UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

 

FORM 10-Q/A

(Amendment #1) 

 

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

 

For the quarterly period ended March 31, 2017

 

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

 

For the transition period from ______ to _______

 

Commission File Number 000-53737

 

AJ GREENTECH HOLDINGS, LTD.

(Exact name of registrant as specified in its charter)

 

Nevada

(State of incorporation)

 

136-20 38th Ave. Unit 3G

Flushing, NY 11354

(Address of Principal Executive Offices)

_______________  

718-395-8706

(Issuer Telephone number)

_______________

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to besubmitted 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 theregistrant was required to submit and post such files).Yes  ☑  No 

 

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

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company  

 

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

At March 31, 2017, there were 58,985,937 shares of the registrant's common stock issued and outstanding.

 

     

 

EXPLANATORY NOTE  

Sino United Worldwide Consolidated Ltd., formerly known as AJ Greentech Holdings Ltd., is filing this Amendment No. 1 on Form 10-Q/A for the period ended March 31, 2017, to amend and restate financial statements and other financial information on the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission (the “SEC”) on May 16, 2017 (the “Original Filing”).

 

The purpose of this Amendment No. 1 on Form 10-Q/A is to amend the financial statements of the Company’s operating subsidiary that was not originally accounted for correctly in the initial filing of form 10Q.  For convenience and ease of reference, the Company is filing this Form 10-Q/A in its entirety with all applicable changes and unless otherwise stated, all information contained in this amendment is as of May 16, 2017, the filing date of the Original Filing. Except as stated herein, this Form 10-Q/A does not reflect events or transactions occurring after such filing date or modify or update those disclosures in the original Form 10-Q that may have been affected by events or transactions occurring subsequent to such filing date.

 

 

AJ GREENTECH HOLDINGS, LTD.

 

FORM 10-Q

 

March 31, 2017

 

INDEX

 

 

PART I-- FINA NCIAL INFORMATION

 

Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
Item 4. Control and Procedures 20

 

PART II-- OTHER INFORMATION

 

Item 1. Legal Proceedings 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures. 22
Item 5. Other Information. 22
Item 6. Exhibits 22
SIGNATURES 23

 

     

 

AJ Greentech Holdings, Ltd.

Index to the consolidated financial statements

 

Contents Page(s)
Unaudited Consolidated Balance Sheets at March 31, 2017 (Restated) and December 31, 2016 F-2
Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2017 (Restated) and 2016 F-3
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 (Restated) and 2016 F-4
Notes to the Consolidated Financial Statements (Restated) (Unaudited) F-5

 

 

  F- 1  

 

AJ Greentech Holdings, Ltd.
Consolidated Balance Sheets
(Unaudited)
         
     

March 31,

2017

     

December 31,

2016

 
ASSETS     (Restated)          
Current Assets                
Cash   $ 87,108     $ 254,432  
Short-term investments     428,631       403,617  
Accounts receivable, net     1,146,995       1,331,409  
Inventories     86,081       81,058  
Other current assets     12,628       1,031  
Total Current Assets     1,761,443       2,071,547  
                 
Property, plant and equipment, net     10,192       8,890  
Intangible Assets, net     135,777       146,142  
Other assets     15,305       14,412  
Total Assets   $ 1,922,717     $ 2,240,991  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current Liabilities                
Short-term loan   $ 388,922     $ 427,168  
Accounts payable     358,342       584,605  
Advances from customers     —         132,000  
Due to related parties     111,042       268,141  
Taxes payable     48,135       3,417  
Accrued expenses and other current liabilities     14,188       9,000  
Total Current Liabilities     920,629       1,424,331  
                 
Long term debt     425,895       433,457  
Total Liabilities     1,346,524       1,857,788  
                 
COMMITMENTS AND CONTINGENCIES                
                 
Stockholders' Equity                
Common stock, $0.001 par value, 394,500,000 shares authorized; 58,985,937 and 58,985,937 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively     58,986       58,986  
Additional paid-in capital     593,947       593,947  
Accumulated deficit     (806,145 )     (960,234 )
Accumulated other comprehensive income     729,405       690,504  
Total Stockholders' Equity     576,193       383,203  
Total Liabilities and Stockholders’ Equity   $ 1,922,717     $ 2,240,991  
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.

 

  F- 2  

 

AJ Greentech Holdings, Ltd.
Consolidated Statements of Comprehensive Income
(Unaudited)
         
    For the Three Months Ended
    March 31,
    2017 (Restated)   2016
Revenue   $ 834,487     $ 612,004  
Cost of revenue     540,203       511,915  
Gross profit     294,284       100,089  
                 
Operating expenses                
General and administrative     98,298       36,747  
Total operating expenses     98,298       36,747  
                 
Income from operations     195,986       63,342  
                 
Other income (expense):                
Interest income (expense), net     (6,879 )     (7,614 )
Total other income (expense)     (6,879 )     (7,614 )
                 
Income before income tax     189,107       55,728  
Income tax provision     35,018       —    
Net income     154,089       55,728  
                 
Other comprehensive income (loss)                
Foreign currency translation adjustment     38,901       15,799  
Comprehensive income   $ 192,990     $ 71,527  
                 
Earnings per share - Basic and Diluted   $ 0.00     $ 0.00  
Weighted average shares outstanding - Basic and Diluted     58,985,937       58,443,054  
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.

