The following summary compensation table
indicates the cash and non-cash compensation earned during the years ended December 31, 2017 and December 31, 2016 by each person
who served as chief executive officer during the year ended December 31, 2017.
(1) Ms.
Chu Li An has served as chief financial officer since October 2013 to September 30, 2017.
(2) Mr. Chang has served as chief executive officer since
October 1, 2017.
(3) Mr. Ong has not received any compensation as of December
31, 2017.
None of the members of the Board of
Directors receives remuneration for service on the Board.
We have employment agreements with CEO,
Chih-Shun Chang on Oct. 1, 2017 for a term of five years, subject to automatic renewals of five years at the rate of $30,000 per
year. The agreement was terminated on February 28, 2018.
We do not have any compensation plan
as of December 31, 2017.
The following table summarizes certain
information regarding the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of outstanding Registrant Common Stock as of December 31, 2017 by (i) each person known by us to be the beneficial owner of more
than 5% of the outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all executive
officers and directors as a group. Except as indicated in the footnotes below, the security and stockholders listed below possess
sole voting and investment power with respect to their shares.
(1) "Beneficial Owner" means
having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment
power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition
of beneficial ownership includes shares, underlying options or warrants to purchase common stock, or other securities convertible
into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60 days.
Unless otherwise indicated, the beneficial owner has sole voting and investment power.
(2) For each shareholder, the calculation
of percentage of beneficial ownership is based upon 33,503,604 shares of Common Stock outstanding as of December 31, 2017, and
shares of Common Stock subject to options, warrants and/or conversion rights held by the shareholder that are currently exercisable
or exercisable within 60 days, which are deemed to be outstanding and to be beneficially owned by the shareholder holding such
options, warrants, or conversion rights. The percentage ownership of any shareholder is determined by assuming that the shareholder
has exercised all options, warrants and conversion rights to obtain additional securities and that no other shareholder has exercised
such rights.
As of the date of this Form 10-K, the
Company has not authorized any equity compensation plan, nor has our Board of Directors authorized the reservation or issuance
of any securities under any equity compensation plan.
There are no arrangements known to us, including any pledge
by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.
On September 30, 2017, pursuant to agreements
with one of the Company’s directors, Li-An Chu, the Company transferred the 100% ownership in its wholly owned Taiwan Subsidiary,
Jinchih International Limited (“Jinchih”), to Li-An Chu in exchange for cancellation of debt of $379,254 and cancellation
of total 25,503,333 shares of the Company’s common stock owned by a group of stockholders, including Li-An Chu.
Currently, we have no independent directors
on our Board of Directors, and therefore have no formal procedures in effect for reviewing and pre-approving any transactions between
us, our directors, officers and other affiliates. We will use our best efforts to insure that all transactions are on terms at
least as favorable to the Company as we would negotiate with unrelated third parties.
Under the Sarbanes-Oxley Act of 2002,
all audit and non-audit services performed by our auditors must be approved in advance by our Board to assure that such services
do not impair the auditors’ independence from us. In accordance with its policies and procedures, our Board pre-approved
the audit service performed by Paritz & Company, P.C., for our consolidated financial statements as of and for the year ended
December 31, 2017.
(1) Filed as exhibits to the registrant’s Form SB-2
filed with the Commission on June 29, 2007.
(2) Filed as exhibits to the registrant’s Form 8-K
filed with the Commission on Oct. 1, 2013.
(3) Filed as exhibits to the registrant’s Form 8-K
filed with the Commission on February 19, 2014.
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Notes to the Consolidated Financial
Statements
December 31, 2017 and 2016
Note 1 – Organization and Basis
of presentation
Organization
Sino United Worldwide Consolidated Ltd.
(the “Company”), through its wholly owned subsidiary in Taiwan, Jinchih International Limited (“Jinchih”),
engaged in design, marketing and distributing of hardware and software technologies, including new cell phone apps, as well as
solutions and technology in fleet management, the driving record management system (DMS) that provide total solution and management
mechanism for vehicles and driver behavior control and analysis, which increase driving safety and efficiency.
