See accompanying notes to the unaudited interim consolidated financial statements
See accompanying notes to the unaudited interim consolidated financial statements
See accompanying notes to the unaudited interim consolidated financial statements
See accompanying notes to the unaudited interim consolidated financial statements
See accompanying notes to the unaudited interim consolidated financial statements
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(UNAUDITED)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS, AND GOING CONCERN
UNION BRIDGE HOLDINGS LIMITED (the “Company”) was incorporated under the laws of the State of Nevada on May 6, 2014. The Company’s principal business activities are as described below in “Recent Developments”.
Recent Developments
The Company incorporated two new wholly owned subsidiaries in the British Virgin Islands: 1.) Phoenix Creation Global Limited (“PC”) on October 26, 2017 and 2.) Windsor Honour Limited (“WH”) on October 30, 2017, respectively. These subsidiaries were formed with the intent to sell healthcare products and services to seniors and individual with disabilities. The Company recently procured samples of motorized wheelchairs, as the first product in an expected portfolio of products targeted at this market.
On February 2, 2018, the Company’s subsidiary Union Beam Investment Limited (“UB”) established Qianhai Lianqiao Investment Consulting (Shenzhen) Company Limited, renamed as Union Beam Trading (Shenzhen) Limited (“UB Trading”), a wholly foreign owned entity in the People’s Republic of China (“PRC”), to engage in the sale of healthcare products and services.
On February 13, 2018, the Company’s subsidiary PC established Union Care Investment Limited (“UC”) in Hong Kong, to engage in the provision of senior care services.
On May 25, 2018, UC established Sino Silver (Qianhai) Holdings Ltd. (“Sino Silver Qianhai”), a wholly owned entity in the PRC, to engage in the provision of elderly home care services, to establish senior care centers and to provide community services. As of December 31, 2019, UC is ready to be engaged in the business activities of the Company.
On September 20, 2018, Sino Silver Qianhai established Sino Sliver (Beijing) Elderly Service Ltd. (“Sino Silver Beijing”) in the PRC, to engage in the provision of elderly home care services, to establish senior care centers and to provide community services in Beijing region.
On December 27, 2018, the Company’s subsidiary UC established Sino Silver (Zhuhai Hengqin) Elderly Service Limited (“Sino Silver Zhuhai”), a wholly owned entity in the PRC engaging the elderly home care services, senior care centers and community services.
On September 24, 2019, the Company entered into a share exchange agreement (the “SEA”) with Conperin Group Inc. (“Conperin”) and Conperin’s shareholders whereby the Company issued 187,546,887 new common shares in exchange for all of the issued and outstanding common shares of Conperin, which totaled 2,500,000. Conperin is a private limited liability company, incorporated and domiciled in the British Virgin Islands. The Company and Conperin were under common control before the acquisition; therefore, the transaction has been accounted for as business combination under common control in accordance to ASC-805-50-30-5, in which the assets and liabilities of Conperin have been presented at their carrying values at the date of common control on March 12, 2019.
On March 12, 2019, Conperin established Circle YY Technologies Inc., a limited company incorporated in the British Virgin Islands (“Circle BVI”). Circle BVI’s principal business activity is investment holding.
On March 27, 2019, Conperin established Circle YY Technologies Limited, a limited company incorporated in Hong Kong (“Circle HK”). Circle HK’s principal business activity is development of website and mobile apps to promote positive communication between the elders and young people.
On September 27, 2019, Conperin established Circle YY International Inc., a limited company incorporated in the British Virgin Islands (“Circle International”). As of March 31, 2020, Circle International are ready to be engaged in the business activities of the Company.
Discontinued Operations
On November 6, 2019, the Company disposed of UB Trading, Sino Silver Qianhai and Sino Silver Beijing to unrelated parties at no consideration. On December 17, 2019, the Company disposed of Sino Silver Zhuhai to unrelated parties at no consideration. Before the disposal, the subsidiaries have minimal business activities. The Company finds no business rationale to maintain these subsidiaries.
Going Concern
The accompanying unaudited interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred a net loss of $604,145 for the period ended September 30, 2020. As of September 30, 2020, the Company had an accumulated deficit of $2,237,131, working capital deficit of $1,898,442, and stockholders’ deficit of $1,898,442; its net cash used in operating activities for period ended September 30, 2020 was $603,258.
These factors raise substantial doubt on the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plan for the Company’s continued existence is dependent upon Management's ability to identify investment opportunities, develop those opportunities to generate profit; additionally, Management will need to continue to rely on certain related parties to provide funding for investment, working capital, and general corporate purposes, and management expertise to the Company at less than prevailing market rates. If Management is unable to execute its plan, the Company may become insolvent.
The Company’s controlling shareholder and Chief Executive Officer has provided a personal guarantee of loan in writing that he would provide to the Company of up to $1 million for investment and working capital purposes. Management believes this guarantee should be considered a material event in executing its overall plan described in the foregoing.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020.
