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EX-32.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350, AS ADOP - National Art Exchange, Inc.f10q0617_ex32-2tianheunion.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350, AS ADOP - National Art Exchange, Inc.f10q0617_ex32-1tianheunion.htm
EX-31.2 - CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE - National Art Exchange, Inc.f10q0617_ex31-2tianheunion.htm
EX-31.1 - CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE - National Art Exchange, Inc.f10q0617_ex31-1tianheunion.htm

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

☒  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the period ended June 30, 2017

 

☐  Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from ___________ to ___________.

 

Commission File Number 333-199967

 

TIANHE UNION HOLDINGS LIMITED

(Exact name of registrant as specified in its charter)

 

Nevada   47-1549749
(State or other jurisdiction of   (I.R.S. employer
Incorporation or organization)   identification number)

 

40 Wall Street, 28 Fl, Unit 2851

New York, NY 10005

(Address of principal executive offices and zip code)

 

+646-512-5855

(Registrant’s telephone number, including area code)

 

____________________________________________________ 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☐    No ☒

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer   Accelerated filer
Non-accelerated filer  (Do not check if a smaller reporting company) Smaller reporting company
      Emerging growth company 

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 14, 2017, the Company has 28,807,500  issued and outstanding shares of common stock, par value $0.001 per share.

 

 

 

 

 

 

TIANHE UNION HOLDINGS LIMITED

FORM 10-Q

 

INDEX

 

PART I. FINANCIAL INFORMATION 1
   
Item 1. Financial Statements 1
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
   
Item 4. Controls and Procedures 16
   
PART II. OTHER INFORMATION 17
   
Item 6. Exhibits 17

 

 

 

 

PART I. FINANCIAL INFORMATION 

 

Item 1. Financial Statements

 

Tianhe Union Holdings Limited

(formerly known as Lissome Trade Corp.)

Condensed Financial Statements

As of and for the three and nine month period ended June 30, 2017 and 2016

 

Content   Page
     
Report of Independent Registered Public Accounting Firm   2
     
Condensed Balance Sheets   3
     
Condensed Statements of Operations   4
     
Condensed Statements of Cash Flows   5
     
Notes to Condensed Financial Statements   6 - 12

 

 1 

 

 

 

To the Board of Directors and Stockholders of

Tianhe Union Holdings Limited

 

We have reviewed the condensed balance sheets of Tianhe Union Holdings Limited as of June 30, 2017 and September 30, 2016, and the condensed related statements of operations for the three and nine month periods ended June 30, 2017 and 2016, and the condensed statements of cash flows for the nine month periods then ended. These financial statements are the responsibility of the company’s management.

 

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

 

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the balance sheet of Tianhe Union Holdings Limited as of September 30, 2016, and the related statements of operation, comprehensive loss, stockholders’ deficiency, and cash flows for the year then ended (not presented herein); and in our report dated April 28, 2017, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of September 30, 2016, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had incurred substantial losses in previous years, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also describe in Note 2. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

San Mateo, California WWC, P.C.
August 14, 2017 Certified Public Accountants

 

 2 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Condensed Balance Sheets

As of June 30, 2017 and September 30, 2016

(Unaudited)

(Stated in U.S. Dollars)

 

   (Unaudited)     
   June 30,   September 30, 
   2017   2016 
ASSETS        
         
Current assets        
Cash and cash equivalents  $49,304   $241,949 
Total assets  $49,304   $241,949 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY          
           
Current liabilities          
Related party payable  $-   $410,200 
Accrued liabilities   -    3,481 
Total liabilities   -    413,681 
           
Stockholders’ deficiency          
Common stock, $0.001 par value, 75,000,000 shares authorized; 28,807,500 shares issued and outstanding at June 30, 2017 and September 30, 2016, respectively.   28,808    28,808 
 Additional paid-in capital   95,837,317    95,427,117 
 Accumulated deficit   (95,816,821)   (95,627,657)
Total stockholders’ deficiency   49,304    (171,732)
           