 

  F- 3  

 

AJ Greentech Holdings, Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
         
    For the Three Months Ended
    March 31,
    2017 (Restated)   2016
CASH FLOW FROM OPERATING ACTIVITIES                
Net income   $ 154,089     $ 55,728  
Adjustment to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization     13,387       —    
Change in operating assets and liabilities:                
Accounts receivable     261,079       (580,029 )
Inventories     —         (50,776 )
Other current assets     (11,279 )     11  
Accounts payable     (256,741 )     569,174  
Advances from customers     (132,000 )     —    
Taxes payable     43,531       (21,219 )
Accrued expenses and other current liabilities     5,188       1,787
Net cash provided by (used in) operating activities     77,254       (25,324 )
                 
CASH FLOW FROM INVESTING ACTIVITIES                
Short term investment     —         6,457  
Acquisition of office equipment     (1,253 )     —    
Net cash provided by (used in) investing activities     (1,253 )     6,457  
                 
CASH FLOW FROM FINANCING ACTIVITIES                
Proceeds from bank loans     —         109,302  
Repayment of bank loans     (96,972 )     (168,199 )
Repayment of related party loan     (157,875 )     —    
Net cash used in financing activities     (254,847 )     (58,897 )
                 
Effect of exchange rate changes on cash     11,522       15,686  
DECREASE IN CASH     (167,324 )     (62,078 )
Cash - beginning of period     254,432       291,832  
Cash - ending of period   $ 87,108     $ 229,754  
                 
Supplement disclosure information                
Cash paid for interest   $ 8,156     $ 7,614  
Cash paid for income taxes   $ 2,698     $ —    
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.

 

  F- 4  

 

AJ Greentech Holdings, Ltd.

 

March 31, 2017

 

Notes to the Consolidated Financial Statements

 

(Unaudited)

 

Note 1 – Organization and Basis of Presentation

 

AJ Greentech Holdings Ltd. is a Nevada corporation incorporated on August 30, 2006, under the name Gateway Certifications, Inc. On November 16, 2009, our corporate name was changed to American Jianye Greentech Holdings,Ltd. and on February 13, 2014, our corporate name was changed to AJ Greentech Holdings,Ltd.

 

From November 2009 until October 2013, through our China subsidiaries, we were engaged in design, marketing and distributing of alcohol base clean fuel that are designed to use less fossil fuel and have less pollution than traditional fuel.

 

On October 31, 2013, pursuant to agreements with one of our former directors, we transferred the stock in our China subsidiaries to the former director in exchange for cancellation of debt totaling $240,000. As a result of the transfer of the subsidiaries, we were no longer engaged in the China clean fuel business. We transferred the stock of the China subsidiaries because we felt that, it not our best interest to continue China clean fuel business as a result of our decreasing revenue, continued losses and inability to raise capital for our business.

 

On October 31, 2013, Chu Li An acquired, for nominal consideration, 8,000,000 shares of common stock from the director who acquired the subsidiaries and12,778,399 shares of common stock from The Chairman, who was also a director. On November 1, 2013, Chu Li An and the Company entered into a loan agreement pursuant to which the Chu Li An agreed to lend us $100,000 initially with future loan amount up to $1,000,000, for which we will issue our 6% demand promissory note in the principal amount of $100,000. As of March 31, 2017, the note has not been issued.

 

On November 18, 2013, we entered into agreement pursuant to which we issued to Chu Li An and her BVI company, our sole director and chief executive officer, 180,000,000 shares of common stock, in consideration of the cancellation of debt due to Chu Li An in the amount of $180,000.

 

On November 30, 2013, the Company entered into an agreement to acquire all of the issued and outstanding stock of Jin Chih International, Ltd., a Taiwan corporation, from its sole owner Chu Li An for five million shares of the Company’s common stock. As of March 31, 2017, the stock has not been issued.

 

As a result of the above transactions, we carry out the electronic products and general cargo trading and related consulting service business through our subsidiary named Jin Chih International, Ltd in Taiwan. We still plan to focus on providing greentech products outside of China in future. Even though the company has disposed China branches, the company's new management will continue to expand the current green energy and technology business in the United States and globally, at the same time to explore many other green and renewable energy such as solar, wind power, sea power by signing licensing agreement or joint venture with other research institutes.

