we no longer own and activities that have been discontinued. In addition, we may be required to pay fines, repair damage or undertake improvement work, even when we have conducted our activities with all due care and in full compliance with operating permits. In addition, due to lack of scientific data or studies, we may not be aware of risks to human health or the environment caused by our operations that may be identified in the future.

We could be the subject of legal action to compensate damage caused to individuals, property or the environment (including the ecosystem). While our policy is to limit our liability contractually, implement prevention and protection measures and take out insurance policies covering our main accident and operational risks, these precautions may be insufficient, leaving us exposed to significant liability.

Our Business Operations May Subject Our Employees to Health and Safety Risks.

Our business operations will rely on our human resources. The intensity, nature and location of the work required, including on public roads and on customer sites, makes maintaining our employees’ safety particularly important. Despite our specific attention to the health and safety of our employees, which may require us to incur significant costs, we may nonetheless face increased work accidents and illness (both in frequency and severity).

RISKS RELATING TO THE OIL AND NATURAL GAS INDUSTRY

We Lack an Extensive Operating History and Have Losses Which We Expect To Continue Into The Future. As A Result, We May Have to Suspend or Cease Activities.

We were incorporated in May 2018 and we have only recently started our business activities and only realized limited revenues. We have a very limited operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:

* our ability to build a successful prototype
* our ability to sell our services to customers
* our ability to generate revenues, and
* our ability to reduce operating costs .

Based upon current plans, we expect to incur operating losses in future periods until revenues are sufficient to fund operations. Failure to generate enough revenues for us to become profitable may cause us to suspend or cease activities.

We may be subject to product liability claims and other claims of our customers and partners.

The performance of services with our LD Unit may involve a certain level of risk of product liability claims and the associated adverse publicity. We may be subject to claims from our customers or third parties who are injured by the LD Unit or our services.

In addition, our customers and partners may bring suits against us alleging damages for the failure of our products or services to meet stated claims, specifications or other requirements. Any such suits, even if not successful, could be costly, disrupt the attention of our management and damage our negotiations with other partners and/or customers. Any attempt by us to limit our product liability in our contracts may not be enforceable or may be subject to exceptions. We do not currently have current product liability insurance, and the product liability insurance we plan to acquire may be inadequate to cover all potential liability claims. Insurance coverage is expensive and may be difficult to obtain. Also, insurance coverage may not be available in the future on acceptable terms and may not be sufficient to cover potential claims. We cannot be sure that our suppliers who produce our products will have adequate insurance coverage themselves to cover against potential claims. If we experience a large insured loss, it may exceed any insurance coverage limits we have at that time, or our insurance carrier may decline to cover us or may raise our insurance rates to unacceptable levels, any of which could impair our financial position and potentially cause us to go out of business.

We may encounter difficulties managing any growth, and if we are unable to do so, our business, financial condition and results of operations may be adversely affected.

If we are able to successfully launch our LD Mobile Unit, as our operations grow, the simultaneous management of development, production and commercialization across our target markets will become increasingly complex and may result in less than optimal allocation of management and other administrative resources, increase our operating expenses and harm our operating results.

Our ability to effectively manage our operations, growth and various projects across our target markets will require us to make additional investments in our infrastructure to continue to improve our operational, financial and management controls and our reporting systems and procedures and to attract and retain sufficient numbers of talented employees, which we may be unable to do effectively. We may be unable to successfully manage our expenses in the future, which may negatively impact our gross margins or operating margins in any particular quarter.

In addition, we may not be able to improve our management information and control systems, including our internal control over financial reporting, to a level necessary to manage our growth and we may discover deficiencies in existing systems and controls that we may not be able to remediate in an efficient or timely manner.

Our success also depends in part on our management’s expertise managing a public company, and our management has limited expertise in this area, and it has no experience conducting “best efforts” offerings. If our management is not able to manage the company properly as a public company or conduct our “best efforts” offering, our business would be harmed.

Each of our officers and directors have limited experience in management positions with public companies in the United States. They also lack experience conducting “best efforts” offerings. If our management is not able to successfully manage the Company as a public company, including complying with various regulatory, disclosure

and reporting obligations of public companies, or if management is unable to successfully conduct our “best efforts” Primary Offering, our business would be harmed.

We may incur significant costs complying with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.

We may use hazardous chemicals in our business and would be subject to a variety of federal, state, local and international laws and regulations governing, among other matters, the use, generation, manufacture, transportation, storage, handling, disposal of, and human exposure to, these materials both in the US and outside the US, including regulation by governmental regulatory agencies, such as the Occupational Safety and Health Administration and the EPA. We will incur capital and operating expenditures and other costs in the ordinary course of our business in complying with these laws and regulations.

Although we will implement safety procedures for handling and disposing of these types of materials and waste products in an effort to comply with these laws and regulations, we cannot be sure that our safety measures will be compliant or capable of eliminating the risk of injury or contamination from the generation, manufacturing, use, storage, transportation, handling, disposal of, and human exposure to, hazardous materials. Failure to comply with environmental, health and safety laws could subject us to liability and resulting damages. There can be no assurance that violations of environmental, health and safety laws will not occur as a result of human error, accident, equipment failure or other causes. Compliance with applicable environmental laws and regulations may be expensive, and the failure to comply with past, present, or future laws could result in the imposition of fines, regulatory oversight costs, third party property damage, product liability and personal injury claims, investigation and remediation costs, the suspension of production, or a cessation of operations, and our liability may exceed our total assets. Liability under environmental laws, such as the Comprehensive Environmental Response Compensation and Liability Act in the United States, can impose liability for the full amount of damages, without regard to comparative fault for the investigation and cleanup of contamination and impacts to human health and for damages to natural resources. Contamination at properties we own and operate, and at properties to which we send hazardous materials, may result in liability for us under environmental laws and regulations.

Our business and operations will be affected by other new environmental, health and safety laws and regulations, which may affect our anti-slip chemicals, and environmental laws could become more stringent over time, requiring us to change our operations, or resulting in greater compliance costs and increasing risks and penalties associated with violations, which could impair our research, development or production efforts and harm our business. The costs of complying with environmental, health and safety laws and regulations, and any claims concerning noncompliance, or liability with respect to contamination in the future could have a material adverse effect on our financial condition or operating results.

Due to the fact that the majority of our officers and directors are located in Japan, your rights as an investor in the United States may be limited in the following ways.

The majority of our officers and directors reside in Japan. As a result, as an investor you may have difficulty with the following:

	·	effecting service of process within the United States against our non-U.S. resident officer and director;

	·	enforcing U.S. court judgments in the United States based upon the civil liability provisions of the U.S. federal securities laws against the above-referenced foreign person;

	·	enforcing U.S. court judgments in a Japanese court based on the civil liability provisions of the U.S. federal securities laws against the above foreign person; and

	·	bringing an original action in a Japanese court to enforce liabilities based upon the U.S. federal securities laws against the above foreign person.

Risks Related to Our Intellectual Property

Our competitive position will depend on our ability to effectively maintain intellectual property protection relating to our LD Unit. If we fail to adequately protect this intellectual property, our operations would be harmed.

Our subsidiary, Liquid Dynamics, is developing the LD Unit that will provide onsite water filtration for produced water via a mobile unit.

Third parties may misappropriate our Supplier’s proprietary technologies, information, or trade secrets despite a contractual obligation not to do so.

Third parties (including joint venture, collaboration, development partners, contract manufacturers, and other contractors and shipping agents) may have custody or control of any proprietary processes and technologies developed by us. If proprietary technologies were stolen, misappropriated or reverse engineered, they could be used by other parties who may be able to use the technologies for their own commercial gain. It is difficult to prevent misappropriation or subsequent reverse engineering. In the event that any proprietary technologies are developed and then misappropriated, it could be difficult for us to challenge the misappropriation or prevent reverse engineering, especially in countries with limited legal and intellectual property protection.

Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of proprietary information and trade secrets.

We plan to rely on confidentiality agreements to protect our technical know-how and other proprietary information. Nevertheless, there can be no guarantee that an outside party will not make an unauthorized disclosure or use of our proprietary confidential information. This might happen intentionally or inadvertently. It is possible that a competitor would make use of such information, and that our competitive position would then be compromised, in spite of any legal action we might take against persons making such unauthorized disclosures.

We also plan to keep as trade secrets our technical and proprietary information regarding our operations and the LD Unit. However, trade secrets are difficult to protect. Although we plan to use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators, partners, and other advisors may unintentionally or willfully disclose our trade secrets to competitors or otherwise use misappropriated trade secrets to compete with us. It can be expensive and time consuming to enforce a claim that a third party illegally obtained and is using our trade secrets. Furthermore, the outcome of such claims is unpredictable. In addition, courts outside the US may be less willing to or may not protect trade secrets. Moreover, our competitors may independently design around our trade secrets or develop equivalent knowledge, methods and know-how without misappropriating or otherwise violating our trade secret rights. Where a third party independently designs around our trade secrets or develops equivalent knowledge, methods and know-how without misappropriating or otherwise violating our trade secret rights, they may be able to seek patent protection for such equivalent knowledge, methods and know-how. This could prohibit us from practicing our own trade secrets.

Risks Relating to Our Common Stock

We may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.

Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock, par value $0.001 per share, of which 5,000,000 shares are issued and outstanding. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then-existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

Our common shares are subject to the “Penny Stock” rules of the SEC, and the trading market in our securities will likely be limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or

with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

	·	That a broker or dealer approve a person’s account for transactions in penny stocks; and
	·	The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quality of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

	·	Obtain financial information and investment experience objectives of the person; and
	·	Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

	·	Sets forth the basis on which the broker or dealer made the suitability determination; and
	·	That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

There is no current trading market for our securities and if a trading market does not develop, purchasers of our securities may have difficulty selling their shares.

There is currently no established public trading market for our securities, and an active trading market in our securities may not develop, or, if developed, may not be sustained. We intend to have a market maker apply for admission to quotation of our securities on the OTC Bulletin Board or another over-the-counter quotation board (the OTCQB or OTCQX tiers of OTC Markets Group’s over-the-counter market) after the registration statement relating to this prospectus is declared effective by the SEC. We do not yet have a market maker who has agreed to file such application. If for any reason our common stock is not quoted on the OTC Bulletin Board (or another over-the-counter quotation board) or a public trading market does not otherwise develop, purchasers of the shares may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so.

State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.

Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.

We have issued shares of preferred stock that may adversely impact your rights as holders of our common stock. The issuance of future classes of preferred stock may adversely impact your rights as holders of our common stock.

Our CFO and director, Mr. McLauchlin, owns shares of preferred stock that give him the majority of the voting rights in the Company. There are additional preferred shares authorized but that have not yet been issued, so Mr. Arai, our director or President who owns a majority of our outstanding common stock, could authorize our Board of Directors to determine the relative rights and preferences of preferred shares without further stockholder approval. As a result, our Board of Directors could then authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as a holder of common stock.

We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock.

We may finance our operations and develop strategic relationships by issuing equity or debt securities, which could significantly reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our stock to decline.

We have used an arbitrary offering price.

The offering price of $0.40 per share of common stock was arbitrarily determined by the Company and is unrelated to specific investment criteria, such as the assets or past results of the Company’s operations. In determining the offering price, the Company considered such factors as the prospects, if any, of similar companies, the previous experience of management, the Company’s anticipated results of operations, and the likelihood of acceptance of this offering. Please review any financial or other information contained in this offering with qualified persons to determine its suitability as an investment before purchasing any shares in this offering.

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions by the SEC.

We are exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404a of the Sarbanes-Oxley Act of 2002. As a smaller reporting company and emerging growth company, we will not be required to provide a report on the effectiveness of our internal controls over financial reporting until our second annual report, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are an emerging growth company or a smaller reporting company. We have not yet evaluated whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations. If we are not able to meet the requirements of Section 404a in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

Risks Associated with this Offering

There has been no independent valuation of the stock, which means that the stock may be worth less than the purchase price.

The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on management’s estimate of the value of the shares. This valuation is highly speculative and arbitrary.

There is no relation to the market value, book value, or any other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.

Investors may never receive cash distributions, which could result in an investor receiving little or no return on his or her investment.

Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.

Even if a market develops for our shares, our shares may be thinly traded with wide share price fluctuations, low share prices and minimal liquidity.

If a market for our shares develops, the share price may be volatile with wide fluctuations in response to several factors, including: potential investors’ anticipated feeling regarding our results of operations; increased competition; and our ability or inability to generate future revenues.

In addition, if our shares are quoted on the OTC QB or another over-the-counter quotation board, our share price may be affected by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political, and market conditions, such as recessions, interest rates, commodity prices, or international currency fluctuations. In addition, even if our stock is approved for quotation by a market maker through the OTC QB or another over-the-counter quotation board, stocks traded over this quotation system are usually thinly traded, highly volatile and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price.

Because our Primary Offering does not have a minimum offering amount, we may not raise enough funds to continue operations.

Because our Primary Offering lacks a minimum offering amount, no minimum amount of funds is assured, and we may only receive proceeds sufficient to fund operations for a short amount of time. We may then have to cease operations, and investors could then lose their entire investment.

Because the Selling Security Holders are selling their shares, we are less likely to sell all of the Primary Offering shares.

Investors interested in purchasing our stock in the Primary Offering may purchase stock directly from the Selling Security Holders. Therefore, the existence of the Selling Security Holders’ secondary offering makes it less likely that we will sell all of the shares available in the Primary Offering.

Purchasers of our stock will experience dilution.

At June 30, 2018, we had a net tangible book value of approximately ($0.0065) per share of our common stock. If you purchase our common stock from us in our Primary Offering, you will experience immediate and substantial dilution to the extent of the difference between the public offering price per share of our common stock ($0.40 per share) and the pro forma net tangible book value per share of our common stock immediately after the offering of $0.1096 per share. See the “Dilution” section below for a more detailed explanation.

We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from

the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any May 30.

Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

THE OFFERING

This prospectus relates to the sale of 2,000,000 shares of common stock, par value $0.001, of the Company at a price of $0.40 per share on a best efforts basis. This offering terminates 12 months after commencement of this offering. This is the initial offering and Primary Offering of common stock of the Company. The Company is offering the shares on a self-underwritten “best efforts” basis directly through its CFO and director, Fred McLauchlin. There is no minimum amount of common shares required to be purchased and, therefore, the total proceeds received by the Company might not be enough to begin operations or a market may not develop. No commission or other compensation related to the sale of the shares will be paid. For more information, see the section titled “Plan of Distribution” and “Use of Proceeds” herein.

In addition, there are 500,000 shares being registered by the Selling Security Holders of the Company in the Secondary Offering. 500,000 shares being registered in the Secondary Offering were purchased from the Company by fifty private individuals at $0.20 per shares in a Regulation S private placement that closed on June 30, 2018.

The Selling Security Holders will be offering the shares of common stock being covered by this prospectus at a price of $0.20 per share until a market develops and our shares are quoted on the OTC Bulletin Board or the OTCQB or OTCQX tiers of OTC Markets Group’s over-the-counter market, and thereafter at prevailing market prices or privately negotiated prices. The Company will not receive any of the proceeds from the sale of shares being sold by the Selling Security Holders. The existence of this secondary offering makes it less likely that we will sell all of the shares offered in the Primary Offering. No underwriting arrangements have been entered into by any of the Selling Security Holders. The Selling Security Holders and any intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act with respect to the securities offered, and any profits realized or commissions received may be deemed “underwriting compensation.”

USE OF PROCEEDS

We estimate that the net proceeds from this offering will be approximately $775,000 after deducting the estimated expenses of registration.

The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75%, and 100%, respectively, of the securities offered for sale in the Primary Offering.

	If 25% of Shares Sold		If 50% of Shares Sold		If 75% of Shares Sold		If 100% of Shares Sold

Gross Proceeds	$	200,000	$	400,000	$	600,000	$	800,000

Expected offering expenses		$25,000		$25,000		$25,000		$25,000

Net Proceeds	$	175,000	$	375,000	$	575,000	$	775,000

Public company costs	$	35,000	$	35,000	$	35,000	$	35,000

Equipment & Product Development	$	140,000	$	340,000	$	540,000	$	740,000


Total	$	200,000	$	400,000	$	600,000	$	800,000

The Company will receive all the proceeds from the sale of common stock in the Primary Offering (but none of the proceeds from the sale of shares by the Selling Security Holders in the Secondary Offering) and intends to use the proceeds from the Primary Offering to continue implementing its business and marketing plan. The expenses of this offering, including the preparation of this prospectus and the filing of the registration statement of which this prospectus is a part is estimated to be approximately $25,000, and such expenses will be paid by the Company, from our cash on hand; however, we have reduced our anticipated gross proceeds in the table above by the estimated offering costs. Our budgetary allocations may vary depending upon the percentage of proceeds that we obtain from the offering.

The Company anticipates that the estimated $800,000 gross proceeds from the maximum Offering will enable it to expand its operations and fund its other capital needs for the next twelve months. In the event that the Maximum Offering is not completed, the Company will be required to seek additional financing as the Company needs $800,000 in gross proceeds to implement its business and marketing plan and support expanded operations over the next twelve months. There can be no assurance that additional financing will be available when needed, and, if available, that it will be on terms acceptable to the Company.

DETERMINATION OF OFFERING PRICE

The Selling Security Holders will be offering the shares of common stock being covered by this prospectus at a price of $0.40 per share until a market develops and our shares are quoted on the OTC Bulletin Board or another over-the counter quotation board (the OTCQB or OTCQX tiers of OTC Markets Group’s over-the-counter market) and thereafter at prevailing market prices or privately negotiated prices. In determining the Primary Offering price of the shares, we considered several factors including:

	·	Our start-up status;

	·	Prevailing market conditions, including the history and prospects for the industry in which we compete;

	·	Our future prospects; and

	·	Our capital structure.

Therefore, the public offering price of the shares does not necessarily bear any relationship to established valuation criteria and may not be indicative of prices that may prevail at any time or from time to time in the public market for the common stock. You cannot be sure that a public market for any of our securities will develop and continue or

that the securities will ever trade at a price at or higher than the offering price in this offering. Such offering price does not have any relationship to any established criteria of value, such as book value or earnings per share. Because we have no significant operating history, the price of our common stock is not based on past earnings, nor is the price of our common stock indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. You cannot be sure that a public market for any of our securities will develop and continue or that the securities will ever trade at a price at or higher than the offering price in this offering.

