Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
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1.
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ORGANIZATION
AND PRINCIPAL ACTIVITIES
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China
Teletech Holding, Inc. (the “Company”) formerly known as Avalon Development Enterprise, Inc. was incorporated in the
State of Florida, United States (an OTCBB Company) on March 29, 1999.
On
June 30, 2014, the Company entered into a cooperation agreement (the “Agreement”) with Shenzhen Jinke Energy Development
Co., Ltd. (“SJD”). Pursuant to the Agreement, the Company will purchase, in an aggregate, 51% of all the outstanding
capital of SJD in exchange for 20 million newly issued shares of the Company’s common stock. The Company filed Form 8-K
with the U.S Securities and Exchange Commission on August 8, 2014 detailing the transaction; the Agreement was filed as an exhibit
to the Form 8-K. As of December 31, 2014, 16 million shares of the 20 million shares have been issued, and 4 million shares are
pending issuance.
The
Company has accounted for the transaction with SJD as reverse takeover and recapitalization of the Company; accordingly, the legal
acquirer is the accounting acquiree and the legal acquirer is the accounting acquirer. As a result of this transaction, the Company
is deemed to be a continuation of the business of SJD. Accordingly, the financial data included in the accompanying consolidated
financial statements for all periods prior to June 30, 2014 is that of the accounting acquirer (SJD). The historical stockholders’
equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction
occurred as of the beginning of the first period presented.
On
November 15, 2016, the Company, SJD and Guangyuan Liu, the holder of 97% of the equity interest of SJD, entered into a certain
Mutual Rescission Agreement (the “Rescission Agreement”), whereby the parties agreed to rescind the Jinke Exchange
Agreement and unwind the Jinke Reverse Merger as if they never occurred, for a consideration of 10,000,000 newly issued restricted
shares (the “Rescission Shares”) of the Company’s common stock to be issued to the Guangyuan Liu, the holder
of 97% of the equity interest of SJD upon closing of the transactions contemplated in the Rescission Agreement. Upon closing of
the Rescission Agreement on November 15, 2016, the Guangyuan Liu, the holder of 97% of the equity interest of SJD, returned and
surrendered 20 million of the Company share and the Company returned and surrendered the 51% of the issued and outstanding securities
of SJD and issued the Rescission Shares to Guangyuan Liu, the holder of 97% of the equity interest of SJD. The Company filed Form
8-K with the U.S Securities and Exchange Commission on November 15, 2016 detailing the transaction; the Rescission Agreement was
filed as an exhibit to the Form 8-K.
On
November 8, 2016, the Company registered a wholly-owned subsidiary, namely Strategic Service Group Limited, which was incorporated
in British Virgin Islands. On October 31, 2017, the Company transferred 100% equity of Strategic Service Group Limited to Ms.
Li Yankuan with the consideration of $3,000.
The
principal activity of the Company is investment holding company.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
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2.
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SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
The
Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The
financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally
accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial
statements.
As
of March 31, 2018, the Company did not own any subsidiary.
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(b)
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Economic
and Political Risks
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The
Company is subject to special considerations and significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the political, economic, legal environment and foreign currency
exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC,
and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion,
restriction on international remittances, and rates and methods of taxation, among other things.
Our
discussion and analysis is based upon our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well
as the reported amounts of revenues and expenses during the reporting years. These accounts and estimates include, but are not
limited to, the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.
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(d)
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Cash
and Cash Equivalents
|
The
Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
Accounts
receivable are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance
for doubtful accounts is made when recovery of the full amount is doubtful.
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(f)
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Accounting
for Impairment of Long-Lived Assets
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The
Company adopted FASB ASC Topic 360-10-05 “Impairment or Disposal of Long-Lived Assets”, which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying
value of long-lived assets to be held and used in accordance with ASC 360. ASC 360 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount
by which the carrying amount exceeds the fair market value of the long-lived assets.
The
long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as
a result of technology or other industry changes. Recoverability of assets to be held and used is determined by comparing the
carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.
If
such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell. During the reporting periods, there was no impairment loss.
Revenue
is measured at the fair value of the consideration received and receivable. Provided it is probable that the economic benefits
will flow to the Company and the revenue and costs incurred or to be incurred, if applicable, can be measure reliably, revenue
is recognized in profit or loss.
The
Company’s cost of sales is comprised mainly of cost of goods sold.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
Selling
expenses are comprised of salaries for the sales force, client entertainment, commissions, advertising, and travel and lodging
expenses.
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(j)
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General
& Administrative Expenses
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General
and administrative expenses include executive compensation, general overhead such as the finance department and administrative
staff, depreciation, office rental and utilities.
The
Company expensed all advertising costs as incurred.
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(l)
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Foreign
Currency Translation
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For
financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have
been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates
and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical
exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment
to other comprehensive income, a component of stockholders’ equity.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
The
Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which
they are available. The Company has implemented FASB ASC Topic 740 “Income Taxes”. Income tax liabilities computed
according to the United States, and British Virgin Islands (BVI) tax laws are provided for the tax effects of transactions reported
in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the
basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent
the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities
are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.
A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire
before the Company is able to realize that tax benefit or that future realization is uncertain.
Since
China Teletech Holding, Inc. is primarily a holding company without any business activities in the United States. The Company
does not have taxable income to be reported in the United States income tax for the year ended March 31, 2018 and 2017
Statutory
reserve refers to the amount appropriated from the net income in accordance with PRC laws or regulations, which can be used to
recover losses and increase capital, as approved, and, are to be used to expand production or operations. PRC laws prescribe that
an enterprise operating at a profit, must appropriate, on an annual basis, from its earnings, an amount to the statutory reserve
to be used for future company development. Such an appropriation is made until the reserve reaches a maximum equalling 50% of
the enterprise’s registered capital.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
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(r)
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Fair
Value of Financial Instruments
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For
certain of the Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts
and other payables, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short
maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial
instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level
valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The
carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial
instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of
such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy
are defined as follows:
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●
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Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
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●
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Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.