Total liabilities and stockholders’ deficiency  $49,304   $241,949

  

See Accompanying Notes to the Financial Statements and Accountant’s Report

 

 3 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Condensed Statements of Operations

For the three and nine months period ended June 30, 2017 and 2016

(Unaudited)

(Stated in U.S. Dollars)

 

   Three months ended   Nine months ended 
   June 30,   June 30, 
   2017   2016   2017   2016 
                 
Revenue  $-   $-   $-   $- 
                     
General and administrative expenses   64,972    94,945    189,164    131,823 
                     
Loss from operations   (64,972)   (94,945)   (189,164)   (131,823)
                     
Other income/(expenses)   -    -    -    (95,423,625)
                     
Income/(loss) before income tax   (64,972)   (94,945)   (189,164)   (95,555,448)
                     
Income tax   -    -    -    - 
                     
Net income/(loss)  $(64,972)  $(94,945)  $(189,164)  $(95,555,448)
                     
Income/ (loss) per share                    
-Basic  $(0.00)  $(0.00)  $(0.01)  $(5.96)
-Diluted  $(0.00)  $(0.00)  $(0.01)  $(5.96)
                     
Weighted average number of shares                    
-Basic   28,807,500    28,807,500    28,807,500    16,026,447 
-Diluted   28,807,500    28,807,500    28,807,500    16,026,447 

 

See Accompanying Notes to the Financial Statements and Accountant’s Report

 

 4 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Condensed Statements of Cash Flows

For the nine month periods ended June 30, 2017 and 2016

(Unaudited)

(Stated in U.S. Dollars)

 

   For the
nine month period ended
   For the
nine month period ended
 
   June 30,   June 30, 
   2017   2016 
         
Cash flows used from Operating Activities        
Net loss  $(189,164)  $(95,555,448)
Adjustments to reconcile net income to cash generated by operating activities:          
Investment loss   -    95,423,625 
Changes in operating assets and liabilities          
Decrease in accrued liability   (3,481)   - 
Cash flows used in operating activities   (192,645)   (131,823)
           
Cash flows from Financing Activities          
Advance from related party   -    380,023 
Cash flows provided by financing activities   -    380,023 

 

(Decrease) Increase in cash and cash equivalents

   (192,645)   248,200 
Cash and cash equivalents – Beginning of period   241,949    30,167 
Cash and cash equivalents – End of period  $49,304   $278,367 
           
Non-Cash Financing Activity          
Issuance of stocks  $-   $19,278 
Increases in additional paid in capital  $-   $95,404,348 
Waiver of debt by related party  $410,200   $- 

 

See Accompanying Notes to the Financial Statements and Accountant’s Report

 

 5 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

1. NATURE OF OPERATION AND ORGANIZATION HISTORY

 

Tianhe Union Holdings Limited (the “Company”) was incorporated in Nevada on May 9, 2014. The Company currently does not have any operations.

 

Reverse Merger and Share Exchange Agreement

 

On March 30, 2015, the Company contemplated a Share Exchange Agreement (the “Share Exchange Agreement”) by and among GLOBAL INTERNATIONAL HOLDINGS LTD. (“BVI1”), a British Virgin Islands corporation, its wholly owned subsidiary GLOBAL TECHNOLOGY CO., LTD. (“BVI2”), a British Virgin Islands corporation, which owns 100% of HUATIAN GLOBAL LIMITED (“HGL”), a Hong Kong corporation, which owns 100% of TIANHE GROUP (HK) LIMITED (“THGL”), a Hong Kong corporation, which owns 100% of JIERUN CONSULTING MANAGEMENT CO., LTD. (“WFOE”) a foreign investment enterprise organized under the laws of the People’s Republic of China (“PRC”), which had entered into various contractual agreements known as variable interest entity (“VIE”) agreements with ANHUI AVI-TRIP TECHNOLOGY CO., LTD. (“Avi-Trip”), a corporation incorporated on October 15, 2014, under the laws of the PRC. The VIE agreements provide WFOE with management control and rights to the profits of Avi-Trip. The VIE agreements include: (1) an Exclusive Service Agreement by and between WFOE and Avi-Trip, entitling WOFE to receive substantially all of the economic benefits of Avi-Trip in consideration for services provided by WFOE to Avi-Trip; (2) a Call Option Agreement by and among the shareholders of Avi-Trip, Jie Wei Wei and Han Yanliang, allowing WFOE to acquire all of Avi-Trip’s shares as permitted by PRC law; (3) a Voting Rights Proxy Agreement providing WFOE with the all of the voting rights of Avi-Trip’s shareholders; and (4) an Equity Pledge Agreement pledging the shares in Avi-Trip to WFOE.

