ITEM 1. FINANCIAL STATEMENTS
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September 30,
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December 31,
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2016
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2015
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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-
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$
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11,141
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Prepaid expenses
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2,500
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2,500
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Total Current Assets
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2,500
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13,641
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TOTAL ASSETS
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$
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2,500
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$
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13,641
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current Liabilities
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Accounts payable
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$
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3,964
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$
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200
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Due to related parties
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37,680
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3,477
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Total Current Liabilities
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41,644
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3,677
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TOTAL LIABILITIES
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41,644
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3,677
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Stockholders' Equity (Deficit)
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Preferred stock, $0.001 par value, 20,000,000 shares authorized; 0 shares issued and outstanding
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-
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-
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Common stock, $0.001 par value, 1,000,000,000 shares authorized; 53,600,000 shares issued and outstanding
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53,600
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53,600
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Capital Deficiency
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(18,400
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)
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(18,400
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)
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Accumulated deficit
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(74,344
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)
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(25,236
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)
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Total Stockholders' Equity (Deficit)
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(39,144
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)
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9,964
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$
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2,500
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$
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13,641
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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For the three months ended
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For the nine months ended
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September 30,
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August 31,
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September 30,
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August 31,
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2016
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2015
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2016
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2015
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Revenues
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$
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-
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$
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-
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$
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-
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$
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-
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Operating Expenses
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General and administrative expenses
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-
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-
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31
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-
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Professional fees
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10,819
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6,496
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49,077
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14,624
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Total operating expenses
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10,819
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6,496
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49,108
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14,624
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Loss from operations
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(10,819
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)
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(6,496
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)
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(49,108
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)
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(14,624
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)
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Net loss
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$
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(10,819
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)
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$
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(6,496
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)
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$
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(49,108
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)
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$
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(14,624
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)
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Basic and dilutive net loss per common share
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$
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(0.00
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)
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$
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(0.00
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)
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$
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(0.00
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)
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$
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(0.00
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)
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Weighted average number of common shares outstanding - basic and diluted
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53,600,000
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42,719,565
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53,600,000
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40,913,140
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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For the nine months ended
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September 30,
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August 31,
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2016
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2015
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
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(49,108
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)
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$
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(14,624
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)
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Adjustments to reconcile net loss to net cash used in operations:
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Expenses paid by a related party
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34,203
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-
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Changes in operating assets and liabilities:
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Prepaid expenses
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-
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720
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Accounts payable
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3,764
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-
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Net Cash Used in Operating Activities
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(11,141
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)
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(13,904
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from share issuance
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-
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27,200
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Proceeds from a related party
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-
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2,800
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Net Cash Provided By Financing Activities
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-
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30,000
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Net increase (decrease) in cash and cash equivalents
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(11,141
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)
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16,096
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Cash and cash equivalents, beginning of period
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11,141
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6,640
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Cash and cash equivalents, end of period
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$
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-
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$
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22,736
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Supplemental cash flow information
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Cash paid for interest
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$
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-
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$
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-
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Cash paid for taxes
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$
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-
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$
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-
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Non-cash financing transactions:
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Stock issued in fulfillment of accounts payable
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$
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-
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$
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-
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Exchanged debt for common shares
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$
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-
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$
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-
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The accompanying notes are an integral part of these unaudited condensed financial statements.
UNION BRIDGE HOLDINGS LIMITED
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2016
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
UNION BRIDGE HOLDINGS LIMITED (formerly Costo Inc.) (the "Company") was incorporated under the laws of the State of Nevada on May 6, 2014. The Company is developing a distribution of autoparts and components necessary for maintenance and repairs of automobiles and special equipment (construction, road machinery etc.) from China to Europe and CIS countries (Kyrgyzstan, Kazakhstan, Armenia, Azerbaijan, Tajikistan, Uzbekistan). The Company has developed a growth plan that includes expansion into businesses in the health-related industry with the goal to maintaining long term sustainable growth and shareholders' wealth creation.
On May 23, 2016, the Company changed its fiscal year end from November 30 to December 31. Since the Company elected to not file a Transition Report on Form 10-Q for the one-month transition period from December 1, 2015 to December 31, 2015 (the "Transition Period"), the Company has included its unaudited financial statements for the Transition Period in this report on Form 10-Q. References to fiscal years of the Company prior to fiscal 2016 refer to the fiscal years ended on November 30 in those years unless otherwise indicated. The Company now operates on a fiscal year ending on December 31, 2016.
Recent Developments
On February 18, 2016, Yuhua Xu, the controlling shareholder, Chief Executive Officer and sole director of the Company, entered into and closed on a Share Purchase Agreement with Mary Ho, Rudolf Novotny, Shan Ho, Lily Ho and Moana Ho (each a "Purchaser" and collectively, the "Purchasers") whereby the Purchasers purchased a total of 7,990,000 shares of the Company's common stock (the "Shares") from Yuhua Xu, for an aggregate price of $223,720. The Shares acquired represent approximately 74.53% of the issued and outstanding shares of common stock of the Company.
