Attached files
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,
2009
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)
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Nevada
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87-0629754
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|
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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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 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
¨
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 x
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
State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date: November 2, 2009, 1,996,112 shares.
UONLIVE
CORPORATION
Form
10-Q for the period ended September 30, 2009
TABLE
OF CONTENTS
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Page
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PART
I - FINANCIAL INFORMATION
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ITEM
1 - FINANCIAL STATEMENTS
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Condensed
Consolidated Balance Sheets as of September 30, 2009 (Unaudited) and
December 31, 2008 (Audited)
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3
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||
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Condensed
Consolidated Statements of Operations And Comprehensive Loss for the Three
and Nine Months Ended September 30, 2009 and 2008
(Unaudited)
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4
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Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2009 and 2008 (Unaudited)
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5
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Condensed
Consolidated Statement of Stockholders’ Deficit for the Nine Months Ended
September 30, 2009
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6
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Notes
to Condensed Consolidated Financial Statements
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7 -
15
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ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
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16
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ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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18
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ITEM
4 - CONTROLS AND PROCEDURES
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18
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ITEM
4T – INTERNAL CONTROL OVER FINANCIAL REPORTING
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19
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PART
II - OTHER INFORMATION
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ITEM
6 - EXHIBITS
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19
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SIGNATURES
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20
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- 2
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UONLIVE
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
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September
30, 2009
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December
31, 2008
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|||||||
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(Unaudited)
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(Audited)
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|||||||
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ASSETS
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||||||||
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Current
assets:
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||||||||
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Cash
and cash equivalents
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$ | 41,461 | $ | 100 | ||||
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Accounts
receivable
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11,612 | 7,741 | ||||||
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Accounts
receivable, related party
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3,871 | 3,871 | ||||||
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Deposits
and other receivables
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11,878 | 11,795 | ||||||
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Total
current assets
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68,822 | 23,507 | ||||||
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Non-current
assets:
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||||||||
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Intangible
asset, net
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- | - | ||||||
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Plant
and equipment, net
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244,834 | 235,832 | ||||||
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Deferred
tax asset
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- | 40,989 | ||||||
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TOTAL
ASSETS
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$ | 313,656 | $ | 300,328 | ||||
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LIABILITIES
AND STOCKHOLDERS’ DEFICIT
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||||||||
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Current
liabilities:
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||||||||
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Accounts
payable and accrued liabilities
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$ | 22,014 | $ | 28,214 | ||||
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Amount
due to a shareholder
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1,756,127 | 1,094,211 | ||||||
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Total
current liabilities
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1,778,141 | 1,122,425 | ||||||
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Non-current
liabilities:
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||||||||
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Note
payable to a shareholder
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167,705 | 167,698 | ||||||
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TOTAL
LIABILITIES
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1,945,846 | 1,290,123 | ||||||
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Stockholders’
deficit:
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||||||||
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Series
A, Convertible preferred stock, $0.001 par value; 10,000,000 shares
authorized, 500,000 shares issued and outstanding as of September 30, 2009
and December 31, 2008
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500 | 500 | ||||||
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Common
stock, $0.001 par value; 200,000,000 shares authorized; 1,996,081 shares
issued and outstanding as of September 30, 2009 and December 31,
2008
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1,996 | 1,996 | ||||||
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Additional
paid-in capital
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197,570 | 197,570 | ||||||
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Accumulated
deficit
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(1,827,298 | ) | (1,185,094 | ) | ||||
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Accumulated
other comprehensive loss
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(4,958 | ) | (4,767 | ) | ||||
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Total
stockholders’ deficit
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(1,632,190 | ) | (989,795 | ) | ||||
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TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$ | 313,656 | $ | 300,328 | ||||
See
accompanying notes to the condensed consolidated financial
statements.