On September 30, 2017, pursuant
to agreements with one of the Company’s directors, Li-An Chu, the Company transferred the 100% ownership in Jinchih, to Li-An
Chu in exchange for cancellation of debt $379,254 and cancellation of total 25,503,333 shares of the Company’s common stock
owned by a group of stockholders, including Ms Li-An Chu. As a result of these transactions, Jinchih is no longer a wholly owned
subsidiary of the Company as of September 30, 2017. (See Note 4)
The Company is developing new businesses
in various fields through careful review and critical selection of new growth businesses. The Company is planning to strengthen
our core competencies in high technology and blockchain related businesses, such as blockchain dapps technology, fintech services,
professional consultancy for ICO’s, and other high potential critical blockchain projects.
Basis of presentation and consolidation
The accompanying consolidated financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”) and include the accounts of the Company and its wholly owned subsidiary. All inter-company transactions and balances
are eliminated in consolidation.
Certain amounts in last year’s financial
statements have been reclassified to conform to current year presentation.
Note 2 – Going Concern
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. The Company had a working capital deficit
of $78,508, an accumulated deficit of $1,759,743 and stockholders’ deficiency was $78,508 as of December 31, 2017. The Company
did not generate cash or income from its continuing operation. These factors, among others, raise substantial doubt about the Company’s
ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
The company is developing new businesses
in various fields. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to
generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings
and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated
from any private placements, public offering and/or bank financing are insufficient to support the Company’s working capital
requirements, the Company will have to raise additional working capital from additional financing. No assurance can be given that
additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital
is not available, the Company may not be able continue its operations.
NOTE 3 – Summary of Significant
Accounting Policies
Use of Estimates
The preparation of consolidated 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 consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management
makes these estimates using the best information available at the time the estimates are made. However, actual results could differ
materially from those results. Significant accounting estimates reflected in the Company’s consolidated financial statements
included the valuation of accounts receivable, the estimated useful lives of long term assets, the valuation of short term investment
and the valuation of deferred tax assets.
Cash and cash equivalents
Cash and cash equivalents include
cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and
with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts. Cash accounts are
guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk on such cash.
Accounts Receivable and Allowance
for Doubtful Accounts
Accounts receivable are recorded at
the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting
Standards Codification to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its
customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined
by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off
experience, customer specific facts and economic conditions.
Outstanding account balances are reviewed
individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable
credit losses in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses,
if any. Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against
the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company
has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or
delinquent based on how recently payments have been received.
For the years ended December 31, 2017
and 2016, the Company recorded bad debt expense of $313,430 and $87,590, respectively, which were included in the loss from discontinued
operations.
Inventories
Inventories consists of
products purchased and are valued at the lower of cost or net realizable value. Cost is determined on the weighted average
cost method. The Company reduces inventories for the diminution of value, resulting from product obsolescence, damage or
other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated net
realizable value. Factors utilized in the determination of estimated net realizable value include (i) current sales data and
historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures, (iv) new product
introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
The Company evaluates its current level
of inventories considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the
income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification
to adjust inventories to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements
if future economic conditions, customer demand or competition differ from expectations.
Revenue Recognition
The Company’s revenue recognition
policies are in compliance with ASC 605 (Originally issued as Staff Accounting Bulletin (SAB) 104). Revenue is recognized at the
date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed,
no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of
the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Discounts provided
to customers by the Company at the time of sale are recognized as a reduction in sales as the products are sold. Sales taxes are
not recorded as a component of sales.
The Company derives its revenues from
sales contracts with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement
is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed acknowledgement
of receipt from the customers or a signed bill of lading from the third party trucking company and title transfers upon shipment,
based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed
purchase order or contract and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue,
no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted
the ultimate collection of revenues.
Net sales of products represent
the invoiced value of goods, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on all
of the Company’s products at the rate of 5% on the invoiced value of sales. Sales or Output VAT is borne by customers in
addition to the invoiced value of sales and Purchase or Input VAT is borne by the Company in addition to the invoiced value of
purchases to the extent not refunded for export sales.
Property and Equipment
Property and equipment are stated at
cost, less accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over
the estimated useful lives of the assets. Leasehold and tenant improvements are amortized over the shorter of the lease term or
the estimated useful lives of the assets. The Company periodically reviews assets’ estimated useful lives based upon actual
experience and expected future utilization. A change in useful life is treated as a change in accounting estimate and is applied
prospectively.
Upon retirement or disposition
of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is
reflected in selling, general and administrative expenses for that period. Major additions and betterments are capitalized to the
asset accounts while maintenance and repairs, which do not improve or extend the lives of assets, are expensed as incurred.