Concurrently with the closing of the Share Purchase Agreement, Yuhua Xu, resigned as an officer and director of the Company and Moana Ho was appointed President and Chairman of the Board of Directors and Hui Zhou was appointed as a Chief Financial Officer and Director.
The Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State on May 23, 2016 to:
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(1)
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Change the Company's corporate name from COSTO INC. to UNION BRIDGE HOLDINGS LIMITED;
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(2)
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Increase the number of authorized shares of common stock, $0.001 par value, from 75,000,000 to 1,000,000,000;
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(3)
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Create a class of preferred stock consisting of 20,000,000 shares, the designations and attributes of which are left for future determination by our board of directors; and
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(4)
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Effect a 1 for 5 forward stock split of the Company's issued and outstanding common stock (the "Forward Stock Split").
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Effective June 21, 2016, The Financial Information Regulatory Association, Inc. ("FINRA") approved the Company's name change and forward stock split application.
All references to share and per share data have not been adjusted to give effect of the Forward Stock Split discussed above.
Union Beam Investment Limited, a Hong Kong company, was formed on February 18, 2016 and First Channel Limited, a British Virgin Islands company was formed on March 18, 2016. Union Beam became a wholly owned subsidiary of First Channel on August 11, 2016 and First Channel became a wholly owned subsidiary of the Company on August 8, 2016. These newly formed subsidiaries will be used to expand the Company’s business to include business operations in the health-related industry with the goal to maintaining long term sustainable growth and shareholders' wealth creation.
UNION BRIDGE HOLDINGS LIMITED
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2016
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K, for the year ended November 30, 2015, as filed with the SEC on January 21, 2016.
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.
Recent accounting pronouncements
Management has considered all recent accounting pronouncements issued. The Company's management believes that these recent pronouncements will not have a material effect on the Company's financial statements.
NOTE 3 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to September 30, 2016 to the date these financial statements were issued, and has determined that it does not have any material events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Change in Fiscal Year End
On May 23, 2016, the Company changed its fiscal year end from November 30 to December 31. Since the Company elected to not file a Transition Report on Form 10-Q for the one-month transition period from December 1, 2015 to December 31, 2015 (the "Transition Period"), the Company has included its unaudited financial statements for the Transition Period in this report on Form 10-Q. References to fiscal years of the Company prior to fiscal 2016 refer to the fiscal years ended on November 30 in those years unless otherwise indicated. The Company now operates on a calendar year ending on December 31, 2016.
Accounting Periods
. We define our accounting periods as follows:
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·
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"Transition Period" - December 1, 2015 through December 31, 2015; and
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·
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"2015" - January 1, 2015 through December 31, 2015.
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Overview
Union Bridge Holdings Limited (formerly Costo, Inc.) was incorporated in the State of Nevada on May 6, 2014. We are a development-stage company formed to commence operations in the distribution of auto parts and components necessary for the maintenance and repair of automobiles and other specialty equipment.
The Company's operations involve the organization and distribution of auto parts and components necessary for maintenance and repair of automobiles and special equipment (i.e. construction, road machinery etc.) from China to Europe and certain Commonwealth of Independent States which include Kyrgyzstan, Kazakhstan, Armenia, Azerbaijan, Belarus, Moldova, Tajikistan, Uzbekistan and the Ukraine.
Many manufacturers transfer their production facilities to China because of reduced production and operating costs. In addition, China has its own automobile brands that are actively entering the world market. Concurrently, China has developed associative production facilities producing a wide selection of parts and components for various types of equipment and the Chinese parts market also produces alternatives (i.e. parts-analogues), which are virtually no different from the original parts and meet all the standards and the technical properties of the original. The Company is evaluating the viability of its auto parts business.
The Company’s recently formed subsidiaries discussed below will be used to expand its business to include business operations in the health-related industry with the goal to maintaining long term sustainable growth and shareholders' wealth creation. This plan is in line with the general trend of increasing health consciousness in the world. Prospective targets are companies in the biotech industry, innovative healthcare products such health supplements and devices as well as healthcare hospitality and service operations. All these aim at improving the well-being of mankind, making the world a better place to live. Our expansion is expected to include raising working capital. We do not have any commitments for this financing as of the date of this report.
Recent Developments
In connection with our desire to expand our business, we filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State on May 23, 2016 to:
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(1)
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Change the Company's corporate name from COSTO INC. to UNION BRIDGE HOLDINGS LIMITED;
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(2)
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Increase the number of authorized shares of common stock, $0.001 par value, from 75,000,000 to 1,000,000,000;
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(3)
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Create a class of preferred stock consisting of 20,000,000 shares, the designations and attributes of which are left for future determination by our board of directors; and
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(4)
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Effect a 1 for 5 forward stock split of the Company's issued and outstanding common stock.