 

Basis of presentation

 

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2017 and the results of operations and cash flows for the periods ended March 31, 2017 and 2016. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending December 31, 2017. The balance sheet on December 31, 2016 has been derived from the audited financial statements at that date.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2016 as included in our Annual Report on Form 10-K.  

 

Certain amounts have been reclassified to conform to current year presentation. 

  F- 5  

 

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

 

Segment Information

 

ASC 280 requires companies to report information about operating segment in interim and annual financial statements. It also requires segment disclosures about products and services geographic and major customers. The Company has determined that it does not have any separately reportable operating segments.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

 

Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any. Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.

 

Inventories

 

The Company values inventories, consisting of raw materials, packaging material and finished goods, at the lower of cost or net realizable value. Cost is determined on the first-in and first-out (“FIFO”) method for raw materials and packaging materials and the weighted average cost method for finished goods. The Company reduces inventories for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated net realizable value. Factors utilized in the determination of estimated net realizable value include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures, (iv)new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.

 

The Company evaluates its current level of inventories considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventories to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations. Other significant estimates include the allocation of variable and fixed production overheads. While variable production overheads are allocated to each unit of production on the basis of actual use of production facilities, the allocation of fixed production overhead to the costs of conversion is based on the normal capacity of the Company’s production facilities, and recognizes abnormal idle facility expenses as current period charges. Certain costs, including categories of indirect materials, indirect labor and other indirect manufacturing costs which are included in the overhead pools are estimated. The management of the Company determines its normal capacity based upon the amount of operating hours of the manufacturing machinery and equipment in a reporting period.

 

  F- 6  

 

Revenue Recognition

 

The Company’s revenue recognition policies are in compliance with ASC 605 (Originally issued as Staff Accounting Bulletin (SAB) 104). Revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Discounts provided to customers by the Company at the time of sale are recognized as a reduction in sales as the products are sold. Sales taxes are not recorded as a component of sales.

 

The Company derives its revenues from sales contracts with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed acknowledgement of receipt from the customers or a signed bill of lading from the third party trucking company and title transfers upon shipment, based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or contract and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.

 

The Company markets and distributes electronic products and general cargo for automobile use and follows Section 605-45-45 (formerly EITF 99-19) (“ASC Section 605-45-45”) of the FASB Accounting Standards Codification for revenue recognition to report revenue gross as a principal for its sales since the Company (1) acts as principal in the transaction, (2) takes title to the products, (3) has risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) does not act as an agent or broker (including performing services, in substance, as an agent or broker) with compensation on a commission or fee basis on its sales. The management of the Company determined that the Company should report revenue based on the gross amount billed to a customer when considering each of the following eight (8) indicators of gross revenue reporting listed in ASC Paragraph 605-45-45-4 through 605-45-45-14 as specified (1) The entity is the primary obligor in the arrangement — The Company signs a product sales agreement with its customer and represents in writing that the Company is responsible for fulfillment, including the acceptability of the product(s) or service(s) ordered or purchased by the customer; (2) The entity has general inventory risk (before customer order is placed or upon customer return); (3) The entity has latitude in establishing price — The Company has reasonable latitude, within economic constraints, to establish the exchange price with a customer for the product or service; (4) The entity changes the product or performs part of the service— The Company developed a method for blending the raw materials in its manufacturing process, through its proprietary technology, catalysts can be mixed with fuel and alcohols to become a finished product to be sold after pumping and piping; (5) The entity has discretion in supplier selection — The Company has multiple suppliers for the products ordered by a customer and discretion to select the supplier that will provide the product(s) or service(s) ordered by a customer; (6) The entity is involved in the determination of product or service specifications — The Company determines the nature, type, characteristics, or specifications of the product(s) or service(s) ordered by the customer; (7) The entity has physical loss inventory risk of purchased inventories after customer order; and (8) The entity has credit risk — The Company is responsible for collecting the sales price from its customer but must pay the amount owed to its supplier after the supplier performs, regardless of whether the sales price is fully collected.

 

Net sales of products represent the invoiced value of goods, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on all of the Company’s products at the rate of 5% on the invoiced value of sales. Sales or Output VAT is borne by customers in addition to the invoiced value of sales and Purchase or Input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

 

Fair Value of Financial Instruments

 

The fair values of the Company’s accrued expenses and other current liabilities approximate their carrying values due to the relatively short maturities of these instruments. The carrying value of the Company’s short and long term debt approximates fair value based on management’s best estimate of the interest rates that would be available for similar debt obligations having similar terms at the balance sheet date.

 

Impairment of Long-Lived Assets

 

The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 360, Property, Plant and Equipment. The Company periodically evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset were less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

 

The assumptions used by management in determining the future cash flows are critical. In the event these expected cash flows are not realized, future impairment losses may be recorded.

 

  F- 7  

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.

 

The Company adopted ASC 740-10-25, Income Taxes- Overall-Recognition, on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.

