NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
|
1.
|
ORGANIZATION
AND BUSINESS BACKGROUND
|
Wunong
Asia Pacific Company Limited (fka Panama Dreaming Inc. and Asia Pacific Boiler Corp.) (“Asia Pacific” or the “Company”
or “we” or “us”), have been prepared in accordance with accounting principles generally accepted in the
United States of America. Asia Pacific was incorporated in Nevada on June 23, 2011 for the purpose of offering real estate consulting
services to persons located in North America who are interested in investing in real estate located in Panama.
On
November 5, 2012, the Company filed Articles of Merger with the Nevada Secretary of State to change its name from “Panama
Dreaming Inc.” to “Asia Pacific Boiler Corporation”, to be effected by way of a merger with its wholly-owned
subsidiary Asia Pacific Boiler Corporation, which was created solely for the name change.
Also
on November 5, 2012, the Company filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward
split of its authorized, issued and outstanding shares of common stock on a 4 new for 1 old basis and, consequently, the Company’s
authorized common stock increased from 100,000,000 to 400,000,000 shares, and the Company’s issued and outstanding common
shares increased from 7,950,000 to 31,800,000, all with a par value of $0.00001. The Company’s preferred stock remained
unchanged with 100,000,000 preferred shares authorized, par value $0.00001, and no preferred shares issued or outstanding.
The
forward split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on November
9, 2012.
On
November 6, 2014, the Company changed the fiscal year end to December 31 from June 30. These financial statements and this
Form 10-K for the period ended December 31, 2016. On July 12, 2018, we filed a certificate of amendment to our articles of incorporation
with the Nevada Secretary of State to change our name to “Wunong Asia Pacific Company Limited”.
Merge
with Million Place Investments Ltd.
On
August 5, 2014, we entered into and closed a share exchange agreement with Million Place Investments Ltd. (“Million Place”)
and the shareholders of Million Place. Pursuant to the terms of the share exchange agreement, we agreed to acquire
all 10,000 of the issued and outstanding shares of Million Place’s common stock in exchange for the issuance by our company
of 7,500,000 shares of our common stock to the shareholders of Million Place. As a result of these transactions, Million Place
has become our wholly owned subsidiary. We would have 39,300,000 issued and outstanding common shares upon issuance of the 7,500,000
shares of common stock. On November 19, 2015, we authorized and issued the 7,500,000 shares of common stock.
Business
of Million Place Investments Ltd.
Million
Place was incorporated on April 30, 2012 under the laws of the British Virgin Island (BVI) to engage in any lawful corporate undertaking,
including but not limited to mergers and acquisitions.
Pursuant
to a Share Transfer Agreement dated December 3, 2012, Million Place purchased from John Gong, 14.7 million shares at Renminbi
(RMB) 1.00 per ordinary share (approximately $2,227,273 in the aggregate) in the share capital of Inner Mongolia Yulong Pump Production
Company Limited (Yulong Pump) thereby acquiring an equity interest of 49% in Yulong Pump. Yulong Pump is a China foreign
joint venture corporation engaged in the sale and manufacture of industrial equipment, and in the acquisition, development and
exploitation of residential, commercial, and industrial real estate assets. The business of Yulong Pump is further described
below. In acquiring a 49% interest in Yulong Pump, Million Place became the deemed cooperative foreign joint venture partner
of Yulong Pump.
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
Pursuant
to PRC law, the partners in a cooperative foreign joint venture are permitted to share profits on an agreed basis and not necessarily
in proportion to capital contribution. The joint venture is not required to be a distinct legal entity from its partners
and management and financial control of the foreign joint venture may be determined at the discretion of the partners by mutual
agreement provided that, upon termination of the joint venture, all fixed assets will become the property of the Chinese participant
in the joint venture. Pursuant to the December 3, 2012 Share Transfer Agreement, Million Place was entitled to appoint the
board of directors of Yulong Pump. Further, absent an agreement between Million Place and Yulong Pump, the articles of association
of Yulong Pump provide for distribution of dividends amongst its shareholder in proportion to the number of shares held by them.