 

Pursuant to the contemplated Share Exchange Agreement, the Company issued to BVI1 and its designees 50,000,000 newly issued shares of the Company’s common stock, par value $.001 per share (“Common Stock”), and a note convertible into 150,000,000 shares of Common Stock as consideration for ownership in BVI2 and its subsidiaries HGL, THGL, WFOE, and the VIE agreements between WFOE and Avi-Trip.

 

As of December 31, 2015, Avi-Trip had registered and paid in capital of $8,188,707 (RMB 50,000,000). Zhihui Chen was its authorized representative. Avi-Trip provided business to business software platform for travel agents to transact flight tickets and book hotel rooms. As of the date of this report, Avi-Trip had ceased operations.

 

BVI1 never instructed the secretary and authorized agent to effectuate a change of registered shareholder of BVI2 from BVI1 being the sole shareholder to the Company being the sole shareholder. Additionally, the Company was unable to exercise control over BVI2, HGL, THGL, WFOE, and Avi-Trip subsequent to the execution of the Share Exchange Agreement. Furthermore, the Company was neither able to secure substantive control over the use and disposition of the assets of BVI2, HGL, THGL, WFOE and Avi-Trip nor exercise control over the accounting and finance department of BVI2, HGL, THGL, WFOE, and Avi-Trip in order to procure relevant financial information for financial reporting purposes; accordingly, the Company was unable to timely file Form 10-Qs for the quarters ended March 31, 2016, June 30, 2016, and December 31, 2016, March 31, 2017 and Form 10-K for the fiscal year ended September 30, 2016.

 

 6 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

Disposition and Loss

 

As a result of the Company’s inability to exercise control over Avi-Trip, on July 19, 2016, on the recommendation of the Company’s board of directors (the “Board”), a majority of holders of the Company’s Common Stock voted to terminate the VIE agreements between WFOE and Avi-Trip, the termination became effective August 29, 2016. The Company also will not pursue the Directors of BVI1 to effectuate the change of ownership of BVI2 from BVI to the Company. In connection with the termination of the VIE agreements, certain shareholders representing 30,722,500 shares of Common Stock, in connection with the share issuance pursuant to the Share Exchange Agreement, agreed to return their shares of Common Stock to the Company for cancellation and convertible note holders also agreed to return their notes to the Company for cancellation. Concurrently, Mr. Yang Jie resigned from his positions as Chairman of the Board, President and Chief Executive Officer of the Company. Ms. Weiwei Jie and Ms. Fengyu Yi also resigned as members of the Board, which resignations were made in connection with the Company’s termination of the VIE agreements.

 

For the 19,277,500 shares that were issued as part of the Share Exchange Agreement on March 30, 2016, and that were not returned to the Company for cancellation, valued at $4.95 per share, the closing price of the Company stock on March 30, 2016, an amount of $95,423,625 was accounted for by the Company as a loss related to the contemplated share exchange transaction; Company management has determined that it should account for the loss during the quarter ended March 31, 2016, although the termination of the agreement became effective on August 29, 2016, subsequent to the end of that reporting period. The Company believes that this was a material subsequent event that affected the presentation of the Company’s financial position at March 31, 2016, and that required a retroactive adjustment to its financial statements for that reporting period.

 

As of the date of this report, 28,807,500 shares of Common Stock and the note convertible into 150 million shares of Common Stock in connection with the Share Exchange Agreement have been returned and cancelled.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

  (a) Method of Accounting

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission.