 

Net Income (Loss) per Share

 

The Company calculates its basic and diluted earnings per share in accordance with ASC 260. Basic earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share are calculated by adjusting the weighted average outstanding shares to assume conversion of all potentially dilutive warrants and options and convertible securities.

 

Translation Adjustment

 

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

 

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

 

Average Rate for the three months ended on: March 31, 2017 March 31, 2016
Taiwan dollar (TWD) 1 1
United States dollar ($) 0.0322 0.0302
     
Exchange Rate at March 31, 2017 March 31, 2016
Taiwan dollar (TWD) 1 1
United States dollar ($) 0.0329 0.0310

 

Comprehensive Income (Loss)

 

Comprehensive income (loss) includes accumulated foreign currency translation gains and losses with respect to the spun-off entities and the operating entity in Taiwan.

 

Recently Issued Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

 

  F- 8  

 

Note 3 – Going Concern

 

The Company has limited cash and accumulated deficit as of March 31, 2017. In addition, the Company did not generate income and cash from its operation for the years ended December 31, 2016, 2015 and 2014. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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

 

  Note 4 – Accounts Receivable

 

Accounts receivable at March 31, 2017 and December 31, 2016 consisted of the following:

 

    March 31, 2017   December 31, 2016
    (Restated)    
Accounts receivable   $ 1,240,014     $ 1,418,999  
Allowance for doubtful accounts     93,019       87,590  
Total:   $ 1,146,995     $ 1,331,409  

 

In January 2017, the company has entered into a license and distribution agreement with Wealthy Link Technology Corporation, where the latter shall obtain license under the company’s software and related services for the purposes of re-selling and distribution. As of March 31, 2017, the accounts receivable balance from Wealthy Link Technology Corporation was $0.

 

Note 5 – Intangible Assets

 

On January 1, 2016, the Company purchased the DMS technology from Xinyahang Gufen Youxian Gongsi(“Xinyahang”) for $128,176 and 500,000 shares of common stock of AJGH (OTCQB). Also on October 1, 2016, the Company entered into two year agreement with Xinyahang to provide design service for the DMS system. The design price was approximately $53,000 (TWD 1,619,047).

 

Intangible assets, stated at cost, less accumulated amortization at March 31, 2017 and December 31, 2016 consisted of the following:

 

    March 31, 2017   December 31, 2016
    (Restated)    
  Intangible assets   $ 181,443     $ 178,348  
  Less: Accumulated amortization     (45,666 )     (32,206 )
  Total   $ 135,777     $ 146,142  

 

For the three months ended March 31, 2017 and 2016, the Company recorded amortization expense of $12,921 and $0, respectively.

 

  F- 9  

 

Note 6 – Property, Plant and Equipment

 

Property, plant and equipment, stated at cost, less accumulated depreciation at March 31, 2017 and December 31, 2016 consisted of the following:

 

    March 31, 2017   December 31, 2016
    (Restated)    
Office equipment   $ 11,300     $ 9,435  
Less: Accumulated depreciation     1,108       545  
Total:   $ 10,192     $ 8,890  

 

For the three months ended March 31, 2017 and 2016, the Company recorded depreciation expense of $466 and $0, respectively.

 

Note 7 – Other Current Assets

 

    March 31, 2017   December 31, 2016
    (Restated)    
Prepayments   $ 12,628     $ 1,031  
    $ 12,628     $ 1,031  

 

Note 8 – Borrowing

 

   

March 31,

2017

  Term   Int. Rate/Year
Cathy United Bank   $ 52,640       Mar. 19, 2017 to Nov. 18, 2017       3.11 %
Long term debt: amount payable within 1 year                        
First Commercial Bank Ltd.     36,580       Mar. 31, 2017 to Mar. 30, 2018       5.07 %
Taiwan Business Bank Ltd.     52,640       Mar. 26, 2017 to Mar. 25, 2018       3.60 %
Bank of Panshin     46,332       Mar. 11, 2017 to Mar. 10, 2018       3.67 %
Sunny Bank Ltd.     95,020       Mar. 22, 2017 to Jan. 21, 2018       3.49 %
Sunny Bank Ltd.     105,711       Mar. 6, 2017 to Mar. 5, 2018       3.49 %
Total   $ 388,923                  
                         
      December 31, 2016       Term       Int. Rate/Year  
Cathy United Bank   $ 59,791       Dec. 19, 2016 to Nov. 18, 2017       3.11 %
Long term debt: amount payable within 1 year                        
First Commercial Bank Ltd.     45,047       Dec. 31, 2016 to Dec. 30, 2017       5.07 %
Taiwan Business Bank Ltd.     56,260       Dec. 26, 2016 to Dec. 25, 2017       3.60 %
Bank of Panshin     45,829       Dec. 11, 2016 to Dec. 10, 2017       3.67 %
Sunny Bank Ltd.     107,309       Dec. 22, 2016 to Dec. 21, 2017       3.49 %
Sunny Bank Ltd.     112,932       Dec. 6, 2016 to Dec. 5, 2017       3.49 %
Total   $ 427,168                  

 

The long term debt should be repaid as equal principal by month. The long term debt -the term less than 1 year represented the amount should be repaid within 1 year.

