Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 16, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | China Network Media, Inc. | |
Entity Central Index Key | 1,440,760 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | CNNM | |
Entity Common Stock, Shares Outstanding | 65,830,533 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 449,462 | $ 482,421 |
Prepaid taxes | 73,238 | 81,236 |
Prepaid expenses and other current assets | 19,758 | 17,404 |
Total current assets | 542,458 | 581,061 |
Property and equipment, net | 8,441 | 5,685 |
Total assets | 550,899 | 586,746 |
Current Liabilities | ||
Deferred revenue | 14,090 | 26,366 |
Due to a related party | 80,778 | 80,251 |
Income tax payable | 145,345 | 135,664 |
Other current liabilities | 25,606 | 23,514 |
Total current liabilities | 265,819 | 265,795 |
Total liabilities | 265,819 | 265,795 |
Shareholders’ equity | ||
Common stock ($0.001 par value,100,000,000 shares authorized; 65,679,533 and 65,679,533 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively) | 65,679 | 65,679 |
Additional paid in capital | 1,349,716 | 1,347,257 |
Accumulated deficit | (1,064,472) | (1,023,818) |
Accumulated other comprehensive loss | (65,843) | (68,167) |
Total shareholders' equity | 285,080 | 320,951 |
Total liabilities and shareholders' equity | $ 550,899 | $ 586,746 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 65,679,533 | 65,679,533 |
Common stock, shares outstanding | 65,679,533 | 65,679,533 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue | ||
- Third parties | $ 12,276 | $ 397,276 |
- A related party | 159,890 | 0 |
Total Revenue | 172,166 | 397,276 |
Cost of revenue | 59,560 | 53,532 |
Gross profit | 112,606 | 343,744 |
Operating expenses: | ||
Research and development expenses | 6,636 | 9,282 |
Selling and marketing expenses | 1,823 | 597 |
General and administrative expenses | 133,674 | 134,504 |
Total operating expenses | 142,133 | 144,383 |
Income (loss) from Operations | (29,527) | 199,361 |
Other income | 0 | 7,061 |
Income (loss) from operations before income taxes | (29,527) | 206,422 |
Provision for income taxes | 8,668 | 65,951 |
Net income (loss) | (38,195) | 140,471 |
Other comprehensive income (loss) | ||
Foreign currency translation adjustment | 2,324 | (353) |
Comprehensive income (loss) | $ (35,871) | $ 140,118 |
Basic and diluted income (loss) per share | $ (0.0006) | $ 0.0021 |
Weighted-average number of shares outstanding -Basic and diluted | 65,679,533 | 65,409,009 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ (38,195) | $ 140,471 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation expense | 1,456 | 6,812 |
Issuance of shares to employees and part-time consultants | 0 | 21,224 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | (2,209) | (2,688) |
Accounts payable | 0 | 163 |
Deferred revenue | (12,276) | (294,407) |
Prepaid taxes | 8,413 | 8,310 |
Income tax payable | 8,668 | (100,395) |
Other current liabilities | 1,911 | (1,159) |
Net cash used in operating activities | (32,232) | (221,669) |
Cash Flows From Investing Activities | ||
Short term loan to an unrelated party | 0 | (130,200) |
Purchases of property and equipment | (4,137) | 0 |
Net cash used in investing activities | (4,137) | (130,200) |
Cash Flows From Financing Activities | ||
Net cash provided by financing activities | 0 | 0 |
Effect of exchange rate fluctuation on cash and cash equivalents | 3,410 | 3,525 |
Net decrease in cash and cash equivalents | (32,959) | (348,344) |
Cash and cash equivalents, beginning of period | 482,421 | 909,922 |
Cash and cash equivalents, end of period | 449,462 | 561,578 |
Supplemental disclosure information: | ||
Income taxes paid | $ 0 | $ 166,346 |
DESCRIPTION OF BUSINESS AND ORG
DESCRIPTION OF BUSINESS AND ORGANIZATION | 3 Months Ended |
Mar. 31, 2016 | |
DESCRIPTION OF BUSINESS AND ORGANIZATION [Abstract] | |
DESCRIPTION OF BUSINESS AND ORGANIZATION | DESCRIPTION OF BUSINESS AND ORGANIZATION China Network Media Inc. (formerly known as Metha Energy Solutions Inc.) was incorporated on April 18, 2008 under the laws of the State of Delaware. Science & Technology World Website Media Group Co., Ltd. (“Science & Technology Media”) was organized under the laws of the British Virgin Island on February 15, 2011 to serve as a holding company for the People's Republic of China (the "PRC") operations. On September 16, 2011, Science & Technology Media established Science & Technology World Website Hong Kong Media Holding Co., Ltd. (“HK Science & Technology”) in Hong Kong to serve as an intermediate holding company. On January 20, 2012, HK Science and Technology established Science& Technology World Website Trade (Dalian) Co., Ltd (the “WFOE” or “Science & Technology Trading”) in the PRC. Its purposes are, among others, a platform for online B2B service. HK Science and Technology and the WFOE are considered foreign investor and foreign invested enterprise respectively under PRC law. As a result, HK Science & Technology and the WFOE are subject to limitations under PRC law on foreign ownership of Chinese companies. According to the Catalogue of Industries for Guiding Foreign Investment (2011 Revision) (the “Catalogue”), there are four kinds of industries which are encouraged, permitted, restricted and prohibited