On
April 25, 2015, Million Place entered into a Share Sale &Purchase Agreement with Qin Xiu Shan, our former President, former
Chief Executive Officer and former Director, whereby Mr. Qin, who is the beneficial owner of a 51% interest in Yulong Pump, granted
to Million Place the option to purchase an additional 2% equity interest in Yulong Pump (being 600,000 shares) for the aggregate
purchase price of RMB 1.00 per share or approximately $96,278 in the aggregate. The option is perpetual and without provision
for termination. With its acquisition of a 49% equity interest together with an option to purchase an aggregate 51% equity
interest, Million Place is seeking to establish a majority equity stake in Yulong Pump.
On
May 22, 2015, Million Place entered into a Joint Venture Contract with Yulong Pump pursuant to which the companies intend to jointly
engage in the manufacture of industrial boilers, the provision of consultancy services for the design of boiler systems, the manufacture
of industrial water pumps and accessories, and the acquisition and development of real estate. Pursuant to the Joint Venture
Contract, Million Place will be solely responsible all operations and management of the joint venture and shall have exclusive
authority to enter into agreements on behalf of the joint venture. Million Place will in turn receive compensation for services
it provides to the joint venture and shall be entitled to a 49% share of profit generated by the joint venture. Both Million
Place and Yulong Pump shall be entitled to engage in business that is competitive with the joint venture. Pursuant
to the Joint Venture Contract, Yulong Pump has allocated its 143,106 square foot commercial property located in Wulateqianqi,
Mongolia to the joint venture operation. That property is currently under construction and is further described below.
Additional assets or operations may be allocated to the joint venture on an ongoing basis. As of today, the joint venture
contract has not been completed.
Business
of Inner Mongolia Yulong Pump Production Company Limited
Inner
Mongolia Yulong Pump Production Company Limited (“Yulong Pump”) was incorporated on October 6, 1998 under the laws
of the Peoples’ Republic of China to engage in any lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions.
In
1998, Yulong Pump paid a total of RMB 799,000 ($131,985) to acquire land use rights in Wuchuan, Inner Mongolia for the purposes
of establishing a manufacturing facility where. From 1998 until 2008, Yulong Pump was engaged in the manufacture of industrial
water pumps for a variety of applications in Wuchuan, Inner Mongolia. In 2008, Yulong Pump ceased its water pump manufacturing
activities due to a decrease in demand for its products and increasing obsolescence of its manufacturing infrastructure.
The land use rights for the Wuchuan property expire in 2046 and are eligible for renewal subject to additional costs. The
Wuchuan property, is located in the city centre of Wuchuan, a suburb of Hohhot. Yulong pump intends to explore the potential
for commercial development of these lands. The land use right has not been transferred to Yulong Pump as of December
31, 2016. Yulong Pump has written off the net amount of land use right as of December 31, 2016.
Since
the termination of its water pump manufacturing operations, Yulong Pump has engaged in the identification and acquisition of other
industrial manufacturing assets, and in the acquisition, development and exploitation of residential, commercial, and industrial
real estate assets.
In
2008, Yulong Pump transformed itself from a local resident China company to a foreign joint venture company. As a result, the
Company has become an entity with the status of a foreign joint venture company with registered capital of RMB30 million (approximately
USD4,839,181), which consists of 30 million shares of authorized, issued and outstanding voting common stock with a par value
of RMB1.0 per share (USD0.16).
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
In
2013, Yulong Pump applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to raise the registered capital
from RMB30 million to RMB600 million. (approximately USD96,783,624). This was approved in November 2013.
During
the year 2013, Yulong Pump raised RMB188,355,325 (USD31,114,083) as a contribution from its president and CEO, Qin Xiu San.
On
August 5, 2013 Yulong Pump entered into Real Estate Sales Contracts (Lease Agreements) with WulateqianqiHua Yuan Real Estate Limited
Company pursuant to which Yulong Pump acquired the land use rights, expiring on September 15, 2080, to the third, fourth and fifth
floors of a 6 story commercial building under development and located in Wulanteqianqi, Mongolia, China. The leasehold area
of the property is approximately 143,106 square feet. Yulong pump paid RMB188,355,325 (approximately USD31,114,000) in consideration
of the land use rights. The property is under construction with completion anticipated by Fall of 2016. The Wulateqianqi
property was subsequently allocated to the joint venture between Million Place and Yulong Pump pursuant to the Joint Venture Agreement
dated May 22, 2015. Million Place is therefore responsible for the administration and management of the property and entitled
to receive 49% of the joint venture proceeds. The parties intend to lease the facility upon completion of construction and a potential
tenant has been identified.