 


Note 9 – Related Party Transactions

 

The total amount advance from related parties consisted of the advance from shareholders for the investment, working capital and the expense. The balance was $111,042 (Restated) and $268,141 as of March 31, 2017 and December 31, 2016, respectively.

 

  F- 10  

 

Note 10 – Long Term Debt

 

    March 31, 2017   Term   Int. Rate/
Year
Taiwan Business Bank Ltd.   $ 131,600     Mar. 26, 2018 to Sept 25, 2020.     3.60 %
Bank of Panshin     13,168     Mar. 11, 2018 to June 10, 2018.     3.67 %
Sunny Bank Ltd.     161,983     Mar. 6, 2018 to Aug. 5, 2019.     3.49 %
First Commercial Bank Ltd.     119,144     Mar. 31, 2018 to Jan. 30, 2021.     5.07 %
Total   $ 425,895              

 

    December 31, 2016   Term   Int. Rate/
Year
Taiwan Business Bank Ltd.   $ 12 9,620     Dec. 26, 2017 to Sept. 25, 2020.     3.60 %
Sunny Bank Ltd.     8,507     Dec. 22, 2017 to Jan. 21, 2018.     3.49 %
Bank of Panshin     21,107     Dec. 11, 2017 to June 10, 2018.     3.67 %
Sunny Bank Ltd.     164,023     Dec. 6, 2017 to Aug. 5, 2019.     3.49 %
First Commercial Bank Ltd.     110,200     Dec. 31, 2017 to Jan. 30, 2021.     5.07 %
Total   $ 433,457              

 

Note 11 – Taxes Payable

 

    March 31, 2017   December 31, 2016
    (Restated)    
Income tax payable   $ 38,561     $ 3,204  
Value added tax payable     9,574       213  
Total:   $ 48,135     $ 3,417  

 

Note 12 – Income Taxes

 

The Company did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because the Company has experienced operating losses for U.S. federal income tax purposes since inception. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. The operating subsidiary is organized and located in the Taiwan and does not conduct any business in the United States. Taxation on profits earned in the Taiwan has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the Taiwan where the Company operates after taking into account the benefits from any special tax credits or “tax holidays” allowed in the county of operations.

 

In accordance with the relevant tax laws in the Taiwan, the Company statutory rate were 17% and 17% for the quarters ended March 31, 2017 and 2016, respectively.

 

The components of the income tax expense are as follows:

 

   

The three

months ended

March 31, 2017

(Restated) 

 

The three

months ended

March 31, 2016

Current provision   $ 35,018     $ —    
Deferred provision     —         —    
Total:   $ 35,018     $ —    

 

  F- 11  

 

Note 13 – Common Stock

 

On April 7, 2014, the shareholder, Chu Li An contributed $165,500 capital to the Company.

 

On June 30, 2015, the Company made a reverse split of its common stock at the rate of 1 for 1500.

 

On July 10, 2015, the Company issued 50,000,000 shares with a par value of $0.001 per share for cash. The cash was finally offset with debt cancel due to shareholder.

 

On July 10, 2015, the Company issued 800,000 shares with a par value of $0.001 per share in exchange for consulting services.

 

On August 6, 2015, the Company issued 5,000,000 shares with a par value of $0.001 per share and 2,500,000 shares with a par value of $0.01 per share for cash. The cash was finally offset with debt cancel due to shareholder.

 

On April 4, 2016, the Company issued 5,000 shares to two investors with a par value of $4.00 per share for cash.

 

On May 10, 2016, the Company issued 3,333 shares to director Chu,Li-An, in exchange for cancellation of debt.

 

On May 10, 2016, the Company issued 2,000 shares to an investor with a par value of $4.00 per share for cash.

 

On May 10, 2016, the Company issued 3,000 shares to an investor with a par value of $5.00 per share for cash.

 

On May 10, 2016, the Company issued 21,000 shares to an investor with a par value of $4.76 per share for cash.

 

On June 28, 2016, the Company issued 1,250 shares to an investor with a par value of $2.40 per share for cash.

 

On July 12, 2016, the Company issued 500,000 shares to a Xinyahang Electronics Co. Ltd. Taiwan, as part of the payment for technology transfer and purchase of DMS platform technology.

 

On July 12, 2016, the Company issued total 1600 shares to six investors with a par value of $10.00 per share for cash.

 

On July 12, 2016, the Company issued 700 shares to an investor with a par value of $12.00 per share for cash.

 

On July 15, 2016, the Company issued 2,000 shares to consultant Kuo, Yu-chieh to offset for consulting fees payable, no cash payment received.