DIVIDEND POLICY

We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends. Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates. You should not purchase our common stock expecting to receive cash dividends. Since we do not anticipate paying dividends, and if we are not successful in establishing an orderly public trading market for our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we may not pay dividends in the foreseeable future, we may have trouble raising additional funds which could affect our ability to expand our business operations.

MARKET FOR OUR COMMON STOCK

Market Information

There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority, FINRA for our common stock to be eligible for trading on the OTC Bulletin Board or another quotation board (such as the OTCQB). We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale.

We have issued 5,000,000 shares of common stock since the Company’s inception on May 16, 2018, all of which are restricted shares. We have also issued fifty one shares of Series A Preferred Stock. We have no other outstanding shares of preferred stock, options, warrants, notes payable convertible into capital stock, or other securities that are convertible into shares of common stock.

Holders

We had 56 shareholders of record of our common stock as of June 30, 2018 and October 2, 2018.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any compensation plan under which equity securities are authorized for issuance.

Dividends

Please see “Dividend Policy” above.

FORWARD-LOOKING STATEMENTS

Information included or incorporated by reference in this prospectus may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.

This prospectus contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our production and technology, (c) the regulation to which we are subject, (d) anticipated trends in our industry and (e) our needs for working capital. These statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Business,” as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur.

Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in the prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.

DILUTION

We had a negative net tangible book value at June 30, 2018, of approximately $0.0065 per share of our common stock. If you invest in our common stock, you will experience immediate and substantial dilution to the extent of the difference between the public offering price per share of our common stock, and the pro forma net tangible book value per share of our common stock immediately after the offering.

Our founders and initial officers and directors acquired their initial shares at par value at a cost of $0.001 per share, our investors in June of 2018 acquired their shares at a cost of $0.20 per share. Outside investors, however, will pay a price of $0.40 per share. Further, the net tangible book value per share after the offering but prior to any new offerings is expected to be approximately $0.1096 per share. Therefore, outside investors participating in this offering will incur immediate substantial dilution of their investment insofar as it refers to the resulting per share net tangible book value of the Company’s Common Stock after completion of this Offering. The following table illustrates dilution to investors on an approximate dollar per share basis, depending upon whether we sell 100%, 75%, 50%, or 25% of the shares being offered in the Primary Offering:

Percentage of Offering Shares Sold	100	%	75	%	50	%	25	%
Offering price per share	0.40		0.40		0.40		0.40
Net tangible book value per share before offering	($0.0065)		($0.0065)		($0.0065)		($0.0065)
Increase per share attributable to investors	$0.1161		$0.0938		$0.0677		$0.0370
Pro forma net tangible book value per share after offering	$0.1096		$0.0873		$0.0612		$0.0305
Dilution per share to investors	$0.2904		$0.3127		$0.3388		$0.3695

SELLING SECURITY HOLDERS

The following table sets forth the shares beneficially owned, as of June 30, 2018, by the Selling Security Holders prior to the offering contemplated by this prospectus, the number of shares each Selling Security Holder is offering by this prospectus and the number of shares which each would own beneficially if all such offered shares are sold.

Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person or his/her spouse has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes

the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

None of the Selling Security Holders is a registered broker-dealer or an affiliate of a registered broker-dealer. Each of the Selling Security Holders acquired his, her or its shares pursuant to a private placement solely for investment and not with a view to or for resale or distribution of such securities. 500,000 of the shares being registered were issued to fifty individuals for subscription agreements under Regulation S.

The percentages below are calculated based on 5,000,000 shares of our common stock issued and outstanding as of June 30, 2018.

Name of Selling Security Holder	Number of Shares Owned by the Selling Security Holder	Number of Shares Offered by Selling Security Holder	Number of Shares Held After the Offering	Percentage of Total Issued and Outstanding after the Oferings (1)
MOTOKI ABE	10,000	10,000	0	0%
HIROMI ARAI	10,000	10,000	0	0%
KATSUNOBU ARAI	10,000	10,000	0	0%
SEIJI ARAI	10,000	10,000	0	0%
SHINTARO ARAI	10,000	10,000	0	0%
TOYO ARAI	10,000	10,000	0	0%
TAKAYOSHI HAMADA	10,000	10,000	0	0%
TADAYOSHI HASHIMOTO	10,000	10,000	0	0%
KIMIO HORIKOSHI	10,000	10,000	0	0%
MITSUKO IGARASHI	10,000	10,000	0	0%
KAZUO IMAHASHI	10,000	10,000	0	0%
HIROAKI ISHIKAWA	10,000	10,000	0	0%
RYUJI IWANAGA	10,000	10,000	0	0%
NAOKO KAMIMURA	10,000	10,000	0	0%
TOSHIO KANETA	10,000	10,000	0	0%
MIE KIKUCHI	10,000	10,000	0	0%
SABURO KIKUCHI	10,000	10,000	0	0%
KENTARO KOJIMA	10,000	10,000	0	0%
YUJI KONO	10,000	10,000	0	0%
YASUHISA MASUDA	10,000	10,000	0	0%
KOUKO MATSUDA	10,000	10,000	0	0%
HIROJI MIYATA	10,000	10,000	0	0%
HIROAKI NAGASAWA	10,000	10,000	0	0%
CHIZUKO NAKAHARA	10,000	10,000	0	0%
AKINORI NAKAO	10,000	10,000	0	0%
TAKAO NASHIMOTO	10,000	10,000	0	0%

Name of Selling Security Holder	Number of Shares Owned by the Selling Security Holder	Number of Shares Offered by Selling Security Holder	Number of Shares Held After the Offering	Percentage of Total Issued and Outstanding after the Oferings (1)
YASUO OGURO	10,000	10,000	0	0%
HIROKI OKADA	10,000	10,000	0	0%
KENJI SAKURAI	10,000	10,000	0	0%
KIKUKO SEKIYA	10,000	10,000	0	0%
TADANAO SHIMADA	10,000	10,000	0	0%
SACHIKO SHINAGAWA	10,000	10,000	0	0%
YU SHINODA	10,000	10,000	0	0%
TOSHIHIRO SUDA	10,000	10,000	0	0%
TAKAKO SUKEGAWA	10,000	10,000	0	0%
MASAAKI SUZUKI	10,000	10,000	0	0%
YUKIE SUZUKI	10,000	10,000	0	0%
YOSHIAKI TAKANO	10,000	10,000	0	0%
MINEKO TAKASHIMA	10,000	10,000	0	0%
MIYOSHI TAKAYAMA	10,000	10,000	0	0%
ITARU TANAKA	10,000	10,000	0	0%
SUSUMU TANIGUCHI	10,000	10,000	0	0%
EIKO TANZAWA	10,000	10,000	0	0%
HIDEAKI TANZAWA	10,000	10,000	0	0%
HIROSHI TANZAWA	10,000	10,000	0	0%
KUNIO TANZAWA	10,000	10,000	0	0%
MANAMI UENO	10,000	10,000	0	0%
REIKO YAMAJI	10,000	10,000	0	0%
KEIKO YAMANOUCHI	10,000	10,000	0	0%
TAKAKO YOKOYAMA	10,000	10,000	0	0%
Total	500,000	500,000	0	0%

__________________

⁽¹⁾

Assumes all of the Primary Offering and Secondary Offering shares of common stock offered in this prospectus are issued and sold, and no other shares of common stock are issued or sold during the offering period. Based on 5,000,000 shares of common stock issued and outstanding as of June 30, 2018, 2,000,000 shares of common stock being sold in the Primary Offering, and 7,000,000 shares of common stock issued and outstanding after completion of the offerings.

We may require the Selling Security Holders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus, or the related registration statement, untrue in any material respect, or that requires the changing of statements in these documents in order to make statements in those documents not misleading. We will file a post-effective amendment to this registration statement to reflect any material changes to this prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FISCAL CONDITION AND RESULTS OF OPERATION

The following discussion of our plan of operation should be read in conjunction with the financial statements and related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in “Risk Factors” beginning on page 18 of this prospectus. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Overview

·salts, which include chlorides, bromides, sulfides of calcium, magnesium, and sodium;

·metals, which include barium, manganese, iron, and strontium, among others;

·oil, grease, and dissolved organics, which include benzene and toluene,

·naturally occurring radioactive materials; and

·production chemicals, which include friction reducers to help with water flow, biocides to prevent growth of microorganisms, and additives to prevent corrosion.

Plan of Operation

Liquid Dynamics is currently developing its LD Unit and expects its first prototype unit to be completed and ready for testing by October 30, 3018. We expect the LD Unit will be ready for use in the market by November.

During the next 12 months, the Company intends to finish the development of its prototype, test the LD Unit, engage independent contractors to help sell and place the LD Unit, market the LD Unit to oil and gas operators, and begin providing services in the oil and gas industry in the initial territory of Utah, Colorado and Wyoming. The Company also intends to develop key relationships with operators and outfits outside of the initial territory in order to grow into geographic markets and increase the Company’s customer base. The Company plans to hire sales and field personnel to sell the Company’s services and perform the services with the LD Units. Finally, the Company plans to invest in product development, marketing, branding, and sales activities along with other operational support activities. Additional capital resources will be necessary to pursue these activities.

The Company is interested in pursuing other acquisition opportunities and is actively seeking candidates for potential acquisition.

Results of Operations

For the Period from Inception on May 16, 2018 to June 30, 2018

Revenues

Revenues for the period from inception through June 30, 2018 were $-0-.

Operating Expenses

Operating expenses for the period from inception through June 30, 2018 were $46,496. Of this total, $18,962 were derived from professional fees, $12,534 from general and administrative expenses, and $15,000 from salaries and wages.

Other Income (Expenses)

During the period from inception through June 30, 2018, the Company recognized interest expense totaling $331. This expense was derived from the Company’s related-party note payable.

Net Loss

For the period from inception to June 30, 2018, the Company recognized a net loss in the amount of $46,827.

Liquidity and Capital Resources

As of June 30, 2018, the Company had $180,063 in current assets, consisting of $166,455 in cash, and $13,608 in prepaid expenses. Current liabilities at June 30, 2018 totaled $212,588, consisting of $27,588 in accounts payable and accrued expenses, and $185,000 in related-party note payable. At June 30, 2018 the Company had a current ratio of 0.847.

Cash used in operations totaled $32,847 for the period from inception through June 30, 2018. Cash used in investing activities totaled $-0-, and cash provided by financing activities totaled $199,302.

Anticipated Cash Requirements

We estimate that our expenses to further implement our plan of operations over the next 12 months, will be approximately $800,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources. We further anticipate incurring additional costs and expenses for accounting, legal, and other miscellaneous fees relating to compliance with SEC requirements and the filing of the registration statement of which this prospectus forms a part.

Description	Estimated Expenses
Legal, Accounting & Other Registration Expenses	$	25,000
Costs Associated with Being a Public Company		35,000
Equipment & Product Development		740,000
Total	$	800,00

Given that our cash needs are strongly driven by our growth requirements, we also intend to maintain a reserve sum for other risk contingencies that may arise.

We intend to meet our cash requirements for the next 12 months through the use of the cash we have on hand and through business operations, director or officer loans, future equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. We currently do not have any other arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies and Estimates

Business Activity

Kou You Kai, Ltd. (“the Company”) is a Wyoming corporation organized on May 16, 2018. The Company was incorporated for the purpose of acquiring various business entities and acting as a holding/funding/management entity for its subsidiaries.

On June 29, 2018 the Company entered into a Stock Purchase Agreement with Liquid Dynamics, Inc., a Wyoming corporation (“Liquid Dynamics”) whereby the Company acquired all the issued and outstanding common stock of Liquid Dynamics in exchange for 500,000 shares of the Company’s Common Stock. Pursuant to the Agreement, Liquid Dynamics became a wholly-owned subsidiary of the Company. Liquid Dynamics is engaged in the development of technology relating to the purification of liquid waste product derived from oil and gas production.

Basis of Presentation

The accompanying audited consolidated financial statements and related notes include the activity of the Company and its wholly-owned subsidiary, Liquid Dynamics, Inc. and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form S-1. All inter-company balances and transactions have been eliminated.

Accounting Method

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company at times may maintain a cash balance in excess of insured limits.

Property, Plant and Equipment

Property and equipment are stated at cost. Major additions and improvements are capitalized in the month following the month in which the assets or improvement are deemed to be placed in service. Maintenance and repairs are expensed as incurred. Upon disposition, the net book value is eliminated from the accounts, with the resultant gain or loss reflected in operations. Depreciation expense is computed on a straight-line basis over the estimate useful lives of the assets as follows:

Building and leasehold improvements	10-25 years
Machinery and equipment	5 years
Furniture and fixtures	3-7 years

The Company periodically assesses the recoverability of property, plant and equipment and evaluates such assets for impairment whenever events or changes in circumstances indicate that the net carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the net carrying amount.

Impairment of Long-Lived Assets

The Company follows the provisions of ASC 360 for its long-lived assets. The Company’s long-lived assets, which include goodwill resulting from the acquisition of its wholly-owned subsidiary, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company recognized no impairment expense during the period from inception on May 16, 2018 through June 30, 2018.

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

Stock-based Compensation

Stock compensation expense includes compensation expense for all stock-based compensation awards, based on the grant-date fair value estimated in accordance with the provisions of ASC 718.

Income Taxes

The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. This method requires that the current or deferred tax consequences of all events recognized in the financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.

This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.

Basic and Diluted Loss per Share

Basic and diluted loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. The Company had no potential dilutive shares at June 30, 2018.

Reporting Segments

ASC 280 establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. Currently, ASC 280 has no effect on the Company’s consolidated financial statements as substantially all of the Company’s operations are conducted in one industry segment.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of its consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.

Going Concern

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Emerging Growth Company

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Recently Issued Accounting Pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.

Seasonality

Initially, while we operate in our initial territory of Utah, Colorado and Wyoming, we expect that our operations will be seasonally impacted. We anticipate slowdowns of up to 50% in those areas in the months of December to February.

DESCRIPTION OF BUSINESS

·salts, which include chlorides, bromides, sulfides of calcium, magnesium, and sodium;

·metals, which include barium, manganese, iron, and strontium, among others;

·oil, grease, and dissolved organics, which include benzene and toluene,

·naturally occurring radioactive materials; and

·production chemicals, which include friction reducers to help with water flow, biocides to prevent growth of microorganisms, and additives to prevent corrosion.

savings to oil and gas well operators and owner companies, as they can avoid the expensive and labor-intensive process of hauling water to and from the site locations and can instead process the water onsite with the LD Unit. Because it is located in a mobile trailer, the equipment can easily be relocated and is applicable across a wide range of industries, although use in the oil and gas industry will be the first application. The LD Unit will utilize gravity separation, filtration, advanced oxidation processes, and electrocoagulation – all technologies that have been accepted and operating for years in the oilfield—with updated technology and service offerings that aim to be more efficient and designed to significantly reduce the oil and gas operators’ operating expense per barrel.

The Company’s fiscal year end is June 30th, its telephone number is (385)282-5041, and the address of its principal executive office is:

Kou You Kai, Ltd.

222 South Main Street

Suite 500

Salt Lake City, Utah 84111

Services

·salts, which include chlorides, bromides, sulfides of calcium, magnesium, and sodium;

·metals, which include barium, manganese, iron, and strontium, among others;

·oil, grease, and dissolved organics, which include benzene and toluene,

·naturally occurring radioactive materials; and

·production chemicals, which include friction reducers to help with water flow, biocides to prevent growth of microorganisms, and additives to prevent corrosion.

accepted and operating for years in the oilfield—with updated technology and service offerings that aim to be more efficient and designed to significantly reduce the oil and gas operators’ operating expense per barrel.

Competition

The oil and gas service industry is very competitive, and there are numerous services providers for produced water treatment and filtration. Some of our competitors include Rain for Rent, Hydrozonix, Fountain Quail, and several other smaller companies. There are a substantial number of traditional operations that compete directly and indirectly with the Company, many of which have significantly greater financial resources, higher revenues, and greater economies of scale than those of the Company.

Market Opportunity

Liquid Dynamics has a unique market opportunity with the development of its mobile LD Unit. The LD Unit will have a small footprint and will be portable to most oil and gas sites. The mobile system can be set up and start running in less than one day. We anticipate it can be profitable on volumes as little as 1,000 barrels per day and anticipate it should be able to process as much as 5,000 barrels per day.

Marketing Strategy

Liquid Dynamics’ initial marketing strategy will utilize our infield contacts of current service providers (such as tank rental companies) to oil and gas operators by offering them an additional profit center for putting our LD Unit to work with the existing operators they are already providing services to.

Customers

Liquid Dynamics’ ideal customers are oil and gas producers that have transportation and disposal challenges for their produced water and currently are engaged in completing multiple well sites. Initially, our LD Unit will process infield water for infield use only, called “beneficial reuse.” This will allow our customers to reuse water, becoming more efficient and saving time and cost in hauling in more water to the sites for use in their operations.

Patent, Trademark, License & Franchise Restrictions and Contractual Obligations & Concessions

We do not have any patents or trademarks, but do have certain trade secrets related to our LD Unit. We have not entered into any other franchise agreements or other contracts that have given, or could give rise to, obligations or concessions.

Governmental Regulations

We will have limited government environmental regulations initially as the LD Unit will provide filtration for beneficial reuse of water only and will not provide filtration for discharge quality water. However, we are governed by laws and regulations governing the oil and gas industry and protecting the environment to some extent. We also will be governed by laws related to our employees and their safety and training, including Land Safe regulations, PEC and OSHA 10 regulations. We believe that we are currently in compliance with all laws which may govern our operations and have no current liabilities thereunder. Our intent is to maintain strict compliance with all relevant laws, rules and regulations.

Employees

Kou You Kai currently has two full-time management employees: our CFO and director, Mr. McLauchlin and the president of Liquid Dynamics, Doug Nosler.