- 3
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UONLIVE
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE LOSS
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
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Three
months ended September 30,
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Nine
months ended September 30,
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|||||||||||||||
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2009
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2008
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2009
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2008
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REVENUES,
NET
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-
Related party
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$ | 3,870 | $ | 3,847 | $ | 11,609 | $ | 11,541 | ||||||||
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-
Non-related party
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3,870 | 3,846 | 15,131 | 11,541 | ||||||||||||
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Total
revenues, net
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7,740 | 7,693 | 26,740 | 23,082 | ||||||||||||
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COST OF REVENUE
(exclusive of depreciation)
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9,928 | 1,404 | 29,778 | 1,404 | ||||||||||||
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GROSS
PROFIT (LOSS)
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(2,188 | ) | 6,289 | (3,038 | ) | 21,678 | ||||||||||
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Operating
expenses:
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Sales
and marketing
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2,227 | 1,917 | 3,770 | 15,309 | ||||||||||||
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Impairment
charge on intangible asset
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- | 166,673 | - | 166,673 | ||||||||||||
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General
and administrative
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200,950 | 176,729 | 594,405 | 517,747 | ||||||||||||
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Total
operating expenses
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203,177 | 345,319 | 598,175 | 699,729 | ||||||||||||
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LOSS
BEFORE INCOME TAXES
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(205,365 | ) | (339,030 | ) | (601,213 | ) | (678,051 | ) | ||||||||
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Income
tax expense
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(40,991 | ) | - | (40,991 | ) | - | ||||||||||
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NET
LOSS
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$ | (246,356 | ) | $ | (339,030 | ) | $ | (642,204 | ) | $ | (678,051 | ) | ||||
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Other
comprehensive loss:
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||||||||||||||||
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-
Foreign currency translation loss
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(17 | ) | (4,587 | ) | (191 | ) | (3,112 | ) | ||||||||
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COMPREHENSIVE
LOSS
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$ | (246,373 | ) | $ | (343,617 | ) | $ | (642,395 | ) | $ | (681,163 | ) | ||||
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Net
loss per share – basic and diluted
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$ | (0.12 | ) | $ | (0.17 | ) | $ | (0.32 | ) | $ | (0.34 | ) | ||||
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Weighted
average shares outstanding during the period – basic and
diluted
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1,996,081 | 1,996,081 | 1,996,081 | 1,996,081 | ||||||||||||
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See
accompanying notes to the condensed consolidated financial
statements.
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- 4
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UONLIVE
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
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Nine
months ended September 30,
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2009
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2008
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Cash
flow from operating activities:
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Net
loss
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$ | (642,204 | ) | $ | (678,051 | ) | ||
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
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55,384 | 41,870 | ||||||
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Impairment
charge on intangible asset
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- | 166,673 | ||||||
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Deferred
tax expense
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40,991 | - | ||||||
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Changes
in operating assets and liabilities:
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||||||||
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Accounts
receivable
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(3,871 | ) | 2,565 | |||||
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Deposits
and other receivables
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(83 | ) | (3,063 | ) | ||||
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Accounts
payable and accrued liabilities
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(6,200 | ) | (13,017 | ) | ||||
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Amount
due to a related company
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- | (57,704 | ) | |||||
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Net
cash used in operating activities
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(555,983 | ) | (540,727 | ) | ||||
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Cash
flows from investing activities:
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||||||||
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Purchase
of plant and equipment
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(64,391 | ) | (62,552 | ) | ||||
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Net
cash used in investing activities
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(64,391 | ) | (62,522 | ) | ||||
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Cash
flows from financing activities:
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Advances
from a shareholder
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661,916 | 594,172 | ||||||
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Net
cash provided by financing activities
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661,916 | 594,172 | ||||||
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Effect
of exchange rate change on cash and cash equivalents
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(181 | ) | 257 | |||||
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NET
CHANGE IN CASH AND CASH EQUIVALENTS
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41,361 | (8,850 | ) | |||||
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CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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100 | 50,000 | ||||||
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CASH
AND CASH EQUIVALENTS, END OF PERIOD
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$ | 41,461 | $ | 41,150 | ||||
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SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
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||||||||
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Cash
paid for income taxes
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$ | - | $ | - | ||||
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Cash
paid for interest
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$ | - | $ | - | ||||
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See
accompanying notes to the condensed consolidated financial
statements.
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- 5
-
UONLIVE
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
| Series A Convertible preferred stock | Common stock | |||||||||||||||||||||||
| No. of shares | Amount | No. of shares | Amount |
Additional
paid
in capital
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Accumulated
deficit
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Accumulated other comprehensive loss | Total stockholders' deficit | |||||||||||||||||
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Balance
as of January 1, 2009 (as adjusted)
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500,000 | $ | 500 | 1,996,081 | $ | 1,996 | $ | 197,570 | $ | (1,185,094 | ) | $ | (4,767 | ) | $ | (989,795 | ) | |||||||
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Net
loss for the period
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- | - | - | - | - | (642,204 | ) | - | (642,204 | ) | ||||||||||||||
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Foreign
currency translation adjustment
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- | - | - | - | - | - | (191 | ) | (191 | ) | ||||||||||||||
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Balance
as of September 30, 2009
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500,000 | $ | 500 | 1,996,081 | $ | 1,996 | $ | 197,570 | $ | (1,827,298 | ) | $ | (4,958 | ) | $ | (1,632,190 | ) | |||||||
See
accompanying notes to the condensed consolidated financial
statements.