 

On August 8, 2016, the Company issued 200 shares to an investor with a par value of $14.00 per share for cash.

 

On September 6, 2016, the Company issued 2400 shares to an investor with a par value of $14.00 per share for cash.

 

On October 31, 2016, the Company issued 400 shares to three investors with a par value of $14 per share for Cash.

 

The Company’s capitalization is 394,500,000 common shares with a par value of $0.001 per share. There are a total of 58,985,937 and 58,985,937 common shares issued and outstanding at March 31, 2017 and December 31, 2016. No preferred shares have been authorized or issued.

 

  F- 12  

 

Note 14 – Foreign Operations

 

Operations

 

Substantially all of the Company’s operations are carried out and all of its assets are located in the Taiwan. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the Taiwan. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, monetary policies, anti-inflationary measures, currency fluctuation and remittances and methods of taxation, among other things.

 

Dividends and Reserves

 

Under the laws of the Taiwan, net income after taxation can only be distributed as dividends after appropriation has been made for the following: (i) cumulative prior years’ losses, if any; (ii) allocations to the “Statutory Surplus Reserve” of at least 10% of net income after tax, as determined under Taiwan accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital; (iii) allocations of 5-10% of income after tax, as determined under Taiwan accounting rules and regulations, to the Company’s “Statutory Common Welfare Fund”, which is established for the purpose of providing employee facilities and other collective benefits to employees in PRC; and (iv) allocations to any discretionary surplus reserve, if approved by stockholders.

 

As of March 31, 2017, the Company had no Statutory Surplus Reserve and the Statutory Common Welfare Fund established and segregated in retained earnings.

 

Note 15 – Commitment and Contingencies

 

The Company had bank loans. Based on the contract agreement, the future minimum repayments required for the coming years are as follows:

 

  Periods ending March 31:
  2018     $ 388,922  
  2019     $ 208,098  
  2020     $ 145,492  
  2021     $ 72,305  
  Total     $ 814,817  

 

The Company did not have other significant capital commitments or significant guarantees as of March 31, 2017.

 

Note 16 – Subsequent Events

 

The company is under negotiations with Nanjing City, China government to provide the government with securities management hardware and all related software and other management services. The initial orders shall be for 300,000 units, and could add up to 10,000,000 units for long-term.

 

We have also initiated our new mobile UBI apps and its field testing has begun. So far, the testing is progressing very positively, generating the quality of accelerometer data needed for accurate scoring. We have also begun establishing connections with various insurance companies, vehicle fleet companies, and motorists for further testing and introduction of our new mobile UBI apps.

 

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

 

NOTE 17 – Restatement

 

The management of the Company has concluded that the consolidated financial statements as of and for the quarter ended March 31, 2017 should be restated.  The conclusion was reached by management because they determined that certain revenues were not recognized correctly and certain transactions occurred during the month ended March 31, 2017 were omitted. 

 

In January 2017, the Company entered into a license and distribution agreement with Wealthy Link Technology Corporation (“Wealthy Link”) to authorize Wealthy Link to distribute and license the Company’s products. In the three months ended March 31, 2017, the Company recorded revenue of $3.5 million as per invoices issued, not services performed.

 

The following table summarize the effect of the restatement on items in the consolidated financial statements as of and for the three months ended March 31, 2017:

 

    Three Moths Ended March 31, 2017
    As Previously Reported   Adjustments   As Restated
Consolidated Balance Sheet amounts
Cash   $ 153,221     $ (66,113 )   $ 87,108  
Accounts receivable, net     3,904,854       (2,757,859 )     1,146,995  
Inventories     697,108       (611,027 )     86,081  
Other current assets     29,729       (17,101 )     12,628  
Property, plant and equipment, net     8,553       1,639       10,192  
Intangible Assets, net     136,648       (871 )     135,777  
Accounts payable     1,004,627       (646,285 )     358,342  
Due to related parties     136,541       (25,499 )     111,042  
Taxes payable     10,499       37,636       48,135  
Accrued expenses and other current liabilities     9,000       5,188       14,188  
Accumulated deficit     2,129,293       (2,935,438 )     (806,145 )
Accumulated other comprehensive income     616,339       113,066       729,405  
                         
Consolidated Statements of Comprehensive Income amounts
Revenue     3,822,265       (2,987,778 )     834,487  
Cost of revenue     630,773       (90,570 )     540,203  
Gross profit     3,191,492       (2,897,208 )     294,284  
Total operating expenses     94,933       3,365       98,298  
Total other income (expense)     7,032       (13,911 )     (6,879 )
Income before income tax     3,089,527       (2,900,420 )     189,107  
Income tax provision     —         35,018       35,018  
Net income     3,089,527       (2,935,438 )     154,089  
Comprehensive income     3,015,362       (2,822,372 )     192,990  
                         
Consolidated Statements of Cash flows amounts
Net cash provided by (used in) operating activities     175,376       (98,122 )     77,254  
Net cash provided by (used in) investing activities     (25,015 )     23,762       (1,253 )
Net cash used in financing activities     (177,407 )     (77,440 )     (254,847 )
Effect of exchange rate changes on cash     (74,165 )     85,687       11,522  
Net change in cash     (101,211 )     (66,113 )     (167,324 )

   

  F- 13  

 

 

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

 

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

 

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

 

Overview

 

From November 2009 until October, 2013, through our China subsidiary, we were engaged in design, marketing and distributing of alcohol base clean fuel which are designed to use less fossil fuel and have less pollution than traditional fuel.