Basis of Consolidation
These financial statements include the accounts of the Company and its wholly-owned subsidiaries: First Channel Limited (“FC”), UB, PC, WH, UC, Conperin, Circle BVI, Circle HK and Circle International. These financial statements have also included the accounts of the subsidiaries previously wholly owned by the Company and have been disposed during the year, up to the date of disposal of the subsidiaries: UB Trading, Sino Silver Qianhai, Sino Silver Beijing and Sino Silver Zhuhai. All intercompany sales, purchases, balances, investments, and capital have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”, except for the translation for Hong Kong dollar, which uses a fixed rate of 0.1280. Since Hong Kong dollar is pledged to U.S. dollar, management considers any difference between the market rate and the fixed rate of 0.1280 as having no significant effect in the Company’s financial statements.
The reporting currency for the Company and its subsidiaries is the U.S. dollar. The functional currency of FC, PC, WH and UB is U.S. dollar; the functional currency of UB Trading, Sino Silver Qianhai, Sino Silver Beijing and Sino Silver Zhuhai is Chinese Renminbi (“RMB”); and the functional currencies of UC, Conperin, Circle BVI, Circle HK and Circle International is the Hong Kong dollar (“HKD”).
The Company’s subsidiaries, whose records are not maintained in those entities’ respective functional currencies, re-measure their records into their functional currency as follows:
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●
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Monetary assets and liabilities at exchange rates in effect at the end of each period
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Nonmonetary assets and liabilities at historical rates
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●
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Revenue and expense items at the average rate of exchange prevailing during the period
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Gains and losses from these re-measurements were not significant and have been included in the Company’s results of operations.
The Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into the U.S. dollar as follows:
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●
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Assets and liabilities at the rate of exchange in effect at the balance sheet date
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●
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Equities at the historical rate
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●
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Revenue and expense items at the average rate of exchange prevailing during the period
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Adjustments arising from such translations are included in accumulated other comprehensive income in shareholders’ equity.
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September 30,
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December 31,
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|
|
|
|
2020
|
|
|
2019
|
|
|
Spot RMB: USD exchange rate
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|
$
|
N/A
|
|
|
$
|
0.1436
|
|
|
Average RMB: USD exchange rate
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|
$
|
N/A
|
|
|
$
|
0.1448
|
|
|
Spot HKD: USD exchange rate
|
|
$
|
0.1280
|
|
|
$
|
0.1280
|
|
|
Average HKD: USD exchange rate
|
|
$
|
0.1280
|
|
|
$
|
0.1280
|
|
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollar at the rates used in translation.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company’s bank deposits are held with large financial institutions located in Hong Kong. These deposits are not protected under FDIC; however, the Company has determined that there is no significant credit risk for these deposits and does not believe these institutions will become insolvent.
Prepaid expenses
The Company makes certain payments for general corporate purposes to service providers that render services over time. The Company amortizes these services to its results of operations over the span of time that the services are contracted. Certain prepayments that are to be delivered after one operating period to the Company have been classified as long-term prepaid expenses. Management does not believe these prepayments qualify as financial instruments that require fair value consideration and disclosure.
Inventories
Inventories are computed using the first-in, first-out method and valued at the lower of cost or net realizable value. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are written down or written off.
Fair value of financial instruments
The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, prepaid expenses and deposits, accounts payable and accrued liabilities and amount due to a related party at their fair values because of the short-term nature of these financial instruments.
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:
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●
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Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
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●
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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
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●
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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.
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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.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Income taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Hong Kong is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company conducts businesses in China and Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.
Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. As of September 30, 2020, the Company has no dilutive securities.
Related Parties
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.
Revenue recognition
The Company adopted ASC606 “Revenue Recognition”, and recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
The Company derives its revenues from the rendering of computer consulting services and selling of health products. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
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identify the contract with a customer;
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identify the performance obligations in the contract;
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determine the transaction price;
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●
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allocate the transaction price to performance obligations in the contract; and
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●
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recognize revenue as the performance obligation is satisfied.
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Recently Adopted Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company´s consolidated financial position, operations or cash flows.
Reclassification
Certain amounts in the comparative financial statements have been reclassified to conform with the presentation of the financial statements of the current period.
NOTE 3 – BUSINESS COMBINATION
The assets, liabilities and net asset value of Conperin and its subsidiaries as of the date of beginning of common control is as follow:
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March 12,
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|
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|
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2019
|
|
|
ASSETS
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$
|
-
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|
|
|
|
|
|
|
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LIABILITIES
|
|
|
|
|
|
Current Liabilities
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|
|
|
|
|
Accounts payable and accrued liabilities
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$
|
8,334
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|
|
Due to related parties
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|
|
28,934
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|
|
Total Current Liabilities
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|
|
37,268
|
|
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TOTAL LIABILITIES
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|
|
37,268
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|
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NET LIABILITIES
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|
$
|
(37,268
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)
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The Company and Conperin were under common control before the acquisition; therefore, the transaction has been accounted for as business combination under common control in accordance to ASC-805-30-5, in which the assets and liabilities of Conperin have been presented at their carrying values at the date of common control on March 12, 2019, and no goodwill is recognized.