- 6
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UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(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, 2008
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, 2009 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending December 31, 2009 or for any future periods.
These
unaudited condensed consolidated financial statements and notes thereto should
be read in conjunction with the 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, 2008.
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 its company
name to China World Trade Corporation. On July 2, 2008, the Company further
changed the name of its company to Uonlive Corporation.
UOLI,
through its subsidiaries, mainly engages in the provision of online multimedia
and advertising services and the operation of an online radio station in Sheung
Wan, Hong Kong. All the operations and assets are located in Hong
Kong.
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
period ended September 30, 2009, the Company has incurred a net loss of $642,204
and experienced negative cash flows from operations of $555,983 with an
accumulated deficit of $1,827,298 as of that date. The continuation of the
Company is dependent upon the continuing financial support of shareholders and
generating significant revenue and achieving profitability. The actions involve
certain cost-saving initiatives and growing strategies, including rapid
promotion and marketing the radio program in the Hong Kong and China. However,
there is no assurance that the Company will be successful in securing sufficient
funds to sustain the operations.
These and
other factors raise substantial doubt about the Company’s ability to continue as
a going concern. These condensed consolidated financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result in the Company not being able to continue as a going
concern.
- 7
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(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
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Basis
of presentation
|
These
accompanying condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America.
|
l
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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
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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
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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, 2009
and 2008, the Company did not provide an allowance for doubtful accounts, nor
have been any write-offs.
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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
|
|
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Furniture,
fittings and office equipment
|
5
years
|
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Computer
and broadcasting equipment
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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, 2009 and 2008 was $25,843 and
$14,587, respectively.
Depreciation
expense for the nine months ended September 30, 2009 and 2008 was $55,384 and
$41,870, respectively.
- 8
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 4 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
l
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Intangible
asset
|
Intangible
asset represents the acquisition cost of online radio broadcasting technology
and its domain name paid to Mr. Samuel Tsun, a shareholder and director of the
Company at the fair value of $167,698. Purchased technical know-how includes
webpage development cost, acquisition cost of domain name of www.uonlive.com,
online radio technology, broadcasting technical and procedural manuals, with an
indefinite useful life.
In
accordance with the provisions of Accounting Standards Codification ("ASC") ASC
Topic 350-50, “General
Intangibles Other Than Goodwill” (“ASC 350”), if an intangible asset is
determined to have an indefinite useful life, it should not be amortized until
its useful life is determined to be no longer indefinite. The asset’s remaining
useful life should be reviewed each reporting period. If such an asset is later
determined to have a finite useful life, the asset should be tested for
impairment. That asset should then be amortized prospectively over its estimated
remaining useful life and accounted for in the same way as intangible assets
subject to amortization. An intangible asset that is not subject to amortization
should be tested for impairment at least annually.
The
Company evaluates the recoverability of identifiable intangible assets whenever
events or changes in circumstances indicate that an intangible asset’s carrying
amount may not be recoverable. Such circumstances could include, but are not
limited to: (1) a significant decrease in the market value of an asset, (2) a
significant adverse change in the extent or manner in which an asset is used, or
(3) an accumulation of costs significantly in excess of the amount originally
expected for the acquisition of an asset. The Company measures the carrying
amount of the asset against the estimated undiscounted future cash flows
associated with it. Should the sum of the expected future net cash flows be less
than the carrying value of the asset being evaluated, an impairment loss would
be recognized. The impairment loss would be calculated as the amount by which
the carrying value of the asset exceeds its fair value. The evaluation of asset
impairment requires the Company to make assumptions about future cash flows over
the life of the asset being evaluated. These assumptions require significant
judgment and actual results may differ from assumed and estimated
amounts.
Based on
the results of the Company's discounted cash flows calculation, the Company
evaluated that the carrying value of the intangible asset exceeded its fair
value and recognized a full impairment loss of $166,673 for the year ended
December 31, 2008.
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l
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Impairment
of long-lived assets
|
Long-lived
assets primarily include plant and equipment and intangible asset. In accordance
with 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.