DESCRIPTION OF PROPERTY

Kou You Kai, through its subsidiary Liquid Dynamics, has personal property and equipment consisting of a motor vehicle and trailer, equipment and tools, the LD Unit prototype and office supplies. Kou You Kai currently owns no real property. The Company leases office space in Salt Lake City, Utah on an annual basis for $209 per month. The Company feels that this space is sufficient until operations significantly expand.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors and Executive Officers

Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments of our current executive officers and directors. Unless otherwise indicated, the business address of the below officers and directors is c/o Kou You Kai, Ltd., 222 South Main Street, Suite 500, Salt Lake City, Utah 84111.

Name	Age	Position
Tsunenobu Arai	78	President and Director
Masaru Tanzawa	75	Chief Executive Officer and Director
Fred McLauchlin	70	Chief Financial Officer and Secretary
Sachiko Shinoda	64	Treasurer and Director
Motoki Abe	70	Advisor to the Board of Directors
Doug Nosler	49	President of Liquid Dynamics

Tsunenobu Arai, age 78, has served as an executive of a variety of businesses for over fifty years. He attended Chuo University in Japan. He currently serves on the Board of Directors of Tunnel Corp. and as the Chief Director of the Kou You Kai Cultural Welfare General Foundation. An experienced leader, he has previously served as the Chief Director of the Japan Environmental Service General Foundation, Chief Executive Officer of the Fukushima Solar Power Plant, Chief Executive Officer of Tokyo Earth Liquor Sales Inc., Chief Executive Officer of Tahou Natural Resource and Development, Chief Director of the Japan Maldives Friendship Foundation, Chief Executive Officer or the Global Energy Corporation, Chief Executive Officer or Shimato, Inc., Chief Executive Officer of Kokusai Jyohou Tsushin Kiko, and Chief Executive Officer of Kou You Sangyo, Inc.

Masaru Tanzawa, age 75, attended Chuo University in Japan. He began his career at the Tokyo Toyota Corporation in 1966 and has since worked for several businesses in the natural resource sector including serving as the President of Great Tahou Holding Limited beginning in 2015, the President of Tahou Natural Resource and Development Inc. beginning in 2006 and working for The Tahou Group beginning in 1971.

Fred McLauchlin, age 70, has been Chief Financial Officer of Kou You Kai since May 16, 2018. Mr. McLauchlin has been an international business consultant for most of his professional career. He attended Georgia State University and graduated with a BBA in Accounting and obtained his CPA certification in 1976. His background includes: four years of factoring department experience as a Credit Manager at a major, international banks; Internal Auditor for a major southeastern paper/chemical/hardware manufacturing company; Special Projects Manager Corp/Home Systems for all North America plants for Bendix Corp; Corporate Controller for a publicly traded company in El Paso, TX; Special Projects Manager for strategic acquisitions for Flowers Industries; and VP Finance for European Bakers. Mr. McLauchlin was also Owner of Small Business Bookkeeping and Accounting Practice for over 200 small business in the Atlanta area. From June 2005 to September 2008, Mr. McLauchlin was Vice President of Operations of Colonel McCrary Trucking LLC (CMT). From September 2008 to May 2018, Mr. McLauchlin was Managing Member of Atlanta View Travel Plaza LLC, a management buyout of CMT.

Sachiko Shinoda, age 64, attended Tsurumi University. She currently serves on the Board of Directors or Tonel Inc. as a representative for Arukimesuto Corporation. Prior to those positions, she worked for Raia Wellman, Inc. beginning in 2014. She also served on the Board of Directors for Tahou Natural Resource and Development. Beginning in 2012, she worked in accounting for the Shimato Corporation.

Motoki Abe, age 70, received a B.A. degree in Commercial Science from Keio University in Japan. Since 2009, he has worked as a business strategist and head of the research and survey division in Able Research Institute to strengthen research and survey functions for Able & Partners Group (a real estate company). In 2016, he was appointed the Chief Compliance Officer at One & Only Co., Ltd. Prior to working for the Able family of companies, he worked for several insurance companies as an underwriter, marketer and manager.

Doug Nosler, age 49, has been President of Liquid Dynamics since its inception. Mr. Nosler attended Brigham Young University and graduated with a BS in Economics. From 2007 to 2013, Mr. Nosler was President, Chief Lending Officer, and EVP Business Development of Fieldbrook Properties, Inc. in Irvine, California where he consistently maintained investor relationships, developed multiple loan sources to grow and maintain market share, and helped grow its loan portfolio. Starting in March 2013 through 2018, Mr. Nosler was a partner and EVP Business Development and Sales at Fieldbrook Environmental.

Board Composition

Our By-Laws provide that the Board of Directors shall initially consist of more than three directors or any amount of directors that the directors shall fix by resolution. Each director of the Company serves until his successor is elected and qualified, subject to removal by the Company’s majority shareholders. Each officer shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors, and shall hold his office until his successor is elected and qualified, or until his earlier resignation or removal.

No Committees of the Board of Directors; No Financial Expert

We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. Nor do we have an audit committee or financial expert. Management has determined not to establish an audit committee at present because our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. As such, our entire Board of Directors acts as our audit committee. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Section 407 of the Sarbanes-Oxley Act of 2002 and Item 407(d) of Regulation S-K is beyond our limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our financial statements at this stage of our development.

Auditors

Our principal registered independent auditor is as follows:

Sadler Gibb & Associates, LLC

2455 East Parleys Way

Suite 320

Salt Lake City, Utah 84109

Code of Ethics

The Board of Directors has established a written code of ethics that applies to the Company’s officers. A copy of the Code of Ethics is filed as Exhibit 14.1 to the registration statement of which this prospectus is a part.

Potential Conflicts of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.

Director Independence

Our board of directors has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that our directors do not meet the independence requirements, according to the applicable rules and regulations of the SEC.

Involvement in Legal Proceedings

None of our officers or directors has filed a personal bankruptcy petition, had a bankruptcy petition filed against any business of which they were a general partner or officer at the time of bankruptcy or within two years prior to that time, or has been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past ten (10) years.

Compliance with Section 16(a) Of the Exchange Act

Upon the effectiveness of this registration statement of which this prospectus is a part, we intend to file a Form 8-A registration statement under Section 12 of the Securities Exchange Act of 1934, as amended. Section 16(a) of that act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.

EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth information concerning the annual and long-term compensation awarded to, earned by, or paid to the named executive officers and directors for all services rendered in all capacities to our company for the year ended June 30, 2018:

SUMMARY COMPENSATION TABLE

Year

Salary

Bonus

Stock

Awards

Option

Awards

Non-Equity

Incentive Plan

Compensation

All Other

Compensation

Total

2018

$15,000(a)

$ -

$ -(b)

$ -

$15,000

(a)On July 19, 2018, the Company consummated an Employment Agreement with Fred McLauchlin. The Agreement was effective retroactive to May 16, 2018. Pursuant to the terms of the Agreement, Mr. McLauchlin is to receive a salary of $10,000 per month. As of June 30, 2018, the Company had made no cash payments of salary to Mr. McLauchlin. Accordingly, as of June 30, 2018, the Company accrued $15,000 in unpaid salary due to Mr. McLauchlin, representing one and one-half months at $10,000 per month.

(b)On May 16, 2018 the Company agreed to issue an aggregate of 4,000,000 shares of common stock to various individuals as founders’ shares, which were valued at zero at the time of issuance. The Company issued an additional 51 shares of series A preferred stock to its chief financial officer. The preferred shares were also accounted for as founders’ shares and valued at zero at the time of issuance.

We have no pension, health, annuity, bonus, insurance, stock options, profit sharing, or similar benefit plans, except as described herein. Messrs. McLauchlin and Nosler are eligible to participate in any company benefit plans starting September 29, if any benefits are offered at that time. Each of Mr. McLauchlin and Mr. Nosler may receive an annual performance bonus in addition to their salaries, as further described below. No stock options or stock appreciation rights have been granted to any of our directors or executive officers; none of our directors or executive officers exercised any stock options or stock appreciation rights; and none of them hold unexercised stock options. We have no long-term incentive plans.

Outstanding Equity Awards

Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.

Compensation of Directors

Other than as disclosed in the compensation table above, our directors do not receive compensation for their services as directors.

Employment Contracts, Termination of Employment, Change-in-Control Arrangements

We have employment agreements in place with Fred McLauchlin, our CFO and Secretary, and Doug Nosler, the President of Liquid Dynamics.

Mr. Nosler’s employment agreement provides for payment of a monthly salary of $10,000 per month which will be accrued for the first ninety days following his employment and the accrued salary will be paid out of the Company’s first revenue. Additionally, he will be eligible to receive an annual cash performance bonus equal to ten percent of Liquid Dynamics’ annual net profits up to an amount of $1,000,000 per year (minus any salary paid for that fiscal year), to be paid after the Company’s annual audit is completed and Form 10-K is filed.

Mr. McLauchlin’s employment agreement provides for payment of a monthly salary of $10,000 per month which will be accrued until the Company becomes profitable. Additionally, he received 275,000 shares of common stock and 51 shares of Series A Preferred Stock as consideration for his services of the Chief Financial Officer of the Company. The Series A Preferred shares have voting rights shall equal to: (x) 0.019607 multiplied by the total issued and outstanding shares of common stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. These shares have preferential voting rights, no conversion rights and no liquidation preferences.

Other than the employment agreements for Messrs. McLauchlin and Nosler, there are no formal employment contracts, or other contracts with our officers or directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table lists, as of June 30, 2018, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 5,000,000 shares of our common stock issued and outstanding as of June 30, 2018. We did not have any outstanding options, warrants exercisable for, or other securities convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed below is c/o Kou You Kai, Ltd.,222 South Main Street, Salt Lake City, Suite 500, Utah 84111.

Name of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership	Percent of Class
Tsunenobu Arai (1)	Common Stock	2,900,000		58.0%
Masaru Tanzawa (2)	Common Stock	275,000		5.5%
Sachiko Shinoda (3)	Common Stock	275,000		5.5%
Motoki Abe (4)	Common Stock	10,000		0.2%
Doug Nosler (5)	Common Stock	500,000		10.0%
Fred McLauchlin (6)	Common Stock	275,000		5.5%
	Series A Preferred Stock	51		100.0%
All Officers and Directors	Common Stock	4,235,000		84.7%

_______________

(1)

(2)

(3)

(4)

(5)

(6)

Mr. Arai is the President and a director of the Company.

Mr. Tanzawa is the Chief Executive Officer and a director of the Company.

Ms. Shinoda is the Treasurer and a director of the Company.

Mr. Abe is a Board Advisor to the Company.

Mr. Nosler is the President of the Company’s wholly-owned subsidiary, Liquid Dynamics.

Mr. McLauchlin is the Chief Financial Officer and Secretary of the Company, and the Chief Financial Officer of Liquid Dynamics. The Series A Preferred shares have voting rights shall equal to: (x) 0.019607 multiplied by the total issued and outstanding shares of common stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. These shares have preferential voting rights, no conversion rights and no liquidation preferences

PLAN OF DISTRIBUTION

The Primary Offering shares will be sold in a “direct public offering” through our CEO and director, Mr. Arai and our CFO, Fred McLauchlin, who may be considered an underwriter as that term is defined in Section 2(a)(11). Messrs. Arai and McLauchlin will not receive any commission in connection with the sale of shares, although we may reimburse them for expenses incurred in connection with the offer and sale of the shares. Messrs. Arai and McLauchlin intend to sell the shares being registered according to the following plan of distribution:

Shares will be offered to friends, family, and business associates of Messrs. Arai and McLauchlin.

Messrs. Arai and McLauchlin will be relying on, and complying with, Rule 3a4-1(a)(4)(ii) of the Exchange Act as a “safe harbor” from registration as a broker-dealer in connection with the offer and sales of the shares. In order to rely on such “safe harbor” provisions provided by Rule 3a4-1(a)(4)(ii), an individual must be in compliance with all of the following:

	·	he must not be subject to a statutory disqualification;
	·	he must not be compensated in connection with such selling participation by payment of commissions or other payments based either directly or indirectly on such transactions;
	·	he must not be an associated person of a broker-dealer;
	·	he must primarily perform, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the Company otherwise than in connection with transactions in securities; and
	·	he must perform substantial duties for the issuer after the close of the offering not connected with transactions in securities, and not have been associated with a broker or dealer for the preceding 12 months, and not participate in selling an offering of securities for any issuer more than once every 12 months.

Messrs. Arai and McLauchlin will comply with the guidelines enumerated in Rule 3a4-1(a)(4)(ii). Neither Mr. McLauchlin, nor any of his affiliates, will be purchasing shares in the Offering.

You may purchase shares by completing and manually executing a simple subscription agreement and delivering it with your payment in full for all shares, which you wish to purchase, to our offices. A copy of the form of that subscription agreement is attached as an exhibit to our registration statement of which this prospectus is a part. Your subscription will not become effective until accepted by us and approved by our counsel. Acceptance will be based upon confirmation that you have purchased the shares in a state providing for an exemption from registration. Our subscription process is as follows:

	·	The Prospectus, with Subscription Agreement, is delivered by the Company to each offeree;

	·	The subscription is completed by the offeree, and submitted with check back to the Company where the subscription and a copy of the check is faxed or emailed to counsel for review;

	·	Each subscription is reviewed by counsel for the Company to confirm the subscribing party completed the form, and to confirm the state of acceptance;

	·	Once approved by counsel, the subscription is accepted by Mr. Arai or Mr. McLauchlin, and the funds deposited into an account labeled Kou You Kai, Ltd. within four (4) days of acceptance;

	·	Subscriptions not accepted are returned with all funds sent with the subscription within three business days of the Company’s receipt of the subscription, without interest or deduction of any kind.

Funds will be deposited to the following bank account:

Kou You Kai, Ltd.

222 South Main Street

Suite 500

Salt Lake City, Utah 84111

The Selling Security Holders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales will be at a fixed price of $0.40 per share until a trading market emerges for the securities. The Selling Security Holders may use any one or more of the following methods when selling shares:

	·	ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;

	·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

	·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

	·	an exchange distribution in accordance with the rules of the applicable exchange;

	·	privately negotiated transactions;

	·	to cover short sales made after the date that this prospectus is declared effective by the Commission;

	·	broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share;

	·	a combination of any such methods of sale; and

	·	any other method permitted pursuant to applicable law.

The Selling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. For more information, see the section titled “Rule 144” herein.

Broker-dealers engaged by the Selling Security Holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Security Holders, or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The Selling Security Holders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The Selling Security Holders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of our common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 462(c) or other applicable provision of the Securities Act amending the list of selling security holders to include the pledgee, transferee or other successors in interest as selling security holders under this prospectus.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver to the prospective purchaser a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective purchaser and receive the purchaser’s written agreement to the transaction. Furthermore, subsequent to a transaction in a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about the penny stock. It is anticipated that our common stock will be traded on the OTC QB at a price of less than $5.00. In this event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules. These disclosure requirements will likely make it more difficult for investors in this offering to sell their common stock in the secondary market.

Upon our being notified in writing by a Selling Security Holder that any material arrangement has been entered into with a broker-dealer for the sale of our common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a post-effective amendment to this prospectus will be filed, if required, pursuant to Rule 462(c) under the Securities Act, disclosing (i) the name of each such Selling Security Holder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of our common stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s). In addition, upon our being notified in writing by a Selling Security Holder that a donee or pledgee intends to sell more than 500 shares of our common stock, a post-effective amendment to this prospectus will be filed if then required in accordance with applicable securities law.

Prior to any involvement of any broker-dealer in the offering, such broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from FINRA.

The Selling Security Holders also may transfer the shares of our common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Security Holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Security Holder and/or the purchasers. Each Selling Security Holder has represented and warranted to us that it acquired the securities subject to this prospectus in the ordinary course of such Selling Security Holder’s business and, at the time of its purchase of such securities such Selling Security Holder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

We have advised each Selling Security Holder that it may not use shares registered on this prospectus to cover short sales of our common stock made prior to the date on which this prospectus shall have been declared effective by the Commission. If a Selling Security Holder uses this prospectus for any sale of our common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Security Holders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Security Holders in connection with resales of their respective shares under this prospectus.

We are required to pay all fees and expenses incident to the registration of the shares being offered in both the Primary Offering and in the Secondary Offering.

All sales by the Company to the public through the direct Primary Offering will be issued directly from the Company to the subscriber as a proceeds-generating offering for the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At inception, we issued 4,000,000 shares of founders’ common stock valued at par value ($0,001 per share) to our officers and directors at the time of inception. We issued 500,000 shares of common stock to Doug Nosler, then the sole shareholder of Liquid Dynamics, as consideration for acquiring Liquid Dynamics as a wholly-owned subsidiary of the Company.

Other than the transactions described above, none of the following parties has, since the date of incorporation, had any other material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

	-	The officers and directors;

	-	Any person proposed as a nominee for election as a director;

	-	Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to the outstanding shares of common stock;

	-	Any relative or spouse of any of the foregoing persons who have the same house as such person.

DESCRIPTION OF SECURITIES

The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation, which has been filed as an exhibit to our registration statement of which this prospectus is a part.

Common Stock

We are authorized to issue 100,000,000 shares of common stock, par value $0.001, of which 5,000,000 shares are issued and outstanding as of June 30, 2018. Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submitted to the vote of stockholders, including the election of Directors. The holders of shares of common stock have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in our Articles of Incorporation or By-laws that would delay, defer, or prevent a change in control of our Company.

Preferred Stock

We are currently authorized to issue 10,000,000 shares of preferred stock, par value $0.001, of which 51 shares are issued and outstanding as of June 30, 2018. The Series A Preferred shares have voting rights shall equal to: (x) 0.019607 multiplied by the total issued and outstanding shares of common stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. These shares have preferential voting rights, no conversion rights and no liquidation preferences. Our Board of Directors has the authority to designate the rights and preferences of each series of preferred stock without action by our stockholders. Because

we may issue additional preferred stock in order to raise capital for our operations, your ownership interest may be diluted which would result in your percentage of ownership in us decreasing.

Warrants and Options

Currently, there are no warrants or options outstanding; nor are there any other equity or debt securities convertible into common stock other than disclosed in the “Convertible Note” paragraph above.

Security Holders

As of June 30, 2018, there were 5,000,000 shares of our common stock issued and outstanding, which were held by 56 stockholders of record.