for foreign investment. The primary business of Dalian Tianyi Culture Development Co., Ltd (“Dalian Tianyi”) and Science & Technology World Network (Dalian) Co., Ltd (“Science & Technology (Dalian)”) are within the category in which foreign investment is currently restricted. On January 21, 2012, the WFOE respectively entered into a series of agreements with Dalian Tianyi, Science & Technology (Dalian) and their respective shareholders (“Contractual Arrangements”). The relationship with Dalian Tianyi, Science & Technology (Dalian) and their respective shareholders are governed by the Contractual Arrangements. The Contractual Arrangements are comprised of a series of agreements, including Exclusive Technical Consulting Service Agreements and Operating Agreements, through which WFOE has the right to advise, consult, manage and operate Dalian Tianyi and Science & Technology (Dalian), and collect 85 15 According to the Power of Attorney executed by the shareholders of Dalian Tianyi and Science & Technology (Dalian), they exclusively authorized WFOE to perform and exercise any and all of the shareholder’s rights in Dalian Tianyi and Science & Technology (Dalian). As a result of the Contractual Arrangements, under generally accepted accounting principles in the United States, or U.S. GAAP, Science & Technology Media is considered the primary beneficiary of Dalian Tianyi and Science & Technology (Dalian) (“VIEs”) On October 29, 2012, Science & Technology Media entered into a Share Exchange Agreement by and among (i) Science & Technology Holding, (ii) the principal shareholders of China Network Media Inc., (iii) China Network Media Inc., (iv) the shareholders of Science &Technology Holding and (v) Science & Technology Media. The acquisition was accounted for as a “reverse merger,” and Science & Technology Media was deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that would be reflected in the financial statements prior to the acquisition would be those of Science &Technology Media and its wholly owned subsidiaries and VIEs, and would be recorded at the historical cost, and the consolidated financial statements after completion of the acquisition would include the assets, liabilities and operation of China Network Media Inc., Science & Technology Media and its wholly owned subsidiaries and VIEs from the closing date of the acquisition. As a result of the issuance of the shares of common stock pursuant to the Exchange Agreement, a change in control of occurred as a result of the acquisition. In connection with the closing of the Exchange Agreement, ToftApS, China Network Media Inc.’ principal shareholder, agreed to cancel its 10,000,000 50,000,000 95.02 52,620,030 China Network Media Inc.’s directors approved the Exchange Agreement and the transactions contemplated thereby. Simultaneously, the directors of Science & Technology Media also approved the Exchange Agreement and the transactions contemplated thereby. As a result of the Exchange Agreement, China Network Media Inc. acquired 100 On March 19, 2014, the Company submitted dissolution application for Science & Technology Holding which was approved on April 2, 2014. China Network Media Inc., its wholly-owned subsidiaries and VIEs are collectively referred as “the Company”, “we”, “us”, “our” for the purposes of these notes. We operate a multi-languages portal website that serves to the technology industry and provide advertising opportunities to the companies through our diverse business network in China. The Company currently operates its website through different versions in China. As our main target, we provide online platform to business entrepreneurs and corporations with a B2B marketplace that can help our customers: ¨ Set their brand image through multiple languages online magazine, online corporate multimedia advertisement, executives interviews, institutional alliances and flexible membership package that tailor made based on what our customers need; ¨ Set up customer’s online exhibition to introduce their products to the public, where they have our tailor-made corporate introduction with 3D product description and factory facilities online show room ; ¨ Develop intelligent leisure retirement industry through building a unique international intelligent technology health leisure endowment industrial district including residential area, holiday resort, spa area etc. ; ¨ Develop an e-commercial platform to combine the online sales business with above intelligent leisure district and all the branches over the world to provide elderly products and also exclusive products provided by our agents; ¨ B2B product purchase platform for companies and end-users; ¨ Online job opportunity section for corporate clients; and ¨ Corporate blogs. We currently derive a substantial portion of our revenues from online advertising membership services. Our advertising membership solutions present corporate users with attractive opportunities to combine the visual impact and engagement of traditional television-like multimedia advertisements and online magazines with the interactivity and precise targeting capabilities of the Internet. We strive to promote a novel and unique advertising environment on our website to attract technology enterprises. |
GOING CONCERN AND LIQUIDITY
