10-Q 1 uoli_10q-093010.htm QUARTERLY REPORT uoli_10q-093010.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12 b - 2 of the Exchange Act)   Yes ¨    No x
 
Commission File Number 0-26119
 
UONLIVE CORPORATION
(Exact name of Registrant as specified in its charter)
 
Nevada
  
87-0629754
(State or other jurisdiction of incorporation or organization)
  
(IRS Employer Identification No.)
 
5/F, Guangdong Finance Building
88 Connaught Road West, Hong Kong
 (Address of principal executive offices)
 
(011) (852) 2116-3560
(Registrant's telephone number)

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o   No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:
 
Large Accelerated Filer o         Accelerated Filer o         Non-accelerated Filer o         Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):   Yes o   No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: October 28, 2010, 1,996,355 shares.

 
 
 

UONLIVE CORPORATION

Form 10-Q for the period ended September 30, 2010

TABLE OF CONTENTS

     
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PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

UONLIVE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
(Currency expressed in United States Dollars (“US$”), except for number of shares)

   
September 30, 2010
    
December 31, 2009
  
   
(Unaudited)
    
(Audited)
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 5,683     $ 53,850  
Accounts receivable
     -       11,605  
Accounts receivable, related party
     3,867       -  
Deposits and other receivables
     389       17,208  
                 
Total current assets
     9,939       82,663  
                 
Non-current assets:
                
Plant and equipment, net
     169,082       227,565  
                 
TOTAL ASSETS
   $ 179,021     $ 310,228  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 7,014     $ 25,014  
Amount due to a shareholder
     2,340,083       1,914,513  
                 
Total current liabilities
     2,347,097       1,939,527  
                 
Long-term liabilities:
                
Note payable to a shareholder
     167,536       167,603  
                 
Total liabilities
     2,514,633       2,107,130  
                 
Stockholders’ deficit:
                
Series A Convertible preferred stock, $0.001 par value; 10,000,000 shares authorized,
500,000 shares issued and outstanding as of September 30, 2010 and December 31, 2009
     500       500  
Common stock, $0.001 par value; 200,000,000 shares authorized;
1,996,355 shares issued and outstanding, respectively
     1,996       1,996  
Additional paid-in capital
     197,570       197,570  
Accumulated deficit
     (2,531,485 )     (1,993,036 )
Accumulated other comprehensive loss
     (4,193 )     (3,932 )
                 
Total stockholders’ deficit
     (2,335,612 )     (1,796,902 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
   $ 179,021     $ 310,228  

 
See accompanying notes to the condensed consolidated financial statements.


UONLIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)

   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2010
    
2009
    
2010
    
2009
  
                         
REVENUES, NET
                        
- Related party
   $ 3,861     $ 3,870     $ 11,581     $ 11,609  
- Non-related party
     -       3,870       2,779       15,131  
                                 
Total revenues, net
     3,861       7,740       14,360       26,740  
                                 
COST OF REVENUE (exclusive of depreciation)
     10,437       9,928       30,348       29,778  
                                 
GROSS LOSS
     (6,576 )     (2,188 )     (15,988 )     (3,038 )
                                 
Operating expenses:
                                
Sales and marketing
     1,540       2,227       5,954       3,770  
General and administrative
     136,101       200,950       516,507       594,405  
                                 
Total operating expenses
     137,641       203,177       522,461       598,175  
                                 
LOSS BEFORE INCOME TAXES
     (144,217 )     (205,365 )     (538,449 )     (601,213 )
                                 
Income tax expense
     -       (40,991 )     -       (40,991 )
                                 
NET LOSS
   $ (144,217 )   $ (246,356 )   $ (538,449 )   $ (642,204 )
                                 
Other comprehensive loss:
                                
- Foreign currency translation loss
     (7,680 )     (17 )     (261 )     (191 )
                                 
COMPREHENSIVE LOSS
   $ (151,897 )   $ (246,373 )   $ (538,710 )   $ (642,395 )
                                 
Net loss per share – basic and diluted
   $ (0.07 )   $ (0.12 )   $ (0.27 )   $ (0.32 )
                                 
Weighted average common stock outstanding – basic and diluted
     1,996,355       1,996,355       1,996,355       1,996,355  

 
See accompanying notes to the condensed consolidated financial statements.
 