Non-cumulative Voting

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

Transfer Agent

We have engaged Colonial Stock Transfer, as transfer agent to serve as agent for shares of our common stock. Our transfer agent’s contact information is as follows:

Colonial Stock Transfer

66 Exchange Place

Salt Lake City, Utah 84111

(801)355-5740

Admission to Quotation on the OTCQB or Another Over-the-Counter Quotation Board

We intend to have a market maker file an application for our common stock to be quoted on the OTC Bulletin Board or the OTCQB or OTCQX tiers of OTC Markets Group’s over-the-counter market. However, we do not have a market maker that has agreed to file such application. If our securities are not quoted on the OTC QB or another over-the-counter quotation board, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The over-the-counter quotation boards differ significantly from national and regional stock exchanges in that they

	(1)	are not situated in a single location but operate through communications of bids, offers and confirmations between broker-dealers, and

	(2)	securities admitted to quotation are offered by one or more Broker-dealers rather than the “specialists” common to stock exchanges.

To qualify for quotation on the OTC QB or another over-the-counter quotation board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. If our securities meet the qualifications for trading securities on the OTC QB or another over-the-counter quotation board, our securities would be eligible to trade on that over-the-counter quotation board, but there is no guarantee that our securities would ever trade. We may not now or ever qualify for quotation on any over-the-counter quotation board. We currently have no market maker who is willing to list quotations for our securities.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there was no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market could

adversely affect the market prices of our common stock and could impair our future ability to raise capital through the sale of our equity securities.

We have outstanding an aggregate of 5,000,000 shares of our common stock prior to this offering, and we will have outstanding 7,000,000 shares of our common stock after conclusion of this offering assuming we sell all of the shares being offered in the Primary Offering (2,000,000 shares). All of the shares registered in the registration statement of which this prospectus forms a part will be freely tradable without restriction or further registration under the Securities Act, unless those shares are purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act.

The remaining 4,500,000 unregistered shares of common stock outstanding after this offering will be restricted as a result of securities laws. Restricted securities may be sold in the public market only if they have been registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, or another exemption from registration under the Securities Act.

Rule 144

Rule 144 allows for the public resale of restricted and control securities if a number of conditions are met. Meeting the conditions includes holding the shares for a certain period of time, having adequate current information, looking into a trading volume formula, and filing a notice of the proposed sale with the SEC.

In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale, (ii) we are subject to the Exchange Act periodic reporting requirements and have filed all required reports for a least 90 days before the sale, and (iii) we are not and have never been a shell company (a company having no or nominal operations and either (1) no or nominal assets, (2) assets consisting solely of cash and cash equivalents, or (3) assets consisting of any amount of cash and cash equivalents and nominal other assets). If we ever become a shell company, Rule 144 would be unavailable until one year following the date we cease to be a shell company and file Form 10 information with the SEC ceasing to be a shell company, provided that we are then subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that we were required to file such reports and materials), other than Form 8-K reports.

Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

	-	1% of the number of shares of our common stock then outstanding, which would equal approximately 70,000 shares, based on the number of shares of our common stock outstanding as of June 30, 2018 (5,000,000 shares), and assuming the 2,000,000 shares being registered in the Primary Offering are sold; or

	-	The average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

At the expiration of the one-year holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described above.

Sales under the Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

LEGAL MATTERS

We know of no existing or pending legal proceedings against us other than as disclosed below, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

EXPERTS

Except as disclosed herein, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or its subsidiary. Nor was any such person connected with the registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

The financial statements of the Company as of June 30, 2018 have been included herein in reliance on the report of Sadler, Gibb & Associates, LLC, an independent registered public accounting firm, given on the authority of that firm as experts in auditing and accounting. The legal opinion rendered by Brunson Chandler & Jones, PLLC, regarding our common stock registered in the registration statement of which this prospectus is a part, is as set forth in its opinion letter included in this prospectus. The address of Brunson Chandler & Jones, PLLC, is Walker Center, 175 S. Main Street, 14^th Floor, Salt Lake City, Utah, 84111.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Sadler, Gibb & Associates, LLC is our independent registered public accounting firm. There have not been any changes in or disagreements with this firm on accounting and financial disclosure or any other matter.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For additional information about our securities, and us we refer you to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, reference is made to the copy of the contract or document filed as an exhibit to the registration statement, and each statement is qualified in all respects by that reference. Copies of the registration statement and the accompanying exhibits and schedules may be inspected without charge (and copies may be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C. 20549.

You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference rooms. Our filings, including the registration statement, will also be available to you on the Internet web site maintained by the SEC at http://www.sec.gov.

Kou You Kai, Ltd.

PROSPECTUS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The Date of This Prospectus is _____

INDEX TO AUDITED FINANCIAL STATEMENTS

June 30, 2018

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Kou You Kai, Ltd.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Kou You Kai, Ltd. (“the Company”) as of June 30, 2018, the related consolidated statements of operations, stockholders’ deficit and cash flows for the period from inception on May 16, 2018 through June 30, 2018 and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2018, and the results of its operations and its cash flows for the period from inception on May 16, 2018 through June 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2018

Salt Lake City, UT

October 5, 2018

KOU YOU KAI, LTD. AND SUBSIDIARY
Consolidated Balance Sheet


			June 30,
			2018

ASSETS

CURRENT ASSETS

	Cash		$	166,455
	Prepaid expenses			13,608

		Total Current Assets		180,063

		TOTAL ASSETS	$	180,063


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

	Accounts payable and accrued expenses		$	27,588
	Notes payable - related party			185,000

		Total Current Liabilities		212,588

		TOTAL LIABILITIES		212,588


STOCKHOLDERS' DEFICIT

	Preferred stock: $0.001 par value, 10,000,000
	shares authorized, 51 shares issued and outstanding			1
	Common stock: $0.001 par value, 100,000,000
	shares authorized, 5,000,000 shares
	issued and outstanding			5,000
	Stock subscriptions receivable			(86,000)
	Additional paid-in capital			95,301
	Accumulated deficit			(46,827)

		Total Stockholders' Deficit		(32,525)

		TOTAL LIABILITIES AND
		STOCKHOLDERS' DEFICIT	$	180,063

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

KOU YOU KAI, LTD. AND SUBSIDIARY
Consolidated Statement of Operations


			For the
			Period From
			May 16, 2018
			(Inception) to
			June 30,
			2018

REVENUES			$	-

OPERATING EXPENSES

	Professional fees			18,962
	Salaries and wages			15,000
	General and administrative			12,534

		Total Operating Expenses		46,496

LOSS FROM OPERATIONS				(46,496)

OTHER EXPENSES

	Interest expense			(331)

		Total Other Expenses		(331)


NET LOSS			$	(46,827)

BASIC AND DILUTED LOSS
PER COMMON SHARE			$	(0.01)

WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING – BASIC AND DILUTED				4,022,222

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

KOU YOU KAI, LTD. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity (Deficit)\

											Deficit
											Accumulated		Total
							Additional		Stock		During the		Stockholders'
	Preferred Stock			Common Stock			Paid-In		Subscriptions		Development		Equity
	Shares	Amount		Shares	Amount		Capital		Receivable		Stage		(Deficit)

Balance at inception on
May 16, 2018	-	$	-	-	$	-	$	-	$	-	$	-	$	-

Issuance of founders' shares	51		1	4,000,000		4,000		(4,001)		-		-		-

Issuance of common stock
for cash	-		-	500,000		500		99,500		(86,000)		-		14,000

Issuance of common stock
in acquisition of subsidiary	-		-	500,000		500		(500)		-		-		-

Capital contributed by
shareholder	-		-	-		-		302		-		-		302

Net loss for the period from inception
on May 16, 2018 through
June 30, 2018	-		-	-		-		-		-		(46,827)		(46,827)

Balance June 30, 2018	51	$	1	5,000,000	$	5,000	$	95,301	$	(86,000)	$	(46,827)	$	(32,525)

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

KOU YOU KAI, LTD. AND SUBSIDIARY
Consolidated Statement of Cash Flows

				For the
				Period From
				May 16, 2018
				(Inception) to
				June 30,
				2018

OPERATING ACTIVITIES
	Net loss			$	`(46,827)`
	Adjustments to reconcile net loss to net cash
	used in operating activities:				`-`
	Changes in operating assets and liabilities:
		Prepaid expenses			`(13,608)`
		Accounts payable and accrued expenses			`27,588`

			Net Cash Used in Operating Activities		`(32,847)`


INVESTING ACTIVITIES					`-`


FINANCING ACTIVITIES
		Proceeds from common stock issued for cash			`14,000`
		Capital contributed by shareholder			`302`
		Proceeds from notes payable - related party			`185,000`

			Net Cash Provided by Financing Activities		`199,302`

		NET INCREASE IN CASH			`166,455`

		CASH AT BEGINNING OF PERIOD			`-`

		CASH AT END OF PERIOD		$	`166,455`


SUPPLEMENTAL DISCLOSURES OF
	CASH FLOW INFORMATION

	CASH PAID FOR:
		Income taxes		$	`-`
		Interest			`-`

	NON-CASH FINANCING AND INVESTING ACTIVITIES:
		Issuance of founders' shares		$	`4,001`

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

KOU YOU KAI, LTD. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

June 30, 2018

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of Kou You Kai and its subsidiary, Liquid Dynamics, Inc. All significant inter-company balances and transactions have been eliminated in consolidation.

Accounting Method

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.

Use of Estimates

Cash and Cash Equivalents

Property, Plant and Equipment

Building and leasehold improvements	10-25 years
Machinery and equipment	5 years
Furniture and fixtures	3-7 years

KOU YOU KAI, LTD. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property, Plant and Equipment

Impairment of Long-Lived Assets

The Company recognized no impairment expense during the period from inception on May 16, 2018 through June 30, 2018.

Fair Value of Financial Instruments

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

Stock-based Compensation

Stock compensation expense includes compensation expense for all stock-based compensation awards, based on the grant-date fair value estimated in accordance with the provisions of ASC 718.

KOU YOU KAI, LTD. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Basic and Diluted Loss per Share

Reporting Segments

Recent Accounting Pronouncements

KOU YOU KAI, LTD. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

June 30, 2018

NOTE 2 - GOING CONCERN

NOTE 3 – NOTES PAYABLE – RELATED PARTY

On May 16, 2018, the Company borrowed $25,000 from a related-party. Pursuant to the terms of the note, the principal accrues interest at a rate of five percent per annum, is unsecured, and is due in full on April 20, 2019. At June 30, 2018 the total outstanding principal balance due to the lender remained at $25,000, and accrued interest on the notes totaled $243.

On June 26, 2018, the Company borrowed $160,000 from a related-party. Pursuant to the terms of the note, the principal accrues interest at a rate of five percent per annum, is unsecured, and is due in full on June 25, 2019. At June 30, 2018 the total outstanding principal balance due to the lender remained at 160,000, and accrued interest on the notes totaled $88.

NOTE 4 – STOCKHOLDERS’ EQUITY

The Company has 10,000,000 preferred shares authorized at a par value of $0.001 and 100,000,000 common shares authorized at par value of $0.001. As of June 30, 2018, the Company has 51 shares of preferred stock and 5,000,000 shares of common stock issued and outstanding.

On May 16, 2018, the Company issued an aggregate of 4,000,000 shares of common stock to five individuals. The shares were issued in consideration of the individuals’ efforts to establish the Company prior to its formal inception and have been classified as founders’ shares.

On May 16, 2018, the Company issued 51 series A preferred shares to its Chief Financial Officer, pursuant to an employment agreement. The preferred shares issued represent a 51% controlling interest, and were classified as founders’ shares with a value of zero. The preferred shares have no dividend rights liquidation preference, or conversion rights. The preferred shares have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of common stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (x) the numerator.

On June 29, 2018, the Company issued an aggregate of 500,000 shares of common stock to fifty individuals. The shares were issued for cash at $0.20 per share. As of June 30, 2018, the Company had received $14,000 of the subscribed $100,000 consideration, leaving $86,000 as stock subscriptions receivable as of June 30, 2018.

KOU YOU KAI, LTD. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

June 30, 2018

NOTE 4 – STOCKHOLDERS’ EQUITY (Continued)

On June 29, 2018 the Company entered into a Stock Purchase Agreement to acquire all of the issued and outstanding common shares of Liquid Dynamics, Inc. Pursuant to the terms of the Agreement, the Company issued 500,000 shares of its common stock in order to consummate the transaction. At the time of the acquisition, Liquid Dynamics had a net entity value of $100. Accordingly, the aggregate value of the common shares issued to acquire Liquid Dynamics was $100, or $0.0002 per share. As a result of the transaction, Liquid Dynamics, Inc. became a wholly-owned subsidiary of the Company.

NOTE 5 – INCOME TAXES

No provision has been made in the financial statements for income taxes because the Company has accumulated losses from operations since inception. Any deferred tax benefit arising from the operating loss carried forward is offset entirely by a valuation allowance since it is currently not likely that the Company will be significantly profitable in the near future to take advantage of the losses.

The provision for income taxes consists of the following:

	For the Period Ended
	June 30,
	2018		2017
Current taxes	$	(15,921)	$	-
Valuation allowance		15,921		-

Total provision for income taxes	$	-	$	-

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 21% to pretax income from continuing operations for the period ended June 30, 2018 due to the following:

	June 30,
	2018		2017
Loss carry forwards	$	(15,921)	$	-
Valuation allowance		15,921		-

Net deferred taxes	$	-	$	-

At June 30, 2018, the Company had net operating loss carry forwards of approximately $42,834 that may be offset against future taxable income through 2039. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company has not had operations resulting in net income and is carrying a large Net Operating Loss as disclosed above. Since it is not thought that this Net Operating Loss will ever produce a tax benefit, even if examined by taxing authorities and disallowed entirely, there would be no effect on the financial statements.

NOTE 6 – SUBSEQUENT EVENTS

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no material subsequent events to report, other than those listed above.

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Securities and Exchange Commission Registration Fee	$	600.00
Transfer/Edgar Agent Fees	$	1,400.00
Accounting Fees and Expenses	$	7,000.00
Legal Fees	$	16,000.00
Total	$	25,000.00

All amounts are estimates other than the Commission’s registration fee. We are paying all expenses of the offering listed above.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our officers and directors are indemnified as provided by the Wyoming Business Corporation Act and our By-Laws.

Under the Wyoming Business Corporation Act, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company’s Articles of Incorporation. Our Articles of Incorporation do not specifically limit our directors’ immunity. Excepted from that immunity are: (a) liability in connection with a proceeding by or in the right of the corporation other than for expenses incurred in connection with the proceeding; (b)receipt by the officer or director of a financial benefit to which they are not entitled; (c) intentional infliction of harm on the corporation or the shareholders; or (d) a willful violation of criminal law.

Article 7.6 of our By-laws provide that we will indemnify our directors and officers to the fullest extent permitted by Wyoming law. The expenses of directors and officers incurred in defending a civil or criminal proceeding must by us as they are incurred and in advance of the final disposition of the proceeding, upon receipt of an undertaking by the director or officer to repay the amount if it is ultimately determined by a court that the director or officer is not entitled to be indemnified by us. Our Board of Directors may cause the Company to purchase and maintain insurance on behalf of any person who is or was a director or officer against any liability asserted against such person and incurred in any capacity, whether or not the Company would have the power to indemnify that person.

ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES

Since inception, May 16, 2018, we have issued the following unregistered securities:

At inception, we issued 4,000,000 shares of founders’ common stock to our initial officers and directors. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

On June 29, 2018, we issued 500,000 shares of common stock to Doug Nosler, then the sole owner of Liquid Dynamics, as consideration for acquiring Liquid Dynamics as a wholly-owned subsidiary. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

On June 30, 2016, we closed an offering through which we sold 500,000 shares of our common stock to fifty individual investors at $0.20 per share in reliance on the exemption from registration provided by Regulation S promulgated under the Securities Act as the securities were offered in offshore transactions, there were no directed selling efforts made in the United States, and the securities were offered to non-U.S. persons only.

ITEM 16. EXHIBITS

Exhibit		Description
3.1		Articles of Incorporation of Registrant*
3.2		Articles of Incorporation of Liquid Dynamics*
3.3		By-Laws of Registrant*
5.1		Opinion Regarding Legality*
10.1		Form of Offering Subscription Agreement*
10.2		Employment Agreement with Fred McLauchlin*
10.3		Stock Purchase Agreement with Liquid Dynamics*
10.4		Employment Agreement with Doug Nosler*
14.1		Code of Ethics of Registrant*
23.1		Consent from Independent Registered Public Accounting Firm*
23.2		Consent from Legal Counsel (included in Exhibit 5.1)*

*Filed herewith

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to:

(1)	File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

	(i)	Include any prospectus required by Section 10(a)(3) of the Securities Act;

	(ii)	Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)

Include any additional or changed material information on the plan of distribution.

(2)	For determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering.

(3)	File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4)	For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

	(i)	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

	(ii)	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

	(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

	(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

That, for the purpose of determining liability under the Securities Act to any purchaser:

Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Japan, on October 9, 2018.

Kou You Kai, Ltd.

By:	/s/ Masaru Tanzawa
	Masaru Tanzawa
	CEO and Director

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Name	Title	Date

/s/ Masaru Tanzawa	Director and Principal Executive Officer,	October 9, 2018
Masaru Tanzawa
/s/ Fred McLauchlin	Principal Accounting Officer and Secretary	October 9, 2018
Fred McLauchlin
/s/ Tsunenobu Arai	President and Director	October 9, 2018
Tsunenobu Arai
/s/ Sachiko Shinoda	Director	October 9, 2018
Sachiko Shinoda

STOCK PURCHASE AGREEMENT

AMONG

KOU YOU KAI LTD.

LIQUID DYNAMICS, INC.,

AND

THE STOCKHOLDER OF LIQUID DYNAMICS, INC.

June 29, 2018

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT, (this “Agreement”) is made as of June 29, 2018 by and among KOU YOU KAI LTD., a Wyoming corporation (the “Buyer”), Liquid Dynamics, Inc., a Wyoming corporation (the “Company”), and Doug Nosler, the sole stockholder of the Company (“Stockholder”). Capitalized terms not otherwise defined in this Agreement are used as defined in Appendix A hereto.

