UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
☑QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 2019
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
For the transition period from ______ to _______
Commission File Number 000-53737
SINO UNITED WORLDWIDE CONSOLIDATED LTD.
(Exact name of registrant as specified in its charter)
Nevada (State of incorporation)
136-20 38th Ave. Unit 12F
Flushing, NY 11354(Address of Principal Executive
Offices)
_______________
718-395-8706 (Issuer Telephone number)
_______________
Check
whether the issuer (1) has filed all reports 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 the issuer was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a larger
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of "accelerated filer and large accelerated
filer" in Rule 12b-2 of the Exchange Act. (Check one)
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated
filer ☐ |
Smaller
reporting company ☑ |
|
Emerging
growth company ☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company as defined
in Rule 12b-2 of the Exchange Act. Yes ☐ No ☑
At September 30, 2019, there were 33,503,604 shares of the
registrant's common stock issued and outstanding.
SINO UNITED WORLDWIDE CONSOLIDATED LTD.
FORM 10-Q
September 30, 2019
INDEX
PART I-- FINANCIAL INFORMATION
Item
1. |
Financial
Statements |
3 |
Item
2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations. |
11 |
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk |
14 |
Item
4. |
Control
and Procedures |
14 |
PART II-- OTHER INFORMATION
Item
1. |
Legal
Proceedings |
14 |
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
14 |
Item
3. |
Defaults
Upon Senior Securities |
14 |
Item
4. |
Mine
Safety Disclosures. |
14 |
Item
5. |
Other
Information. |
14 |
Item
6. |
Exhibits |
14 |
SIGNATURES |
15 |
Sino United Worldwide Consolidated Ltd.
Index to the consolidated financial statements
Table of Contents |
Page(s) |
Consolidated Balance Sheets at September 30, 2019
(Unaudited) and December 31, 2018 |
F-2 |
Unaudited Consolidated Statements of Operations
for the Three and Nine Months Ended September 30, 2019 and
2018 |
F-3 |
Unaudited Consolidated Statement of Stockholders’
Equity for the Nine Months Ended September 30, 2019 |
F-4 |
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2019 and 2018 |
F-5 |
Notes to the Consolidated Financial Statements
(Unaudited) |
F-6 -
F-9 |
Sino United
Worldwide Consolidated Ltd. |
Balance Sheets |
|
|
|
|
|
|
|
|
|
September 30, 2019 |
|
|
|
December 31, 2018 |
|
ASSETS |
|
|
(Unaudited) |
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
21,525 |
|
|
$ |
25,882 |
|
Accounts receivable |
|
|
95,000 |
|
|
|
20,000 |
|
Total Current Assets |
|
|
116,525 |
|
|
|
45,882 |
|
|
|
|
|
|
|
|
|
|
Loan Receivable |
|
|
50,000 |
|
|
|
— |
|
Total Assets |
|
$ |
166,525 |
|
|
$ |
45,882 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Credit
card payable |
|
$ |
14,079 |
|
|
$ |
14,641 |
|
Convertible promissory note - other |
|
|
170,000 |
|
|
|
85,000 |
|
Accrued expenses and other current liabilities |
|
|
43,680 |
|
|
|
25,064 |
|
Total Current Liabilities |
|
|
227,759 |
|
|
|
124,705 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficiency |
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 394,500,000 shares authorized; 33,503,604
shares issued and outstanding |
|
|
33,504 |
|
|
|
33,504 |
|
Additional paid-in capital |
|
|
1,647,731 |
|
|
|
1,647,731 |
|
Accumulated deficit |
|
|
(1,742,469 |
) |
|
|
(1,760,058 |
) |
Total Stockholders' Deficiency |
|
|
(61,234 |
) |
|
|
(78,823 |
) |
Total Liabilities and Stockholders’ Deficiency |
|
$ |
166,525 |
|
|
$ |
45,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements. |
Sino
United Worldwide Consolidated Ltd. |
Statements of Operations |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue |
|
$ |
30,000 |
|
|
$ |
60,000 |
|
|
$ |
75,000 |
|
|
$ |
120,000 |
|
Costs of revenue |
|
|
|
|
|
|
9,000 |
|
|
|
— |
|
|
|
18,000 |
|
Gross profit |
|
|
30,000 |
|
|
|
51,000 |
|
|
|