Investments in Non-consolidated Entities
Investments in non-consolidated
entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability
to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments
are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income
or losses after the date of investment. When net losses from an investment are accounted for under the equity method exceed its
carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting
for the investment under the equity method if the entity subsequently reports net income and the Company's share of that net income
exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down
only when there is clear evidence that a decline in value that is other than temporary has occurred.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement
and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. This topic also establishes a fair value hierarchy that requires classification based on observable and
unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data
(observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
|
|
•
|
Level
one - Quoted market prices in active markets for identical assets or liabilities;
|
|
|
|
|
|
|
•
|
Level
two - Inputs other than level one inputs that are either directly or indirectly observable; and
|
|
|
|
|
|
|
•
|
Level
three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect
those assumptions that a market participant would use.
|
Determining which category an asset or liability falls
within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The fair values of the Company’s
cash, accounts receivable, accrued expenses and other current liabilities approximate their carrying values due to the relatively
short maturities of these instruments. The carrying value of the Company’s short and long term debt approximates fair value
based on management’s best estimate of the interest rates that would be available for similar debt obligations having similar
terms at the balance sheet date.
There are no financial instruments measured at fair value
on a recurring basis.
Impairment of Long-Lived Assets
The Company accounts for the impairment
and disposition of long-lived assets in accordance with ASC 360, Property, Plant and Equipment. The Company periodically evaluates
long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not
be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset were less
than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.
The assumptions used by management in
determining the future cash flows are critical. In the event these expected cash flows are not realized, future impairment losses
may be recorded.
Convertible Instruments
The Company evaluates and accounts for
conversion options embedded in convertible instruments in accordance with ASC 815,
Derivatives and Hedging Activities.
Applicable GAAP requires companies to
bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments
according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms
as the embedded derivative instrument would be considered a derivative instrument.
The Company accounts for convertible
instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments)
as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded
in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of
the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their stated date of redemption.
Income Taxes
The Company accounts for income taxes
in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based
on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted
tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the
change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management,
it is more likely than not that some or all of any deferred tax assets will not be realized.
The Company adopted ASC 740-10-25, Income
Taxes- Overall-Recognition, on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure
of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely
than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit
that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional
liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.
Net Loss per Share
The Company calculates its
basic and diluted earnings per share in accordance with ASC 260. Basic earnings per share are calculated by dividing net
income by the weighted average number of common shares outstanding for the period. Diluted earnings per share are calculated
by adjusting the weighted average outstanding shares to assume conversion of all potentially dilutive warrants and options
and convertible securities. Because the Company incurred losses for the years ended December 31, 2017 and 2016, the number
of basic and diluted shares of common stock is the same since any effect from outstanding warrants would be
anti-dilutive.
Translation Adjustment
The Company’s
financial statements are presented in the U.S. dollar ($), which is the Company’s reporting and functional currency.
The functional currency of the Company’s subsidiaries is TWD. Transactions in foreign currencies are initially recorded
at the functional currency rate prevailing at the date of transaction. Any differences between the initially recorded amount
and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements
of comprehensive income (loss). Monetary assets and liabilities denominated in foreign currency are translated at the functional
currency rate of exchange prevailing at the balance sheet date. Any differences are taken to profit or loss as a gain or loss
on foreign currency translation in the statements of comprehensive income (loss).
In accordance with ASC 830, Foreign
Currency Matters, the Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing
at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting
period. Adjustments resulting from the translation from TWD into U.S. dollar are recorded in stockholders’ equity as part
of accumulated other comprehensive income. The exchange rates used for the financial statements in accordance with ASC 830, Foreign
Currency Matters, are as follows:
|
Average Rate for the year
|
|
December 31,
2016
|
|
December 31,
2017
|
|
Taiwan dollar (TWD)
|
|
|
1
|
|
|
|
1
|
|
|
United States dollar ($)
|
|
|
0.03105
|
|
|
|
0.033
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate at
|
|
|
December 31,
2016
|
|
|
|
December 31,
2017
|
|
|
Taiwan dollar (TWD)
|
|
|
1
|
|
|
|
1
|
|
|
United States dollar ($)
|
|
|
0.03098
|
|
|
|
0.033
|
|
Comprehensive Income (Loss)
Comprehensive income (loss) includes
accumulated foreign currency translation gains and losses with respect to the operating entity in Taiwan.
