10-Q 1 suic0705form10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

 

FORM 10-Q

 

☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2018

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

 

Commission File Number 000-53737

 

SINO UNITED WORLDWIDE CONSOLIDATED LTD.

 

(Exact name of registrant as specified in its charter)

 

Nevada (State of incorporation)

 

136-20 38th Ave. Unit 3G

Flushing, NY 11354(Address of Principal Executive Offices)

_______________

 

718-395-8706 (Issuer Telephone number)

_______________ 

 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☑ 
  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☑

 

At March 31, 2018, there were 33,503,604 shares of the registrant's common stock issued and outstanding.

 

   

 

 

SINO UNITED WORLDWIDE CONSOLIDATED LTD.

FORM 10-Q

March 31, 2018

INDEX

 

PART I-- FINANCIAL INFORMATION

 

Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
Item 4. Control and Procedures 14

 

PART II-- OTHER INFORMATION

 

Item 1. Legal Proceedings 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Mine Safety Disclosures. 16
Item 5. Other Information. 16
Item 6. Exhibits 16
SIGNATURES 17

 

   

 

 

Sino United Worldwide Consolidated Ltd.

Index to the consolidated financial statements

 

Table of Contents Page(s)
Unaudited Consolidated Balance Sheets at March 31, 2018 and December 31, 2017 F-2
Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017 F-3
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 F-4
Notes to the Consolidated Financial Statements (Unaudited) F-5 - F-8

 

 F-1 

 

 

Sino United Worldwide Consolidated Ltd.
Consolidated Balance Sheets
(Unaudited)
       
    

March 31,

2018

    

December 31,

2017

 
ASSETS          
Current Assets          
Cash  $47,203   $50,044 
Accounts receivable   10,000    15,000 
Total Current Assets   57,203    65,044 
           
Property, plant and equipment, net   444    —   
Total Assets  $57,647   $65,044 
           
LIABILITIES AND STOCKHOLDERS' DEFICIENCY          
Current Liabilities          
Credit card payable  $5,486   $4,630 
Convertible promissory note - related party   30,000    30,000 
Convertible promissory note - other   65,000    65,000 
Accrued expenses and other current liabilities   27,609    43,922 
Total Current Liabilities   128,095    143,552 
           
COMMITMENTS AND CONTINGENCIES          
           
Stockholders' Deficiency          
Common stock, $0.001 par value, 394,500,000 shares authorized; 33,503,604 shares issued and outstanding   33,504    33,504 
Additional paid-in capital   1,647,731    1,647,731 
Accumulated deficit   (1,751,683)   (1,759,743)
Total Stockholders' Deficiency   (70,448)   (78,508)
Total Liabilities and Stockholders’ Deficiency  $57,647   $65,044 
           
           
The accompanying notes are an integral part of these consolidated financial statements.

 

 F-2 

 

 

Sino United Worldwide Consolidated Ltd.
Consolidated Statements of Comprehensive Income
(Unaudited)
       
   For the Three Months Ended
   March 31,
   2018  2017
Revenue  $30,000   $—   
           
Operating expenses          
General and administrative   20,752    10,473 
Total operating expenses   20,752    10,473 
           
Income (loss) from operations   9,248    (10,473)
           
Other expenses:          
Interest expense - related party   (375)   —   
Interest expense - other   (813)   —   
Total other expense   (1,188)   —   
           
Income (loss) from continuing operations before income tax   8,060    (10,473)
Income tax provision   —      —   
Income (loss) from continuing operations   8,060    (10,473)
           
Discontinued operations          
Income from discontinued operations, net of tax   —      164,562 
           
Net income   8,060    154,089 
           
Other comprehensive income          
Foreign currency translation adjustment   —      38,901 
Comprehensive income  $8,060   $192,990 
           
Earnings (loss) per share          
Basic - continuing operation  $0.00   $(0.00)
- discontinued operation  $—     $0.00 
Total  $0.00   $0.00 
           
Diluted - continuing operation  $0.00   $(0.00)
- discontinued operation  $—     $0.00 
Total  $0.00   $0.00 
           
Weighted average shares outstanding          
Basic   33,503,604    58,985,937 
Diluted   130,878,604    58,985,937 
           
           
The accompanying notes are an integral part of these consolidated financial statements.