 

  (b) Development Stage Company

 

The Company is a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification. The Company is devoting substantially all of its efforts on establishing its business and its planned principal operations have not yet commenced. All losses accumulated since inception have been considered to be part of the Company’s development stage activities.

 

The Company has elected to adopt the early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. Subsequent to adoption, the Company no longer presents or discloses inception-to-date information and other remaining disclosure requirements of Topic 915.

  

 7 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

  (c) Going Concern

 

The financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since its inception on May 9, 2014, resulting in an accumulated deficit of $95,816,821 as of June 30, 2017 and further losses may be incurred during the continued development of its business. Accordingly, there is substantial doubt regarding the Company’s ability to continue as a going concern.

 

The ability to continue as a going concern is dependent upon the Company generating profitable operations, making investments with positive returns in the future, and/or obtaining the financing necessary to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or the private placement of Common Stock.

 

  (d) Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

  (e) Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

 

The Company’s bank accounts are deposited in insured institutions. The funds are insured up to $250,000. As of June 30, 2017 the Company’s bank deposits did not exceed the insured amounts.

 

  (f) Basic and Diluted Income (Loss) Per Share

 

The Company computes loss per share in accordance with ASC-260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to holders of our Common Stock by the weighted average number of outstanding shares of Common Stock during the period. Diluted loss per share gives effect to all dilutive potential shares of Common Stock outstanding during the period. Dilutive loss per share excludes all potential issuances of shares of Common Stock if their effect is anti-dilutive. Except for the note that is convertible into 150 million shares of the Company’s Common Stock, there were no potentially dilutive debt or equity securities outstanding during the period from the inception (May 9, 2014) of the Company through June 30, 2017.

 

 8 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

  (g) Dividends

  

The Company has not adopted any policies regarding payment of dividends. No dividends have been paid during any of the reported periods.

  

  (h) Impairment of Long-Lived Assets

 

The Company, when applicable, continually monitors events and changes in circumstances that could indicate that carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

  (i) Revenue Recognition

 

The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. No revenue has been earned since the inception.

 

  (j) Stock-Based Compensation

 

Stock-based compensation is accounted for at fair value in accordance with ASC 718, when applicable. To date, the Company has not adopted a stock option plan and has not granted any stock options.

 

As of June 30, 2017, the Company has not issued any stock-based payments to its employees.

 

  (k) Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes.  Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences).  The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

  (l) Comprehensive income

 

The Company uses FASB ASC Topic 220, “Reporting Comprehensive Income”. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. For the periods presented, the Company does not have any item that is required to be presented as a component of comprehensive income. As a result, a statement of comprehensive income is not required to be presented.

 

 9 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

  (m) Unaudited Interim Financial Information

 

These unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending September 30, 2017.

 

The balance sheets and certain comparative information as of September 30, 2016 are derived from the audited financial statements and related notes for the year ended September 30, 2016 (“2016 Annual Financial Statements”), included in the Company’s 2016 Annual Report on Form 10-K. These unaudited interim condensed financial statements should be read in conjunction with the 2016 Annual Financial Statements.

 

  (n) Recent accounting pronouncements

 

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. The amendments in ASU 2015-17 eliminate the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments in the ASU are effective for public business entities for financial statements issued for annual periods beginning after December 15, 2016, and for interim periods within those annual periods. The amendments may be applied prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.

 

On January 5, 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”, which amends U.S. GAAP guidance on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments.

 

On March 15, 2016, the FASB issued ASU 2016-07 “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting”, which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. Consequently, when an investment qualifies for the equity method (as a result of an increase in the level of ownership interest or degree of influence), the cost of acquiring the additional interest in the investee would be added to the current basis of the investor’s previously held interest and the equity method would be applied subsequently from the date on which the investor obtains the ability to exercise significant influence over the investee. The ASU further requires that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity method.

  

The guidance in the ASU is effective for all entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years; early adoption is permitted for all entities. Entities are required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the ASU’s effective date. Additional transition disclosures are not required upon adoption.