Recently Issued Accounting Pronouncements
In January 2016, the FASB issued
ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.
This guidance makes targeted improvements to existing U.S. GAAP for financial instruments, including requiring equity investments
(except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be
measured at fair value with changes in fair value recognized in net income; requiring entities to use the exit price notion when
measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets
and financial liabilities by measurement category and form of financial asset and requiring entities to present separately in other
comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific
credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value
in accordance with the fair value option. The new guidance is effective for public companies for fiscal years beginning after December
15, 2017. Early adoption of the own credit provision is permitted. The Company is currently evaluating the impact that the adoption
of this guidance will have on its consolidated financial statements.
In May 2016, FASB issued ASU 2016-12,
“Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients”. The update
is to address certain issues identified by the FASB/IASB Joint Transition Resource Group for Revenue Recognition (TRG) in the
guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract
modifications at transition, the Board decided to add a project to its technical agenda to improve Topic 606, Revenue from Contracts
with Customers, by reducing: 1) the potential for diversity in practice at initial application and 2) the cost and complexity
of applying Topic 606 both at transition and on an ongoing basis. The amendments in this Update affect entities with transactions
included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to
transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments
to the recognition and measurement provisions of Topic 606 also affect entities with transactions included within the scope of
Topic 610, Other Income. The amendments in this Update affect the guidance in Accounting Standards Update No. 2014-09, Revenue
from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the
amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended
by Update 2014-09). Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the
Effective Date, defers the effective date of Update 2014-09 by one year. The adoption of this guidance is not expected to have
a material impact on the Company’s Consolidated Financial Statements and related disclosures.
In December 2017, the Securities
and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 118 (the “Bulletin”), which provides
accounting guidance regarding accounting for income taxes for the reporting period that includes the enactment of the Tax Act.
The Bulletin provides guidance in those situations where the accounting for certain income tax effects of the Tax Act will be incomplete
by the time financial statements are issued for the reporting period that includes the enactment date. For those elements of the
Tax Act that cannot be reasonably estimated, no effect will be recorded.
The SEC has provided in the Bulletin
that in situations where the accounting is incomplete for certain effects of the Tax Act, a measurement period which begins in
the reporting period that includes the enactment of the Tax Act and ends when the entity has obtained, prepared and analyzed the
information is needed in order to complete the accounting requirements. The measurement period shall not exceed one year from enactment.
In February 2018, the FASB issued ASU
2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income to retained earnings
for stranded tax effects resulting from the Tax Cuts and Jobs Act. This guidance is effective for all entities for fiscal
years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The amendments
in ASU 2018-02 should be applied either in the period of adoption or retrospectively to each period in which the effect of the
change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The adoption of this guidance
is not expected to have a material impact on the Company's Consolidated Financial Statements and related disclosures.
Management does not believe that
any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying
financial statements.
NOTE 4 – Discontinued Operation
On September 30, 2017, pursuant to agreements
with one of our directors, Li-An Chu, the Company transferred the 100% ownership in Jinchih, to Li-An Chu in exchange for cancellation
of loan payable of $379,254 to Li-An Chu and cancellation of total 25,503,333 shares of the Company’s common stock owned
by a group of stockholders, including Li-An Chu. As a result of these transactions, Jinchih is no longer a wholly owned subsidiary
of the Company as of September 30, 2017. Since Jinchih was sold back to Li-An Chu who is the Company’s director, CEO and
CFO at the time of the transaction, no gain or loss was recorded in the statement of comprehensive loss for the year ended December
31, 2017. The net gain of $99,822 from the sale of Jinchih was included in stockholders’ equity.