 
UONLIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(Currency expressed in United States Dollars (“US$”))
(Unaudited)

   
Nine months ended September 30,
  
   
2010
    
2009
  
Cash flow from operating activities:
            
Net loss
   $ (538,449 )   $ (642,204 )
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation
     58,796       55,384  
Deferred tax expense
     -       40,991  
Changes in operating assets and liabilities:
                
Accounts receivable, trade
     11,601       (3,871 )
Accounts receivable, related party
     (3,867 )     -  
Deposits and other receivables
     16,812       (83 )
Accounts payable and accrued liabilities
     (17,990 )     (6,200 )
                 
Net cash used in operating activities
     (473,097 )     (555,983 )
                 
Cash flows from investing activities:
                
Purchase of plant and equipment
     (505 )     (64,391 )
                 
Net cash used in investing activities
     (505 )     (64,391 )
                 
Cash flows from financing activities:
                
Amount due to a shareholder
     426,335       661,916  
                 
Net cash provided by financing activities
     426,335       661,916  
                 
Effect of exchange rate change on cash and cash equivalents
     (900 )     (181 )
                 
NET CHANGE IN CASH AND CASH EQUIVALENTS
     (48,167 )     41,361  
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     53,850       100  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 5,683     $ 41,461  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
          
Cash paid for income taxes
   $ -     $ -  
Cash paid for interest
   $ -     $ -  

 
See accompanying notes to the condensed consolidated financial statements
 
 
UONLIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)

   
Series A Convertible preferred stock
  
Common stock
  
Additional
paid-in
  Accumulated    
Accumulated
other
comprehensive
  Total stockholders’    
   
No. of shares
  
Amount
  
No. of shares
  
Amount
  
capital
  
deficit
  
income (loss)
  
deficit
  
                                   
Balance as of January 1, 2010
     500,000   $ 500     1,996,355   $ 1,996   $ 197,570   $ (1,993,036 ) $ (3,932 ) $ (1,796,902 )
                                                   
Net loss for the period
     -     -     -     -     -     (538,449 )   -     (538,449 )
                                                   
Foreign currency translation adjustment
     -     -     -     -     -     -     (261 )   (261 )
                                                   
Balance as of September 30, 2010
     500,000   $ 500     1,996,355   $ 1,996   $ 197,570   $ (2,531,485 ) $ (4,193 ) $ (2,335,612 )


See accompanying notes to the condensed consolidated financial statements

 
 
6
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)


NOTE－1                   BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, the consolidated balance sheet as of December 31, 2009 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2010 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2010 or for any future periods.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2009.

NOTE－2                   DESCRIPTION OF BUSINESS AND ORGANIZATION

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, the name was changed to Txon International Development Corporation. On September 15, 2000, the Company changed to its company name to China World Trade Corporation. On July 2, 2008, the Company further changed its name to Uonlive Corporation.

UOLI, through its subsidiaries, mainly engages in the provision of online multimedia and advertising service and the operation of online radio stations in Hong Kong and China.

UOLI and its subsidiaries are hereinafter collectively referred to as “the Company”.

NOTE－3                   GOING CONCERN UNCERTAINTIES

These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

For the nine months ended September 30, 2010, the Company has incurred a net loss of $538,449 and experienced negative cash flows from operations of $473,097 with an accumulated deficit of $2,531,485 as of that date. The continuation of the Company is dependent upon the continuing financial support of shareholders and generating significant revenue and achieving profitability. The actions involve certain cost-saving initiatives and growing strategies, including rapid promotion and marketing the radio program in the Hong Kong and China. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated 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 in the Company not being able to continue as a going concern.
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)

 
NOTE－4                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

l
Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

l
Basis of consolidation

The condensed consolidated financial statements include the financial statements of UOLI and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

l
Cash and cash equivalents

Cash and cash equivalents are carried at cost and maintained in bank deposit accounts with an original maturity of three months or less to be cash equivalents.

l
Accounts receivable

Accounts receivable consist primarily of trade receivables. Accounts receivable are recognized and carried at original invoiced amount less an allowance for any uncollectible accounts. Management reviews and adjusts this allowance periodically based on historical experience, current economic climate as well as its evaluation of the collectibility of outstanding accounts. The Company evaluates the credit risks of its customers utilizing historical data and estimates of future performance. For the nine months ended September 30, 2010 and 2009, the Company did not provide an allowance for doubtful accounts, nor have been any write-offs.

l
Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
 
 
Depreciable life
Furniture, fittings and office equipment
5 years
Computer and broadcasting equipment
5 years

Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.