RECITALS

WHEREAS, the Company designs and develops environmental solutions focused on water applications for the oil and gas industry (the “Business”);

WHEREAS, the Stockholder owns all of the issued and outstanding capital stock of the Company (the “Shares”); and

WHEREAS, Buyer desires to purchase from the Stockholder, and the Stockholder desires to sell to the Buyer, all of the Shares, upon the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1
Purchase of Shares

1.1Agreement of Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Stockholder shall sell, transfer, assign and deliver unto Buyer and its successors and assigns forever, and Buyer shall purchase, all of the Shares, free and clear of all Encumbrances, for the Purchase Price.

1.2Purchase Price and Payment Terms.

(a)The aggregate purchase price (the “Purchase Price”) shall be paid as follows: (i) 500,000 shares of common stock of the Company; and (ii) the Buyer shall assume and pay for all fees related to the development and production of a prototype demonstration unit (the “LD Unit” (estimated to be approximately $250,000).

(b)At the Closing, Buyer shall deliver to the Stockholder (i) the Purchase Price; and (ii) restricted stock agreements, in substantially the form of Exhibit B attached hereto (the “Restricted Stock Agreements”).

1.3Offset Rights. Buyer shall have the right to set off against its payments under this 0 the full amount of any Losses (as defined in Section 0) arising out of any breach of this Agreement by the Stockholder, relating to actions or failure to act by the Stockholder, or any

amounts for which the Buyer would be entitled to indemnification from the Stockholder, each in accordance with Section 0 hereof.

ARTICLE 2
Representations and Warranties of the COMPANY
and the Stockholder

The Company and the Stockholder, jointly and severally, hereby represent and warrant to the Buyer as follows:

2.1Corporate Organization. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Wyoming. The Company has the power to own, operate, and lease the assets and properties owned, operated, or leased by Company and to carry on the Business as now being conducted. The Company is duly qualified or licensed to do business as a foreign corporation, and is in good standing, in each jurisdiction in which the character or location of the properties owned or leased by it or the nature of the Business makes such qualification necessary. The Stockholder have heretofore delivered or made available to the Buyer accurate and complete copies of the Company’s minute book(s) and the charter documents, bylaws and certificates of authority as a foreign corporation, as currently in effect, of the Company.

2.2Due Authorization; Execution and Enforceability; Consents; No Conflict.

(a)The Company has full corporate power and authority to execute and deliver this Agreement and all agreements, documents and instruments to be executed and delivered by the Company in connection herewith, to consummate the transactions contemplated hereby and thereby and to perform the Company’s obligations hereunder and thereunder. The Stockholder has full capacity, right, power and authority to execute and deliver this Agreement and all agreements, documents and instruments to be executed and delivered by such Stockholder in connection herewith, to consummate the transactions contemplated hereby and thereby and to perform such Stockholder’s obligations hereunder and thereunder. The Stockholder has, or will have on the Closing Date, the full right to transfer, assign and deliver his or her entire interest in the Shares to the Buyer.

(b)This Agreement has been duly executed and delivered by the Company and the Stockholder. The execution and delivery by the Company and the Stockholder of this Agreement and all other such agreements, certificates and documents, the performance of their respective obligations hereunder and thereunder and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company and the Stockholder, and no other corporate action or proceeding on the part of the Company or any Stockholder is necessary to authorize the execution and delivery of, or the performance of its respective obligations under, this Agreement and all other such agreements, certificates and documents or to consummate the transactions contemplated hereby or thereby. This Agreement and all other agreements, certificates and documents executed or to be executed by the Company in connection herewith, constitute or, when executed and delivered, will constitute valid, legal and binding obligations of the Company, enforceable against the Company in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditor’s rights generally and general equity principles. This

Agreement and all other agreements, certificates and documents executed or to be executed by any Stockholder in connection herewith, constitute or, when executed and delivered, will constitute valid, legal and binding obligations of such Stockholder, enforceable against such Stockholder in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditor’s rights generally and general equity principles.

(c)Except as set forth on Section 0 of the Disclosure Schedule, no authorization, approval or consent of, or notice to or filing or registration with, any Governmental Body or any other Person, is required in connection with the execution and delivery by the Company and the Stockholder of this Agreement and the other agreements, documents and instruments to be executed and delivered by the Company and the Stockholder in connection herewith, the consummation of the transactions contemplated hereby and thereby and the performance by the Stockholder of their respective obligations hereunder and thereunder.

(d)Except as set forth on Section 0 of the Disclosure Schedule, the execution and delivery by the Company and the Stockholder of this Agreement and the other agreements, documents and instruments to be executed and delivered by Company and the Stockholder in connection herewith, the consummation by the Company and the Stockholder of the transactions contemplated hereby and thereby and the performance by the Company and the Stockholder of their respective obligations hereunder and thereunder do not and will not: (i) conflict with or violate any of the terms of the Articles of Incorporation or Bylaws of the Company ; (ii) violate or conflict with any Law or any Order, applicable to the Company, or any Stockholder, (iii) violate or conflict with the terms of, or result in the acceleration of, any indebtedness or obligation of the Company under, or violate or conflict with or result in a breach of, or constitute a default under, any indenture, mortgage, deed of trust, contract, agreement or instrument to which the Company is a party or by which any of its assets or properties is bound or affected, (iv) result in the creation or imposition of any Encumbrance of any nature upon any of the assets or properties of the Company , or (v) constitute an event permitting termination of any Contract, Permit or other right of the Company .

2.3Subsidiaries. The Company has no subsidiaries.

2.4Financial Statements. The Company agrees to deliver all financial statements requested by the Buyer for the purposes of financial review and for the Buyer’s audit. The Financial Statements shall be complete and correct in all material respects and fairly present the financial condition, results of operations, changes in stockholder’s equity, and cash flow of the Company as at the respective dates thereof and for the periods referred to therein, all in accordance with GAAP.

2.5Absence of Liabilities; No Indebtedness.

(a)Except as set forth in Section 0 of the Disclosure Schedule, the Company does not have any Liabilities other than those disclosed herein.

(b)Except as set forth in Section 0 of the Disclosure Schedule, the Company does not have, and will not have as of the Closing, any indebtedness, including without limitation,

money borrowed, indebtedness owed to the Stockholder or former stockholders, the deferred purchase price of assets, letters of credits or capitalized leases, other than trade accounts payable generated by the Company in the Ordinary Course of Business.

2.6Absence of Changes. Since June 21, 2018, the Business has been operated in the Ordinary Course of Business and, except as set forth on Section 0 of the Disclosure Schedule, there has not been incurred, nor has there occurred:

(a)any damage, destruction or loss (whether or not covered by insurance), adversely affecting the Business or assets of the Company in excess of $5,000;

(b)any strikes, work stoppages or other labor disputes involving the employees of the Company;

(c)transfer, pledge or other disposition of any of the assets of the Company having an aggregate book value of $5,000 or more (except sales in the Ordinary Course of Business);

(d)any declaration or payment of any dividend or other distribution in respect of its Stockholder interests or any redemption, repurchase or other acquisition of its Stockholder interests;

(e)any amendment, termination, waiver or cancellation of any material Contract or any termination, amendment, waiver or cancellation of any material right or claim of the Company under any material Contract (except in each case in the Ordinary Course of Business);

(f)any (i) general uniform increase in the compensation of the employees of the Company (including, without limitation, any increase pursuant to any bonus, pension, profit-sharing, deferred compensation or other plan or commitment), other than in the Ordinary Course of Business, (ii) increase in any such compensation payable to any individual officer, partner, consultant or agent thereof, other than in the Ordinary Course of Business, or (iii) loan or commitment therefor made by the Company to any officer, partner, employee, consultant or agent of the Company ;

(g)any change in the accounting methods, procedures or practices followed by the Company or any change in depreciation or amortization policies or rates theretofore adopted by the Company;

(h)any Tax election, any amended Tax Return, any closing agreement, any settlement of any Tax claim, assessment or Liability, any surrender of any right to claim a refund of Taxes, any consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, or any other similar action relating to the filing of any Tax Return or the payment of any Tax;

(i)any material change in policies, operations or practices of the Company with respect to business operations followed by the Company, including, without limitation, with

respect to selling methods, returns, discounts or other terms of sale, or with respect to the policies, operations or practices of the Company concerning the employees of the Company;

(j)any capital appropriation or expenditure or commitment therefor on behalf of the Company in excess of $5,000 individually or $10,000 in the aggregate;

(k)any write-down or write-up of the value of any inventory or equipment of the Company or any increase in inventory levels in excess of historical levels for comparable periods;

(l)any account receivable in excess of $2,000 or note receivable in excess of $5,000 owing to the Company which (i) has been written off as uncollectible, in whole or in part, (ii) has had asserted against it any claim, refusal or right of setoff, or (iii) the account or note debtor has refused to, or threatened not to, pay for any reason, or such account or note debtor has become insolvent or bankrupt;

(m)any other change in the condition (financial or otherwise), business operations, assets, earnings, business or prospects of the Company which has, or could reasonably be expected to have, a material adverse effect on the assets, business or operations of the Company;

(n)any grant of license or sublicense of any rights under or with respect to any the Company Intellectual Property; or

(o)any agreement, whether in writing or otherwise, for the Company to take any of the actions enumerated in this Section 0.

2.7Directors and Officers of the Company. Doug Nosler is the sole director, officer and Shareholder of the Company.

2.8Capitalization.

(a)The authorized capital stock of the Company consists of 1,000,000 shares of common stock, par value $0.001 (“Common Stock”), of which 1,000,000 shares of Common Stock are issued and outstanding. The Company does not have any preferred class of stock authorized, issued or outstanding. All of such issued and outstanding shares of Common Stock constitute the Shares. The Shares have been validly issued, are fully paid and nonassessable and are owned of record and beneficially by the Stockholder. Except for the Shares, there are no other authorized or issued and outstanding equity securities of the Company of any kind, class or character. There are no outstanding subscriptions, options, warrants, or other agreements or commitments obligating the Company to issue any additional shares of its capital stock of any class, or any options or rights with respect thereto, or any securities convertible into any shares of stock of any class. None of the Shares have been issued in violation of, or are subject to, any preemptive or subscription rights. The consummation of the transactions contemplated hereby shall convey to Buyer good and valid title to the Shares, free and clear of all Encumbrances.

2.9Compliance with Laws; Permits.

(a)Except as set forth in Section 0 of the Disclosure Schedule, the Company has complied, and is now complying with all Laws applicable to the Business and there is no investigation by any Governmental Body pending or, to the Knowledge of the Stockholder, threatened against the Company or the Stockholder or any basis therefor.

(b)Section 0 of the Disclosure Schedule contains a complete and accurate list of all Permits which are required for the operation of the Business as presently conducted and as presently intended to be conducted. The Company is currently in possession of all Permits which are required for the operation of the Business as presently conducted and as presently intended to be conducted. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 0 of the Disclosure Schedule.

2.10Environmental Matters.

(a)The operations of the Business are and have been in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining in good standing and complying with all Environmental Permits and no action or proceeding is pending or, to the Knowledge of the Stockholder, threatened to revoke, modify or terminate any such Environmental Permit, and, to the Knowledge of the Stockholder, no facts, circumstances or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require currently unbudgeted capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.

(b)The Company is not the subject of any outstanding written Order or Contract with any Governmental Body or Person with respect to any Environmental Laws or any Release or threatened Release of a Hazardous Material, or requiring the Company to take any action to (i) clean up, remove, treat or in any other way address any Hazardous Material; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) to correct a condition of noncompliance with Environmental Laws.

(c)No claim has been made or is pending, or to the Knowledge of the Stockholder, threatened against the Company alleging either or both that the Company may be in violation of any Environmental Law or Environmental Permit, any may have any Liability under any Environmental Law.

(d)To the Knowledge of the Stockholder, no facts, circumstances or conditions exist with respect to the Company or any property currently or formerly owned, operated or leased by the Company with respect to the Business or any property to which the Company arranged for the disposal or treatment of Hazardous Materials related to the Business that could reasonably be expected to result in the Company incurring unbudgeted Environmental Costs and Liabilities.

(e)There are no investigations of the business, operations, or currently or, to the Knowledge of the Stockholder, previously owned, operated or leased property of the Company pending or, to the Knowledge of the Stockholder, threatened which could lead to the imposition of any Environmental Costs and Liabilities or liens under Environmental Law.

(f)The transactions contemplated hereunder do not require the consent of or filings with any Governmental Body with jurisdiction over the Company with respect to environmental matters.

(g)There is not located at any of the properties currently or (while owned, operated or leased by the Company) previously owned, operated or leased by the Company related to the Business any (i) underground storage tanks, (ii) landfill, (iii) surface impoundment, (iv) asbestos-containing material, or (v) equipment containing polychlorinated biphenyls.

(h)The Company does not have residual Liability with respect to abandoned or former properties used or useful in the Business, including any obligation to remove or demolish on-site structures or close wastewater lagoons or ponds, and, to the Knowledge of the Stockholder, the Leased Real Property has no structures or features, including abandoned buildings or wastewater lagoons or ponds (other than those being used in compliance with Environmental Laws) requiring removal, demolition, or closure.

(i)The Company has provided to Buyer all environmentally related audits, studies, reports, analyses, and results of investigations that have been performed with respect to the currently or previously owned, leased or operated properties of the Company used or useful in the Business or material documentation relating to pending or threatened claims or investigations pursuant to Environmental Laws and relating to the Business, to the extent such materials are in the possession, custody or control of the Company .

2.11Real Property.

(a)Section 0 of the Disclosure Schedule sets forth all real property and interests in real property leased, licensed or subleased by the Company and used in or related to the Business. The Company does not own or lease any real property used in or related to the Business. The Company is not in default under any Real Property Lease, and no event has occurred and no circumstance exists which, if not remedied, and whether with or without notice or the passage of time or both, would result in such a default. The Company does not have received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company under any Real Property Lease and, to the Knowledge of the Stockholder, no other party is in default thereof, and no party to a Real Property Lease has exercised any termination rights with respect thereto.

(b)The Company does not have received any notice from any insurance company that has issued a policy with respect to the Leased Real Property requiring performance of any structural or other repairs or alterations to such Leased Real Property.

(c)The Company does not own or hold, nor is the Company obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real estate or any portion thereof or interest therein related to the Business.

2.12Machinery and Equipment. Section 0 of the Disclosure Schedule sets forth a list of (a) all material machinery, equipment, motor vehicles, furniture and fixtures owned by the Company (collectively, the “Owned Equipment”) and (b) all leases or other agreements, whether written or oral, under which the Company is lessee of or holds or operates any items of machinery, equipment, motor vehicles, furniture and fixtures or other property (other than real property) owned by any third party (collectively, the “Leased Equipment”). The Owned Equipment and the Leased Equipment are in good operating condition, maintenance and repair, reasonable wear and tear excepted, and are not in need of maintenance or repairs except for maintenance or repairs which are routine, ordinary and are not material in costs or nature.

2.13Title to Assets; Adequacy.

(a)The Company has good and valid title to all assets, rights, interests and other properties, real, personal and mixed, tangible and intangible, owned by them (collectively, the “Assets”), free and clear of all Encumbrances, except for Encumbrances specified on Section 0 of the Disclosure Schedule and liens for Taxes not yet due and payable. The Assets (i) include all properties and assets (real, personal and mixed, tangible and intangible) owned by the Company or used or held for use in the conduct of the Business, and (ii) do not include (A) any contracts for future services, prepaid items or deferred assets or charges, the full value or benefit of which will not be transferable to and usable by Buyer, or (B) any goodwill, organizational expense or other similar intangible asset. The tangible assets included within the Assets are physically identifiable and are in the possession or control of the Company and no other Person has a right to possession or claims possession of all or any part of such Assets, except the rights of lessors of leased equipment and Leased Real Property under their respective contracts and leases. The product of the Business does not utilize the intellectual property of any other person or entity to conduct its Business or build its product.

(b)Except as set forth on Section 0 of the Disclosure Schedule, the Assets and the Leased Real Property are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing.

(c)Except as set forth Section 0 of the Disclosure Schedule, no officer, director, Stockholder or Affiliate of the Company or any individual in such officer’s, director’s or Stockholder’s immediate family is a party to any Contract or transaction with the Company or has any direct or indirect interest in any of the Assets.

2.14Contracts.

(a)Set forth on Section 0 of the Disclosure Schedule is a list of each Contract under which the Company or their Business or Assets are subject or bound. True, correct and complete copies of all written Contracts and written summaries of all oral Contracts described or required to be described on Section 0 have been furnished to Buyer.

(b)Except as set forth in Section 0 of the Disclosure Schedule: (i) none of the Company, or any Stockholder has received any written claim, or to the Knowledge of the Stockholder, any other claim, that the Company has breached any of the terms or conditions of any Contract set forth or required to be set forth on Section 0 of the Disclosure Schedule; (ii) each

Contract is in full force and effect in the form delivered to or made available to Buyer and, to the Knowledge of the Stockholder, there is no material breach or default by any party thereto; and (iii) there are no facts or conditions which have occurred or are, to the Knowledge of the Stockholder, anticipated which, through the passage of time or the giving of notice, or both, would constitute a default under any Contract giving rise to a right to cancel or a claim for damages or would cause the acceleration of any obligation of any party thereto or the creation of an Encumbrance which is reasonably likely to materially limit the use, modification or sale of any asset having a value in excess of $10,000.

(c)With respect to each Contract, regardless of amount, that is a prime contract, subcontract, teaming agreement or arrangement, joint venture, ordering agreement, blanket purchase agreement, letter agreement, purchase order, delivery order, task order, grant, cooperative agreement, bid, change order or other commitment or funding vehicle between the Company and: (i) a Governmental Body; (ii) any prime contractor to a Governmental Body (a “Government Prime Contractor”); or (iii) any subcontractor with respect to any Contract with a counterparty described in subclauses (i) or (ii) (a “Government Subcontractor”) (such Contracts, being the “Government Contracts”), each of the Company and has fully complied with and is currently in compliance with all material terms and conditions of such Government Contracts, including all clauses, provisions, representations, certifications and requirements incorporated expressly or by reference therein, and with all Laws pertaining to such Government Contracts, and no Governmental Body, Government Prime Contractor or Government Subcontractor has provided written notice to the Company that the Company or any of the has violated any Law or materially breached any clause, provision, representation, certification, or requirement pertaining to such Government Contracts. The Company does not have received written notice of any termination for default, pending termination, cure notice or show cause notice by or on behalf of a Governmental Body or Government Prime Contractor relating to any Government Contract.

