The accompanying notes are an integral part of
these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Audited)
Note 1 – Organization and basis of accounting
Principles of Consolidation
The Company prepares its consolidated financial statements
on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly
owned subsidiary. All intercompany accounts, balances and transactions have been eliminated in the consolidation.
Basis of Presentation and Organization
This summary of significant accounting policies
of UONLIVE CORPORATION. (a development stage company) (“the Company”) is presented to assist in understanding the Company's
consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States
of America and have been consistently applied in the preparation of the accompanying consolidated financial statements. The Company has
realized minimal revenues from its planned principal business purpose and, accordingly, is considered to be in its development stage in
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic
No. 915 (SFAS No. 7). The Company has elected a fiscal year end of December 31.
Business Description
Uonlive Corporation (“UOLI” or
the “Company”) was incorporated under the laws of the State of Nevada on January 29, 1998 as Weston International Development
Corporation. On July 28, 1998, its name was changed to Txon International Development Corporation. On September 15, 2000, the Company
changed its name to China World Trade Corporation. On July 2, 2008, the Company further changed its name to Uonlive Corporation.
The Company ceased operations in early 2015.
The Company has fully impaired all assets since the shutdown of its operations in 2015 and has recorded the effects of this impairment
as part of its discontinued operations.
On June 15, 2018, the eight judicial District
Court of Nevada appointed Small Cap Compliance, LLC as custodian for Uonlive Corporations., proper notice having been given to the officers
and directors of Uonlive Corporation. There was no opposition.
On September 10, 2019, the Company filed a certificate
of revival with the state of Nevada, appointing Raymond Fu as, President, Secretary, Treasurer and Director.
Reorganization and Share Exchange
On March 02, 2020, the Company entered into a
Definitive Share Agreement whereby Raymond Fu, the sole shareholder of Asia Image Investment Limited (“Asia Image”), relinquished
all his shares in Asia Image and acquired 100,000 shares of the Company. Consequently, Asia Image became a wholly-owned subsidiary of
the Company.
Since the major shareholder of Uonlive retained
control of both the Company and Asia Image, the share exchange was accounted for as a reverse merger. As such, the Company recognized
the assets and liabilities of Asia Image, acquired in the Reorganization, at their historical carrying amounts.
The accompanying financial statements are prepared
on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development
stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products
which may become part of the Company’s product portfolio. The Company has not realized significant sales through since inception.
A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even
if planned principal operations have commenced, revenues are insignificant.
The accompanying financial statements have been
prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company
is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While
management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be
no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization
of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note 2 – Summary of significant accounting policies
Cash and Cash Equivalents
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly
liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Inventory
Inventory is stated at the lower of cost or market.
Cost is determined using the first-in, first-out (“FIFO”) method. On December 22, 2021, the Company entered into a purchase
contract with a third party and subsequent sales contract with another third party. The Company did not recognize any inventory on this
transaction as the risk of loss remains with the seller on this transaction and therefore no inventory was recorded by the Company. The
Company has recognized a contract liability of $50,000 with the related to services which it will deliver within one year as a current
liability.
Employee Stock-Based Compensation
The Company accounts for stock-based compensation
in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment
(“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards
result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected
to vest and will result in a charge to operations.
Revenue Recognition
The Company recognizes revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to receive in exchange
for those goods or services as per the contract with the customer. As a result, the Company accounts for revenue contracts with customers
by applying the requirements of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606), which
includes the following steps:
| ● | Identify the contract(s), and subsequent amendments with the customer. |
| ● | Identify all the performance obligations in the contract and subsequent amendments. |
| ● | Determine the transaction price for completing performance obligations. |
| ● | Allocate the transaction price to the performance obligations in the contract. |
| ● | Recognize the revenue when, or as, the Company satisfies a performance obligation. |
The Company adopted ASC 606 using the modified
retrospective method applied to all contracts not completed as of January 1, 2018. The Company presents results for reporting periods
beginning after January 1, 2018, under ASC 606 while prior period amounts are reported following legacy GAAP. In addition to the above
guidelines, the Company also considers implementation guidance on warranties, customer options, licensing, and other topics. The Company
takes into account revenue collectability, methods for measuring progress toward complete satisfaction of a performance obligation, warranties,
customer options for additional goods or services, nonrefundable upfront fees, licensing, customer acceptance, and other relevant categories.