Depreciation expense for the three months ended September 30, 2010 and 2009 was $19,607 and $25,843, respectively.

Depreciation expense for the nine months ended September 30, 2010 and 2009 was $58,796 and $55,384, respectively.
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
 
 
l
Impairment of long-lived assets
 
Long-lived assets primarily include plant and equipment. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets,” the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment as of September 30, 2010.

l
Revenue recognition

The Company derives revenues from the sale of advertising airtime to customers. Revenue is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectibility is reasonably assured, as defined by ASC Topic 605, “Revenue Recognition.”

l
Income taxes

The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the nine months ended September 30, 2010 and 2009, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2010, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

l
Net loss per share

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
 

l
 Comprehensive income or loss
 
ASC Topic 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income or loss consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income or loss is not included in the computation of income tax expense or benefit.

l
Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.

The reporting currency of the Company is the United States Dollars ("US$") and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company’s subsidiary in Hong Kong maintain its books and record in its local currency, Hong Kong Dollars ("HK$"), which is functional currencies as being the primary currency of the economic environment in which their operations are conducted.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement,” using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ deficit.

Translation of amounts from HK$ into US$1 has been made at the following exchange rates for the respective period:

   
September 30, 2010
    
September 30, 2009
  
Period-end HK$:US$1 exchange rate
     7.7582       7.7504  
Period average HK$:US$1 exchange rate
     7.7717       7.7524  

l
Segment reporting

ASC Topic 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the nine months ended September 30, 2010, the Company operates in one reportable segment in Hong Kong and China.

l
Related parties

For the purposes of these financial statements, parties are considered to be related if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

l
Fair value measurement

ASC Topic 820, “Fair Value Measurements and Disclosures,” ("ASC 820") establishes a new framework for measuring fair value and expands related disclosures. Broadly, ASC 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a three-level valuation hierarchy based upon observable and non-observable inputs. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

For financial assets and liabilities, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
 

l
Fair value of financial instruments

The carrying value of the Company’s financial instruments include cash and cash equivalents, accounts receivable, deposits and other receivables, accounts payable and accrued liabilities, amount due to and note payable to a shareholder. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate at fair values.

l
Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations, as follows:

In April 2010, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010 and is not expected to have a significant impact on the Company’s financial statements.

In July 2010, the FASB issued an accounting standards update to require further disaggregated disclosures that improve financial statement users’ understanding of (1) the nature of an entity’s credit risk associated with its financing receivables and (2) the entity’s assessment of that risk in estimating its allowance for credit losses as well as changes in the allowance and the reasons for those changes. This update will be effective for the Company in the second quarter of fiscal 2011, except for the disclosures relating to activity that occurred during a reporting period which is effective for the Company in the third quarter of fiscal 2011. Since this update addresses only disclosures related to credit quality of financing receivables and the allowance for credit losses, it is not expected that the adoption of this update will have a material impact on the Company’s financial position, results of operations or cash flows.

 
 
11
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)

 
NOTE－5                   AMOUNT DUE TO AND NOTE PAYBLE TO A SHAREHOLDER

(a)         Amount due to a shareholder

As of September 30, 2010, the amount of $2,340,083 represented temporary advances for working capital purposes from a major shareholder, Mr. Samuel Tsun, which were unsecured and interest free, with no fixed terms of repayment.

(b)         Note payable to a shareholder

As of September 30, 2010, the note payable due to a major shareholder, Mr. Samuel Tsun, was unsecured and interest free, with no fixed repayment term.

NOTE－6                   INCOME TAXES

The Company has operations in various countries and is subject to tax in the jurisdictions in which it operates, as follows:

United States of America

UOLI is registered in the State of Nevada and is subject to United States of America tax law. No provision for income taxes have been made as UOLI has generated no taxable income for the nine months ended September 30, 2010.

British Virgin Island

Under the current BVI law, the Company is not subject to tax on income.

Hong Kong

The Company’s subsidiary operating in Hong Kong is subject to Hong Kong Profits Tax at the statutory rate of 16.5% on its assessable income. For the nine months ended September 30, 2010, the Company incurred an operating loss of $376,268, with approximately $1,910,162 of cumulative operating loss carryforwards available for Hong Kong income tax purpose at no expiration.