GOING CONCERN AND LIQUIDITY | 3 Months Ended |
Mar. 31, 2016 | |
GOING CONCERN AND LIQUIDITY [Abstract] | |
GOING CONCERN AND LIQUIDITY | NOTE 2. GOING CONCERN AND LIQUIDITY The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company currently has limited revenue and has accumulated deficit of $ 1,062,013 1,023,818 38,195 The principal sources of liquidity are cash and cash equivalents, loans from shareholders, as well as the cash flows generated from our operations. As of March 31, 2016, the Company had cash and cash equivalents of approximately $ 449,462 482,421 The Company believes that the current cash and cash equivalents combined with proceeds that it expects to generate from operating activities are sufficient to meet anticipated working capital needs, commitments and capital expenditures over the next twelve months. It may, however, require additional cash resources due to changes in business conditions and other future developments, or changes in general economic conditions. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2016 | |
VARIABLE INTEREST ENTITIES [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES To satisfy PRC laws and regulations, the Company conducts certain business in the PRC through its VIEs. The significant terms of the VIE Agreements are summarized below: Exclusive Technical Consulting Service Agreement: Exclusive Equity Interest Purchase Agreement: Equity Interest Pledge Agreement: Powers of Attorney: As a result of these VIE Agreements, the Company through its wholly-owned subsidiary, Science& Technology Trading, was granted with unconstrained decision making rights and power over key strategic and operational functions that would significantly impact the PRC Operating Entities or the VIEs’ economic performance, which includes, but is not limited to, the development and execution of the overall business strategy; important and material decision making; decision making for merger and acquisition targets and execution of merger and acquisition plans; business partnership strategy development and execution; government liaison; operation management and review; and human resources recruitment and compensation and incentive strategy development and execution. Science& Technology Trading also provides comprehensive services to the VIEs for their daily operations, such as operational technical support, OA technical support, accounting support, general administration support and technical support for products and services. As a result of the Exclusive Business Cooperation Agreements, the Equity Pledge Agreements and the Exclusive Option Agreements, the Company will bear all of the VIEs’ operating costs in exchange for 100% of the net income of the VIEs. Under these agreements, the Company has the absolute and exclusive right to enjoy economic benefits similar to equity ownership through the VIE Agreements with our PRC Operating Entities and their shareholders. These contractual arrangements may not be as effective in providing the Company with control over the VIEs as direct ownership. Due to its VIE structure, the Company has to rely on contractual rights to effect control and management of the VIEs, which exposes it to the risk of potential breach of contract by the shareholders of the VIEs for a number of reasons. For example, their interests as shareholders of the VIEs and the interests of the Company may conflict and the Company may fail to resolve such conflicts; the shareholders may believe that breaching the contracts will lead to greater economic benefit for them; or the shareholders may otherwise act in bad faith. If any of the foregoing were to happen, the Company may have to rely on legal or arbitral proceedings to enforce its contractual rights, including specific performance or injunctive relief, and claiming damages. Such arbitral and legal proceedings may cost substantial financial and other resources, and result in a disruption of its business, and the Company cannot assure that the outcome will be in its favor. Apart from the above risks, there are no significant judgments or assumptions regarding enforceability of the contracts. In addition, as all of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these contractual arrangements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event the Company is unable to enforce these contractual arrangements, it may not be able to exert effective control over the VIEs, and its ability to conduct its business may be materially and adversely affected. The assets of the VIEs can be used to settle obligations of the consolidated entities. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets. Most of our operations are conducted through our affiliated companies which the Company controls through contractual agreements in the form of VIEs. Current regulations in China permit our PRC subsidiaries to pay dividends to us only out of its accumulated distributable profits, if any, determined in accordance with their articles of association and PRC accounting standards and regulations. The ability of these Chinese affiliates to make dividends and other payments to us may be restricted by factors that include changes in applicable foreign exchange and other laws and regulations. A. Under PRC law, our subsidiary may only pay dividends after 10% of its after-tax profits have been set aside as reserve funds, unless such reserves have reached at least 50% of its registered capital. Such cash reserve may not be distributed as cash dividends. B. The PRC Income Tax Law also imposes a 10% withholding income tax on dividends generated on or after January 1, 2008 and distributed by a resident enterprise to its foreign investors, if such foreign investors are considered as non-resident enterprise without any establishment or place within China or if the received dividends have no connection with such foreign investors’ establishment or place within China, unless such foreign investors’ jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. As of March 31, 2016, the Company has no plan for distribution of retained earnings. March 31, December 31, (Unaudited) Total assets $ 495,507 $ 586,746 Total liabilities $ 263,292 $ 265,795 For the Three Months Ended March 31, 2016 2015 (Unaudited) (Unaudited) Revenues $ 172,166 $ 397,276 Net income (loss) $ (35,544) $ 140,471 All of our current revenue is generated in PRC currency Renminbi (“RMB”). Any future restrictions on currency exchanges may limit our ability to use net revenues generated in RMB to make dividends or other payments in U.S. dollars or fund possible business activities outside China. Foreign currency exchange regulation in China is primarily governed by the following rules: ¨ Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules; ¨ Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules. Under the Administration Rules, RMB is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange (“SAFE”) is obtained and prior registration with the SAFE is made. Foreign-invested enterprises like ours that need foreign exchange for the distribution of profits to their shareholders may affect payment from their foreign exchange accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks. |
SUMMARIES OF SIGNIFICANT ACCOUN
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of preparation The accompanying consolidated balance sheet as of December 31, 2015, which has been derived from audited financial statements, and the unaudited interim consolidated financial statements as of March 31, 2016 and for the three month periods ended March 31, 2016 and 2015 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP), have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation. The interim financial information should be read in conjunction with the Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, previously filed with the SEC. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2016, its consolidated results of operations and cash flows for the three month periods ended March 31, 2016 and 2015, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. b. Principles of consolidation The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries and VIEs. Upon consolidation, all balances and transactions between the Company and its subsidiaries and VIEs have been eliminated. c. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include valuation allowances for receivables and recoverability of carrying amount and the estimated useful lives of long-lived assets. d. Cash and cash equivalents Cash and cash equivalents include cash on hand, cash on deposit with various financial institutions in PRC and all highly-liquid investments with original maturities of three months or less at the time of purchase. Cash accounts are not insured or otherwise protected. Should any bank or trust company holding cash deposits become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash on deposits with that particular bank or other financial institutions. e. Property and equipment Property and equipment mainly comprise computer equipment, hardware and office furniture. Property and equipment are recorded at cost less accumulated depreciation with no residual value. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: 5 years Computers 3 years Depreciation expense is allocated among Research and development expenses, Selling and marketing expenses and General and administrative expenses. When office equipment and electronic devices are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. f. Impairment of long-lived assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount of the asset and its fair value. There were no impairment losses for the three months ended March 31, 2016 and 2015, respectively. Revenue recognition The Company recognizes revenue in accordance with ASC 605, Revenue Recognition Online Membership Revenue Online membership revenue includes revenue from members for brand advertising services as well as others services. The Company has the arrangements with nonrefundable up-front fees model (“the Model”) to recognize revenue for the online membership business. We apply the Model, where a contract is signed to establish a fixed price for our services to be provided for a period of time as a membership enrollment, for a majority of our online membership revenue. Revenue is recognized ratably over the membership periods on a straight line basis, unless evidence suggests that the revenue is earned or obligations are fulfilled in a different pattern, over the contractual term of the arrangement or the