On
February 1, 2015, Yulong Pump entered into a Warranty Deed Agreement with Qin Xiu San, a former officer and former director of the
Company, pursuant to which Mr. Qin has agreed to transfer to Yulong Pump by July 31, 2015 all outstanding securities of Hohhot
Devotion Boiler General Company Private Limited (“Hohhot Devotion Boiler”). The Warranty Deed Agreement does
not provide for financial consideration. Hohhot Devotion Boiler is a PRC company with approximately 300 employees engaged
in the manufacture and sale of industrial boilers, and in real estate development in the Hohhot region of Inner Mongolia, China.
It is the largest manufacturer of boilers in Inner Mongolia. Together, Devotion Boiler and Yulong Pump are concurrently
planning to begin construction in March 2015 of a new state of the art boiler manufacturing factory with a planned investment
of approximately USD250 million. The companies intend to commence staffing and training of the new boiler plant employees concurrently
with the start of construction. Yulong Pump and Devotion Boiler also intend to rezone for commercial and residential use industrial
land owned by Devotion Boiler in Inner Mongolia. As at the date of this report, the acquisition of Devotion Boiler by Yulong
Pump remains incomplete, and there is no guarantee that any such acquisition will be completed. Further, there is no guarantee
that Yulong Pump or Devotion Boiler will successfully financing the construction of their planned boiler facility. On August 5,
2015, the warranty deed was extended to October 31, 2015. As at the date of this report, the acquisition has not been completed
and our company is seeking a further extension until June 30, 2016. There is no guarantee that the transfer will be completed
or that it will be completed on terms favorable to Yulong Pump.
Through
our wholly owned subsidiary, Million Place, together with its joint venture partner, Yulong Pump, we adopted a multi-pronged business
plan involving the acquisition, development and exploitation of residential, commercial, and industrial real estate assets, the
manufacture and sale of industrial water pumps and accessories and industrial boilers, and the provision of consultancy services
for the design of industrial boiler systems.
Description
of subsidiary and associate
Name
|
|
Place of incorporation
and kind of
legal
entity
|
|
Principal activities
and place of operation
|
|
Particulars of issued/
registered share
capital
|
|
Effective interest
held
|
|
|
|
|
|
|
|
|
|
|
|
Million Place Investments Limited
|
|
British Virgin Island
|
|
Investment holding
|
|
10,000 ordinary shares at US$1
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Inner Mongolia Yulong Pump Production Company Limited
|
|
The PRC, a limited liability company
|
|
Manufacture of water pump systems
|
|
RMB30,000,000
|
|
|
49
|
%
|
The
Company and its subsidiary are hereinafter referred to as (the “Company”).
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
These
accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“U.S. GAAP”).
In
preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts
of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ
from these estimates.
The
consolidated financial statements include the financial statements of PADR and its subsidiary. All significant inter-company balances
and transactions within the Company have been eliminated upon consolidation.
The
Company accounts for the investment in associate in which the Company does not hold a controlling financial interest but have
significant influence over operating and financial policies using the equity method. Under the equity method, the investment is
recorded at cost and adjusted for the proportionate share of net earnings or losses and other comprehensive income or loss, cash
contributions made and distributions received, and other adjustments, as appropriate. The Company performs a periodic evaluation
of an investment to determine whether the fair value of each investment is less than the carrying value, and, if so, whether such
decrease in value is deemed to be other-than-temporary. The Company has provided an impairment loss in full to the investment
in an associate 2015. As at December 31, 2016 and 2015, the investment in an associate was reduced to zero.
The
basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the
weighted average number of common shares outstanding plus potential dilutive securities. For the year ended December 31, 2016
and 2015, there were no potentially dilutive securities outstanding.
The
Company accounts for income taxes under the Financial Accounting Standards Board of Financial Accounting Standard ASC 740, “
Accounting for Income Taxes ” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC
740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date. There was no current or deferred income tax expense or benefits for the periods ending December 31, 2016 and
2015.