 

 10 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017.

 

The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and it does not believe that 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.

 

3. RELATED PARTY TRANSACTIONS

 

A certain former director of the Company was owed $8,542 at September 30, 2015; however, the Company underwent a change of control when majority ownership was transferred to a new majority shareholder. Pursuant to the agreement between the previous majority shareholder and new majority shareholder, the previous majority shareholder would assume all obligations owed by the Company up until the date of the ownership is transferred, including payables owed to the former director. Accordingly, the debt owed to the former director was written off and the Company recognized a one-time gain of $8,542, which is included as gain on change of control in the Company’s results of operations during the year ended September 30, 2015.

 

As of December 31, 2016, another former director had advanced funds in the total amount of $410,200 to the Company to fund general corporate activities. The advances were non-interest bearing, due upon demand and unsecured. On December 31, 2016, the former director agreed to waive his creditor’s right against the company in the full amount of $410,200. Accordingly, the debt owed to the former director was credited to the Company’s additional paid in capital.

 

4. COMMON STOCK

 

The Company has authorized capital of 75,000,000 shares of Common Stock, par value of $ 0.001 per share. In August 2014, the Company issued 5,000,000 shares of Common Stock at $0.001 per share for total proceeds of $5,000. On September 5, 2014, the Company issued 2,000,000 shares of Common Stock at $0.001 per share for total proceeds of $2,000. In February and March 2015, the Company issued 2,530,000 shares of Common Stock at $0.01 per share for total proceeds of $25,300.

 

On March 30, 2016, the Company issued 50,000,000 shares of Common Stock in connection with the acquisition as discussed in Note 1, and subsequently 30,277,500 were cancelled.

 

As of June 30, 2017, the Company had 28,807,500 shares of Common Stock issued and outstanding.

 

 11 

 

 

Tianhe Union Holdings Limited

(f/k/a Lissome Trade Corp.)

Notes to Condensed Financial Statements

 

5. INCOME TAX

 

The Company is subject to US Federal tax laws. The Company has not recognized an income tax benefit for its operating losses based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. Further, the benefit from utilization of NOL carryforwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.

 

As of June 30, 2017, and September 30, 2016, the Company has accumulated net losses of $95,816,821 and $95,627,657, respectively. The deferred tax assets will begin to expire in 2025. A significant portion of these losses were related to stock issuances. The Company will assess the deductibility of such losses.

 

The net losses before income taxes and its provision for income taxes as follows:

 

Deferred tax asset is calculated based on the statutory average rate of 34%. A 100% valuation was taken as the realization of the NOL is more likely than not.

  

6. INCOME/(LOSS) PER SHARE

 

For the periods presented, there is no dilutive securities that could potentially dilute loss per shares that is not included in the computation because the effect was antidilutive.

 

7. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from June 30, 2017, through the date the financial statements were available to be issued and has determined that there were no subsequent events after June 30, 2017 which disclosure is required.

 

 12 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements”. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,”“estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

General

 