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The Amended and Restated Articles of Incorporation became effective on June 21, 2016 upon approval by The Financial Information Regulatory Association, Inc.
Union Beam Investment Limited, a Hong Kong company, was formed on February 18, 2016 and First Channel Limited, a British Virgin Islands company was formed on March 18, 2016. Union Beam became a wholly owned subsidiary of First Channel on August 11, 2016 and First Channel became a wholly owned subsidiary of the Company on August 8, 2016. These newly formed subsidiaries will be used to expand the Company’s business to include business operations in the health-related industry with the goal to maintaining long term sustainable growth and shareholders' wealth creation.
RESULTS OF OPERATIONS
We are a development stage company and have not generated revenue to date. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
The following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report.
The following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. The results discussed below are for the three and nine months ended September 30, 2016 and August 31, 2015. For comparative purposes, we are comparing the three and nine months ended September 30, 2016, to the three and nine months ended August 31, 2015 as a result of our change in fiscal year end from November 30 to December 31 and have included our financial statements for the one-month transition period from December 1, 2015 to December 31, 2015. The following discussion should be read in conjunction with the Company's financial statements and the related notes included in this quarterly report.
Three and Nine Month Period Ended September 30, 2016 Compared to the Three and Nine Month Period Ended August 31, 2015
Revenue
During the three and nine months ended September 30, 2016 and August 31, 2015 we did not generate any revenue.
Operating Expenses
Total operating expenses for the three months ended September 30, 2016, increased by $4,323 to $ 10,819 compared to the three months ended August 31, 2015. Total operating expenses for the nine months ended September 30, 2016, increased by $34,484 to $49,108 compared to the nine months ended August 31, 2015. The increases were primarily a result of an increase in administrative expenses related to financial and administrative contracted services, such as legal and accounting fees to remain a reporting company with the SEC. We are unable to predict the level of our operating expenses as we continue to develop our business.
Net Loss
The net loss for the three months ended September 30, 2016 was $10,819, an increase of $4,323 compared to the three months ended August 31, 2015. The net loss for the nine months ended September 30, 2016 was $49,108, an increase of $34,484 compared to the nine months ended August 31, 2015. The increase is primarily a result of the increases in operating expenses discussed above.
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of September 30, 2016, we had a working capital deficit of $39,144, an increase of $49,108 from the working capital surplus of $9,964 at December 31, 2015. The increase in the deficit is primarily a result of the increases total current liabilities discussed below. As of September 30, 2016, our total assets were $2,500 compared to $13,641 in total assets at December 31, 2015. Total assets as of September 30, 2016 were comprised of $2,500 in prepaid expenses, while as at December 31, 2015 total assets were comprised entirely of cash of $11,141 and $2,500 of prepaid expenses. As of September 30, 2016, our current liabilities were $41,644 comprised of $37,680 in loans from related parties and $3,964 for accounts payable. As of December 31, 2015, our current liabilities were $3,677 comprised of $3,477 loan from a shareholder and $200 in accounts payable.
As of September 30, 2016, working capital consisted of $2,500 in prepaid expenses.
Cash Flows From Operating Activities
We have not generated positive cash flows from operating activities. Net cash used in operating activities for the nine month period ended September 30, 2016 were $11,141 consisting of a net loss of $49,108 , a $34,203 increase in expenses paid by a related party on behalf of the company and $3,764 increase in accounts payable. Net cash flows used in operating activities was $13,904 for the nine month period ended August 31, 2015 consisting of a loss of $14,624 and reduced by a reduction in prepaid expenses of $720.
Cash Flows From Financing Activities
We have financed our operations primarily from advances from shareholders. For the nine month period ended September 30, 2016, there was no net cash provided by financing activities. For the nine months ended August 31, 2015, net cash provided by financing activities was $30,000 with $27,200 from issuance of common stock and $2,800 received from a loan from our principal shareholder.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through further issuances of our securities and loans from our principal shareholders. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are not expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
Material Commitments
As of September 30, 2016, we had no material commitments.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any 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 or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying condensed financial statements, the Company had an accumulated deficit at September 30, 2016 of $74,344, a net loss for the nine months ended September 30, 2016 of $49,108 and net cash used in operating activities for the nine months ended September 30, 2016 of $11,141. These conditions raise substantial doubt about our ability to continue as a going concern.
The Company is attempting to produce sufficient revenue; however, the Company's cash position is not sufficient to support its daily operations. While the Company believes in the viability of its strategy to produce sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds.
The unaudited financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The independent auditors' audit report accompanying our November 30, 2015 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
Critical Accounting Policies
We have identified the following policies below as critical to our business and results of operations. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.
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.