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
Income
taxes are determined in accordance with the provisions of ASC 740. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts.
For
the years ended December 31, 2016 and 2015, the Company did not have any interest and penalties associated with tax positions.
As of December 31, 2016 and 2015, the Company did not have any significant unrecognized uncertain tax positions.
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operational decisions.
Companies are also considered to be related if they are subject to common control or common significant influence.
|
●
|
Fair
value of financial instruments
|
The
carrying value of the Company’s financial instruments (excluding short-term bank borrowing and convertible promissory notes):
cash and cash equivalents, accounts payable, accounts payable to a related party and advance from a related party approximate
at their fair values because of the short-term nature of these financial instruments.
Management
believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation
under finance lease and short-term bank borrowing approximate the carrying amount.
The
Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” (“ASC
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
●
|
Level
1
: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
|
●
|
Level
2 :
Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model)
for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially
the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future
amounts to a present value using market-based observable inputs; and
|
●
|
Level
3
: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including
option pricing models and discounted cash flow models.
|
Fair
value estimates are made at a specific point in time based on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the estimates.
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
|
●
|
Recent
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.
The amendments in this update require all equity investments to be measured at
fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of
accounting or those that result in consolidation of the investee). The amendments in this update also require an entity 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 when the entity has elected to measure the liability at fair value in accordance with the
fair value option for financial instruments. The amendments in ASU 2016-01 are effective for public companies for fiscal years
beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect that the adoption
will have a material impact on its consolidated financial statements.
In
February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842)
. The new standard establishes a right-of-use (“ROU”)
model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer
than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense
recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and
operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial
statements, with certain practical expedients available. The Company does not expect that the adoption will have a material impact
on its consolidated financial statements.
In
March 2016, the FASB issued ASU No. 2016-07,
Simplifying the Transition to the Equity Method of Accounting
, which eliminates
the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence
over a previously held investment. The amendments in ASU 2016-07 are effective for public companies for fiscal years beginning
after December 15, 2016 including interim periods therein. Early adoption is permitted. The new standard should be applied prospectively
for investments that qualify for the equity method of accounting after the effective date. The Company does not expect that the
adoption will have a material impact on its consolidated financial statements.
In
March 2016, the FASB issued ASU No. 2016-09,
Improvements to Employee Share-Based Payment Accounting
, which includes amendments
to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU
2016-09 are effective for public companies for fiscal years beginning after December 15, 2016, and interim periods within those
annual periods. Early adoption is permitted but requires all elements of the amendments to be adopted at once rather than individually.
The Company is evaluating the effect that ASU No. 2016-09 will have on the Company’s consolidated financial statements and
related disclosures.
In
June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13,
Financial Instruments-Credit Losses (Topic
326)
, which requires entities to measure all expected credit losses for financial assets held at the reporting date based
on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss
model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be
permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related
disclosures.
In
August 2016, the FASB issued ASU No. 2016-15,
Classification of Certain Cash Receipts and Cash Payments
. ASU 2016-15 clarifies
the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective
for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early
adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements and
related disclosures.
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
In
October 2016, the FASB issued ASU No. 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory.
This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption
is permitted. The Company does not anticipate that the adoption of this ASU to have a significant impact on its consolidated financial
statements.
In
October 2016, the FASB issued ASU No. 2016-17,
Consolidation (Topic 810): Interests Held through Related Parties That Are Under
Common Control
. The amendments in this ASU change how a reporting entity that is the single decision maker of a variable
interest entity should treat indirect interests in the entity held through related parties that are under common control with
the reporting entity when determining whether it is the primary beneficiary of that variable interest entity. The ASU is effective
for fiscal years and interim periods within those years beginning after December 15, 2016. The Company does not expect the adoption
of this ASU to have a material impact on its consolidated financial statements.
In
November 2016, the FASB issued Accounting Standards Update 2016-18 (ASU 2016-18),
Statement of Cash Flows: Restricted Cash
. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. The amendments in this
ASU are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The amendments
in the ASU should be adopted on a retrospective basis. The Company does not expect that adoption of this ASU to have a material
effect on its consolidated financial statements.