Tianhe Union Holdings Limited, formerly known as Lissome Trade Corp., was incorporated in the State of Nevada on May 9, 2014. We were formed to engage in the distribution of metal cookware made from stainless steel from China to the markets of Europe and Commonwealth of Independent States (CIS) countries. In connection with a change of control transaction that closed on August 28, 2015, we appointed a new executive management team and changed our planned business operations. On March 30, 2016, the Company, GLOBAL INTERNATIONAL HOLDINGS LTD. (“BVI1”), a British Virgin Islands corporation, its wholly owned subsidiary GLOBAL TECHNOLOGY CO., LTD. (“BVI2”), a British Virgin Islands corporation entered into and consummated the Share Exchange Agreement pursuant to which BVI1 (its sole director, who has the voting and dispositive power of the shares of BVI1 is CHOW, Chun Yu Leeds), as the sole shareholder of BVI2, received 50,000,000 newly issued shares of the Company’s Common Stock (84.0% upon the completion of the Share Exchange) and a convertible note issued convertible into 150,000,000 shares of Common Stock upon the Company’s completion of its increase of the authorized shares by June 30, 2016, in exchange for its ownership in BVI2 and its subsidiaries and the control over Avi-Trip formed by the VIE Agreements entered into by and between WFOE and Avi-Trip. BVI2 owns 100% of HUATIAN GLOBAL LIMITED (“HGL”), a Hong Kong corporation, which owns 100% of TIANHE GROUP (HK) LIMITED (“THGL”), a Hong Kong corporation, which owns 100% of JIERUN CONSULTING MANAGEMENT CO., LTD. (“WFOE”) a foreign investment enterprise organized under the laws of the People’s Republic of China (“PRC”), which had entered into various contractual agreements known as variable interest entity (“VIE”) agreements with ANHUI AVI-TRIP TECHNOLOGY CO., LTD. (“Avi-Trip”), a corporation incorporated on October 15, 2014, under the laws of the PRC. The VIE agreements provide WFOE with management control and rights to the profits of Avi-Trip. The VIE agreements include: (1) an Exclusive Service Agreement by and between WFOE and Avi-Trip, entitling WOFE to receive substantially all of the economic benefits of Avi-Trip in consideration for services provided by WFOE to Avi-Trip; (2) a Call Option Agreement by and among the shareholders of Avi-Trip, Jie Wei Wei and Han Yanliang, allowing WFOE to acquire all of Avi-Trip’s shares as permitted by PRC law; (3) a Voting Rights Proxy Agreement providing WFOE with the all of the voting rights of Avi-Trip’s shareholders; and (4) an Equity Pledge Agreement pledging the shares in Avi-Trip to WFOE.

 

BVI1 never instructed the secretary and authorized agent to effectuate a change of registered shareholder of BVI2 from BVI1 being the sole shareholder to the Company being the sole shareholder. Additionally, the Company was unable to exercise control over BVI2, HGL, THGL, WFOE, and Avi-Trip subsequent to the execution of the Share Exchange Agreement. Furthermore, the Company was neither able to secure substantive control over the use and disposition of the assets of BVI2, HGL, THGL, WFOE and Avi-Trip nor exercise control over the accounting and finance department of BVI2, HGL, THGL, WFOE, and Avi-Trip in order to procure relevant financial information for financial reporting purposes; accordingly, the Company was unable to timely file Form 10-Qs for the quarters ended March 31, 2016, June 30, 2016, and December 31, 2016, March 31, 2017 and Form 10-K for the fiscal year ended September 30, 2016.

 

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As a result of the Company’s inability to exercise control over Avi-Trip, on July 19, 2016, on the recommendation of the Company’s board of directors (the “Board”), a majority of holders of the Company’s Common Stock voted to terminate the VIE agreements between WFOE and Avi-Trip, the termination became effective August 29, 2016. The Company also will not pursue the Directors of BVI1 to effectuate the change of ownership of BVI2 from BVI to the Company. In connection with the termination of the VIE agreements, certain shareholders representing 30,722,500 shares of Common Stock, in connection with the share issuance pursuant to the Share Exchange Agreement, agreed to return their shares of Common Stock to the Company for cancellation and convertible note holders also agreed to return their notes to the Company for cancellation. Concurrently, Mr. Yang Jie resigned from his positions as Chairman of the Board, President and Chief Executive Officer of the Company. Ms. Weiwei Jie and Ms. Fengyu Yi also resigned as members of the Board, which resignations were made in connection with the Company’s termination of the VIE agreements.

 

As of the date of this report, 28,807,500 shares of Common Stock and the note convertible into 150 million shares of Common Stock in connection with the Share Exchange Agreement have been returned and cancelled.

 

As a result of the termination of the VIE agreement, we are currently a shell company.

 

GOING CONCERN

  

The independent auditors’ report accompanying our audited financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared based on the assumption that we will continue as a going concern, which assumption contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. The quarterly 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. Management believes that the continuing financial support from the existing shareholders will provide the additional cash to meet the Company’s obligations as they become due.