 

On October 31, 2013, pursuant to agreements with one of our former directors, we transferred the stock in our China subsidiaries to the former director in exchange for cancellation of debt totaling $240,000. As a result of the transfer of the subsidiaries, we were no longer engaged in the China cleanfuel business. We transferred the stock of the China subsidiaries because we felt that, it's not our best interest to continue China cleanfuel business as a result of our decreasing revenue, continued losses and inability to raise capital for our business.

 

On November 30, 2013, the company entered into an agreement to acquire all of the issued and outstanding stock of Jin Chih International, Ltd., a Taiwan corporation, from its sole owner Chu Li An for five million shares of the Company’s common stock. As of March 31, 2017, the stock has not been issued.

 

As a result of the above transactions, we carry out the electronic products and general cargo trading and related consulting service business through our subsidiary named Jin Chih International, Ltd in Taiwan. We still plan to focus on providing greentech products outside of China in future. Even though the company has disposed China branches, the company's new management will continue to expand the current green energy and technology business in the United States and globally, at the same time to explore many other green and renewable energy such as solar, wind power, sea power by signing licensing agreement or joint venture with other research institutes.

 

  17  

 

Results of Operations

 

Three Months Ended March 31, 2017 and 2016

 

Revenue

 

For the three months ended March 31, 2017, we recognized revenues of $834,487 compared to $612,004 for the three months ended March 31, 2016, representing an increase of $222,483. Our sales of $502,487 came from the electronic products and general cargo trading business operated by the Taiwan subsidiary.

 

On January 5, 2017, the Company entered into license and distribution agreement with Wealthy Link Technology Corp. for the sale of its licensed product adopting the B2C and B2B business models, resulting to sales revenues of $332,000 for the three months ended March 31, 2017.  

 

Cost of revenue and gross profit

 

The Company recorded cost of revenue of $540,203 and $511,915 for the three months ended March 31, 2017 and 2016, respectively. The Company had a gross profit of $294,284 and $100,089 for the three months ended March 31, 2017 and 2016.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses primarily consist of provision for doubtful debts, payroll, local taxes, investor relation expenses and professional fees. Selling, general and administrative expenses for the three months ended March 31, 2017 were $98,298, comparing to $36,747 for three months ended March 31, 2016.

 

Income tax expense

 

We are subject to U.S. federal income tax, and our subsidiary incorporated in the Taiwan is subject to enterprise income taxes in the Taiwan. The Company did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because the Company has experienced operating losses for U.S. federal income tax purposes since inception. Taxation on profits earned in the Taiwan has been calculated on the estimated assessable profits for the periods at the rates of 17% in the Taiwan after taking into account the benefits from any special tax credits or “tax holidays” allowed in the county of operation.

 

For the three months ended March 31, 2017 and 2016, the Company recorded income tax provision of $35,018 and $0, respectively.

 

Net income

 

As a result of the forgoing, the Company generated net income of $154,089 and $55,728 for the three months ended March 31, 2017 and 2016

 

Foreign currency translation adjustment

 

The functional currency of our subsidiaries operating in the Taiwan is the Taiwan Dollars (“TWD”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of comprehensive income. As a result of these translations, which are a non-cash adjustment, we reported foreign currency translation gain of $38,901 and $15,799 for the three months ended March 31, 2017 and 2016, respectively.

 

Liquidity and Capital Resources

 

We have funded our operations to date primarily through the operations and related party loan, bank loan and capital contributions. The Company has limited cash and accumulated deficit as of March 31, 2017. In addition, the Company did not generate income and cash from its operation for the years ended December 31, 2016, 2015 and 2014. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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

 

As of March 31, 2017, we had a working capital of $840,814. Our current assets on March 31, 2017 were $1,761,443 primarily consisting of cash of $87,108, short-term investments of $428,631 and account receivable of $1,146,995. Our current liabilities were primarily composed of short-term loan of $388,922, accounts payable of $358,342 and due to related parties of $111,042.

 

  18  

 

Cash Flow from Operating Activities

 

Net cash provided by operating activities was $77,254 during the three months ended March 31, 2017, which consisted of our net income of $154,089, depreciation and amortization of $13,387, a change of accounts receivable of $261,079, a change of other current assets of $11,279, a change of accounts payable of $256,741, a change of advances from customers of $132,000, a change of taxes payable of $43,531 and a change of accrued expenses and other current liabilities of $5,188.