The Company accounts for a contract when the Company
and the customer (‘parties’) have approved the contract and are committed to performing their respective obligations, where
each party can identify their rights, obligations, and payment terms, the contract has commercial substance, and the Company will probably
collect all of the consideration substantially. Revenue is recognized when, or as, performance obligations are satisfied by transferring
control of the promised service to a customer. The Company fixes the transaction price for goods and services at contract inception. The
Company’s standard payment terms are generally net 30 days and, in some cases, due upon receipt of the invoice.
The Company considers contract modification as
a change in the scope or price (or both) of a contract that is approved by the parties. The parties describe contract modification as
a change order, a variation, or an amendment. A contract modification exists when the parties to the contract approve a modification that
either creates new or changes existing enforceable rights and obligations of the parties to the contract. The Company assumes a contract
modification when approved in writing, by oral agreement, or implied by the customary business practice of the customer. If the parties
to the contract have not approved a contract modification, the Company continues to apply the guidance to the existing contract until
the contract modification is approved. The Company recognizes contract modification in various forms – including but not limited
to partial termination, an extension of the contract term with a corresponding increase in price, adding new goods and/or services to
the contract, with or without a corresponding change in price, and reducing the contract price without a change in goods or services promised.
For all its goods and services, at contract inception,
the Company assesses the solutions or services, obligated in the contract with a customer to identify each performance obligation within
the contract, and then evaluate whether the performance obligations are capable of being distinct and distinct within the context of the
contract. Solutions and services that are not both capable of being distinct and distinct within the context of the contract are combined
and treated as a single performance obligation in determining the allocation and recognition of revenue. For multi-element transactions,
the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. The Company
determines the stand-alone selling price for each item at the inception of the transaction involving these multiple elements.
For purposes of determining the transaction price,
the Company assumes that the goods or services promised in the existing contract will be transferred to the customer. The Company assumes
that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only those amounts to which the
Company has rights under the present contract. For example, if the Company enters into a contract with a customer that has an original
term of one year and the Company expects the customer to renew for a second year, the Company would determine the transaction price based
on the original one-year term. When determining the transaction price, the Company first identifies the fixed consideration, which includes
any nonrefundable upfront payment amounts.
For purposes of allocating the transaction
price, the Company allocates an amount that best represents consideration that the entity expects to receive for transferring each promised
good or service to the customer. To meet the allocation objective, the Company allocates the transaction price to each performance obligation
identified in the contract on a relative standalone selling price basis. In determining the standalone selling price, the Company uses
the best evidence of the stand-alone selling price that the Company charges to similar customers in similar circumstances. In some cases,
the Company uses the adjusted market assessment approach to determine the standalone selling price, where it evaluates the market in which
it sells the goods or services and estimates the price that customers in that market would pay for those goods or services when sold separately.
The Company recognizes revenue when or as it transfers
the promised goods or services in the contract. The Company considers the “transfers” the promised goods or services when,
or as, the customer obtains control of the goods or services. The Company considers a customer “obtains control” of an asset
when, or as, it can direct the use of, and obtain all the remaining benefits from, an asset substantially. The Company recognizes deferred
revenue related to services which it will deliver within one year as a current liability. The Company presents deferred revenue related
to services that the Company will deliver more than one year into the future as a non-current liability.
Provision for Income Taxes
The provision for income taxes is determined
using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences
between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates that are applicable
in each year.
The Company utilizes a two-step approach
to recognizing and measuring uncertain tax positions (“tax contingencies”). The first step is to evaluate the tax position
for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained
on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest
amount, which is more than 50% likely to be realized upon ultimate settlement.
The Company considers many factors when evaluating
and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual
outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes in the consolidated
statements of operations. Management of the Company does not expect the total amount of unrecognized tax benefits to change in the next
12 months significantly.
Subsequent Event
The Company evaluated subsequent events through the date when financial
statements are issued for disclosure consideration.
Recent Accounting Pronouncements
In February 2016, the FASB issued an accounting
standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns
many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue
recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the
current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable
users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective
for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15,
2020, for nonpublic entities using a modified retrospective approach. Early adoption is permitted. The Company is still evaluating the
impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined
the method by which it will adopt the standard.