 

 F-3 

 

 

Sino United Worldwide Consolidated Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
       
   Three Months Ended March 31,
   2018  2017
CASH FLOW FROM OPERATING ACTIVITIES          
Net income  $8,060   $154,089 
Net income from discontinued operation   —      164,562 
Net income (loss) from continuing operation   8,060    (10,473)
           
Adjustment to reconcile net income to net cash provided by (used in) operating activities:            
Change in operating assets and liabilities:          
Accounts receivable   5,000    —   
Credit card payable   856    188 
Accrued expenses and other current liabilities   (16,313)   5,000 
Net cash used in continuing operation   (2,397)   (5,285)
Net cash provided by discontinued operation   —      252,078 
Net cash provided by (used in) operating activities   (2,397)   246,793 
           
CASH FLOW FROM INVESTING ACTIVITIES          
Acquisition of property, plant and equipment   (444)   —   
Net cash used in continuing operation   (444)   —   
Net cash used in discontinued operation   —      (1,253)
Net cash used in investing activities   (444)   (1,253)
           
CASH FLOW FROM FINANCING ACTIVITIES          
Net cash used in continuing operation   —      —   
Net cash used in discontinued operation   —      (254,847)
Net cash used in financing activities   —      (254,847)
           
Effect of exchange rate changes on cash   —      11,522 
INCREASE (DECREASE) IN CASH   (2,841)   2,215 
Cash - beginning of period   50,044    3,016 
Cash - end of period  $47,203   $5,231 
           
Supplement disclosure information          
Cash paid for interest - continuing operation  $—     $—   
Cash paid for interest - discontinued operation  $—     $8,156 
Cash paid for income taxes - continuing operation  $—     $—   
Cash paid for income taxes - discontinued operation  $—     $2,698 
           
           
The accompanying notes are an integral part of these consolidated financial statements.

 

 F-4 

 

Sino United Worldwide Consolidated Ltd.

Notes to the Consolidated Financial Statements

March 31, 2018

(Unaudited) 

 

 

Note 1 – Organization and Basis of presentation

 

Organization

Sino United Worldwide Consolidated Ltd. (the “Company”) provides IT management consulting services. The Company is also developing new businesses in various fields through careful review and critical selection of new growth businesses. The Company is planning to strengthen our core competencies in high technology and blockchain related businesses, such as blockchain dapps technology, fintech services, professional consultancy for ICO’s, and other high potential critical blockchain projects.

Basis of presentation and consolidation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2018 and the results of operations and cash flows for the periods ended March 31, 2018 and 2017. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending December 31, 2018. The balance sheet on December 31, 2017 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2017 as included in our Annual Report on Form 10-K.

Certain amounts in last year’s financial statements have been reclassified to conform to current year presentation.

Note 2 – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a working capital deficit of $70,892, an accumulated deficit of $1,751,683 and a stockholders’ deficiency of $70,448 as of March 31, 2018. The Company did not generate sufficient cash or income from its continuing operation. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The company is developing new businesses in various fields. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offering and/or bank financing are insufficient to support the Company’s working capital requirements, the Company will have to raise additional working capital from additional financing. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not be able continue its operations.

 F-5 

 

Note 3 — Summary of Significant Accounting Policies

Translation Adjustment

The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting and functional currency. The functional currency of the Company’s subsidiaries is TWD. Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of comprehensive income (loss). Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange prevailing at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of comprehensive income (loss).