expected period during which those specified services will be performed, whichever is longer. The Company provides advertisement placements to our advertising customers on our different Website channels and in different formats, which can include, among other things, banners, links, logos, buttons, rich media, pre-roll and post-roll video screens, pause video screens and content integration, as specified in the contracts with the members. The members can choose various on line services from the membership contracts based on their yearly membership. The Company recognizes revenue when all revenue recognition criteria are met. h. Related parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. i. Earnings (loss) per share Basic earnings (loss) per share is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for all periods. Diluted earnings per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares outstanding, increased by common stock equivalents. Common stock equivalents represent incremental shares issuable upon exercise of outstanding warrants. However, potential common shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded. j. Foreign currency transactions and translations An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The reporting currency of the Company is United States dollars (“U.S. dollars” or “$”), and the functional currency of HK Science & Technology is Hong Kong dollars (“HK dollar”). The functional currency of the Company’s PRC subsidiary and VIEs is the RMB, and PRC is the primary economic environment in which the Company operates. The reporting currency of these consolidated financial statements is U.S. dollars. For financial reporting purposes, the financial statements of the Company’s PRC subsidiary and VIEs, which are prepared using the RMB, are translated into the Company’s reporting currency, U.S. dollars. The financial statements of HK Science & Technology, which are prepared using the HK dollar, are translated into the Company’s reporting currency, U.S. dollars. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders' equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in owners’ equity. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income (loss) of the consolidated financial statements for the respective periods. March 31, December 31, ($1 = RMB) Balance sheet items, except for equity accounts 6.4494 6.4917 ($1 = HKD) Balance sheet items, except for equity accounts 7.7507 7.7507 Three Months Ended March 31, 2016 2015 ($1 = RMB) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 6.5405 6.1444 ($1 = HKD) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 7.7524 7.7556 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. Translations adjustments resulting from this process are included in accumulated other comprehensive loss in the shareholders’ equity were $ 65,843 68,167 k. Fair Value Measurements The Company applies the provisions of ASC Subtopic 820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ¨ Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ¨ Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ¨ Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. There were not transfers between level 1, level 2 or level 3 measurements for the three months ended March 31, 2016 and 2015, respectively. The carrying values of the Company’s financial assets and liabilities, including accounts receivables, other current assets, and accrued expenses and other current liabilities, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. l. Share-Based Compensation Pursuant to ASC Topic 718, Compensation - Stock Compensation m. Recently adopted accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this update defers the effective date of ASU 2014-09 for all entities by one year to annual periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, interim and annual reporting periods after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. In April 2016, the FASB issued Accounting Standards Update 2016-10, Revenue from Contracts with Customers. These new standards will identify performance obligations. The Company is currently evaluating the effect of these new standards, including the transition method, to determine the impact on the Company's consolidated financial position, results of operations, cash flows, or related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), aimed at making leasing activities more transparent and comparable. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including today’s operating leases. For public business entities, the standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all entities. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In March, 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." This update was issued as part of a simplification effort for the accounting of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations, financial condition and cash flows. We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