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l
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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
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Income
taxes
|
The
Company adopts the ASC Topic 740, “Income Taxes” regarding
accounting for uncertainty in income taxes prescribes the recognition threshold
and measurement attributes for financial statement recognition and measurement
of tax positions taken or expected to be taken on a tax return. In addition, the
guidance requires the determination of whether the benefits of tax positions
will be more likely than not sustained upon audit based upon the technical
merits of the tax position. For tax positions that are determined to be more
likely than not sustained upon audit, a company recognizes the largest amount of
benefit that is greater than 50% likely of being realized upon ultimate
settlement in the financial statements. For tax positions that are not
determined to be more likely than not sustained upon audit, a company does not
recognize any portion of the benefit in the financial statements. The guidance
provides for de-recognition, classification, penalties and interest, accounting
in interim periods and disclosure.
For the
period ended September 30, 2009 and 2008, the Company did not have any interest
and penalties associated with tax positions. As of September 30, 2009, 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.
- 9
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 4 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
l
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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 shares 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 shares that would have been
outstanding if the potential common stock equivalents had been issued and if the
additional common shares were dilutive.
l
Comprehensive
loss
ASC Topic
220, “Reporting Comprehensive
Income” establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income as defined
includes all changes in equity during a period from non-owner sources.
Accumulated comprehensive income consists of changes in unrealized gains and
losses on foreign currency translation. This comprehensive income is not
included in the computation of income tax expense or benefit.
|
l
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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 subsidiaries in Hong Kong maintain their books
and record in their 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$1 has been made at the following exchange rates for
the respective period:
|
September
30, 2009
|
September
30, 2008
|
||
|
Period-end
rates HK$:US$1 exchange rate
|
7.7504
|
7.7701
|
|
|
Average
rates HK$:US$1 exchange rate
|
7.7524
|
7.7984
|
|
l
|
Segment
reporting
|
ASC Topic
280, “Segment
Reporting” establishes standards for reporting information about
operating segments on a basis consistent with the Company’s internal
organization structure as well as information about geographical areas, business
segments and major customers in financial statements. For the period ended
September 30, 2009 and 2008, the Company operates in one reportable
segment.
|
l
|
Related
parties
|
For the
purposes of these financial statements, parties are considered to be related if
one party has the ability, directly or indirectly, to control the party or
exercise significant influence over the party in making financial and operating
decisions, or vice versa, or where the Company and the party are subject to
common control or common significant influence. Related parties may be
individuals or other entities.
- 10
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 4 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
l
|
Fair
value measurement
|
ASC Topic
820-10, “Fair Value
Measurements and Disclosures” ("ASC 820-10") establishes a new framework
for measuring fair value and expands related disclosures. Broadly, ASC 820-10
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 820-10 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.
|
l
|
Financial
instruments
|
Cash and
cash equivalents, accounts receivable, accounts payable amount due to a
shareholder and note payable are carried at cost which approximates fair value.
Any changes in fair value of assets or liabilities carried at fair value are
recognized in other comprehensive income for each period.
|
l
|
Recent
accounting pronouncements
|
The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and do 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.
In
September 2009, Accounting Standards Codification (“ASC”) became the source of
authoritative U.S. GAAP recognized by the Financial Accounting Standards Board
(“FASB”) for nongovernmental entities, except for certain FASB Statements not
yet incorporated into ASC. Rules and interpretive releases of the SEC under
federal securities laws are also sources of authoritative U.S. GAAP for
registrants. The discussion below includes the applicable ASC
reference.
The
Company adopted ASC Topic 810-10 “Consolidation” (formerly SFAS
No. 160, “Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51”) effective January 2, 2009. Topic 810-10 changes the manner of
presentation and related disclosures for the noncontrolling interest in a
subsidiary (formerly referred to as a minority interest) and for the
deconsolidation of a subsidiary. The adoption of these sections did not have a
material impact on the Company’s condensed consolidated financial
statements.
ASC Topic
815-10 “Derivatives and
Hedging” (formerly SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”) was adopted by the Company effective
January 2, 2009. The guidance under ASC Topic 815-10 changes the manner of
presentation and related disclosures of the fair values of derivative
instruments and their gains and losses.
In April
2009, the FASB issued an update to ASC Topic 820-10, “Fair Value Measurements and
Disclosures” (“ASC 820-10) (formerly FASB Staff Position No. SFAS 157-4,
“Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly”). The
standard provides additional guidance on estimating fair value in accordance
with ASC 820-10 when the volume and level of transaction activity for an asset
or liability have significantly decreased in relation to normal market activity
for the asset or liability have significantly decreased and includes guidance on
identifying circumstances that indicate if a transaction is not orderly. The
Company adopted this pronouncement effective April 1, 2009 with no impact on its
condensed consolidated financial statements.