In accordance with ASC 830, Foreign Currency Matters, the Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of comprehensive income (loss) and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from TWD into U.S. dollar are recorded in stockholders’ equity as part of accumulated other comprehensive income. The exchange rates used for the financial statements in accordance with ASC 830, Foreign Currency Matters, are as follows:

Average Rate for the period  March 31, 2018  March 31, 2017
Taiwan dollar (TWD)   —      1 
United States dollar ($)   —      0.0322 
           
Exchange Rate at  March 31, 2018  December 31, 2017
Taiwan dollar (TWD)   —      1 
United States dollar ($)   —      0.0330 

 

The subsidiary in Taiwan was sold as of September 30, 2017.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard bodies that may have an impact on the Company’s accounting and reporting. The Company believes that any recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

 F-6 

 

NOTE 4 – Discontinued Operation

 

On September 30, 2017, pursuant to agreements with one of our directors, Li-An Chu, the Company transferred the 100% ownership in Jinchih, to Li-An Chu in exchange for cancellation of loan payable of $379,254 to Li-An Chu and cancellation of total 25,503,333 shares of the Company’s common stock owned by a group of stockholders, including Li-An Chu. As a result of these transactions, Jinchih is no longer a wholly owned subsidiary of the Company as of September 30, 2017. Since Jinchih was sold back to Li-An Chu who is the Company’s director, CEO and CFO at the time of the transaction, no gain or loss was recorded. The net gain of $99,822 from the sale of Jinchih was included in stockholders’ equity.

 

The results of operations of discontinued operations for the three months ended March 31, 2018 and 2017 are as following:

 

   2018  2017
Revenue  $—     $834,487 
Cost of goods sold   —      (540,203)
General and administrative expenses   —      (74,438)
Depreciation and amortization   —      (13,387)
Interest income (expense), net   —      (6,879)
Income tax provision   —      (35,018)
Income from discontinued operations  $—     $164,562 

 

NOTE 5 – Convertible Promissory Note

On October 1, 2017, Mr. Tee-Keat Ong, the Chairmen of the Board of Directors, and the Company entered into a loan agreement pursuant to which Mr. Tee-Keat Ong agreed to lend the Company $30,000 initially with future loan amount up to $1,000,000. On the same date, the Company issued a promissory note to Mr. Tee-Keat Ong for the principal amount of $30,000. The promissory note bears interest at five percent (5%) per annum and is due on demand. Pursuant to the terms of the note, the note is convertible into the Company’s common stock at a conversion price of $0.001 per share. The note began to accrue interest at 10% per annum when it is past due.

 

On October 1, 2017, the Company entered into a loan agreement with Ms. Shoou Chyn Kan, an unrelated individual. Pursuant to the loan agreement, Ms. Shoou Chyn Kan agreed to lend the Company $65,000 initially with future loan amount up to $1,000,000. On the same date, the Company issued a promissory note to Ms. Shoou Chyn Kan for the principal amount of $65,000. The promissory note bears interest at five percent (5%) per annum and is due on demand. Pursuant to the terms of the note, the note is convertible into the Company’s common stock at a conversion price of $0.001 per share. The note began to accrue interest at 10% per annum when it is past due.

 

NOTE 6 – Related Party Transactions and Balances

As of March 31, 2018 and December 31, 2017, balance of convertible promissory note with related party was $30,000 (See Note 5). The Company accrued interest of $375 for the three months ended March 31, 2018.

 F-7 

 

NOTE 7 – Income Taxes

The Company was incorporated in the United States and are subject to income tax according to U.S. tax law.

A reconciliation of the provision for income taxes to the Company’s effective income tax rate for continuing operation is as follows:

   Three Months Ended March 31,
   2018  2017
Pre-tax income (loss)  $8,060   $(10,473)
U.S. federal corporate income tax rate   21%   35%
Expected U.S. income tax expense (credit)   1,693    (3,666)
Change of valuation allowance   (1,693)   3,666 
Effective tax expense  $—     $—   

 

As of March 31, 2018, the Company has approximately $1 million net operating loss carryforwards available in US, which will expire in 2026. It is more likely than not that the deferred tax assets cannot be utilized in the future because there will not be significant future earnings from the entity which generated the net operating loss. Therefore, the Company has set up 100% valuation allowance on deferred tax assets resulting from net operating loss incurred in the U.S.