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●
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Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
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The
Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities
from Equity,” and ASC 815.
As
of March 31, 2018 and December 31, 2017 the Company did not identify any assets and liabilities that were required to be presented
on the balance sheet at fair value.
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(s)
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Other
Comprehensive Income (Loss)
|
For
financial reporting purposes, RMB were translated into United States Dollars ("USD" or “$”) as the reporting
currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses
are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the
use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated
other comprehensive income".
The
Company uses FASB ASC Topic 220, “Reporting Comprehensive Income”. Comprehensive income is comprised of net income
and all changes to the statements of stockholders’ equity, except the changes in paid-in capital and distributions to stockholders
due to investments by stockholders.
Goodwill
represents the excess of the purchase price over the fair value of the net tangible and identifiable assets acquired in a business
combination. In accordance with FASB ASC Topic 350 “Intangibles and Other”, goodwill is no longer subject to amortization.
Rather, goodwill is subject to at least an annual assessment for impairment, applying a fair-value-based test. Fair value is generally
determined using a discounted cash flow analysis.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
FASB
ASC Topic 280, "Disclosures about Segments of an Enterprise and Related Information" requires use of the “management
approach” model for segment reporting. The management approach model is based on the way a company's management organizes
segments within the company for making operating decisions and assessing performance. Reportable segments are based on products
and services, geography, legal structure, management structure, or any other manners in which management disaggregates a company.
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(v)
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Recent
Accounting Pronouncements
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In
March 2016, the FASB issued ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting, which eliminates the
requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over
a previously held investment. The amendments in ASU 2016-07 are effective for public companies for fiscal years beginning after
December 15, 2016 including interim periods therein. Early adoption is permitted. The new standard should be applied prospectively
for investments that qualify for the equity method of accounting after the effective date. We do not expect that the adoption
will have a material impact on our financial statements.
In
March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which includes amendments
to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU
2016-09 are effective for public companies for fiscal years beginning after December 15, 2016, and interim periods within those
annual periods. Early adoption is permitted but requires all elements of the amendments to be adopted at once rather than individually.
We are evaluating the effect that ASU No. 2016-09 will have on our financial statements and related disclosures.
In
August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies
the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective
for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early
adoption is permitted. We are currently assessing the potential impact of ASU 2016-15 on our financial statements and related
disclosures.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
In
October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.
This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This
ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is
permitted. We do not anticipate that the adoption of this ASU to have a significant impact on our financial statements.
In
October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are Under
Common Control. The amendments in this ASU change how a reporting entity that is the single decision maker of a variable interest
entity should treat indirect interests in the entity held through related parties that are under common control with the reporting
entity when determining whether it is the primary beneficiary of that variable interest entity. The ASU is effective for fiscal
years and interim periods within those years beginning after December 15, 2016. We do not expect the adoption of this ASU to have
a material impact on our financial statements.
In
November 2016, the FASB issued Accounting Standards Update 2016-18 (ASU 2016-18), Statement of Cash Flows: Restricted Cash. This
ASU provides guidance on the classification of restricted cash in the statement of cash flows. The amendments in this ASU are
effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The amendments in the
ASU should be adopted on a retrospective basis. We do not expect that adoption of this ASU to have a material effect on our financial
statements.
Other
accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption
until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
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3.
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DUE
TO RELATED PARTIES
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As
of 03/31/2017
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As
of
12/31/2017
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Ms
Li, Yankuan
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534,550
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514,550
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$
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534,550
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$
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514,550
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Ms
Yankuan Li, the former Chief Executive Officer and Director of the Company, made advances to the Company to help fund the Company’s
prior operations. These advances are unsecured and interest-free. There is no due date for repayment.
China
Teletech Holding, Inc.
Notes
to Unaudited Financial Statements
As
of March 31, 2018, and 2017
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March
31, 2018
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2017
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Basic
and diluted loss per share numerator
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Net
loss
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$
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(18,044
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)
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$
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(233,138
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)
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Loss
attributable to non-controlling interest
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-
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-
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Loss
attributable to common stockholders
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$
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(18,044
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)
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$
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(233,138
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)
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Original
Shares:
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202,473,776
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147,513,776
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Additions
from Actual Events
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-
Issuance of shares
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2,000,000
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|
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54,960,000
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Basic
weighted average shares outstanding
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204,473,776
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202,473,776
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Loss
Per Share
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-
Basic
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$
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-
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$
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-
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-
Diluted
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$
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-
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$
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-
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|
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Weighted
Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
|
204,473,776
|
|
|
|
202,473,776
|
|
|
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-
Diluted
|
|
|
204,473,776
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|
|
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202,473,776
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5.
|
GOING
CONCERN UNCERTAINTIES
|
These
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 year ended March 31, 2018, the Company reported a net loss of $18,044. The Company had an accumulated deficit of $8,078,778
as of December 31, 2017, due to the fact that the Company continued to incur losses over the past several years.
The
continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support
from its stockholders or other capital sources. Management believes that the continuing financial support from the existing or
potential shareholders or external debt or equity financing will provide the additional cash to meet the Company’s obligations
as they become due. Also, the management team will focus on acquiring potential operation which can generate stable cash flows,
to meet the need of working capital of the Company.
These
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to
continue as a going concern.
The
company has evaluated the period after the balance sheet date up through the day that the financial statements were issued and
determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.