In April
2009, the FASB issued FSP SFAS No. 107-1, “Disclosures about Fair Value of
Financial Instruments” (“ASC 825-10”). ASC 825-10 requires fair value of
financial instruments disclosure
for interim reporting periods of publicly traded companies as well as in annual
financial statements. ASC 825-10 is effective for interim periods ending after
June 15, 2009 and was adopted by the Company in the second quarter of 2009.
There was no material impact to the Company’s condensed consolidated financial
statements as a result of the adoption of ASC 825-10.
In April
2009, the FASB issued FSP APB No. 28-1, “Interim Financial Reporting”
(“ASC 825-10”). ASC 825-10 requires the fair value of financial
instruments disclosure in summarized financial
information at interim reporting periods. ASC 825-10 is effective for interim
periods ending after June 15, 2009 and was adopted by the Company in the second
quarter of 2009. There was no material impact to the Company’s condensed
consolidated financial statements as a result of the adoption of ASC
825-10.
- 11
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 4 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
l
|
Recent
accounting pronouncements
(cont.)
|
The
Company adopted, ASC Topic 855-10, “Subsequent Events” (formerly
SFAS 165, “Subsequent
Events”) effective April 1, 2009. This pronouncement changes the general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.
In June
2009, the FASB finalized SFAS No. 167, “Amending FASB interpretation No.
46(R)”, which was included in ASC Topic 810-10-05 “Variable Interest Entities”.
The provisions of ASC Topic 810-10-05 amend the definition of the primary
beneficiary of a variable interest entity and will require the Company to make
an assessment each reporting period of its variable interests. The provisions of
this pronouncement are effective January 1, 2010. The Company is evaluating the
impact of the statement on its consolidated financial statements.
In July
2009, the FASB issued SFAS No. 168, “The Hierarchy of Generally Accepted
Accounting Principles”. SFAS 168 codified all previously issued
accounting pronouncements, eliminating the prior hierarchy of accounting
literature, in a single source for authoritative U.S. GAAP recognized by the
FASB to be applied by nongovernmental entities. SFAS 168, now ASC Topic 105-10
“Generally Accepted Accounting
Principles”, is effective for financial statements issued for interim and
annual periods ending after September 15, 2009. The adoption of this
pronouncement did not have an effect on the Company’s condensed consolidated
financial statements.
In August
2009, the FASB issued an update of ASC Topic 820, “Measuring Liabilities at Fair Value
”. The new guidance provides clarification that in circumstances in which
a quoted price in an active market for the identical liability is not available,
a reporting entity is required to measure fair value using prescribed
techniques. The Company adopted the new guidance in the third quarter of 2009
and it did not materially affect the Company’s financial position and results of
operations.
In
October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13,
“Revenue Recognition (Topic
605): Multiple-Deliverable Revenue Arrangements (a consensus of the FASB
Emerging Issues Task Force)” which amends ASC 605-25, “Revenue Recognition:
Multiple-Element Arrangements.” ASU No. 2009-13 addresses how to
determine whether an arrangement involving multiple deliverables contains more
than one unit of accounting and how to allocate consideration to each unit of
accounting in the arrangement. This ASU replaces all references to fair value as
the measurement criteria with the term selling price and establishes a hierarchy
for determining the selling price of a deliverable. ASU No. 2009-13 also
eliminates the use of the residual value method for determining the allocation
of arrangement consideration. Additionally, ASU No. 2009-13 requires expanded
disclosures. This ASU will become effective for us for revenue arrangements
entered into or materially modified on or after April 1, 2011. Earlier
application is permitted with required transition disclosures based on the
period of adoption. The Company is currently evaluating the application date and
the impact of this standard on its condensed consolidated financial
statements.
NOTE 5 -
AMOUNT DUE TO A SHAREHOLDER
As of
September 30, 2009 and December 31, 2008, the amounts of $1,756,127 and
$1,094,211 represented temporary advances for working capital purposes from a
major shareholder, Mr. Samuel Tsun, which were unsecured, interest free and has
no fixed terms of repayment.
NOTE 6 -
STOCKHOLDERS’ EQUITY
On May
15, 2009, the Company approved the 1 for 100 reverse split of its common stock.
All common stock and per share data for all periods presented in these financial
statements have been restated to give effect to the reverse stock
split.