As of March 31, 2018 and December 31, 2017, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods, and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the three months ended March 31, 2018 and 2017, and no provision for interest and penalties is deemed necessary as of March 31, 2018 and December 31, 2017.

The U.S. Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively. The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. Since the Company has no foreign subsidiaries after it disposed its Taiwan subsidiary on September 30, 2017, the Company believes that Tax Act will not have significant impact on the Company’s financial statements.

 

NOTE 8 – Subsequent Events

The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date the financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements.

 F-8 

 

Item 2. Management's Discussion and Analysis Of Financial Condition And Plan Of Operation.

 

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "management believes" and similar language. The forward-looking statements are based on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. Actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

 

Investors are also advised to refer to the information in our previous filings with the Securities and Exchange Commission (SEC), especially on Forms 10-K, 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

 

Overview

 

From October 2013 until September, 2017, through our Taiwan subsidiary Jinchih International Limited (“Jinchih”), we were engaged in design, marketing and distributing of hardware and software technologies, including new cell phone apps, as well as solutions and technology in fleet management, the driving record management system (DMS) that provide total solution and management mechanism for vehicles and driver behavior control and analysis, which increase driving safety and efficiency.

 

On September 30, 2017, pursuant to agreements with one of the Company’s directors, Li-An Chu, the Company transferred the 100% ownership in its wholly owned Taiwan Subsidiary, Jinchih International Limited (“Jinchih”), to Li-An Chu in exchange for cancellation of debt $379,254, and cancellation of total 25,503,333 shares of the Company’s common stock owned by a group of stockholders, including Li-An Chu. As a result of these transactions, Jinchih is no longer a wholly owned subsidiary of the Company as of September 30, 2017.

 

Currently, the Company provides IT management consulting services. The Company is also developing new businesses in various fields through careful review and critical selection of new growth businesses. The Company is planning to strengthen its core competencies in high technology and blockchain related businesses, such as blockchain dapps technology, fintech services, professional consultancy for ICO’s, and other high potential critical blockchain projects.

 

Results of Operations

 

Three Months Ended March 31, 2018 and 2017

 

Revenue

 

The Company generated $30,000 revenue from the continuing operation during the three months ended March 31, 2018. As discussed previously, the Company sold its wholly-owned subsidiary Jinchih on September 30, 2017, we included the revenue from Jinchih for the three months ended March 31, 2017 in the income from discontinued operation on Consolidated Statements of Comprehensive Income.

 

Our revenue of $30,000 were generated from the I.T. management consulting services.

 11 

 

General and administrative expenses

General and administrative expenses primarily consist of investor relation expenses, professional fees and other miscellaneous operational expenses. General and administrative expenses for the three months ended March 31, 2018 and 2017 were $20,752 and $10,473, respectively.

Interest expense

 

Interest expense from continuing operation was $1,188 for the three months ended March 31, 2018 which included the interest on the convertible promissory notes issued for $1,188. There was no interest expense from continuing operation for the three months ended March 31, 2017.

Income (Loss) from continuing operations

The Company generated net income from continuing operations of $8,060 and net loss from continuing operations of $10,473 for the three months ended March 31, 2018 and 2017, respectively.

Income from discontinued operations

The Company generated net income from discontinued operations of $0 and $164,562 for the three months ended March 31, 2018 and 2017, respectively.

Net income

As a result of the foregoing, the Company generated net income of $8,060 and $154,089 for the three months ended March 31, 2018 and 2017, respectively.

Foreign currency translation adjustments

The functional currency of our subsidiaries operating in the Taiwan is the Taiwan Dollars (“TWD”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of comprehensive income. As a result of these translations, which are a non-cash adjustment, we reported foreign currency translation gain of $38,901 for the three months ended March 31, 2017. There is no foreign currency translation adjustment recorded for the three months ended March 31, 2018 since the Company sold the wholly-owned subsidiary Jinchih on September 30, 2017.