The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of September 30, 2010 and December 31, 2009:

   
September 30, 2010
    
December 31, 2009
  
Deferred tax assets:
            
Net operating loss carryforwards
   $ 314,016     $ 216,178  
Less: valuation allowance
     (314,016 )     (216,178 )
Deferred tax assets, net
   $ -     $ -  

As of September 30, 2010, the Company has provided for a full valuation allowance against the deferred tax assets of $314,016 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. For the nine months ended September 30, 2010, the valuation allowance is increased by $97,838, primarily relating to net operating loss carryforwards from the foreign tax regime.
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
 

NOTE－7                   RELATED PARTY TRANSACTIONS

(a)         Accounts receivable and sales – related company

For the nine months ended September 30, 2010 and 2009, the Company earned sales revenue of $11,581 and $11,609 from Dbtronix (Far East) Ltd., which was controlled by a director of the Company, Mr. Samuel Tsun, at the current market value in a normal course of business.

As of September 30, 2010, accounts receivable from a related party amounted to $3,867.

(b)         IT service cost paid to a related company

For the nine months ended September 30, 2010 and 2009, the Company paid IT service cost of $25,477 and $25,541, respectively to the related company, which was controlled by a director of the Company, Mr. Samuel Tsun, at the current market value in a normal course of business.

(c)         Rent charge paid to a related company

For the nine months ended September 30, 2010 and 2009, the Company paid rent charge of $69,483 and $65,786 respectively to the related company, which was controlled by a director of the Company, Mr. Samuel Tsun, at the current market value in a normal course of business.

NOTE－8                   CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a)         Major customers

For the three months ended September 30, 2010, one customer represented more than 10% of the Company’s revenue and accounts receivable. This customer accounted for 100% of the Company’s revenues amounting to $3,861, with $3,861 of accounts receivable.

For the nine months ended September 30, 2010, one customer represented more than 10% of the Company’s revenue and accounts receivable. This customer accounted for 81% of the Company’s revenues amounting to $11,581, with $3,861 of accounts receivable.

For the three and nine months ended September 30, 2009, the customer who accounted for 10% or more of revenues and their outstanding balances as at period-end dates, are presented as follows:

   
Three months ended September 30, 2009
    
September 30, 2009
  
   
Revenue
    
Percentage
of revenue
    
Accounts
receivable
  
                   
Customer A (related party)
   $ 3,870       50 %   $ 3,871  
Customer B
     3,870       50 %     11,612  
                         
Total:
   $ 7,740       100 %   $ 15,483  
 
 
UONLIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
 
 
   
Nine months ended September 30, 2009
    
September 30, 2009
  
   
Revenue
    
Percentage
of revenue
    
Accounts
receivable
  
                   
Customer A (related party)
   $ 11,609       43 %   $ 3,871  
Customer B
     11,609       43 %     11,612  
                         
Total:
   $ 23,218       86 %   $ 15,483  

(b)         Major vendors

For the three and nine months ended September 30, 2010 and 2009, there was no vendor who accounted for 10% or more of the Company’s purchases.

(c)         Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers’ financial condition, but does not require collateral to support such receivables.

(d)         Exchange rate risk

The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HK$ converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

NOTE－9                   COMMITMENTS AND CONTINGENCIES

The Company rented office spaces from a related party under a non-cancelable operating lease agreement in Hong Kong for a term of 3 years, with fixed monthly rentals, expiring in March 2011. Costs incurred under the operating lease, which are considered to equivalent to the market rate, are recorded as rental expense and totaled approximately $69,483 and $72,400 for the nine months ended September 30, 2010 and 2009.
 
As of September 30, 2010, the future minimum rental payments due under this non-cancelable operating lease in the next 12 months is $46,403.


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS ABOUT OUR OPERATIONS. THE READER SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE FORWARD LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD - LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.

OVERVIEW

The predecessor of Uonlive Corporation was incorporated in the State of Nevada on January 29, 1998 under the name Txon International Development Corporation to conduct any lawful business, to exercise any lawful purpose and power, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Laws of Nevada.  On August 1, 2008, the Company changed its name to Uonlive Corporation.

On March 28, 2008, the Company entered into the Exchange Agreement with Tsang William, Uonlive Limited, Tsun Samuel, Hui Chi Kit and Parure Capital Limited. Upon closing of the Share Exchange on March 31, 2008, Tsun and Hui delivered all of their share capital in Parure Capital to the Company in exchange for 150,000,000 shares of common stock of the Company and 500,000 shares of Series A Convertible Preferred Stock, resulting in Parure Capital becoming a wholly owned subsidiary of the Company and Uonlive becoming an indirect wholly owned subsidiary of the Company.