75,000 |
|
|
|
102,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
18,731 |
|
|
|
14,827 |
|
|
|
50,153 |
|
|
|
80,784 |
|
Total
operating expenses |
|
|
18,731 |
|
|
|
14,827 |
|
|
|
50,153 |
|
|
|
80,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income(loss) from operations |
|
|
11,269 |
|
|
|
36,173 |
|
|
|
24,847 |
|
|
|
21,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense - related party |
|
|
— |
|
|
|
(1,188 |
) |
|
|
— |
|
|
|
(3,563 |
) |
Interest expense - other |
|
|
(3,077 |
) |
|
|
(727 |
) |
|
|
(7,258 |
) |
|
|
(1,463 |
) |
Total
other expense |
|
|
(3,077 |
) |
|
|
(1,915 |
) |
|
|
(7,258 |
) |
|
|
(5,026 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income(loss) from operations before income tax provision |
|
|
8,192 |
|
|
|
34,258 |
|
|
|
17,589 |
|
|
|
16,190 |
|
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income(loss) |
|
$ |
8,192 |
|
|
$ |
34,258 |
|
|
$ |
17,589 |
|
|
$ |
16,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
Diluted |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
33,503,604 |
|
|
|
33,503,604 |
|
|
|
33,503,604 |
|
|
|
33,503,604 |
|
Diluted |
|
|
33,503,604 |
|
|
|
33,503,604 |
|
|
|
33,503,604 |
|
|
|
33,503,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements. |
Sino United Worldwide Consolidated Ltd. |
Statements of Stockholders' Equity (Deficiency) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
Additional |
|
|
|
Accumulated Other |
|
|
|
|
Number of
Shares |
|
Amount |
|
Paid-in
Capital |
|
Accumulated
Deficit |
|
Comprehensive
Income (loss) |
|
Total |
Balance
at December 31, 2017 |
|
|
33,503,604 |
|
|
$ |
33,504 |
|
|
$ |
1,647,731 |
|
|
$ |
(1,759,743 |
) |
|
$ |
— |
|
|
$ |
(78,508 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(315 |
) |
|
|
— |
|
|
|
(315 |
) |
Foreign currency
translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at December
31, 2018 |
|
|
33,503,604 |
|
|
|
33,504 |
|
|
|
1,647,731 |
|
|
|
(1,760,058 |
) |
|
|
— |
|
|
|
(78,823 |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,589 |
|
|
|
— |
|
|
|
17,589 |
|
Balance at September 30, 2019 |
|
|
33,503,604 |
|
|
$ |
33,504 |
|
|
$ |
1,647,731 |
|
|
$ |
(1,742,469 |
) |
|
$ |
— |
|
|
$ |
(61,234 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements. |
Sino
United Worldwide Consolidated Ltd. |
Statements of Cash
Flows |
(Unaudited) |
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2019 |
|
2018 |
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
17,589 |
|
|
$ |
16,190 |
|
|
|
|
|
|
|
|
|
|
Adjustment to reconcile net income to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Change
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(75,000 |
) |
|
|
(36,000 |
) |
Credit
card payable |
|
|
(562 |
) |
|
|
6,576 |
|
Accrued expenses and other current liabilities |
|
|
18,616 |
|
|
|
(16,938 |
) |
Net cash used in operating activities |
|
|
(39,357 |
) |
|
|
(30,172 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Making loans to others |
|
|
(50,000 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(50,000 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from non-related party loan |
|
|
85,000 |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
85,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
INCREASE(DECREASE) IN CASH |
|
|
(4,357 |
) |
|
|
(30,172 |
) |
Cash - beginning of period |
|
|
25,882 |
|
|
|
50,044 |
|
Cash - end of period |
|
$ |
21,525 |
|
|
$ |
19,872 |
|
|
|
|
|
|
|
|
|
|
Supplement disclosure information |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
— |
|
|
$ |
— |
|
Cash paid for income taxes |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements. |
Sino United Worldwide Consolidated Ltd.
Notes to the Consolidated Financial Statements
June 30, 2019
(Unaudited)
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.
The Company is working new businesses in various fields through
careful review and critical selection of new growth businesses. The
Company is working 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.