The balance sheets and the results of operations of discontinued
operations for the years ended December 31, 2017 and 2016 are as following:
|
|
|
2017
|
|
2016
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
—
|
|
|
$
|
251,416
|
|
|
Short-term investments
|
|
|
—
|
|
|
|
403,617
|
|
|
Accounts receivable, net
|
|
|
—
|
|
|
|
1,331,409
|
|
|
Inventories
|
|
|
—
|
|
|
|
81,058
|
|
|
Other current assets
|
|
|
—
|
|
|
|
1,031
|
|
|
Property, plant and equipment, net
|
|
|
—
|
|
|
|
8,890
|
|
|
Intangible Assets, net
|
|
|
—
|
|
|
|
146,142
|
|
|
Other assets
|
|
|
—
|
|
|
|
14,412
|
|
|
Total assets
|
|
$
|
—
|
|
|
$
|
2,237,975
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term loan
|
|
|
—
|
|
|
|
427,168
|
|
|
Accounts payable
|
|
|
—
|
|
|
|
584,605
|
|
|
Advances from customers
|
|
|
—
|
|
|
|
132,000
|
|
|
Other current liabilities
|
|
|
—
|
|
|
|
3,417
|
|
|
Long-term debt
|
|
|
—
|
|
|
|
433,457
|
|
|
Total liabilities
|
|
$
|
—
|
|
|
$
|
1,580,647
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,439,841
|
|
|
$
|
2,666,662
|
|
|
Cost of goods sold
|
|
|
(1,827,637
|
)
|
|
|
(2,307,293
|
)
|
|
General and administrative expenses
|
|
|
(792,542
|
)
|
|
|
(307,404
|
)
|
|
Depreciation and amortization
|
|
|
(30,665
|
)
|
|
|
(32,751
|
)
|
|
Bad debt expense
|
|
|
(313,430
|
)
|
|
|
(87,590
|
)
|
|
Interest income (expense), net
|
|
|
(23,439
|
)
|
|
|
(33,075
|
)
|
|
Income tax provision
|
|
|
—
|
|
|
|
(3,204
|
)
|
|
Loss from discontinued operations
|
|
$
|
(547,872
|
)
|
|
$
|
(104,655
|
)
|
NOTE 5 – Accounts Receivable
Accounts receivable at December 31,
2017 and 2016 consisted of the following:
|
|
|
December
31, 2017
|
|
December
31, 2016
|
|
Continuing operations:
|
|
|
|
|
|
Accounts receivable
|
|
$
|
15,000
|
|
|
$
|
—
|
|
|
Less: Allowance for doubtful accounts
|
|
|
—
|
|
|
|
—
|
|
|
|
|
$
|
15,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
—
|
|
|
$
|
1,418,999
|
|
|
Less: Allowance for doubtful accounts
|
|
|
—
|
|
|
|
(87,590
)
|
|
|
|
|
$
|
—
|
|
|
$
|
1,331,409
|
|
NOTE 6 – Short-Term Investment
Short-term investment consists of shares
of stock of non-public traded company purchased by the Company which was recorded at cost. For the year ended December 31, 2016,
the Company sold 100,000 shares of stock of Xin Tianran Electric Power Co., Ltd. for TWD$10 (approximately $0.33) per share which
was same as the cost per share. No gain or loss was recognized. During the year ended December 31, 2017, the Company impaired the
full amount of short-term investment and recorded an impairment loss of $425,753 which was included in the loss from discontinued
operation.
NOTE 7 – Intangible Assets
Intangible assets include costs of technology
purchased and product designed cost. Intangible assets are stated at cost, less accumulated amortization.
In the year ended December 31, 2016, the Company
purchased the DMS technology from Xinyahang Gufen Youxian Gongsi (“Xinyahang”) for $128,176 and 500,000 shares of the
Company’s common stock. Cash of $128,176 was paid in 2016 and 500,000 shares of common stock were valued at $0.001 per share.
On October 1, 2016, the Company entered into
two-year service agreement with Xinyahang to design the device for the DMS system for $50,172.
In August 2017, the Company determined not
to continue the business with the DMS system and recorded the impairment on intangible assets of $119,181 which was included in
the loss from discontinued operation.
On September 30, 2017, the Company sold
Jinchih to one of the Company’s officer and director (see note 4).
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Intangible assets
|
|
$
|
—
|
|
|
$
|
178,348
|
|
|
Less: Accumulated amortization
|
|
|
—
|
|
|
|
(32,206
|
)
|
|
Total:
|
|
$
|
—
|
|
|
$
|
146,142
|
|
NOTE 8 – Bank Loans
Bank loans were repaid by equal monthly
payment of principal and interest. Bank loans payable as of December 31, 2016 consist of following which were included in the liabilities
from discontinued operation:
|
|
|
December
31, 2016
|
|
Term
|
|
Int.