NOTE 4 – ACCOUNTS RECEIVABLE
The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of September 30, 2020 and December 31, 2019. As at September 30, 2020 and December 31, 2019, the Company had accounts receivable of $103,427 and $0, respectively.
NOTE 5 – PREPAID EXPENSES AND DEPOSITS
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|
September 30,
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|
|
December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Prepaid expenses
|
|
$
|
3,000
|
|
|
$
|
12,000
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|
|
Deposits for platform design
|
|
|
111,846
|
|
|
|
111,846
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|
|
Sundry deposits
|
|
|
11,266
|
|
|
|
11,266
|
|
|
|
|
$
|
126,112
|
|
|
$
|
135,112
|
|
NOTE 6 – INVENTORIES
$9,831 and $54,264 of the inventories of $64,095 as of September 30, 2020 is finished clothing goods and finished surgical masks, respectively. There are no inventory write-offs made as of September 30, 2020.
All of the inventories of $30,715 as of December 31, 2019 is finished clothing goods. There are no inventory write-offs made as of December 31, 2019.
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
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|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Accounts payable
|
|
$
|
-
|
|
|
$
|
55,015
|
|
|
Accrued charges
|
|
|
423,329
|
|
|
|
239,620
|
|
|
|
|
$
|
423,329
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|
|
$
|
294,635
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|
NOTE 8 - RELATED-PARTY TRANSACTIONS
For the periods ended September 30, 2020 and 2019, the Company received advances of $609,470 and $332,418 from the Company’s director, who is also our CEO and majority shareholder, and Union Glory Gold Holdings Limited (“Union Glory”), a Company controlled by our CEO, and repaid $26,538 and $15,360, respectively.
As of September 30, 2020 and December 31, 2019, the balances owed to the related parties totaled $1,770,760 and $1,187,828, respectively.
For the periods ended September 30, 2020 and 2019, the Company has provided computer services to Union Glory Gold Holdings Limited and earned a service income of $0 and $65,179, respectively. Union Glory Gold Holdings Limited is under the control by the major shareholder of the Company.
On September 24, 2019, the Company entered into a share exchange agreement (the “SEA”) with Conperin Group Inc. (“Conperin”) and Conperin’s shareholders whereby the Company issued 187,546,887 new common shares in exchange for all of the issued and outstanding common shares of Conperin, which totaled 2,500,000. Conperin is a private limited liability company, incorporated and domiciled in the British Virgin Islands. The Company and Conperin were under common control before the acquisition. Among the 187,546,887 new common shares, 131,282,821 shares were issued to our CEO and Director of the Company, and 56,264,066 shares were issued to a Director of the Company.
On November 6, 2019, the Company disposed of UB Trading, Sino Silver Qianhai and Sino Silver Beijing to unrelated parties at no consideration. On December 17, 2019, the Company disposed of Sino Silver Zhuhai to unrelated parties at no consideration. The Company’s director, who is also our CEO and majority shareholder, and Union Glory Gold Holdings Limited have agreed not to require the Company to repay the amounts due to them by the disposed subsidiaries and the Company recorded debt forgiveness of $97,542 as additional paid in capital. Loss on disposal of the subsidiaries have been charged to the consolidated statements of operations and comprehensive loss.
The Company’s principal executive offices are located in Hong Kong. The office premises were provided by Company’s controlled by our CEO at no charge to the Company.
The Company is subject to the risk that if the related parties do not continue to provide services and advances to fund the company’s operations or expansion, or if those related parties demand immediate repayment, the Company may become insolvent.
NOTE 9 - STOCKHOLDERS’ DEFICIT
The Company is authorized to issue up to 1,000,000,000 shares of Common Stock, par value $0.001 per share, and 20,000,000 of Preferred Stock, par value $0.001 per share.
Common stock
During the period ended September 30, 2020, the Company has issued no Common Stock.
During the period ended September 30, 2019, the Company issued Common Stock as follows:
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·
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On September 24, 2019, in connection with the Exchange with Conperin (see Notes 1 and 3), the Company issued 187,546,887 shares of Common Stock.
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As of September 30, 2020 and December 31, 2019, 241,146,887 shares of Common Stock were issued and outstanding.
NOTE 10 – CONCENTRATION RISK
As of September 30, 2020, 63% and 37% of the accounts receivable of $103,427 was due from two clients, respectively, who are unrelated to the Company.
During the period ended September 30, 2020, 99% of the revenue of $160,850 was received from three clients, who are unrelated to the Company.
During the period ended September 30, 2019, 100% of the revenue of $65,179 was received from a single client, who is a related party to the Company (Note 8).
NOTE 11 - SUBSEQUENT EVENTS
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 September 30, 2020, up through the date the Company issued the financial statements. During the period, the Company did not have any material recognizable subsequent events.