(d)To the Knowledge of the Stockholder there is no pending, threatened, administrative, civil or criminal investigation, indictment or civil charge with respect to any action, irregularity, misstatement or omission arising under or relating to any Government Contract, and the Company has not conducted or initiated any internal investigation or made any mandatory or voluntary disclosure to any Governmental Body or Government Prime Contractor with respect to any: (A) matter required to be disclosed by any Law or provision pertaining to a Government Contract, or (B) irregularity, misstatement or omission arising under or relating to any Government Contract. Further, none of the Company or any of its or their respective directors, officers, principals or other individuals having primary management or supervisory responsibilities with respect to thereto, is debarred or suspended or proposed for debarment by any Governmental Body or otherwise has been declared ineligible for contracting with any Governmental Body.

2.15Affiliate Transactions. Except as disclosed on Section 0 of the Disclosure Schedule, no officer, director, stockholder or employee of the Company or immediate family member of the foregoing or any entity controlled by any of the foregoing (i) is a party to any Contract or transaction with the Company (other than any Contract relating solely to such Person’s employment with the Company) (each an “Affiliate Transaction”), (ii) or has any interest in any Leased Real Property, or (iii) owns an interest in, or (in the case of individuals) serves as an officer or director of, any Person that operates a business that is competitive with the Company . Each Affiliate Transaction is upon terms no less favorable to the Company than the terms the Company,

as applicable, would have obtained had it entered into the same transaction with an un-Affiliated Person, in an “arms-length” transaction, after good faith negotiations.

2.16Litigation. There is no claim, action, suit or proceeding at law or in equity by any Person, or any arbitration or any investigation, administrative or other proceeding by or before any Governmental Body pending, or, to the Knowledge of the Stockholder, threatened, against the Company, or any properties or rights of the Company or against or affecting the Shares or the transactions contemplated hereby. To the Knowledge of the Stockholder, no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such claim, action, suit or proceeding. Neither the Company nor the Stockholder, nor any Assets or properties owned, leased or used or held for use by the Company are subject to any Order which: (a) prohibits or restricts the consummation of the transactions contemplated hereby or the ability of the Company, the or the Stockholder to comply with the terms and conditions hereof; or (b) restricts the ability of the Company to acquire any property or conduct business in any area.

2.17Intellectual Property.

(a)Section 0(i), (ii), (iii) and (iv) of the Disclosure Schedule contains (i) a list and description of (i) all Patents and Trademarks (including all assumed or fictitious names owned by the Company or otherwise under which the Company is conducting business or has within the previous five (5) years conducted business), (ii) all Copyrights owned by the Company , (iii) all Copyrights (including software) licensed to or otherwise used by the Company in connection with the Business, and (iv) all agreements, contracts, licenses, sublicenses, assignments and indemnities which relate to (A) any such Copyrights, Patents or Trademarks, or (B) any Trade Secrets owned by, licensed to or used by the Company in connection with the Business. Except as specifically disclosed in Section 0(a)(i)-(iv) of the Disclosure Schedule, the Company owns the entire right, title and interest in and to the Intellectual Property that is used in the Business, free and clear of any Encumbrance.

(b)All issued Patents and registered Trademarks identified in Section 0 of the Disclosure Schedule are valid and enforceable. To the Knowledge of the Stockholder, all applications for issuance of Patents and all applications to register Trademarks identified in Section 0 of the Disclosure Schedule are in good standing and without challenge by any third party. To the Knowledge of the Stockholder, there are no pending claims, actions or proceeding which challenge the validity of any Intellectual Property rights identified in Section 0 of the Disclosure Schedule or which form the basis for such Intellectual Property rights being adjudicated invalid or unenforceable. The Company has the sole and exclusive right to bring actions for infringement or unauthorized use of the Intellectual Property rights which are included in the Assets and to the Knowledge of the Stockholder, there is no basis for any such action.

(c)No infringement of any Intellectual Property rights of any other Person has occurred or results in any way from the Company’s ’s operations or the conduct of the Business. No claim of any infringement of any Intellectual Property rights of any other Person has been made or asserted against or to the Company in respect of the Company’s ’s operations. None of the Company, or any Stockholder has notice of, and, to the Knowledge of the Stockholder, there is no basis for, a claim against the Company that the operations, activities, products, software,

equipment, machinery or processes of the Company infringe any Intellectual Property rights of any other Person.

(d)All employees, agents, consultants or contractors who have contributed to or participated in the creation or development of any patentable or trade secret material, or copyrightable material, in each case relating to the Business on behalf of the Company, or any predecessor in interest to the Company either: (i) is a party to a “work-for-hire” agreement under which the Company is deemed to be the original owner/author of all property rights therein; or (ii) has executed an assignment agreement assigning to the Company all right, title and interest in such material. Each current and former Employee and independent contractor of the Company (including co-op students and interns), has assigned to the Company all Intellectual Property rights developed, conceived or reduced to practice in the course of such Persons’ employment or engagement with the Company and has waived all non-assignable rights (including moral rights) therein.

(e)The Company has taken commercially reasonable steps to protect rights in confidential information (both of the Company, and that of third Persons that the Company has received under an obligation of confidentiality). The Company has obtained legally binding written confidentiality agreements from all Employees and third parties with whom the Company has shared confidential information (i) of the Company, or (ii) received from others that the Company is obligated to treat as confidential and that require Employees and third parties to keep such information as confidential.

(f)The transactions contemplated by this Agreement will not affect the rights of the Company in or to Company Intellectual Property, including triggering any additional obligations, liabilities or rights to terminate any Contract in respect thereof.

2.18Taxes.

(a)The Company has filed or caused to be filed, within the times and within the manner prescribed by applicable Laws, all Tax Returns which are required to be filed by, or with respect to, the Company. The Tax Returns reflect accurately all Liabilities for Taxes of the Company for the periods covered thereby. All Taxes payable by, or due from, the Company (including all Taxes attributable to periods ending on or before the Closing Date), whether or not shown on any Tax Return, have been fully and timely paid or adequately disclosed and fully provided for in the Company’s books and (to the extent required by GAAP) in the Financial Statements. No examination or audit of any Tax Return is currently in progress and no examination or audit of any Tax Return has been made in the last five (5) years. There are no outstanding agreements or waivers extending, or having the effect of extending, the statutory period of limitation within which to assess any amount or the filing due date applicable to any Tax Return. The Company has duly withheld, collected and timely paid over, or holds for such payment, to the proper Governmental Body all Taxes required to be withheld by or on behalf of it. No Governmental Body is asserting or, to the Knowledge of the Stockholder, threatening to assert against the Company any deficiency, proposed deficiency, or claim for additional Taxes or any adjustment thereof with respect to any period for which a Tax Return has been filed, for which Tax Returns have not yet been filed or for which Taxes are not yet due and payable. There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company.

The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code. The Buyer will not be required to deduct and withhold any amount under Section 1445(a) of the Code or otherwise upon the transfer of the Shares to the Buyer. No consent under Section 341 of the Code has been made affecting the Company. There is no agreement, plan or arrangement covering any current or former employee or independent contractor of the Company that will or could give rise, separately or in the aggregate, to any actual or deemed payment of any “excess parachute payments” within the meaning of Section 280G of the Code.

(b)The Company is, and since its date of formation has been, properly classified as a corporation under subchapter C of the Code and any applicable state, local or foreign Tax Laws for federal and applicable state income Tax purposes.

2.19Employees. As of the date of this Agreement, the Company employs only the Shareholder (“Employee”), and retains only those contractors, consultants, or other agents (“Additional Personnel”) whose names, positions and salaries are listed on Section 0 of the Disclosure Schedule. Except as set forth on Section 0 and other than for customary “at will” oral employment arrangements, neither the Company have any written, oral or implied employment contracts with any Employees or Additional Personnel. As of the date hereof:

(a)the Company is in compliance, in all material respects, with all applicable Laws relating to employment or employment practices, including all such Laws relating to wages, hours, classification of employees as exempt or non-exempt under the Fair Labor Standards Act and any applicable state or local law or regulation, collective bargaining and labor relations, classification of independent contractors, equal opportunity, reasonable accommodations for disabled employees, discrimination , retaliation, whistleblower rights and protections, civil rights, employment and reemployment rights of members of the uniformed services, employee leave, safety and health, immigration , unemployment insurance, data privacy, background check reports, the application process, new hire reporting, child labor, workers’ compensation, and the collection and payment of withholding and/or social security Taxes and any other employment Tax. All internal complaints made by Employees, former employees, or Additional Personnel that pertain to any applicable Laws relating to employment or employment practices have been disclosed. The Company does not have any liability with respect to any prior violation of any such Laws and no action, suit, claim, investigation or other proceeding is pending or threatened alleging any such violation of Law with respect to the Employees, former employees and Additional Personnel of the Company;

(b)The Company is not delinquent in the payment (i) to or on behalf of its past or present Employees or Additional Personnel of any wages, salaries, commissions, bonuses, benefit plan contributions or other compensation for all periods prior to the date hereof, or (ii) of any amount which is due and payable to any state or state fund pursuant to any workers’ compensation statute, rule or regulation or any amount which is due and payable to any workers’ compensation claimant;

(c)there are no collective bargaining agreements currently in effect between or among the Company, or any labor union or organization representing any Employees of the Company;

(d)no collective bargaining agreement is currently being negotiated by the Company;

(e)to the Knowledge of the Stockholder, there are no union organizational efforts being presently made or threatened by or on behalf of any labor union with respect to the Employees of the Company and there has been no formal or informal request to the Company for collective bargaining or for an employee election from any labor union or from the National Labor Relations Board;

(f)no dispute exists between the Company and any of its sales representatives or, to the Knowledge of the Stockholder, between any such sales representatives with respect to territory, commissions, products or any other terms of their representation; and

(g)no Employee or Additional Personnel of the Company is a party to, or is otherwise bound by, any contract or arrangement, including any confidentiality, noncompetition or proprietary rights agreement, with any entity other than the Company , or is subject to any court Order, that in any way materially adversely affects or could reasonably be expected to affect in any material respect (i) the performance of such individual’s duties for the Company , or (ii) the ability of the Company to conduct the Business.

No Employees of the Company will be entitled to any severance or other payment in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. The Company does not have extended to any of its Employees any loans or credit.

2.20Employee Benefits. The Company does not have any Employee Benefit Plans.

The Company does not maintain or contribute to, and has never maintained or contributed to, an Employee Benefit Plan that is either (i) subject to Title IV of ERISA, (ii) a “multiemployer plan” within the meaning of Section 3(37) of ERISA, or (iii) subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA. No Employee Benefit Plan is a multiple employer plan within the meaning of Section 413(c) of the Code. No Employee Benefit Plan is a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA.

2.21Insurance. Section 0 of the Disclosure Schedule contains: (a) a list of all policies of liability, theft, fidelity, life, fire, product liability, workmen’s compensation, health and any other insurance and bonds maintained by, or on behalf of, the Company on their respective properties, operations, inventories, assets, business or personnel (specifying the insurer, amount of coverage, type of insurance, policy number and any pending claims); and (b) a brief description of all claims in excess of $5,000 reported to insurers within the past three (3) years under any of such policies. All such insurance policies (i) are valid, outstanding, and enforceable, (ii) taken together, provide adequate insurance coverage for the assets and the operations of the Company for all risks normally insured against by a Person carrying on the same business as the Company, (iii) are sufficient for compliance with all Laws and Contracts to which the Company is a party or by which it is bound, (iv) will continue in full force and effect following the consummation of the transactions contemplated by this Agreement, and (v) do not provide for any retrospective premium adjustment or other experienced-based liability on the part of the Company. Neither the

Company nor the Stockholder has received (A) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (B) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder. The Company has paid all premiums due, and has otherwise performed all of its obligations, under each policy to which the Company is a party or that provides coverage to the Company, or directors thereof. The Company has given notice to the insurer of all claims that may be insured thereby. Except as set forth in Section 0 of the Disclosure Schedule, each policy of the Company is, where applicable, an “occurrences based” policy.

2.22Accounts Receivable. The Company does not have any Accounts Receivable There is no contest, claim, or right of set-off, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable.

2.23No Guaranty by Company. Except as set forth on Section 0 of the Disclosure Schedule, The Company is not a guarantor, co-signor, surety or indemnitor of any obligations or liabilities of any other Person.

2.24No Prepayment. Except as described in Section 0 of the Disclosure Schedule, the Company does not have received any prepayments of any kind whatsoever from any customer as of the date hereof.

2.25Banks; Powers of Attorney. Section 0 of the Disclosure Schedule sets forth (a) the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which the Company maintains safe deposit boxes or accounts of any nature to which it has access, and of all Persons authorized to draw thereon, make withdrawals therefrom or have access thereto, and (b) the names of all Persons to whom the Company has granted a power of attorney.

2.26Broker’s and Finder’s Fees. Except as set forth on Section 0 of the Disclosure Schedule, none of the Stockholder, or the Company has employed any broker or finder or incurred any Liability for any financial advisory fees, commission or finder’s fee and no broker or finder has acted directly or indirectly for any of the Stockholder, the Company in connection with this Agreement or the transaction contemplated by it. The Stockholder shall reimburse the Company for any amounts due such broker or finder in connection with this Agreement or the transaction contemplated by it.

2.27Customers. Section 0 of the Disclosure Schedule sets forth a complete and accurate list of all customers of the Company during the last full fiscal year and the interim period through the Balance Sheet Date. Except as set forth in Section 0 of the Disclosure Schedule, the Company does not have received any written notice of non-renewal from a customer, and has reason to believe, that any of its customers intends to give written notice of non-renewal, or to otherwise terminate or materially reduce its relationship with the Company.

2.28Suppliers. Section 0 of the Disclosure Schedule sets forth a complete and accurate list of all the suppliers to whom the Company has paid consideration for goods or services

rendered in an amount greater than or equal to $10,000 for the last full fiscal year and the interim period through the Balance Sheet Date (collectively, the “Material Suppliers”). The Company does not have received any notice, and has reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to the Company or to otherwise terminate or materially reduce its relationship with the Company.

2.29No Misstatements or Omissions. No representation or warranty by the Company or the Stockholder contained in this Agreement and no statement furnished or to be furnished to the Company or the Stockholder pursuant hereto or in connection with the transactions contemplated hereby, contains or will contain on the Closing Date any untrue statement of material fact, or omits or will omit on the Closing Date to state a material fact necessary in order to make such representation and warranty or such statement not misleading in light of the circumstances in which it was made.

ARTICLE 3
Representations and Warranties of the BUYER

The Buyer represents and warrants to the Stockholder as follows:

3.1Corporate Organization. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of Wyoming.

3.2Due Authorization; Execution and Enforceability; Consents; No Conflict.

(a)The Buyer has the requisite corporate power and authority to execute and deliver this Agreement and all agreements, documents and instruments to be executed and delivered by the Buyer in connection herewith, to consummate the transactions contemplated hereby and thereby and to perform the Buyer’s obligations hereunder and thereunder. The execution, delivery and performance of this Agreement have been duly and validly authorized by the Buyer.

(b)This Agreement and the other agreements, documents and instruments to be executed by the Buyer in connection herewith, and the consummation by the Buyer of the transactions contemplated hereby and thereby, have been duly authorized, executed and delivered by the Buyer, and constitute, and the other agreements, documents and instruments contemplated hereby, when executed and delivered by the Buyer, shall constitute, the legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditor’s rights generally and general equity principles.

(c)No authorization, approval or consent of, or notice to or filing or registration with, any Governmental Body or any other Person, is required in connection with the execution and delivery by the Buyer of this Agreement and the other agreements, documents and instruments to be executed and delivered by the Buyer in connection herewith, the consummation of the transactions contemplated hereby and thereby and the performance by the Buyer of its obligations hereunder and thereunder.

(d)The execution and delivery by the Buyer of this Agreement and the other agreements, documents and instruments to be executed and delivered by the Buyer in connection herewith, the consummation by the Buyer of the transactions contemplated hereby and thereby and the performance by the Buyer of its obligations hereunder and thereunder do not and will not (i) conflict with or violate any of the terms of the Certificate of Incorporation or Bylaws of the Buyer, (ii) violate or conflict with any Law or any Order, applicable to the Buyer, or (iii) violate or conflict with or result in a breach of, or constitute a default under, any indenture, mortgage, deed of trust, contract, agreement or instrument to which the Buyer is a party or by which any of its assets or properties is bound or affected.

3.3Broker’s and Finder’s Fees. The Buyer has not employed any broker or finder or incurred any Liability for any financial advisory fees, commission or finder’s fee and no broker or finder has acted directly or indirectly for the Buyer in connection with this Agreement or the transaction contemplated by it.

3.4Investment Representation. The Buyer is not acquiring the Shares of the Company with a view to the sale or distribution thereof, other than in a sale or distribution which is registered under the Securities Act of 1933 or is exempt from such registration, and will accept certificates for such stock of the Company with a legend thereon indicating this fact. Notwithstanding the foregoing, nothing herein shall be interpreted so as to prevent Buyer from reselling the Shares as long as it complies with all applicable laws and regulations.

ARTICLE 4
COVENANTS

4.1Confidentiality.

(a)From and after the date hereof, the Stockholder shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all documents, materials, or other information, whether written or oral, regarding or concerning (i) Buyer that have been disclosed, either orally or in writing, or made available by Buyer or its Representatives to Stockholder, (ii) the Company, and (iii) the Business, except (a) to the extent that such Seller can reasonably demonstrate that such information is generally available to and known by the public through no fault of such Stockholder, any of its Affiliates or their respective Representatives, or (b) for such information that such Seller can reasonably demonstrate is lawfully acquired by such Stockholder, any of its Affiliates or its or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, or (c) as required in connection with the performance of such Stockholder’s duties as an employee of the Company , as applicable.