Rate/Year
|
|
Cathay United
Bank
|
|
|
59,791
|
|
|
|
Dec
19, 2016 to Nov 18, 2017.
|
|
|
|
3.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
term debt: principal amount payable within 1 year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Commercial Bank Ltd.
|
|
|
45,047
|
|
|
|
Dec
31, 2016 to Dec 30, 2017.
|
|
|
|
5.07
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taiwan Business Bank Ltd.
|
|
|
56,260
|
|
|
|
Dec
26, 2016 to Dec 25, 2017.
|
|
|
|
3.60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of Panshin
|
|
|
45,829
|
|
|
|
Dec
11, 2016 to Dec 10, 2017.
|
|
|
|
3.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sunny Bank Ltd.
|
|
|
107,309
|
|
|
|
Dec
22, 2016 to Dec 21, 2017.
|
|
|
|
3.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sunny Bank Ltd.
|
|
|
112,932
|
|
|
|
Dec
6, 2016 to Dec 5, 2017.
|
|
|
|
3.49
|
%
|
|
Total
|
|
$
|
427,168
|
|
|
|
|
|
|
|
|
|
Long-Term portion of bank loans:
|
|
|
December
31, 2016
|
|
Term
|
|
Int.
Rate/Year
|
|
Taiwan Business Bank Ltd.
|
|
|
129,620
|
|
|
|
Dec
26, 2017 to
Sep
25, 2020.
|
|
|
|
3.60
|
%
|
|
Sunny Bank Ltd.
|
|
|
8,507
|
|
|
|
Dec
22, 2017 to
Jan
21, 2018.
|
|
|
|
3.49
|
%
|
|
Bank of Panshin
|
|
|
21,107
|
|
|
|
Dec
11, 2017 to
Jun
10, 2018.
|
|
|
|
3.67
|
%
|
|
Sunny Bank Ltd.
|
|
|
164,023
|
|
|
|
Dec
6, 2017 to
Aug
5, 2019.
|
|
|
|
3.49
|
%
|
|
First Commercial Bank Ltd.
|
|
|
110,200
|
|
|
|
Dec
31, 2017 to
Jan
30, 2021.
|
|
|
|
5.07
|
%
|
|
Total
|
|
$
|
433,457
|
|
|
|
|
|
|
|
|
|
There were no bank loan payable as of December 31, 2017.
NOTE 9 – Convertible
Promissory Note
On October 1, 2017, Mr. Tee-Keat Ong,
the Chairmen of the Board of Directors, and the Company entered into a loan agreement pursuant to which Mr. Tee-Keat Ong agreed
to lend the Company $30,000 initially with future loan amount up to $1,000,000. On the same date, the Company issued a promissory
note to Mr. Tee-Keat Ong for the principal amount of $30,000. The promissory note bears interest at five percent (5%) per annum
and is due on demand. Pursuant to the terms of the note, the note is convertible into the Company’s common stock at a conversion
price of $0.001 per share. The note began to accrue interest at 10% per annum when it is past due.
On October 1, 2017, the Company entered into a loan agreement
with Ms. Shoou Chyn Kan, an unrelated individual. Pursuant to the loan agreement, Ms. Shoou Chyn Kan agreed to lend the Company
$65,000 initially with future loan amount up to $1,000,000. On the same date, the Company issued a promissory note to Ms. Shoou
Chyn Kan for the principal amount of $65,000. The promissory note bears interest at 5% per annum and is due on demand. Pursuant
to the terms of the note, the note is convertible into the Company’s common stock at a conversion price of $0.001 per share.
The note began to accrue interest at 10% per annum when it is past due.
Since
the conversion price for above notes were lower than the quoted price of the Company’s common stock on OTC market, the beneficial
conversion amount of $95,000 was recorded as interest expense in the statement of comprehensive loss for the year ended December
31, 2017.
NOTE
10 – Related Party Transactions and Balances
Due to
related parties consists of amount advances from stockholders for the use of working capital and the payment of expenses. During
the year ended December 31, 2016, stockholders advanced $183,304 to the Company. As of December 31, 2016, the balance due to related
parties was $268,141.
On May
10, 2016, the Company issued 3,333 shares to director Chu,Li-An, in exchange for cancellation of debt.
During
the year ended December 31, 2017, the Company paid $37,500 to Rock Computer Technology Company for service provided. The company’s
CEO, Mr. Chi-Shun Chang served as the president of Rock Computer Technology Company.