Interim Financial Statements
These interim unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States for interim financial information. They do not
include all of the information and footnotes required by generally
accepted accounting principles for complete consolidated financial
statements. Therefore, these consolidated financial statements
should be read in conjunction with the Company's audited financial
statements and notes thereto contained in its report on Form 10-K
for the years ended December 31, 2018
The consolidated financial statements included herein are
unaudited; however, they contain all normal recurring accruals and
adjustments that, in the opinion of management, are necessary to
present fairly the Company's financial position at September 30,
2019, and the results of its operations and cash flows for the
three and nine months ended September 30, 2019. The results of
operations for the period ended September 30, 2019 are not
necessarily indicative of the results to be expected for future
quarters or the full year.
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 $141,234, an
accumulated deficit of $1,742,469 and stockholders’ deficiency was
$61,234 as of September 30, 2019. 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.
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 606. The core principle underlying the revenue recognition ASU
is that the Company will recognize revenue to represent the
transfer of goods and services to customers in an amount that
reflects the consideration to which the Company expects to be
entitled in such exchange. This will require the Company to
identify contractual performance obligations and determine whether
revenue should be recognized at a point in time or over time, based
on when control of goods and services transfers to a customer. The
Company’s revenue streams are recognized over time for the
Company’s sale and installation of power generation systems and are
recognized at a point in time for the Company’s sale of
products.
The ASU requires the use of a new five-step model to recognize
revenue from customer contracts. The five-step model requires that
the Company (i) identify the contract with the customer, (ii)
identify the performance obligations in the contract, (iii)
determine the transaction price, including variable consideration
to the extent that it is probable that a significant future
reversal will not occur, (iv) allocate the transaction price to the
respective performance obligations in the contract, and (v)
recognize revenue when (or as) the Company satisfies the
performance obligation. The application of the five-step model to
the revenue streams compared to the prior guidance did not result
in significant changes in the way the Company records its revenue.
Upon adoption, the Company evaluated its revenue recognition policy
for all revenue streams within the scope of the ASU under previous
standards and using the five-step model under the new guidance and
confirmed that there were no differences in the pattern of revenue
recognition.
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 term 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.
Earnings 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. For the six months ended June 30, 2019 and 2018,
the difference between numbers of basic and diluted shares of
common stock is due to effect of convertible promissory note.
Recently Issued Accounting Pronouncements
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 – Loan Receivable
On June 7, 2019, the Company entered into a loan agreement with a
principal of $50,000. The loan is without definite expiration date
and bears no interest.
NOTE 5 – Convertible Promissory Note
On December 1, 2018, the Company entered into a loan agreement with
Ms. Shoou Chyn Kan, an related individual. Pursuant to the loan
agreement, Ms. Shoou Chyn Kan agreed to lend the Company $20,000 of
loan with 5% of annual interest rate. On the same date, the Company
issued a promissory note to Ms. Shoou Chyn Kan for the principal
amount of $20,000. 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 6% per
annum when it is past due.
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. The
loan was paid off in year 2018.
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. In
2019, the Company received $15,000, $50,000 and $20,000 on January
29, 2019, June 7, 2019 and July 25, 2019, respectively and the
principal of this loan is $150,000 on Septemer 30, 2019.
NOTE 6 – 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
September 30, 2019, the Company had approximately $1.8 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.
A reconciliation of the provision for income taxes to the Company’s
effective income tax rate for is as follows:
|
|
Nine Months Ended
September 30, |
|
|
2019 |
|
2018 |
Pre-tax income(loss) |
|
$ |
(12,411 |
) |
|
$ |
16,190 |
|
U.S. federal
corporate income tax rate |
|
|
21 |
% |
|
|
21 |
% |
Expected U.S.
income tax expense(credit) |
|
|
(2,606 |
) |
|
|
3,400 |
|
Change
of valuation allowance |
|
|
2,606 |
|
|
|
(3,400 |
) |
Effective tax expense |
|
$ |
— |
|
|
$ |
— |
|
|
|
Three Months Ended
September 30, |
|
|
2019 |
|
2018 |
Pre-tax income(loss) |
|
$ |
(21,808 |
) |
|
$ |
34,258 |
|
U.S. federal
corporate income tax rate |
|
|
21 |
% |
|
|
21 |
% |
Expected U.S.
income tax expense(credit) |
|
|
(4,580 |
) |
|
|
7,194 |
|
Change
of valuation allowance |
|
|
4,580 |
|
|
|
(7,194 |
) |
Effective tax expense |
|
$ |
— |
|
|
$ |
— |
|
NOTE 7 –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.