(b)Exceptions. Nothing contained herein shall prohibit Stockholder from using any documents, materials or other information in connection with any action or proceeding brought or any claim asserted by Buyer in respect of any breach of any representation, warranty or covenant made in or pursuant to this Agreement. Additionally, nothing contained herein shall prohibit Stockholder from disclosing information to any Governmental Body for the purpose of

reporting or participating in an investigation into a possible violation of law, which a Stockholder may do without obtaining Buyer’s consent or providing any notice to Buyer.

(c)Requirement of Law or Order. Subject to the exceptions contained in subsection (b), if any of the Stockholder or their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such Stockholder shall promptly notify Buyer in writing and shall disclose only that portion of such information which such Stockholder is advised by its counsel in writing is legally required to be disclosed, provided that such Stockholder shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

4.2Non-Disparagement. At all times following the date hereof, none of the Stockholder shall make, and Stockholder shall cause their Affiliates not to make, any disparaging, negative, critical or otherwise detrimental comment or representation, whether written or oral, to any Person concerning the Business, its products or services, Buyer, or any of its respective officers, directors, member, employees or Affiliates; provided, however, that nothing in this Agreement shall prohibit any Stockholder from engaging in any conduct protected under the National Labor Relations Act (the “NLRA”), to the extent the NLRA applies, or in providing truthful information to any government representative or entity for the purpose of reporting or participating in an investigation into a possible violation of law.

ARTICLE 5
THE ClosING

5.1Closing. The Closing shall take place at the offices of Brunson Chandler & Jones, PLLC, or by the exchange of duly executed copies of this Agreement and any agreement or instrument to be entered into in connection with this Agreement, on a date designated by the Buyer on the date hereof (the “Closing Date”).

5.2Closing Deliveries of the Company and Stockholder. Prior to or at the Closing, the Company and Stockholder shall have delivered the following documents, any of which may be waived by Buyer:

(a)The Stockholder shall have delivered to Buyer certificates representing the Shares, accompanied by duly executed assignments. All certificates, instruments and documents delivered by the Stockholder in connection with the transactions contemplated hereby and necessary to evidence such transactions shall be in form and substance reasonably satisfactory to Buyer and its counsel.

(b)Buyer shall have received, in a form reasonably acceptable to Buyer, a certificate of a duly authorized officer of the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Buyer’s counsel, certifying as to (i) the Articles of Incorporation of the Company, as certified by the Secretary of State or other appropriate official of the State of Wyoming, (ii) the bylaws of the Company, (iii) the good standing, as certified by the Secretary of State or other appropriate official of the State of Wyoming and each other State in which the Company is qualified to do business, (iv) the resolutions of the Board of Directors

of the Company, authorizing the execution, delivery and performance of this Agreement and all other agreements, instruments, certificates and documents required to be executed and delivered hereunder to which the Company is a party, and (v) the authority and incumbency of persons acting on behalf of the Company in connection with the execution and delivery of this Agreement and any document or certificate executed and delivered by the Company in connection herewith.

(c)Buyer shall have received, in a form reasonably acceptable to Buyer, evidence demonstrating satisfaction of all amounts owing to the Company from the Stockholder or any Affiliate of the Company or the Stockholder or from the Company’s officers and employees.

(d)The Company shall have received, and provided Buyer copies of, all authorizations, approvals, consents, notices, registrations and filings referred to in Section 0 of the Disclosure Schedule, specifically including any consents required under the Contracts and Real Property Leases.

(e)The Stockholder shall have entered into a Restricted Stock Agreement.

(f)The Stockholder shall have entered into Non-Competition Agreements, in the form of Exhibit D attached hereto.

(g)The Employee of the Company set forth on Schedule 0 shall have entered into an Employment Offer Letter in the form of Exhibit E attached hereto and shall have executed all hiring and employment documentation required by Buyer, including a non-disclosure and invention agreement, a non-compete and non-solicitation agreement, and an assignment agreement.

(h)Buyer shall have received such other documents or statements as reasonably requested by the Buyer or its counsel.

(i)Buyer shall have received a certificate from the Stockholder, dated as of the Closing Date and signed under penalties of perjury, stating that such Stockholder is not a “foreign person” as defined in Section 1445 of the Code.

5.3Closing Deliveries of the Buyer. Prior to or at the Closing, Buyer shall have delivered the following documents, any of which may be waived by Stockholder:

(a)Buyer shall have delivered the Purchase Price as provided in Section 0 hereof.

(b)Buyer shall have entered into Restricted Stock Agreements with the Stockholder.

(c)Buyer shall have entered into Non-Competition Agreements, in the form of Exhibit D attached hereto, with the Stockholder.

(d)Buyer shall have entered into Employment Offer Letter, in the form of Exhibit E attached hereto, with the Stockholder set forth on Schedule 0.

ARTICLE 6
Indemnification

6.1Indemnification by the Stockholder. Subject to the terms and conditions of Sections 0 and 0 hereof, the Stockholder, jointly and severally, agree to indemnify, defend and hold harmless the Buyer and its Affiliates (including the Company) and their respective successors and assigns (each a “Buyer Indemnitee”) from or against, for and in respect of, any and all damages, losses, obligations, liabilities, demands, judgments, injuries, penalties, claims, actions or causes of action, costs, and expenses (including, without limitation, reasonable attorneys’, experts’ and consultants’ fees) (collectively, “Losses”) suffered, sustained, incurred or required to by paid by any Buyer Indemnitee arising out of, based upon or in connection with or as a result of:

(a)any inaccuracy in or the breach of any of the representations or warranties made by the Stockholder or the Company in or pursuant to this Agreement;

(b)the failure of the Stockholder or the Company to perform and comply with all of their respective covenants, agreements and obligations hereunder, when and as required by this Agreement to be performed or complied with;

(c)any of the Stockholder’s Transaction Expenses remaining unpaid after the Closing, regardless of when incurred, but only to the extent any such expenses are not taken into account in determining the Actual Working Capital;

(d)all known or unknown liabilities and claims arising out of the sale of products or the furnishing of services by the Company prior to the Closing Date;

(e)all liabilities and obligations in connection with the sale of products or the furnishing of services by the Company, or arising from or with respect to any Contracts entered into with any third-party customer, prior to the Closing Date;

(f)any claims asserted against Buyer, the Company by Stockholder, equity holders or former Stockholder or equity holders of the Company or other third parties (i) claiming to own an equity interest in the Company , (ii) claiming a breach of fiduciary duty by the directors, officers or any stockholder of the Company relating to acts, omissions, events or circumstances prior to the Closing Date, (iii) arising from a violation of minority stockholder rights or similar claims relating to acts, omissions, events or circumstances prior to the Closing Date, or (iv) claiming that any action taken by the Company prior to the Closing was not properly approved; and

(g)any Pre-Closing Taxes.

6.2Indemnification by the Buyer. Subject to the terms and conditions of Sections 3, and 0 hereof, the Buyer hereby agrees to indemnify, defend and hold harmless the Stockholder and their Affiliates and their respective heirs and assigns (each a “Stockholder Indemnitee”) from or against, for and in respect of, any and all Losses suffered, sustained, incurred or required to be paid by any Stockholder Indemnitee arising out of, based upon or in connection with or as a result of:

(a)any inaccuracy in or the breach of any representations or warranties made by the Buyer in or pursuant to this Agreement; or

(b)the failure of the Buyer to perform and comply with all of its covenants, agreements and obligations hereunder, when and as required by this Agreement to be performed or complied with.

6.3Indemnification Procedures. The indemnification obligations and liabilities of Buyer and the Stockholder under this Agreement shall be subject to the following terms and conditions:

(a)Any Person seeking indemnification under this 0 (the “Indemnified Party”) shall promptly give written notice to the party or parties from whom indemnification is sought (the “Indemnitor”) of any claim or claims, whether a Third Party Claim (as defined in Section 0 below) or a claim for indemnification for any matter not involving a Third Party Claim (a “Direct Claim”), which might give rise to an indemnification claim under this 0 against such party, stating the nature and basis of such claim and the amounts thereof, to the extent known (a “Claim Notice”); provided, that the failure to give such notice shall not relieve the Indemnitor of its obligations hereunder except to the extent it shall have been materially prejudiced by such failure.

(b)Subject to Section 0 below, the Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any third Person claim, action or suit (a “Third Party Claim”) against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnitor hereunder, and in any such case, the Indemnitor shall cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnified Party in connection therewith; provided, that the Indemnitor may participate, through counsel chosen by it and at its own expense, in the defense of any such Third Party Claim as to which the Indemnified Party has so elected to conduct and control the defense thereof; and provided, further, that the Indemnified Party shall not, without the written consent of the Indemnitor (which written consent shall not be unreasonably withheld or delayed), pay, compromise or settle any such Third Party Claim except that no such consent shall be required if, following a written request from the Indemnified Party, the Indemnitor shall fail, within thirty (30) days after the making of such request, to acknowledge and agree in writing that, if such Third Party Claim shall be adversely determined, such Indemnitor has an obligation to provide indemnification hereunder to such Indemnified Party in respect thereof. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay, settle or compromise any such Third Party Claim without such consent, provided that in such event the Indemnified Party shall waive any right to indemnity therefor hereunder unless such consent is unreasonably withheld.

(c)If any Third Party Claim against any Indemnified Party is solely for money damages and, where the Stockholder are the Indemnitors, will have no continuing adverse effect after resolution of such Third Party Claim in any material respect on the Company or its Business, then the Indemnitor shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any such Third Party Claim against such Indemnified

Party as to which indemnification will be sought by any Indemnified Party from any Indemnitor hereunder if the Indemnitor has acknowledged and agreed in writing that, if the same is adversely determined, the Indemnitor has an obligation to provide indemnification to the Indemnified Party in respect thereof. In any such case, the Indemnified Party shall cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnitor in connection therewith; provided, that the Indemnified Party may participate, through counsel chosen by it and at its own expense, in the defense of any such Third Party Claim as to which the Indemnitor has so elected to conduct and control the defense thereof. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay, settle or compromise any such Third Party Claim, provided, that in such event the Indemnified Party shall waive any right to indemnity therefore hereunder unless the Indemnified Party shall have sought the consent of the Indemnitor to such payment, settlement or compromise and such consent was unreasonably withheld or delayed, in which event no claim for indemnity therefor hereunder shall be waived.

6.4Survival of Representations and Warranties.

(a)All representations and warranties in this Agreement made by any party hereto, except the Company, shall survive the Closing for a period of two (2) years, with the exception of (i) the representations and warranties contained in Sections 0 and 0, which shall survive the Closing indefinitely, and (ii) the representations and warranties contained in Section 0, which shall survive the Closing until the date that is sixty (60) days after the expiration of the applicable statute or period of limitations (including any extension of such statute or period of limitations). Neither any Buyer Indemnitee nor any Stockholder Indemnitee shall have any right to indemnification with respect to any matter under Section 0 and 0, respectively, unless it provides the Indemnitor with a Claim Notice, in accordance herewith, with respect to such matter prior to the expiration of the applicable survival period set forth in this Section 0. Notwithstanding the foregoing, once an Indemnified Party has timely delivered a Claim Notice under Section 0, the Indemnitor’s indemnification obligations with respect to all matters described on such Claim Notice shall survive in full force and effect until all such matters have been prosecuted to a final, non-appealable judgment or settlement. Further, notwithstanding the foregoing, the expiration of the survival period of a representation or warranty of any party shall not, in any manner modify, limit or restrict the remaining indemnification obligations contained in Sections 0 and 0 of such party.

(b)The parties hereto understand and agree that, upon the consummation of the transactions contemplated hereby, all of the representations, warranties, covenants and agreements made by the Company hereunder expire and terminate and shall be of no further force or effect and that no party hereto shall have any right of contribution, or any valid indemnification or other claim, against the Company with respect to the transactions contemplated hereby. The foregoing sentence shall not, however, in any manner modify, limit or restrict the Stockholder’ obligations and liabilities hereunder.

6.5Effectiveness. The provisions of this 0 shall be effective upon consummation of the Closing, and prior to the Closing, shall have no force and effect.

ARTICLE 7
Post-Closing Covenants and Agreements

7.1Post-Closing Deliveries. After the Closing, each party to this Agreement shall, at the request of the other, furnish, execute and deliver documents, instruments, certificates, notices of other further assurances as the requesting party shall reasonably request as necessary or desirable to effect complete consummation of this Agreement and the transactions contemplated hereby.

7.2Post-Closing Actions Concerning Taxes.

(b)The Buyer shall file or cause to be filed when due all Tax Returns with respect to all federal, state, local and foreign income Taxes that are required to be filed by or with respect to the Company for taxable years or periods ending after the Closing Date.

(c)The Buyer shall prepare and file or cause to be filed when due all Tax Returns (“Operational Tax Returns”) with respect to Taxes other than income Taxes

(“Operational Taxes”) that are required to be filed (i) by or with respect to the Company for taxable years or taxable periods ending on or before the Closing Date, if such Operational Tax Returns are due after the close of business on the Closing Date, and (ii) by or with respect the Company for taxable years or taxable periods that include but do not end on the Closing Date; provided, however, that the Buyer shall not file or cause to be filed any Operational Tax Returns described in clause (i) without the prior written consent of the Stockholder, which consent shall not be unreasonably withheld or delayed.

(d)Notwithstanding the foregoing, any sales, use, transfer, documentary stamps or other Tax attributable to or arising from the sale and transfer of the Shares shall be paid by the Stockholder.

(e)Straddle Period. In case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes for the portion of such Straddle Period prior to the Closing shall be determined based on an interim closing of the books as of the close of business on the Closing Date).

7.3Release. Effective as of the Closing, the Stockholder hereby releases and forever discharges the Company , from any and all losses, damages, liabilities, obligations, assessments, suits, proceedings, claims or demands, judgments, penalties, encumbrances, actions or causes of action, including costs, expenses and fees (including without limitation, reasonable attorneys’ fees and expert witness fees incurred in connection therewith) whatsoever, whether known or unknown, suspected or unsuspected, contingent or absolute, both at law and in equity, which such Stockholder now has, has ever had or may hereafter have against the Company arising contemporaneously with or prior to the Closing Date or on account of or arising out of any matter, cause or event occurring contemporaneously with or prior to the Closing Date, including but not limited to, any rights to indemnification or reimbursement from the Company , whether pursuant to contract or otherwise and whether or not relating to claims pending on, or asserted after, the Closing Date. Notwithstanding anything herein to the contrary, nothing contained in this Section 0 shall operate to discharge, release or waive the obligations, covenants and agreements of Buyer arising under this Agreement and the agreements, instruments, certificates and other documents contemplated hereby.

7.4Use of Names. The Stockholder acknowledge and agree that the Buyer has acquired all of the goodwill of the Company and, in so doing, all of the Company’s right, title and interest, if any, in and to the Trademarks referenced in Section 0 of the Disclosure Schedule, including without limitation the trade name “Liquid Dynamics” and the Company shall be free to use, from and after the Closing, such Trademarks, and derivations thereof, in connection with the operation of the Business. Accordingly, after the Closing Date, the Stockholder shall not, and shall not permit any Affiliate of the Stockholder to, use any such trade name, trademark or service mark or any derivative thereof. The Stockholder acknowledge and agree that the Buyer would suffer irreparable injury, which could not be fairly remedied by money damages, in the event of a breach by the Stockholder of the provisions of this Section 0 and that the Buyer shall be entitled to an injunction restraining the Stockholder from any breach thereof.

ARTICLE 8
Miscellaneous

8.1Stockholder.

(a)The Stockholder, by their execution hereof, hereby irrevocably constitutes and appoints the Stockholder to act as his or her exclusive agent and attorney-in-fact to give and receive notices on behalf of the Stockholder and in general to do all things and to perform all acts on the Stockholder’s behalf as may be contemplated by this Agreement (including receiving payment of the Purchase Price and amounts released to Stockholder from the Escrow Account and the resolution of indemnity claim disputes). The Stockholder shall be bound by all acts of the Stockholder taken in connection and conformity with this Agreement. The Stockholder also shall be entitled to establish one or more cash reserve trust accounts (to be held for the benefit of the Stockholder) to reserve for potential indemnity claims, or any expenses, costs or other amounts (including, any tax liability imposed upon the Stockholder in connection with the performance of its duties hereunder or under the Escrow Agreement, attorneys’, accountants’ and other professional fees and costs) as the Stockholder deems reasonably appropriate or necessary.

(b)This power of attorney, and all authority hereby conferred, is irrevocable and will not be terminated by any act of any Stockholder or by operation of Law, whether by the death or incapacity of any Stockholder or by the occurrence of any other event. The Stockholder is acting solely in an agency capacity and will have no personal liability of any type for any action taken in the capacity of the Stockholder in accordance with the terms of this Agreement, including the compromise, settlement, payment or defense of any claim (including expenses and costs associated therewith) under this Agreement regardless of whether any Stockholder is the claimant or the party against whom a claim is being made, other than liability arising out of or relating to the gross negligence or willful misconduct of the Stockholder.

(c)In connection with the exercise of its duties, the Stockholder will be entitled to consult with and rely upon legal counsel and other professional advisors, with the costs thereof (and all other out-of-pocket costs reasonably incurred by the Stockholder incident to discharging its duties under this Agreement) to be allocated among the Stockholder in accordance with his or her respective Pro Rata Share (the amount of which may be withheld from any payment due to any Stockholder hereunder) and will have no personal liability of any type hereunder for any actions of any type taken in good faith reliance upon the advice of such advisors.

(d)Any payment received by the Stockholder on behalf of a Stockholder in respect of his or her Shares pursuant to this Agreement shall be distributed to such Stockholder within ten (10) Business Days after receipt thereof by the Stockholder, but in all cases subject to any reasonable reserves as contemplated in Section 0 and Section 0 above. The Stockholder shall be entitled to retain any amounts necessary to satisfy Tax obligations imposed on it in connection with the Escrow Account.

(e)Buyer shall be entitled to solely rely on the authority of the Stockholder with respect to any matter described in this Section 0 as one over which the Stockholder has authority to bind the Stockholder.

8.2Costs and Expenses. The Stockholder shall pay all costs and expenses incurred on their or the Company’s behalf in connection with the transactions contemplated by this Agreement, including, without limitation, all fees and expenses of their counsel, financial advisors and accountants, and the Buyer shall pay all of its costs and expenses relating to the transactions contemplated by this Agreement, including, without limitation the fees and expenses of its counsel, financial advisors and accountants.