During
the year ended December 31, 2017, the Company sold its wholly owned subsidiary, Jinchih, to one of its directors, Li-An Chu. (See
Note 4)
During
the year ended December 31, 2017, the Company entered a loan agreement and issued a promissory note to the Chairman of Board of
Directors. (See Note 9)
NOTE 11 – INCOME TAXES
The Company did not provide any
current or deferred U.S. federal income tax provision or benefit for any of the periods presented because the Company has
experienced operating losses for U.S. federal income tax purposes since inception. When it is more likely than not that the
deferred tax asset cannot be realized through future income the Company must set up allowance for this future tax
benefit.
As
of December 31, 2017, the Company had approximately $1 million net operating loss carryforward available in the U.S. from
continuing operation to reduce future taxable income.
The Company set up 100% valuation allowance for deferred tax
assets resulting from net operating loss carryforward.
Taxation on profits earned in the Taiwan
has been calculated on the estimated assessable profits for the year at the rates of 17% in the Taiwan after taking into account
the benefits from any special tax credits or “tax holidays” allowed in the county of operations.
A reconciliation of the provision for
income taxes to the Company’s effective income tax rate for continuing operation is as follows:
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
Pre-tax loss
|
|
$
|
(251,637
|
)
|
|
$
|
(209,347
|
)
|
|
U.S. federal corporate income tax rate
|
|
|
35
|
%
|
|
|
35
|
%
|
|
Expected U.S. income tax credit
|
|
|
(88,073
|
)
|
|
|
(73,271
|
)
|
|
Change of valuation allowance
|
|
|
88,073
|
|
|
|
73,271
|
|
|
Effective tax expense
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company had deferred tax assets
as follows:
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
Net operating losses carried forward
|
|
$
|
356,624
|
|
|
$
|
268,552
|
|
|
Effect of rate change
|
|
|
(142,650
|
)
|
|
|
—
|
|
|
Less: Valuation allowance
|
|
|
(213,974
|
)
|
|
|
(268,552
|
)
|
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
The
U.S. Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law.
Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced
earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion
tax, respectively. The Company's deferred tax assets were remeasured to reflect the reduction in the U.S. corporate income tax
rate from 35% to 21%, resulting in a change of deferred tax assets of $142,650 for the year ended December 31, 2017. This amount
can be seen on the rate reconciliation as an adjustment to deferred tax asset and corresponding valuation allowance.
NOTE 12 – COMMON STOCK
The Company issue the following shares
of common stock during the periods indicated below:
On October 5, 2017, the Company issued
21,000 shares to two investors at five dollars per share for a purchase price of $105,000.
On December 27, 2017, the Company retired
25,503,333 shares returned from various stockholders in connection with the sale of Taiwan subsidiary, Jinchih, pursuant to the
agreement with one of the Company’s directors. (See Note 4)
On April 4, 2016, the Company issued 5,000
shares to two investors with a purchase price of $4.00 per share for cash.
On May 10, 2016, the Company issued 3,333
shares to director Chu,Li-An, in exchange for cancellation of debt.
On May 10, 2016, the Company issued 2,000
shares to an investor with a purchase price of $4.00 per share for cash.
On May 10, 2016, the Company issued 3,000
shares to an investor with a purchase price $5.00 per share for cash.
On May 10, 2016, the Company issued 21,000
shares to an investor with a purchase price of $4.76 per share for cash.
On June 28, 2016, the Company issued 1,250
shares to an investor with a purchase price of $2.40 per share for cash.
On July 12, 2016, the Company issued 500,000
shares to a Xinyahang Electronics Co. Ltd. Taiwan, as part of the payment for technology transfer and purchase of DMS platform
technology.
On July 12, 2016, the Company issued total
1,600 shares to six investors with a purchase price of $10.00 per share for cash.
On July 12, 2016, the Company issued 700 shares
to an investor with a purchase price of $12.00 per share for cash.
On July 15, 2016, the Company issued 2,000
shares to consultant Kuo, Yu-chieh to offset for consulting fees payable.
On August 8, 2016, the Company issued 200
shares to an investor with a purchase price of $14.00 per share for cash.
On September 6, 2016, the Company issued 2,400
shares to an investor with a purchase price of $14.00 per share for cash.
On October 31, 2016, the Company issued 400
shares to three investors with a purchase price of $14 per share for cash.
NOTE 13 –SUBSEQUENT EVENTS
The Company has evaluated the
existence of significant events subsequent to the balance sheet date through the date the financial statements were issued and
has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial
statements.
F-16