ITEM 2.-MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Quarterly Report contains forward-looking statements within
the meaning of the federal securities laws. These include
statements about our expectations, beliefs, intentions or
strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we
believe," "management believes" and similar language. The
forward-looking statements are based on the current expectations of
the Company and are subject to certain risks, uncertainties and
assumptions, including those set forth in the discussion under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in this report. Actual results may differ
materially from results anticipated in these forward-looking
statements. We base the forward-looking statements on information
currently available to us, and we assume no obligation to update
them.
Investors are also advised to refer to the information in our
previous filings with the Securities and Exchange Commission (SEC),
especially on Forms 10-K, 10-Q and 8-K, in which we discuss in more
detail various important factors that could cause actual results to
differ from expected or historic results. It is not possible to
foresee or identify all such factors. As such, investors should not
consider any list of such factors to be an exhaustive statement of
all risks and uncertainties or potentially inaccurate
assumptions.
Overview
From November 2009 until October, 2013, through our China
subsidiary, we were engaged in design, marketing and distributing
of alcohol base clean fuel which are designed to use less fossil
fuel and have less pollution than traditional fuel.
From October 2013 until September, 2017, through our Taiwan
subsidiary, we were 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 its wholly owned Taiwan Subsidiary, Jinchih
International Limited (“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 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.
The Company is working new businesses in various fields through
careful review and critical selection of new growth businesses. The
Company is working 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.
Results of Operations
Three and Nine Months ended June 30, 2019 and 2018
Revenue
The Company recognized $60,000 and $120,000 of revenue during the
three and nine months ended September 30, 2018, $30,000 and $75,000
of revenue during three and nine months ended September 30, 2019.
Our revenues were generated from the I.T. management consulting
services.
General and Administrative Expenses:
General and administrative expenses were $18,731 and $14,827 for
the three months ended September 30, 2019 and 2018, $50,153 and
$80,784 for the nine months ended September 30, 2019 and 2018,
respectively. The decrease in nine months ended period was
primarily due to decrease in professional expenses and travel
expense.
Interest expense
During the three and nine months ended September 30, 2019, the
Company had interest expense of $2,314 and $5,116 from convertible
promissory note. During the three and nine months ended September
30, 2018, the Company had interest expense of $1,187 and $3,563
from related party convertible promissory note.
Net income
As a result of the foregoing, The Company generated net loss of
$8,192 and $17,589 for the three and nine months ended September
30, 2019, respectively. The Company generated net income of $34,258
and $16,190 for the three and nine months ended September 30, 2018,
respectively.
Liquidity and Capital Resources
We have funded our operations to date primarily through operations,
and related party loans and capital contributions. Due to our net
loss and negative cash flow from operating activities, there is
substantial doubt about the Company’s ability to continue as a
going concern. The Company’s management recognizes that the Company
must generate sales and obtain additional financial resources to
continue to develop its operations
As of September 30, 2019, we had a working capital deficit of
$111,234. Our current assets on September 30, 2019 were $116,525
primarily consisting of cash of $21,525, and account receivable of
$95,000. Our current liabilities were primarily composed of credit
card payable of $14,079, convertible promissory notes of $170,000
and accrued expenses and other current liabilities of $43,680.
Cash Flow from Operating Activities
Net cash used in operating activities was $39,357 during the nine
months ended September 30, 2019, which consisted of our net loss of
$17,589, offset by a change of accounts receivable of $75,000, a
change of accrued expenses of $18,616 and a change of credit card
payable of $562.
Net cash used in operating activities was $30,172 for the nine
months ended September 30, 2018, which consisted of our net income
from operation of $16,190, a change of accounts receivable of
$36,000, a change of credit card payable of $6,576 and a change of
accrued expenses of $16,938.
Cash Flow from Investing Activities
Net cash used in investing activities was $50,000 during the six
months ended September 30, 2019. The cash outflow is due to loan
made to others.
Cash Flow from Financing Activities
Net cash provided by financing activities totaled $85,000 of
proceeds from non-related party for the nine months ended June 30,
2019.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues,
expenses, results of operations, liquidity, capital expenditures or
capital resources.
Inflation
We do not believe our business and operations have been materially
affected by inflation
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results
of operations are based on our financial statements that have been
prepared under accounting principle generally accepted in the
United States of America. 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 the 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.
A summary of significant accounting policies is included in Note 3
to the consolidated financial statements included in this Annual
Report. Of these policies, we believe that the following items are
the most critical in preparing our financial statements.
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.
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.