 

Net cash used in operating activities was $25,324 during the three months ended March 31, 2016, which primarily consisted of our net income of $55,728, a change of accounts receivable of $580,029, a change of inventories of $50,776 and a change of accounts payable of $569,174.

 

Cash Flow from Investing Activities

 

Net cash used in investing activities totaled $1,253 for the three months ended March 31, 2017, which was primarily related to cash paid for acquisition of office equipment.

 

Net cash provided by investing activities totaled $6,457 for the three months ended March 31, 2016, which was primarily related to proceeds received from short-term investment.

 

Cash Flow from Financing Activities

 

Net cash used in financing activities was $254,847 during the three months ended March 31, 2017, which primarily consisted of repayment of bank loans of $96,972 and repayment of related party loan of $157,875.

 

Net cash used in financing activities was $58,897 during the three months ended March 31, 2016, which primarily consisted of proceeds from bank loans of $109,302 offset by repayment of bank loans of $168,199.

 

Off-Balance Sheet Arrangements

 

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

 

Inflation

 

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

 

  19  

 

Critical Accounting Policies and Estimates

 

Refer to note 2 in the accompanying consolidated financial statements.

 

Impact of Accounting Pronouncements

 

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

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

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

 

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2017. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

 

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

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that, as of March 31, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level:

 

  1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ending March 31, 2017. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

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

 

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

 

Management's Report on Internal Control over Financial Reporting.

 

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

 

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

 

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

 

  20  

 

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

 

Management is currently reviewing its staffing and systems in order to remedy the weaknesses identified in this assessment. However, because of the above condition, management’s assessment is that the Company’s internal controls over financial reporting were not effective as of March 31, 2017. Additionally, the Registrant’s management has concluded that the Registrant has a material weakness associated with its U.S. GAAP expertise.

 

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

 

Management's Remediation Initiatives

 

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

 

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

 

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

 

  21  

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

To the best knowledge of the officers and directors, the Company was not a party to any legal proceeding or litigation as of March 31, 2017.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

Exhibit No. Description
31.1 Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2 Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101 The following materials from AJ Greentech Holdings, Ltd.’s Quarterly Report on Form 10-Q for the period ended March 31, 2016 are formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheet; (ii) the Condensed Consolidated Statement of Operations;, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements. This Exhibit 101 is deemed not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

  22  

 

SIGNATURES

 

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

 

 

  AJ GREENTECH HOLDINGS LTD.
   
   
   
Date: June 28, 2018 By:  /s/ Yanru Zhou            
    Yanru Zhou
    Chief Executive Officer
   
   
  AJ GREENTECH HOLDINGS LTD.
   
   
   
Date: June 28, 2018 By:  /s/ Yanru Zhou            
    Yanru Zhou
    Chief Financial Officer

 

 

23

Exhibit 31.1

 

Certification Pursuant to Section 302 of the Sarbanes- Oxley Act of 2022

 

I, Chu Li An, certify that:

 

1. I have reviewed this the quarterly report on Form 10-Q/A of Sino United Worldwide Consolidated Ltd. (the “Registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

 

Dated: June 28, 2018

 

 

By: /s/ Yanru Zhou        

Name: Yanru Zhou

Title: Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

 

Certification Pursuant to Section 302 of the Sarbanes- Oxley Act of 2022

 

I, Chu Li An, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q/A of Sino United Worldwide Consolidated Ltd.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

 

Dated: June 28, 2018

 

 

By: /s/ Yanru Zhou        

Name: Yanru Zhou

Title: Chief Financial Officer

(Principal Accounting Officer)

Exhibit 32.1

 

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of Sino United Worldwide Consolidated Ltd. (the “Registrant”) on Form 10-Q/A for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Chu Li An, as CEO of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

Dated: June 28, 2018

 

 

By: /s/ Yanru Zhou        

Name: Yanru Zhou

Title: Chief Executive Officer

(Principal Executive Officer)

 

 

A signed original of this written statement required by Section 906 has been provided to Sino United Worldwide Consolidated Ltd. and will be retained by Sino United Worldwide Consolidated Ltd. and furnished to the Securities and Exchange Commission or its staff.

Exhibit 32.2

 

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of Sino United Worldwide Consolidated Ltd. (the “Registrant”) on Form 10-Q/A for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Chu Li An, as CFO of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(3) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934; and

 

(4) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

Dated: June 28, 2018

 

 

By: /s/ Yanru Zhou        

Name: Yanru Zhou

Title: Chief Financial Officer

(Principal Accounting Officer)

 

 

A signed original of this written statement required by Section 906 has been provided to Sino United Worldwide Consolidated Ltd. and will be retained by Sino United Worldwide Consolidated Ltd. and furnished to the Securities and Exchange Commission or its staff.