 

RESULTS OF OPERATIONS

 

Results of Operation for the three months ended June 30, 2017 compared with three months ended June 30, 2016

 

Total Revenue

 

We did not generate any revenue for the three months ended June 30, 2017. We generated revenue of $0 during the three months ended June 30, 2016. This was because there’s no operation.

 

Net Income 

 

Our net loss for the three months ended June 30, 2017 was $64,972 compared to $94,945 for the three months ended June 30, 2016. The decrease was caused by less G&A.

 

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During the three months ended June 30, 2017, we incurred general and administrative expenses and professional fees of $64,972. During the three months ended June 30, 2016, we incurred general and administrative expenses of $94,945. General and administrative and professional expenses were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting costs. The decrease was because there’s no operation. 

 

Results of Operation for the nine months ended June 30, 2017 compared with the nine months ended June 30, 2016

 

Total Revenue

 

We did not generate any revenue for the nine months ended June 30, 2017. We generated revenue of $0 during the six months ended June 30, 2016.

 

Net Income

 

Our net loss for the nine months ended June 30, 2017 was $189,164 compared to $95,555,448 for the nine months ended June 30, 2016. The decrease was caused by less other expense.

 

During the nine months ended June 30, 2017, we incurred general and administrative expenses and professional fees of $189,164. During the nine months ended June 30, 2016, we incurred general and administrative expenses of $131,823. General and administrative and professional expenses were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting costs. The decrease was because there’s no operation.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of June 30, 2017, we had a working capital surplus of $49,304compared to a working capital deficit of $171,732 as of September 30, 2016. As of June 30, 2017, our current assets were $49,304 compared to $241,949 as of September 30, 2016. As of June 30, 2016, our current liabilities were $0 compared to $413,681 as of September 30, 2016. Current liabilities were composed of related party payables of $410,200. 

 

Accumulated deficit increased from a deficit of $95,627,657 as of September 30, 2016 to a deficit of $95,816,821 as of June 30, 2017.

 

Cash Flows from Operating Activities

 

We have not generated positive cash flows from operating activities. For the nine months ended June 30, 2017, net cash flows used in operating activities was $192,645, consisting of decrease in accrued liability of $3,481.

 

Non-Cash Financing Activity

 

For the nine months ended June 30, 2017, Non-Cash Financing Activities was $410,200, consisting of $410,200 waiver of debt by related party.

 

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CRITICIAL ACCOUNTING POLICIES 

 

Our significant accounting policies are summarized in Note 2 of our financial statements included in this quarter report on Form 10-Q for the period ended June 30, 2017.  Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”).  GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported.  These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions.  We continue to monitor significant estimates made during the preparation of our financial statements.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

Please refer to Note 2(n) to Condensed Financial Statements for the period ended June 30, 2017. 

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

  

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

This Item is not applicable because we are a smaller reporting company.

 

Item 4. Controls and Procedures

 

a) Evaluation of disclosure controls and procedures

 

At the conclusion of the period ended June 30, 2017 we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our CEO and CFO concluded that as of June 30, 2017, our disclosure controls and procedures were effective and adequately designed to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our management, including our CEO and CFO, in a manner that allowed for timely decisions regarding required disclosure.

 

(b) Changes in internal controls

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. 

 

Item 1A. Risk Factors.

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

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

 

None. 

 

Item 3. Defaults Upon Senior Securities.

 

None. 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6.

Exhibits

 

The following exhibits are filed herewith:

 

Exhibit
No.
  Title of Document
     
31.1   Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
     
31.2   Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
     
32.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
     
32.2   Certification of Principal Financial Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: August 14, 2017 By: /s/ Qiliang Zheng
    Qiliang Zheng
    President, Chief Executive Officer, 
Chairman of the Board of Directors 
(principal executive officer)

 

Date: August 14, 2017 By: /s/ Ming Yi
    Ming Yi
    Chief Financial Officer
(principal financial officer and
principal accounting officer)

 

 

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