Immediately
following completion of reverse stock split, the Company had a total of
1,996,081 shares of its common stock issued and outstanding as of September 30,
2009.
- 12
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 7 -
INCOME TAXES
The
Company generated an operating loss for the period ended September 30, 2009 and
did not record income tax expense. The Company has operations in various
countries and is subject to tax in the jurisdictions in which they operate, as
follows:
United
States of America
UOLI is
registered in the State of Nevada and is subject to the tax laws of United
States of America and has no operation for the period ended September 30,
2009.
British
Virgin Island
Under the
current BVI law, the Company’s subsidiary, PCL is not subject to tax on
income.
Hong
Kong
The
Company’s subsidiary, Uonlive is subject to Hong Kong Profits Tax at the
statutory rate of 16.5% on its assessable income for the period ended September
30, 2009 and December 31, 2008, respectively. For the period ended September 30,
2009, Uonlive incurred an operating loss of $574,373 for income tax
purposes.
For the
nine months ended September 30, 2009, the Company has provided for a valuation
allowance of $231,838 against the deferred tax assets of $231,838 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. The valuation allowance is increased by $105,606,
primarily relating to net operating loss carryforwards from the foreign tax
regime.
NOTE 8 -
RELATED PARTY TRANSACTIONS
(a) Accounts
receivable and sales – related company
For the
nine months ended September 30, 2009 and 2008, the Company earned sales revenue
of $11,609 and $11,541, respectively, from Dbtronix (Far East) Ltd., which was
controlled by Mr. Samuel Tsun, a director and a major shareholder of the Company
in a normal course of business.
As of
September 30, 2009 and December 31, 2008, accounts receivable from a related
party was amounted to $3,871 and $3,871, respectively.
(b) Amounts
due to a shareholder
As of
September 30, 2009 and December 31, 2008, the balance due to a shareholder
totaling $1,756,127 and $1,094,211, respectively, represented temporary advance
for working capital purpose, which was unsecured, interest free and had no fixed
repayment term.
(c) Note
payable to a shareholder
As of
September 30, 2009 and December 31, 2008, the balance due to a shareholder is
$167,705 and $167,698, respectively, which was unsecured, interest free and had
no fixed repayment term.
(d) IT
service cost paid to a related company
For the
nine months ended September 30, 2009 and 2008, the Company paid IT service cost
of $25,541 and $9,489, respectively to the related company, which was controlled
by Mr. Samuel Tsun, a director of the Company at the current market value in a
normal course of business.
(e) Rent
charge paid to a related company
For the
nine months ended September 30, 2009 and 2008, the Company paid rent charge of
$65,786 and $57,704, respectively to the related company, which was controlled
by Mr. Samuel Tsun, a director of the Company at the current market value in a
normal course of business.
- 13
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 9 -
CONCENTRATIONS OF RISK
The
Company is exposed to the following concentrations of risk:
(a) Major
customers
For the
three months ended September 30, 2009 and 2008, customers who account for 10% or
more of the Company’s 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
|
$ | 3,870 | 50% | $ | 3,871 | ||||||
|
Customer
D
|
3,870 | 50% | 11,612 | ||||||||
|
Total:
|
$ | 7,740 | 100% | $ | 15,483 | ||||||
|
Three
months ended September 30, 2008
|
September
30, 2008
|
||||||||||
|
Revenue
|
Percentage
of
revenue
|
Accounts
receivable
|
|||||||||
|
Customer
A
|
$ | 3,847 | 50% | $ | 3,861 | ||||||
|
Customer
C
|
3,846 | 50% | 3,861 | ||||||||
|
Total:
|
$ | 7,693 | 100% | $ | 7,722 | ||||||
For the
nine months ended September 30, 2009 and 2008, customers who account for 10% or
more of the Company’s revenues and their outstanding balances as at period-end
dates, are presented as follows:
|
Nine
months ended September 30, 2009
|
September
30, 2009
|
||||||||||
|
Revenue
|
Percentage
of
revenue
|
Accounts
receivable
|
|||||||||
|
Customer
A
|
$ | 11,609 | 43% | $ | 3,871 | ||||||
|
Customer
D
|
11,609 | 43% | 11,612 | ||||||||
|
Total:
|
$ | 23,218 | 86% | $ | 15,483 | ||||||
|
Nine
months ended September 30, 2008
|
September
30, 2008
|
||||||||||
|
Revenue
|
Percentage
of
revenue
|
Accounts
receivable
|
|||||||||
|
Customer
A
|
$ | 11,541 | 50% | $ | 3,861 | ||||||
|
Customer
B
|
7,694 | 33% | - | ||||||||
|
Customer
C
|
3,847 | 17% | 3,861 | ||||||||
|
Total:
|
$ | 23,082 | 100% | $ | 7,722 | ||||||
(b) Major
vendors
For the
three and nine months ended September 30, 2009 and 2008, there is no vendor who
accounts for 10% or more of the Company’s purchases.