Other
accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption
until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
|
3.
|
GOING
CONCERN UNCERTAINTIES
|
The
accompanying consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business.
As
of December 31, 2016, the Company has not generated revenues and has accumulated losses of $4,998,494 since inception. The Company
has suffered from continuous losses with a net loss of $267,954 for the year ended December 31, 2016 and experienced negative
cash flows from operations. The continuation of the Company as a going concern through December 31, 2017 is dependent upon the
continued financial support from its stockholders. Management believes the Company is currently pursuing additional financing
for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain
the operations.
These
and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets and liabilities that may result in the Company not being able to continue as a going concern.
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
|
4.
|
INVESTMENT
IN AN ASSOCIATE
|
The
Company, through Million Place, has a 49% interest in Yulong Pump, a pump and boiler production company in Inner Mongolia since
December 1, 2012. We use the equity method to account for investments in Yulong Pump; accordingly, our results of operations include
the Company’s proportionate share of the net income or loss of Yulong Pump. Our judgment regarding the level of influence
over each equity method investment includes considering key factors such as our ownership interest, representation on the board
of directors, participation in policy-making decisions and material intercompany transactions. Since the investment loss exceeded
the carrying amount of an investment accounted for the equity method, the investment is reduced to zero as of December 31, 2016
and 2015. The Company will resume applying the equity method only after its share of that net income equals the share of net losses
not recognized during the period the equity method was suspended.
No
further investment loss from Yulong Pump was made for the year ended December 31, 2016 and 2015.
|
5.
|
RELATED
PARTY TRANSACTIONS
|
As
of December 31, 2016 and December 31, 2015, advances from the Company’s chairman, chief executive officer and director,
John Gong, amounted to $88,526 and $88,526, respectively. The advances are payments made by John Gong to cover expenses related
to its operations. The advance is non-interest bearing, and payable on demand.
As
of December 31, 2016 and December 31, 2015, amounts due to related companies, amounted $1,093,179 and $845,225, respectively.
These payables are for providing management services to the Company controlled by John Gong, the CEO and a shareholder.
As
of December 31, 2016 and 2015, the Company had no shares of its preferred stock issued and outstanding.
As
of December 31, 2016 and 2015, the Company had a total of 39,300,000 shares of its common stock issued and outstanding.
United
States
Asia
Pacific is incorporated in United States, and is subject to corporate income tax rate of 34%.
As
of December 31, 2016, the Company has $4,996,931 of cumulative net operating losses which can be carried forward to offset future
taxable income. The net operating loss carryforwards begin to expire in 2036, if unutilized. The Company has provided for a full
valuation allowance against the deferred tax assets of $1,698,967 on the expected future tax benefits from the net operating loss
carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
Deferred tax assets and liabilities
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
1,698,967
|
|
|
$
|
1,607,852
|
|
Valuation allowance
|
|
|
(1,698,967
|
)
|
|
|
(1,607,852
|
)
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
WUNONG ASIA PACIFIC
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016
AND 2015
(Currency expressed in United States
Dollars (“US$”), except for number of shares)
Basic
net loss per share is computed using the weighted average number of common shares outstanding during the year. The dilutive effect
of potential common shares outstanding is included in diluted net loss per share. The following table sets forth the computation
of basic and diluted net loss per share for the years ended December 31, 2016 and 2015:
|
|
Years ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders
|
|
$
|
(267,954
|
)
|
|
$
|
(375,749
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – Basic and diluted
|
|
|
39,300,000
|
|
|
|
39,300,000
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – Basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
9.
|
COMMITMENTS
AND CONTINGENCIES
|
As
of December 31, 2016, there were no commitments and contingencies involved.
In
accordance with ASC Topic 855, “
Subsequent Events
”, which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated
all events or transactions that occurred after December 31, 2016 up through the date was the Company issued the audited consolidated
financial statements. During the period, the Company did not have any material recognizable subsequent events.
On July 12, 2018, the Company filed a certificate of amendment to its articles of incorporation with the
Nevada Secretary of State to change its company name to “Wunong Asia Pacific Company Limited”.