As a result, post reverse split, 49,565,923 shares of the Company’s common stock were outstanding immediately prior to the closing of the Share Exchange, and 199,565,923 shares of the Company’s common stock were outstanding immediately after the closing of the Share Exchange. In addition, 500,000 shares of Series A Convertible Preferred Stock were outstanding immediately after the closing of the Share Exchange. Of these shares, approximately 26,355,874 shares represented the Company’s “public float” prior to and after the Share Exchange. The 150,000,000 shares of common stock and 500,000 shares of Series A Convertible Preferred Stock issued in the Share Exchange were issued in reliance upon an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The shares in the public float will continue to represent the shares of the Company’s common stock held for resale without further registration by the holders thereof. After the Share Exchange, Uonlive becomes our operating subsidiary.

On May 19, 2009, we approved a 1:100 reverse stock split (the “Reverse Split”) of our common stock and an amendment to our Articles of Incorporation to effectuate the Reverse Split.

 
Uonlive is a leading private online multimedia company incorporated in April 2007 with its headquarters in Hong Kong, China. It is one of the members of Jingu Group. The main business of Uonlive is operating an online radio station, a kind of virtual community able to provide the public with free online radio services, and mainly targets the younger listening audience.

Uonlive is the abbreviation for “You Are on Live”, which means no matter where you live around the world, Uonlive’s information can be transmitted to you. With online radio, there are no geographic boundaries.

Uonlive provides multi-division entertainment programs through live-audio-radio and audio-on-demand. Audio-on-demand allows the listener to choose his or her own programming.  Uonlive also utilizes the most advanced technologies for DJs and audiences to control their broadcasting techniques. Uonlive is also endeavoring to develop new radio receiving techniques. For example, in the near future, Uonlive hopes to distribute online radio programs for communication products including mobile, family electronics etc., anytime and anywhere.

Different than traditional radio stations, Uonlive is continuously adding more interactive features, including online live voting, chat rooms, and download service, etc. in order to reach more audiences.

In addition, Uonlive provides professional training courses to DJs.  It is committed to developing new radio personalities by providing professional and systematic training programs. After completion of the courses, the participants are qualified to take part in large-scale activities and ceremonies. Such opportunities work for the mutual benefit of the online station and the participant. Currently, Uonlive has over 50 DJs hosting online radio programs and has over 40 diversified programs, which operate 24-hours a day.  No matter when and where, listeners can hear Uonlive voices anytime.

Our objective is to develop and provide diversified programming that has an upbeat message for anyone who listens. We will use advanced technologies to provide a variety of interactive channels through a Multimedia Communication Platform to give the audience impressive and fun radio shows.

Development of Our Business

The commercial market for the online radio business is developing rapidly. Many large competitors have been formed or are in the process of being formed to take advantage of an expanding market. The commercialization of the Internet has effectively promoted the development of online radio communication technologies. The significant business opportunities inherent in online radio will cause the utilization of the various kinds of equipment necessary for an online radio station.

Our development strategies include opening up new channels, attracting more members, strengthening and diversifying online programs, selling or renting our channels, attempting to develop a “U outlet”, and later attempting co-operation with Karaoke, and developing a voice-ecard for our stations. Uonlive will also sell its commercial products to users through its multimedia communication platform. It hopes to set up a team to source products in Guangdong Province, China and market the product on the website. Lastly, Uonlive will try another model allowing users to call up and record a message and leave it on the website so that other people listen to them (thereby setting up a sound recording library).

Our revenue model is to (1) sell air time or spot time to customers in different time sections with a tailor made package to be designed for each customer, which package may contain a number of air or spot times with a time frame of, say, 30 seconds, (2) to sell title sponsorships to customers for each program, and (3) to sell banner advertisements on our website. We plan to have eight banners for the year 2010 for customers to place their advertisements.

Management believes that Uonlive has a niche market in the online radio industry in Hong Kong and Mainland China. The prospect for this industry is enormous with high margin potential. Uonlive is the pioneer in this market and hopes to be the leader, taking the largest market share in the coming years.

 
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed consolidated Financial Statements for the nine-month period ended September 30, 2010 and 2009 and related notes thereto.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 COMPARED TO THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2009

Operating Revenue

We recorded a total of $3,861 consolidated revenue for the three-month period ended September 30, 2010 compared to $7,740 for the same corresponding period in 2009. The decrease in consolidated revenue was mainly due to poor performance from our sales team.  The consolidated gross loss for the three-month period ended September  30, 2010 recorded at $6,576, which accounted for (170.3)% of total revenue. The gross loss was mainly due to the decrease in sales to customers. 