- 14
-
UONLIVE
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 9 -
CONCENTRATIONS OF RISK (CONT.)
(c) Credit
risk
Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers’ financial
condition, but does not require collateral to support such
receivables.
(d) Exchange
rate risk
The
Company cannot guarantee that the current exchange rate will remain steady;
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of the fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of HK$ converted
to US$ on that date. The exchange rate could fluctuate depending on changes in
political and economic environments without notice.
NOTE 10 -
COMMITMENTS AND CONTINGENCIES
(a) Operating
lease commitments
The
Company rented office spaces under a non-cancelable operating lease agreement in
Hong Kong for periods of 3 years, with fixed monthly rentals, expiring in March
2011. Costs incurred under these operating leases are recorded as rental expense
and totaled approximately $72,400 and $57,704 for the nine months ended
September 30, 2009 and 2008.
As of
September 30, 2009, the future minimum annual operating lease payments are as
follows:
|
Periods
ending September 30:
|
||||
|
2010
|
$ | 95,215 | ||
|
2011
|
46,449 | |||
|
Total
|
$ | 141,664 | ||
(b) Royalty
fee commitments
The
Company is committed to pay an annual fee to the Composers and Authors Society
of Hong Kong Limited for music playing right on its net radio portal with a term
of 2 years, expiring December 31, 2010. As of September 30, 2009, the Company
has future minimum contingent payment of $11,612 in the next 12
months.
NOTE 11 -
COMPARATIVE FIGURES
Certain
amounts in the prior periods presented have been reclassified to conform to the
current period financial statement presentation.
NOTE 12 -
SUBSEQUENT EVENTS
The
Company evaluated subsequent events through November 13, 2009, the date the
financial statements were issued, and there were no subsequent events which
impacted the Company’s financial position or results of operations as of
September 30, 2009 or which required disclosure.
- 15
-
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, 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.
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 will 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.
Currently Uonlive 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.
- 16
-
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
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.
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 planned to have eight banners
this year 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 the unaudited
consolidated Financial Statements of the Company for the three-months’ and
nine-months’ periods ended September 30, 2009 and 2008 and related notes
thereto.
THREE-MONTH
PERIOD ENDED SEPTEMBER 30, 2009 COMPARED TO THREE-MONTH PERIOD ENDED SEPTEMBER
30, 2008
Operating
Revenue
We
recorded a total of $7,740 consolidated revenue for the three-month period ended
September 30, 2009 compared to $7,693 for the same corresponding period in 2008.
The revenue is about the same as the same corresponding period in
2008. The consolidated gross loss for the three-month period ended
September 30, 2009 recorded at $2,188, which accounted for -28.27% of total
revenue, or a decrease of 134.8%, compared to a gross profit of $6,289 for the
same corresponding period in 2008.
Operating
Expenses
Operating
expenses for the three-month period ended September 30, 2009 decreased to
$203,177 from $345,319 in the corresponding period of 2008, or 2,625% of the
total revenue, which was mainly from general and administrative
expenses. The general and administrative expense included
approximately $53,200 of salaries expense and labor charge, approximately
$25,300 of rental expense, approximately $25,600 of consulting fees,
approximately $25,800 depreciation expenses, approximately $19,300 of
professional fees and approximately $50,900 of computer system maintenance
expense.
Impairment
and Depreciation
During
the three-month period ended September 30, 2009, we incurred $25,843 of
depreciation expenses and $0 of impairment charges relating to online radio
technology compared to $14,587 and $166,673 for the same corresponding period in
2008.
Net
Loss/Comprehensive Loss
We
incurred a net loss of $246,356 for the three-month period ended September 30,
2009, comparing to $339,030 for the corresponding period in the year
2008.
We
accounted for a minimum amount of comprehensive loss of $17 for the three-month
period ended September 30, 2009 comparing to a comprehensive loss
of $4,587 for the same corresponding period in the year of 2008,
which was due to foreign exchange gain.