8.3Governing Law. The interpretation and construction of this Agreement, and all matters relating hereto, shall be governed by the laws of the State of Wyoming, without giving effect to choice of law provisions.

8.4Interpretation. Unless otherwise provided, when used in this Agreement:

(a)all references to an “Appendix” or “Exhibit” are to Exhibits or Appendixes attached to this Agreement, each of which is an integral part of this Agreement and made a part of this Agreement for all purposes;

(b)references to any gender include all others if applicable in the context;

(c)terms defined in the singular shall have the corresponding meaning when used in the plural and vice versa;

(d)all uses of “include” or “including” mean “without limitation”;

(e)references to a law, rule, regulation, contract, agreement, or other document mean that law, rule, regulation, contract, agreement, or document as amended, modified, or supplemented, if applicable, from time to time;

(f)the word “or” has the inclusive meaning represented by the phrase “and/or”;

(g)unless the context requires otherwise, the words “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby” or words of similar import refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause, or other subdivision of this Agreement;

(h)any reference to a Person includes such Person's successors and permitted assigns; and

(i)any definition in one part of speech of a word, such as definition of the noun form of that word, shall have a comparable meaning when used in a different part of speech, such as the verb form of that word.

8.5Notices. Any notice or other communications required or permitted hereunder shall be in writing and shall be deemed to have been given: (a) when delivered personally by hand; (b) when sent by reputable overnight courier or delivery; (c) when sent by facsimile or e-mail transmission; or (d) when mailed by registered or certified mail, postage prepaid, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of change of address shall be effective only upon receipt thereof):

If to the Buyer,	Kou You Kai Ltd.
or the Company:	690 South Highway 89 Suite 200 Jackson, WY 83001 Attn: Fred McLauchlin

with a copy to:	Brunson Chandler & Jones, PLLC
	175 South Main Street Suite 1410 Salt Lake City, Utah 84111


If to the Stockholder:	Doug Nosler

All such notices and other communications shall be deemed effective: (i) if by personal delivery, upon receipt; (ii) if by overnight courier or delivery, on the first Business Day after the date of mailing; (iii) if by facsimile or e-mail transmission, immediately upon sending, provided notice is sent on a Business Day between the hours of 9:00 a.m. and 6:00 p.m., recipient’s time, but if not then upon the following Business Day; and (iv) if by certified or registered mail, on the fifth (5th) Business Day after the date of the mailing thereof.

8.6Assignment; Parties in Interest. Except as permitted in this Section 0, neither this Agreement nor any of the rights of the parties hereunder may be transferred, assigned or pledged by any party hereto, in whole or in part, and any attempted assignment prohibited hereunder shall be void. The Buyer may, without the consent of the Company or the Stockholder, assign, by operation of law or otherwise, all or any part of its rights under this Agreement to any Affiliate; provided, however, no such assignment shall relieve the Buyer of its obligations hereunder if such assignee does not perform such obligations. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

8.7Counterparts; Electronic and Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall constitute one and the same instrument. The exchange of executed copies of this Agreement by facsimile, portable document format (“PDF”) or electronic transmissions shall constitute effective execution and delivery of this Agreement.

8.8Entire Agreement. This Agreement, together with the Schedules attached hereto which are hereby incorporated herein by this reference, contains the entire understanding of the parties hereto with respect to the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. In that this Agreement was prepared as a result of negotiation and mutual agreement between the parties hereto, neither this Agreement nor any provision hereof shall be construed against either party hereto as the party that prepared this Agreement or any such provision.

8.9Schedules. The Schedules attached hereto, together with all documents and instruments incorporated by reference therein, form an integral part of this Agreement and are hereby incorporated into this Agreement wherever reference is made to them, to the same extent as if they were set out in full at the point at which such reference is made. Notwithstanding anything to the contrary contained herein, no information disclosed in any Schedule shall be, unless expressly stated in such Schedule, deemed to be disclosed in any other Schedule.

8.10Amendments; Waivers. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder.

8.11Third Party Beneficiaries. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto.

8.12Severability. Any provision, or clause thereof, of this Agreement that shall be found to be contrary to applicable law or otherwise unenforceable shall not affect the remaining terms of this Agreement, which shall be construed as if the unenforceable provision, or clause thereof, were absent from this Agreement.

(Signatures appear on following page)

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

BUYER:	KOU YOU KAI LTD.

	By:/s/ Fred McLauchlin
	Name: Fred McLauchlin
	Title: Chief Financial Officer and Secretary

COMPANY:	LIQUID DYNAMICS, INC.

	By:/s/ Doug Nosler
	Name: Doug Nosler
	Title: President

STOCKHOLDER:	/s/ Doug Nosler
	Doug Nosler, individually

[Signature Page to Stock Purchase Agreement]

APPENDIX A

Definitions

Capitalized terms in this Agreement shall have the meanings ascribed to them in this Appendix A unless such terms are defined elsewhere in this Agreement:

“Affiliate” shall mean, with respect to a specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. As used in the definition of Affiliate, the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Business Day” shall mean a day other than a Saturday, a Sunday or a day on which banks are required to be closed in the State of Wyoming.

“Buyer” has the meaning set forth in the preamble.

“Buyer’s Accountants” shall be Sadler Gibb PLLC.

“Closing” shall mean the consummation and effectuation of the transactions contemplated herein pursuant to the terms and conditions of this Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company Intellectual Property” shall mean all Intellectual Property that is owned, licensed to, or otherwise used by Company.

“Contract” shall mean any contract, obligation, understanding, commitment, lease, license, purchase order, bid or other agreement, whether written or oral and whether express or implied, together with all amendments and other modifications thereto.

“Debt” shall mean, with respect to the Company, (i) all indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, and any notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (iii) all amounts owing under purchase money mortgages, indentures, deeds of trust or other purchase money liens or conditional sale or other title retention agreements, (iv) all indebtedness, excluding accounts payable incurred in the ordinary course of business consistent with past practices, secured by any Encumbrance of any kind on any property or asset owned or held by Company regardless of whether the indebtedness secured thereby shall have been assumed by the Company or is nonrecourse, (v) obligations with respect to any lease which is classified as a capital lease in conformity with GAAP, (vi) all accrued and unpaid interest on or any fees, penalties, including, without limitation, prepayment fees or other amounts due with respect to any of the foregoing described indebtedness whether at maturity or otherwise, and (vii) without duplication, any obligations of any other Person of a type referred to in clauses (i) –

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(vi) to the extent guaranteed by the Company. The determination of the amount of the Debt at the relevant time of determination shall be made in accordance with GAAP.

“Encumbrances” shall mean any and all liens, charges, security interests, options, claims, deeds of trust, mortgages, pledges, proxies, voting trusts or agreements, obligations, covenants, easements, servitudes, leases, licenses, rights of way, encroachments, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever.

“Environmental Costs and Liabilities” shall mean, with respect to any Person, all Liabilities and Remedial Actions incurred as a result of any claim or demand by any other Person or in response to any violation of Environmental Law or to the extent based upon, related to, or arising under or pursuant to any Environmental Law, Environmental Permit, Order or agreement with any Governmental Body or other Person, or which relates to any environmental, health or safety condition, violation of Environmental Law or a Release or threatened Release of Hazardous Materials, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, or criminal or civil statute.

“Environmental Law(s)” shall mean any and all present and future Laws and Orders relating to the protection of human health and safety, the environment or natural resources, including, without limitation, Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be amended and the regulations promulgated pursuant thereto.

“Environmental Permit” shall mean any Permit required by Environmental Laws for the operation of the Business.

“GAAP” shall mean the United States generally accepted accounting principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors in effect from time to time.

“Governmental Body” shall mean any federal, state, local, foreign or other government or political subdivision thereof, or any department, agency, instrumentality or authority thereof, or any arbitrator, court or tribunal of competent jurisdiction.

“Hazardous Materials” shall mean any substance, material or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold or other fungi and urea formaldehyde insulation.

“HIPAA” means the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996, including the Standards for Privacy of Individually Identifiable Health Information (45 CFR Part 160 and Part 164, Subparts A and E), the

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Transactions and Code Set Standards (45 CFR Part 162), Security Standards for the Protection of Electronic Protected Health Information (45 CFR Part 164, Subparts A and C), and requirements for Notification in the Case of Breach of Unsecured Protected Health Information (45 CFR Part 164, Subparts A and D), as in effect on the date hereof, and the Health Information Technology for Economic and Clinical Health Act provisions of the American Recovery and Reinvestment Act of 2009 set forth at 42 USC § 17931 et seq., and all implementing regulations thereof.

“Independent Accountants” shall mean Baker Tilly Virchow Krause, LLP or, if such firm is unavailable, an independent accounting firm that is mutually acceptable to Buyer and the Stockholder.

“Intellectual Property” shall mean all right, title and interest in or relating to intellectual property, whether protected, created or arising under the laws of the United States or any other jurisdiction, including: (i) all patents and applications therefor, including all continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations, substitutions and extensions thereof and any patent rights, inventions, discoveries and invention disclosures (whether or not patented) (collectively, “Patents”); (ii) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, corporate names, trade styles, brands, logos, packaging design, slogans, all phone numbers of the Company and its Affiliates used in the Business, registered and unregistered trademarks and service marks and related registrations and applications for registration and other source or business identifiers and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof (collectively, “Marks”); (iii) all Internet domain names; (iv) all copyrights, works of authorship, moral rights, all mask work, database and design rights, all compilations, databases and computer programs, source code, object code, manuals and other documentation whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith, along with all reversions, extensions and renewals thereof, and all derivatives, translations, adaptations and combinations of the above (collectively, “Copyrights”); (v) all proprietary information that is considered a “trade secret” under applicable Law (“Trade Secrets”); (vi) all other intellectual property rights and/or proprietary rights arising from or relating to any of the foregoing; (vii) all Contracts granting any right relating to or under the foregoing; and (viii) goodwill, franchises, licenses, permits, consents, approvals, and claims of infringement against third parties.

“Knowledge” shall mean that, whenever any representation or warranty of the Stockholder contained herein or in any other document executed and delivered in connection herewith is based upon the Knowledge of the Stockholder, such knowledge shall be deemed to include (i) the best actual or constructive knowledge, information and belief of the Stockholder and the officers and directors of the Company, and (ii) any information which the Stockholder, any such officer or director would reasonably be expected to be aware of in the prudent discharge of his or her duties in the ordinary course of business (including consultation with legal counsel) on behalf of the Company.

“Law” shall mean any federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation or statute as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder.

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“Liability” shall mean any debt, loss, damage, adverse claim, fine, penalty, Tax, liability or obligation (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured, determined or determinable, disputed or undisputed, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), and including all costs and expenses relating thereto (including all fees, disbursements and expenses of legal counsel, experts, engineers and consultants and costs of investigation).

“Order” shall mean any judgment, order, award, decision, notice, injunction, ruling, subpoena, verdict or decree of any foreign, federal, state, local court or tribunal or other Governmental Body and any award in any arbitration proceeding.

“Ordinary Course of Business” shall mean the ordinary and usual course of normal day-to-day operations of the Business, as conducted by Company or its Affiliates, through the date hereof consistent with past practice.

“Permits” shall mean any approvals, authorizations, consents, licenses, registrations, variances, permits or certificates granted by or obtained from a Governmental Body, and applications therefor and renewals thereof.

“Person” shall mean any individual, general or limited partnership, corporation, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Body or other entity.

“Personal Information” means information in the possession or under the control of the Company regarding any Person, including personally identifiable information, financial information and protected health information, the use or disclosure of which is protected by applicable Law.

“Pre-Closing Taxes” means (i) any and all Taxes of the Company for any Pre-Closing Tax Period, (ii) any and all Taxes of any Person imposed on the Company as a transferee or successor, by Contract, from any express or implied obligation to indemnify or otherwise assume or succeed to the Liability of any other Person, pursuant to any Tax Law, which Taxes relate to any event or transaction occurring before the Closing, and (iii) any and all transfer Taxes owed by the Stockholder pursuant to Section 0.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and, with respect to a Straddle Period, the portion of such Straddle Period ending on the Closing Date.

“Pro Rata Share” has the meaning set forth in Schedule 1.2.

“Release” shall mean “release” as defined in CERCLA or in any Environmental Law.

“Representative” shall mean, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

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“Response Action” shall mean any action or activities of “response” as that term is defined in 42 U.S.C. § 9601(25), without regard to any limitation of that term (or terms included therein by reference) to hazardous substances under CERCLA.

“Stockholder’ Accountants” shall mean Rainer Advisors LLC.

“Stockholder’ Transaction Expenses” shall mean any and all amounts unpaid as of the Closing due from the Company in connection with the transactions contemplated by this Agreement, including (i) any amounts payable to Stockholder’ or Company’s counsel, accountants or financial advisors for services relating to a potential sale of the Company, or to reimburse any person for out-of-pocket expenses relating to a potential sale and (ii) any bonuses or other compensation payable by the Company in connection with the transactions contemplated by this Agreement. Stockholder’ Transaction Expenses shall specifically include all amounts payable after the Closing pursuant to (i) that certain Separation Agreement and General Release dated as of July 5, 2017 by and between the Company and Christina Goleman and (ii) any other Contract entered into prior to the Closing with respect to the separation or termination of any employee of, or consultant to, the Company.

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) shall mean any federal, state, local or foreign net income, alternative or add-on minimum, value-added, gross income, gross receipts, real or personal property, windfall profit, severance, production, ad valorem, sales, use, transfer, gains, license, excise, employment, employer health or health insurance, payroll, withholding or minimum tax, stamp or environmental tax or any other tax custom, duty, governmental fee or other like assessment or charge, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Body.

“Tax Return” shall mean any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

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LIST OF SCHEDULES AND EXHIBITS

Exhibits:

Exhibit A	Closing Statement and Agreement
Exhibit B	Form of Restricted Stock Purchase Agreement
Exhibit C	Form of Escrow Agreement
Exhibit D	Form of Non-Competition Agreement
Exhibit E	Form of Employment Offer Letter

Schedules:

Schedule 1.2	Allocation of Purchase Price
Schedule 5.2(g)	Key Employees

Disclosure Schedule Sections:

Section 2.2(c)	Required Consents
Section 2.2(d)	No Conflicts
Section 2.3	Subsidiaries
Section 2.4	Financial Statements
Section 2.5(a)	Absences of Liabilities
Section 2.5(b)	Indebtedness
Section 0	Absence of Changes
Section 0	Directors and Officers of the Company
Section 2.8(a)	Company Capitalization
Section 2.9(a)	Compliance with Laws
Section 2.9(b)	Permits
Section 2.11(a)	Real Property
Section 0	Machinery and Equipment
Section 2.13(a)	Title to Assets
Section 2.13(b)	Adequacy of Assets
Section 2.13(c)	Related Party Interests in Assets
Section 2.14(a)	Contracts
Section 0	No Breaches or Defaults
Section 0	Affiliate Transactions
Section 0(i)	Patents and Trademarks
Section 0(ii)	Owned Copyrights
Section 0(iii)	Licensed and Otherwise Used Copyrights
Section 0(iv)	Intellectual Property Agreements
Section	Reciprocal Licenses
Section 2.19	Employees and Additional Personnel
Section 2.20	Employee Benefit Plans
Section 2.21	Insurance
Section 2.23	No Guaranty
Section 2.24	No Prepayment
Section 2.25	Banks; Powers of Attorney
Section 2.26	Broker’s and Finder’s Fees
Section 2.27	Customers
Section 2.28	Suppliers

Schedules and Exhibits

`Number of Common Shares:`100,000,000	Common Par Value:	$0.0010
`Number of Preferred Shares:`10,000,000	Preferred Par Value:	$0.0010

INDIVIDUAL:

____________________________________
(Signature)

____________________________________
(Print Name)
Address for Notices:	____________________________________
	____________________________________
	____________________________________

Name of Primary Contact Person: Title:	____________________________________ ____________________________________

Telephone Number:	____________________________________

E-Mail Address: Government Identification Number:	____________________________________ ____________________________________

	1.	The Company’s Articles of Incorporation;

	2.	The Company’s By-Laws;

	3.	The Registration Statement; and

	4.	Unanimous Consents of the Company’s Board of Directors.

	1.	Kou You Kai, Ltd. is a corporation duly organized and validly existing under the laws of the State of Wyoming.

	2.	The Selling Security Holders’ Secondary Offering shares covered by the Registration Statement have been duly authorized and are validly issued, fully paid and non-assessable.
	3.	The Primary Offering shares covered by the Registration Statement to be sold pursuant to the terms of the Registration Statement, when issued upon receipt by the Company of the agreed-upon consideration therefore, will be duly authorized and, upon the sale thereof, will be duly authorized validly issued, fully paid and non-assessable.

	·	To cause KOU YOU KAI to engage in business with friends or relatives.
	·	To prepare to or compete with KOU YOU KAI while still an employee.
	·	To have a financial interest in KOU YOU KAI’s competitors and/or customers.
	·	To perform work for a competitor of KOU YOU KAI, any governmental, supplier, customer, or other entity there of. Working with a third party which could impair your performance or judgment or could diminish the time spent working and completing work tasks while at KOU YOU KAI is also prohibited.

	·	Maintaining any undisclosed or unrecorded funds or “off the book” assets.
	·	Signing documents that are thought to be inaccurate.
	·	Making false entries that hide or disguise the true nature of a transaction, and is done with the intention to do so.
	·	Making payment for a purpose other than any described in the documents supporting the payment.
	·	Improperly accelerating or deferring the recording of expenses or revenues to achieve financial results or goals.
	·	The establishment or maintenance of improper, misleading, incomplete or fraudulent account documentation or financial reporting.

	·	Business methods
	·	Pricing
	·	Market data
	·	Strategy
	·	Codes
	·	Research
	·	Information about current, former or prospective customers
	·	Information about current, former or prospective employees

	·	Will my actions be ethical in every regard and do they fully comply with the law and with KOU YOU KAI policy?
	·	Will my actions have the appearance of impropriety?
	·	Will my actions be questioned by management, supervisors, fellow employees, customers, family and the general public?