Foreign Currency Translation
The Company follows Section 830-10-45 of the FASB Accounting
Standards Codification (“Section 830-10-45”) for foreign currency
translation to translate the financial statements of the foreign
subsidiary from the functional currency, generally the local
currency, into U.S. Dollars. Section 830-10-45 sets out the
guidance relating to how a reporting entity determines the
functional currency of a foreign entity (including of a foreign
entity in a highly inflationary economy), re-measures the books of
record (if necessary), and characterizes transaction gains and
losses. the assets, liabilities, and operations of a foreign entity
shall be measured using the functional currency of that entity. An
entity’s functional currency is the currency of the primary
economic environment in which the entity operates; normally, that
is the currency of the environment, or local currency, in which an
entity primarily generates and expends cash.
The functional currency of each foreign subsidiary is determined
based on management’s judgment and involves consideration of all
relevant economic facts and circumstances affecting the subsidiary.
Generally, the currency in which the subsidiary transacts a
majority of its transactions, including billings, financing,
payroll and other expenditures, would be considered the functional
currency, but any dependency upon the parent and the nature of the
subsidiary’s operations must also be considered. If a subsidiary’s
functional currency is deemed to be the local currency, then any
gain or loss associated with the translation of that subsidiary’s
financial statements is included in accumulated other comprehensive
income. However, if the functional currency is deemed to be the
U.S. Dollar, then any gain or loss associated with the
re-measurement of these financial statements from the local
currency to the functional currency would be included in the
consolidated statements of comprehensive income (loss). If the
Company disposes of foreign subsidiaries, then any cumulative
translation gains or losses would be recorded into the consolidated
statements of comprehensive income (loss). If the Company
determines that there has been a change in the functional currency
of a subsidiary to the U.S. Dollar, any translation gains or losses
arising after the date of change would be included within the
statement of comprehensive income (loss).
Based on an assessment of the factors discussed above, the
management of the Company determined the relevant subsidiaries’
local currencies to be their respective functional currencies.
The financial records of the Company's Taiwan operating
subsidiaries acquired on November 30, 2013 are maintained in their
local currency, the “TWD”, which is also the functional currency.
Assets and liabilities are translated from the local currency into
the reporting currency, U.S. dollars, at the exchange rate
prevailing at the balance sheet date. Revenues and expenses are
translated at weighted average exchange rates for the period to
approximate translation at the exchange rates prevailing at the
dates those elements are recognized in the consolidated financial
statements. Foreign currency translation gain (loss) resulting from
the process of translating the local currency financial statements
into U.S. dollars are included in determining accumulated other
comprehensive income in the consolidated statement of stockholders’
equity.
PART II — OTHER
INFORMATION
Item 1. Legal Proceedings.
To the best knowledge of the officers and directors, the Company
was not a party to any legal proceeding or litigation as of
September 30, 2019.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit
No. |
Description |
31.1 |
Chief
Executive Officer Certification of Periodic Financial Report
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. |
31.2 |
Chief
Financial Officer Certification of Periodic Financial Report
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
32.1 |
Chief
Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002. |
32.2 |
Chief
Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002 |
101 |
The
following materials from Sino United Worldwide Consolidated Ltd.’s
Quarterly Report on Form 10-Q for the period ended September 30,
2018 are formatted in eXtensible Business Reporting Language
(XBRL): (i) the Consolidated Balance Sheet; (ii) the Consolidated
Statement of Comprehensive Income; (iii) the Consolidated
Statements of Cash Flows, and (iv) Notes to Consolidated Financial
Statements. This Exhibit 101 is deemed not filed for purposes of
Sections 11 or 12 of the Securities Act of 1933 and Section 18 of
the Securities Exchange Act of 1934, and otherwise is not subject
to liability under these sections. |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
SINO
UNITED WORLDWIDE CONSOLIDATED LTD. |
|
|
Date:
November 19, 2019 |
By:
/s/ Yanru Zhou |
|
Yanru
Zhou |
|
Chief
Executive Officer |
|
|
Date:
November 19, 2019 |
By:
/s/ Yanru Zhou |
|
Yanru
Zhou |
|
Chief
Financial Officer |
15
Sino United Worldwide Co... (PK) (USOTC:SUIC)
Historical Stock Chart
From Dec 2020 to Jan 2021
Sino United Worldwide Co... (PK) (USOTC:SUIC)
Historical Stock Chart
From Jan 2020 to Jan 2021