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NINE-MONTH
PERIOD ENDED SEPTEMBER 30, 2009 COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER
30, 2008
Operating
Revenue
We
recorded a total of $26,740 consolidated revenue for the nine-month period ended
September 30, 2009 compared to $23,082 for the same corresponding period in
2008, an increase of 15.8%. The increase was mainly due to increased
sales to the customers and an increase in the number of clients.
Operating
Expenses
Operating
expenses for the nine-month period ended September 30, 2009 decreased by
$101,554 to $598,175, or 2,237% of the total revenue, which consisted of
approximately $3,700 for sales and marketing expenses or 14% of
revenue. Approximately $594,400 or 2,223% of revenue accounted for
general and administrative expenses, an increase of approximately $76,700
compared to the same corresponding period in 2008. The general and
administrative expenses included approximately $170,900 of salaries expense,
approximately $72,400 of rental expense, approximately $104,500 of consultancy
fees, approximately $82,300 of professional fees and approximately $88,600 of
computer system maintenance expense.
Impairment
and Depreciation
During
the reporting period, we incurred $0 impairment expenses and approximately
$55,380 for depreciation expenses.
Net
Loss/Comprehensive loss
We
incurred a net loss of approximately $642,200 for the period ended September 30,
2009, a decrease of approximately $35,800 from the corresponding period in the
year 2008. We accounted for a minimum comprehensive loss of approximately $191
for the period ended September 30, 2009 compared to a comprehensive loss of
$3,112 for the same corresponding period in the year of 2008.
LIQUIDITY
AND CAPITAL RESOURCES
During
the period ended September 30, 2009, net cash used in operating activities was
$555,983, which included a net loss of $642,204, use in depreciation of
approximately $55,384 and deferred tax expense of $40,991, and, which was offset
by an increase in accounts receivable of approximately $3,800 and the decrease
in accounts payable and accrued liabilities of approximately
$6,200. We accounted net cash used in investing activities of
$64,391, which was used to purchase plant and equipment. Net cash provided by
financing activities accounted for $661,916, which was an amount due to a
shareholder.
As of
September 30, 2009, we have incurred accumulated deficit of $1,827,298. The
continuation of our operation is dependent upon the continuing financial support
of our shareholders and generating significant revenue and achieving
profitability. The actions involve certain cost-saving initiatives and growing
strategies, including rapid promotion and marketing the radio program in the
Hong Kong and China. However, there is no assurance that we would be successful
in securing sufficient funds to sustain the operations.
ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit
Risk
Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers’ financial
condition, but does not require collateral to support such
receivables.
|
Exchange
Rate Risk
|
The
Company cannot guarantee that the current exchange rate will remain steady;
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of the fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of HK$ converted
to US$ on that date. The exchange rate could fluctuate depending on changes in
political and economic environments without notice.
ITEM
4 - CONTROLS AND PROCEDURES
The Chief
Executive Officer and Chief Financial Officer (the principal executive officer
and principal financial officer, respectively) of the Company have concluded,
based on their evaluation as of September 30, 2009, that the design and
operation of the Company's "disclosure controls and procedures" (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange
Act")) are effective to ensure that information required to be disclosed in the
reports filed or submitted by the Company under the Exchange Act is accumulated,
recorded, processed, summarized and reported to the management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.
During
the quarter ended September 30, 2009, there were no changes in the internal
controls of the Company over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, the internal controls of the Company over financial
reporting.
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ITEM
4T – INTERNAL CONTROL OVER FINANCIAL REPORTING
The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Securities Exchange Act of 1934, as amended). Management conducted an
evaluation of the effectiveness of the Company’s internal control over financial
reporting based on the criteria set forth in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management has concluded that the
Company’s internal control over financial reporting was effective as of
September 30, 2009.
There
were no changes in the Company's internal controls over financial reporting,
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, the Company's internal control
over financial reporting.
PART
II - OTHER INFORMATION
ITEM
6 - EXHIBITS
|
31.1
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934
|
|
31.2
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934
|
|
32.1
|
Certification
of the Company's Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of the Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350 Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
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SIGNATURES
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
13, 2009
|
/s/
Tsun Sin Man Samuel
|
|
Tsun
Sin Man Samuel
|
|
|
Chief
Executive Officer and Director
|
|
|
(Principal
Executive Officer)
|
|
|
November
13, 2009
|
/s/
Hui Chi Kit
|
|
Hui
Chi Kit
|
|
|
Chief
Financial Officer
|
|
|
(Principal
Financial and Accounting
Officer)
|
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