There were other updates recently issued, most
of which represent technical corrections to the accounting literature or application to specific industries or transactions that are not
expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Note 3- Going Concern
In early January 2020, an outbreak of a respiratory
illness caused by the coronavirus was identified in Wuhan, China. As part of its effort to combat the virus, the government of China has
placed travel restrictions throughout parts of China. This has resulted in some of the Company’s customers and suppliers being closed
for an extended period or operating at significantly below their normal capacity and will also affect our suppliers that source some of
their materials from China. The duration and intensity of this global health emergency and related disruptions is uncertain. The duration
of this crisis and its impact on both the Company’s customers and supply chain is expected to have a material impact on the consolidated
results of operations, cash flows and financial condition, but cannot be reasonably estimated at this time.
The Company has an accumulated deficit of $4,043,966
and a working capital deficit of $346,589, as of December 31, 2021, and a working capital deficit of $263,713 as of December 31, 2020.
The accompanying consolidated financial statements have been prepared assuming the continuation of the Company as a going concern. The
Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity
financing to fund its operations. Management of the Company is making efforts to raise additional funding until a registration statement
relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital
formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital
or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The
accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a
going concern.
Note 4 - Fair value of the Assets Acquired
and the Liabilities Assumed
The
following is the preliminary estimate of the fair value of the assets acquired and the liabilities assumed by Uonlive Corporation in the
Share Exchange:
| |
Dr. (Cr.) | |
Cash and cash equivalents | |
$ | 162,068 | |
Other payables and accrued expenses | |
| (1,532 | ) |
Loan payable – related party | |
| (229,528 | ) |
Net liabilities acquired | |
$ | (68,992 | ) |
Note 5 – Related party transactions
On June 15, 2018, the eight judicial District
Court of Nevada appointed Small Cap Compliance, LLC as custodian for Uonlive Corporation., proper notice having been given to the officers
and directors of Uonlive Corporation. There was no opposition.
On June 16, 2018, the Company filed a certificate
of revival with the state of Nevada, appointing Small Cap Compliance as, President, Secretary, Treasurer and Director.
On March 02, 2020, the Company entered into a
Definitive Share Agreement whereby Raymond Fu, the sole shareholder of Asia Image Investment Limited (“Asia Image”), relinquished
all his shares in Asia Image and acquired 100,000 shares of the Company. Consequently, Asia Image became a wholly-owned subsidiary of
the Company.
On May 26, 2020 and October
10, 2020, the Company issued 650,000 (Series B Convertible Preferred Stock) and 520,000 (Series A Convertible Preferred Stock) Convertible
Preferred Stock to Uonlive (Hong Kong) Limited for the provision of management services valued at $54,586 and $ 290,990 respectively.
Mr. Raymond Fu, President, and Chief Executive Officer of the Company is also the indirect beneficial owner of Uonlive (Hong Kong) Limited.
Loan Payable-Related Party
As of December 31, 2021 and 2020 the Company has a loan payable of
$170,712 and $99,316 to Mr. Raymond Fu, President and Chief Executive Officer of the Company, respectively. This loan is unsecured, non-interest
bearing and it is repayable on demand.
Note Payable-Related Party
As of December 31, 2021 and 2020 the Company has a note payable of
$167,554 to Mr. Raymond Fu, President and Chief Executive Officer of the Company. This note is unsecured, non-interest bearing and it
is repayable on demand.
Note 6 – Income taxes
The Company provides for income taxes under FASB
ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes.
Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and
liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred
tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to 100% of the deferred tax
asset has also been recorded resulting in no net deferred tax asset. The cumulative deferred tax asset for period ended December 31, 2021
is $17,180, which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following
items:
Schedule of deferred tax assets
For the period ended December 31, | |
2021 | | |
2020 | |
Book loss for the year | |
$ | (81,812 | ) | |
$ | (372,743 | ) |
| |
| | | |
| | |
Permanent differences: | |
| | | |
| | |
Stock based compensation | |
| - | | |
| 345,577 | |
Tax loss for the year | |
| (81,812 | ) | |
| (27,166 | ) |
| |
| | | |
| | |
Estimated effective tax rate | |
| 21 | % | |
| 21 | % |
Deferred tax asset | |
$ | (17,180 | ) | |
$ | (5,705 | ) |
Less: Valuation allowance | |
| 17,180 | | |
| 5,705 | |
Net Deferred tax asset | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
| |
| | | |
| | |
Details for the last period are as follows: | |
| | | |
| | |
| |
| | | |
| | |
| |
| | | |
| | |
For the period ended December 31, | |
| 2021 | | |
| 2020 | |
Balance at beginning of year | |
$ | (5,705 | ) | |
$ | - | |
Additions | |
| (17,180 | ) | |
| (5,705 | ) |
Deductions | |
| - | | |
| - | |
Balance at end of year | |
$ | (22,885 | ) | |
$ | (5,705 | ) |
| |
| | | |
| | |
| |
| | | |
| | |
Rate Reconciliation: | |
| | | |
| | |
| |
| | | |
| | |
For the year ended December 31, | |
| 2021 | | |
| 2020 | |
Federal income tax at statutory rate | |
$ | - | | |
$ | - | |
Temporary difference | |
| (17,180 | ) | |
| (78,276 | ) |
Permanent difference | |
| - | | |
| 72,571 | |
Change in Valuation Allowance | |
| 17,180 | | |
| 5,705 | |
| |
$ | - | | |
$ | - | |
Note 7 – Common stock
On March 04, 2020, the Company issued 100,000
shares of common stock to a shareholder for a total price of $100 as part of the share exchange and reverse merger.