Operating Expenses

Operating expenses for the three-month period ended September  30, 2010 decreased to $137,641 from $203,177 in the corresponding period of 2009, which consisted of $1,540 for sales and marketing expenses and $136,101, for general and administrative expenses.  The general and administrative expenses included approximately $29,900 of salaries expense and labor charges, $21,800 of rental expense, $41,264 of consulting and professional fees, $19,600 depreciation expenses and $25,300 of computer system maintenance expense.

Impairment and Depreciation

During the three-month period ended September 30, 2010, we incurred $19,607 of depreciation expenses, compared to $25,843 for the same period in 2009.
 
Net Loss/ Comprehensive Loss

We incurred a net loss of $144,217 for the three-month period ended September  30, 2010, compared to $246,356 for the corresponding period in the year 2009.

We accounted for a comprehensive loss of $151,897 for the three-month period ended September 30, 2010 after an adjustment on the foreign currency translation compared to $246,373 for the same corresponding period in 2009.

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2009

Operating Revenue

We recorded a total of $14,360 consolidated revenue for the nine-month period ended September 30, 2010 compared to $26,740 for the same corresponding period in 2009, a decrease of 46.3%.  The decrease was mainly due to a tough business environment and the poor performance from the sales team.  The consolidated gross loss for the nine-months ended September 30, 2010 recorded at $15,988, which accounted for (111)% of total revenue.  The gross loss was mainly due to the decrease in sales to customers.

Operating Expenses

Operating expenses for the nine-month period ended September 30, 2010 decreased by $75,714 to $522,461, which consisted of approximately $6,000 for sales and marketing expenses or 41.4% of total revenue.  Approximately $516,507 accounted for general and administrative expenses, a decrease of approximately $77,900 compared to the same corresponding period in 2009.  The general and administrative expenses included approximately $114,771 of salaries expense, $65,300 of rental expense, $88,050 of consultancy fees, $64,000 of professional fees and $132,929 of computer system maintenance expense.

 
Impairment and Depreciation
 
During the nine-month period ended September 30, 2010 and 2009, we incurred approximately $58,796 and $55,384 for depreciation expenses.

Net Loss/ Comprehensive Income (loss)

We incurred a net loss of approximately $538,400 for the nine-month period ended September 30, 2010, a decrease of approximately $103,700 from the corresponding period in the year 2009. We accounted for a comprehensive loss of approximately $538,700 for the nine-month period ended September 30, 2010 compared to a comprehensive loss of approximately $642,000 for the same corresponding period in 2009.

LIQUIDITY AND CAPITAL RESOURCES

During the period ended September 30, 2010, net cash used in operating activities was $473,097, which included a net loss of $538,449 compared to $555,983 and $642,204 for the same period in 2009. The operating activities also included the use in depreciation of approximately $58,796, an increase in changes to accounts receivable of approximately $11,600 and deposits and other receivables of approximately $16,800, which was offset by the decrease in changes to accounts receivable by related party of approximately $3,800 and accounts payables and accrued liabilities of approximately $18,000.  We accounted for net cash used in investing activities of a minimal $505, which was used to purchase plant and equipment, and approximately $64,000 for the same corresponding period in 2009. Net cash provided by financing activities accounted for approximately $426,300 and $661,900 for the nine-month period ended September 30, 2010 and 2009, respectively, which represented further advances from a shareholder.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. We perform ongoing credit evaluations of our customers’ financial condition, but do not require collateral to support such receivables.
 
Exchange Rate Risk

We cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that we could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HK$ converted to US$ on that date. The exchange rate could fluctuate without notice, depending on changes in political and economic environments.

ITEM 4 - CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining disclosure controls and procedures for us. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

 
As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), known to the chief executive officer or the chief financial officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 6 - EXHIBITS
 

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
UONLIVE CORPORATION
(Registrant)
 
November 15, 2010
/s/ Tsun Sin Man Samuel
 
Tsun Sin Man Samuel
 
Chief Executive Officer and Director
 
(Principal Executive Officer)
   
   
November 15, 2010
/s/ Hui Chi Kit
 
Hui Chi Kit
 
Chief Financial Officer
 
(Principal Financial and Accounting Officer)
   
 
 
 
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