Liquidity and Capital Resources

We have funded our operations to date primarily through the operations and related party loan, bank loan and capital contributions. The Company had a working capital deficit of $70,892, an accumulated deficit of $1,751,683 and a stockholders’ deficiency of $70,448 as of March 31, 2018. The Company did not generate sufficient cash or income from its continuing operation. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company plans to rely on the advances and loans from related parties, the proceeds from funds generated from private placements, public offering and/or bank financing to support the Company’s working capital requirements. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not be able continue its operations.

As of March 31 2018, we had a working capital deficit of $70,892. Our current assets on March 31, 2018 were $57,203 primarily consisting of cash of $47,203. Our current liabilities were primarily composed of credit card payable of $5,486, convertible promissory notes of $95,000 and accrued expenses and other current liabilities of $27,609.

 12 

 

Cash Flow from Operating Activities

Net cash used in operating activities was $2,397 for the three months ended March 31, 2018, which consisted of our net income from continuing operation of $8,060, a change of accounts receivable of $5,000, a change of credit card payable of $856 and a change of accrued expenses of $16,313.

Net cash provided by operating activities was $246,793 for the three months ended March 31, 2017, which consisted of our net loss from continuing operation of $10,473, a change of credit card payable of $188, a change of accrued expenses of $5,000 and net cash provided by discontinued operation of $252,078.

Cash Flow from Investing Activities

Net cash used in investing activities totaled $444 for the three months ended March 31, 2018, all of which contributed by continuing operation.

Net cash used in investing activities totaled $1,253 for the three months ended March 31, 2017, all of which contributed by discontinued operation.

Cash Flow from Financing Activities

Net cash used in financing activities was $254,847 for the three months ended March 31, 2017, all of which contributed by discontinued operation. There was no financing activities for the three months ended March 31, 2018.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Inflation

We do not believe our business and operations have been materially affected by inflation

Critical Accounting Policies and Estimates

Refer to note 3 in the accompanying consolidated financial statements.

Impact of Accounting Pronouncements

There were no recent accounting pronouncements that have had a material effect on the Company’s financial position or results of operations.

 

 13 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2018. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

 

In light of the material weaknesses described below, we performed additional analysis to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that, as of March 31, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level:

 

  1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ending March 31, 2018. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

  2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

 

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Management's Report on Internal Control over Financial Reporting.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

 

A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified some material weaknesses in our internal control over financial reporting.

 

We lack sufficient personnel with the appropriate level of knowledge, experience and training in the application of accounting operations of our company. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews.

 

Management is currently reviewing its staffing and systems in order to remedy the weaknesses identified in this assessment. However, because of the above condition, management’s assessment is that the Company’s internal controls over financial reporting were not effective as of March 31, 2018. Additionally, the Registrant’s management has concluded that the Registrant has a material weakness associated with its U.S. GAAP expertise.

 

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

Management's Remediation Initiatives

 

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We intend to our personnel resources and technical accounting expertise within the accounting function. First, we intend to create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets. Second, we intend to create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. We anticipate the costs of implementing these remediation initiatives will be approximately $37,500 to $50,000 a year in increased salaries, legal and accounting expenses.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

To the best knowledge of the officers and directors, the Company was not a party to any legal proceeding or litigation as of March 31, 2018.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

Exhibit No. Description
31.1 Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2 Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101 The following materials from Sino United Worldwide Consolidated Ltd.’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 are formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheet; (ii) the Consolidated Statement of Comprehensive Income; (iii) the Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements. This Exhibit 101 is deemed not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  SINO UNITED WORLDWIDE CONSOLIDATED LTD.
   
   
   
Date: July 6, 2018  By: /s/ Yanru Zhou        
  Yanru Zhou
  Chief Executive Officer
   
   
  SINO UNITED WORLDWIDE CONSOLIDATED LTD.
   
   
   
Date: July 6, 2018 By: /s/ Yanru Zhou        
  Yanru Zhou
  Chief Financial Officer

 

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