On June 08, 2020, the Company converted 650,000
Series B convertible Preferred Stock into 650,000,000 common stock.
On May 14th, 2021, the Company approved
a 1 for 20 reverse stock split.
As of December 31, 2021 and 2020, a total of 32,606,582
shares of common stock with par value $0.001 remain outstanding.
Note 8 – Preferred stock
Preferred Stock
On January 01, 2018 the Company created 1,000,000
shares of Series B Convertible Preferred Stock, out of the 1,000,000 shares that were already authorized. On September 07, 2018, the Company
issued 150,000 shares of the Series B convertible preferred stock to Chuang Fu Qu Kuai Lian Technology (Shenzhen) Limited for services
valued at $30,000.
On May 26, 2020, the Company issued 650,000 shares
of Series B Convertible Preferred Stock to Uonlive (Hong Kong) Limited for the provision of management services valued at $54,586.
The following is a description of the material
rights of our Series B Convertible Preferred Stock:
Each share of Series B convertible Preferred
Stock shall have a par value of $0.001 per share. The Series B Preferred Stock shall vote on any matter that may from time to time be
submitted to the Company’s shareholders for a vote, on a 1,000 for one basis. If the Company effects a stock split which either
increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series A shall
not be subject to adjustment unless specifically authorized.
Each share of Series B Convertible Preferred
Stock shall be convertible into 1,000 shares of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time
and from time to time, from and after the issuance of the Series C Preferred Stock.
In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, subject to the rights of any existing series of Preferred Stock or
to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of the Series B
Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the
holders of Common Stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Corporation
upon the initial issuance of the Series B Preferred Stock (each, the “the Original Issue Price”) for each share of Series
B Preferred Stock then held by them, plus declared but unpaid dividends. Unless the Corporation can establish a different Original Issue
Price in connection with a particular sale of Series B Preferred Stock, the Original issue price shall be $0.001 per share for the Series
B Preferred Stock. If, upon the occurrence of any liquidation, dissolution or winding up of the Corporation, the assets and funds thus
distributed among the holders of the Series B Preferred Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of any existing series of Preferred Stock or to the rights of any series of
Preferred Stock which may from time to time hereafter come into existence, the entire assets and funds of the corporation legally available
for distribution shall be distributed ratably among the holders of the each series of Preferred Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive.
The Series B Preferred Stock shares are
nonredeemable other than upon the mutual agreement of the Company and the holder of shares to be redeemed, and even in such case only
to the extent permitted by this Certificate of Designation, the Corporation’s Articles of Incorporation and applicable law.
Series B Preferred Stock shall be convertible,
at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer
agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original
Issue Price of the Series B Preferred Stock by the Series B Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion.
On October 07, 2020, the Company’s board
of directors approved the creation of 2,000,000 shares of a Series A Preferred stock. On
that same dated the Company issued 520,000 shares
of its newly created Series A Preferred Stock to Uonlive (Hong Kong) Limtied as payment for management services provided valued at $290,990.
As of December 31, 2021 and December 31, 2020,
the Company has 150,000 shares of Series B Convertible preferred shares and 1,020,000 Series A Convertible preferred shares outstanding
Note 9 – Subsequent Event
The Company expects to commence the business operations
from the first quarter of Year 2022 and during the first quarter ended March 31, 2022, the Company expects to recognize a revenue of $155,000
on the December 27, 2021 sales contract.
In accordance with ASC 855 the Company’s management reviewed
all material events through the date these financial statements were available to be issued, there were no material subsequent events.