EARNINGS (LOSS) PER SHARE [Abstract] | |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The FASB’s accounting standard for earnings (loss) per share requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings (loss) per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. The Company has no potential dilutive securities as of March 31, 2016. For the Three Months Ended March 31, 2016 2015 (Unaudited) (Unaudited) Net income (loss) $ (38,195) $ 140,471 Weighted average shares used in basic and diluted computation 65,679,533 65,409,009 Earnings/(loss) per share: Basic and diluted $ (0.0006) $ 0.0021 |
CONCENTRATION OF RISK
CONCENTRATION OF RISK | 3 Months Ended |
Mar. 31, 2016 | |
CONCENTRATION OF RISK [Abstract] | |
CONCENTRATION OF RISK | CONCENTRATION OF RISK Credit risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivables. The Company places its cash and cash equivalents with financial institutions, which management believes are of high-credit ratings and quality. The Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. Concentration During the three months ended March 31, 2016, the Company had concentration of sales to the top customer accounting for 93 46 19 12 During the three months ended March 31, 2016 and 2015, there was no single supplier accounted for over 10 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS At March 31, 2016 and December 31, 2015, prepayment and other current assets consists of: December 31, 2016 2015 (Unaudited) Prepayment to advertisement and internet resources providers $ 5,011 $ 3,419 Other current assets 14,747 13,985 $ 19,758 $ 17,404 Prepayment to advertisement and internet resources providers consists of the deposits required by and made to the telecommunication platform operators for using their network services. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2016 | |
PROPERTY AND EQUIPMENT [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consists of network equipment and servers used for hosting Company’s website and furniture, equipment and computers used in the office. March 31, 2016 December 31, 2015 (Unaudited) Office and other equipment $ 97,468 $ 92,665 Computers 61,487 61,087 Property and equipment, cost 158,955 153,752 Less: accumulated depreciation (150,514) (148,067) Property and equipment, net $ 8,441 $ 5,685 Depreciation expense for the three months ended March 31, 2016 and 2015 were $ 1,456 6,812 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2016 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS As of March 31, 2016 and December 31, 2015, the Company had a balance due to Xie He Si Decoration Co., Ltd, a related company owned by the Chairman, Mr. Jiang Wei, of $ 80,778 80,251 For the three months ended March 31, 2016 and 2015, the Company derived revenue from Science & Technology Health Industry (Dalian) Co., Ltd, a related company owned by Mr. Jiang Wei and PengHuian, of $ 159,890 |
DEFERRED REVENUE
DEFERRED REVENUE | 3 Months Ended |
Mar. 31, 2016 | |
ADVANCE FROM CUSTOMERS AND DEFERRED REVENUE [Abstract] | |
ADVANCES FROM A CUSTOMER AND DEFERRED REVENUE | NOTE 10. DEFERRED REVENUE Deferred revenue represents customer payments made in advance for membership contracts while services have not been fully provided. Membership contracts are typically billed on full basis in advance and revenue is recognized ratably over the membership period. March 31, 2016 December 31, 2015 (Unaudited) Deferred revenue, current $ 14,090 $ 26,366 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2016 | |
OTHER CURRENT LIABILITIES [Abstract] | |
OTHER CURRENT LIABILITIES | NOTE 11. OTHER CURRENT LIABILITIES Other current liabilities consists of the following: March 31, 2016 December 31, 2015 (Unaudited) Payroll payable $ 23,779 $ 21,736 Other payable 1,827 1,778 Total $ 25,606 $ 23,514 |
TAXATION
TAXATION | 3 Months Ended |
Mar. 31, 2016 | |
TAXATION [Abstract] | |
TAXATION | TAXATION A) Income Tax Science & Technology Trading and our combined VIEs are established in Dalian, Province, PRC, and governed by the Income Tax Law of the PRC concerning privately-held enterprises, which are generally subject to tax at a statutory rate of 25 The effective tax rate for the Company for the three months ended March 31, 2016 and 2015 was 29 32 March 31, 2016 March 31, 2015 (Unaudited) (Unaudited) US federal rate 34 % 34 % Taxable income (loss) $ (29,527) $ 206,422 Computed expected income tax (expense)/ benefit 10,039 (70,183) Reconciliation items: Rate differential for domestic earnings (2,657) 18,578 Non-deductible expenses (439) (185) Valuation allowance on deferred tax assets (15,611) (14,161) Effective income tax expense $ (8,668) $ (65,951) Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of March 31, 2016, valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets which consisted of tax loss carry-forwards, which can be carried forward to offset future taxable income. The management determines it is more likely than not that these deferred tax assets could not be recognized, so full allowances were provided as of March 31, 2016 and December 31, 2015. B) Business Tax and relevant surcharge The Company pays the business tax when the contracts payments are received from customers and estimates the income tax as the full received amounts had been recognized as revenue. The prepaid business tax and income tax are deductible in the following years. C) Value Added Tax and relevant surcharge The Company pays the VAT when the invoices are issued to customers and estimates the income tax as the full received amounts had been recognized as revenue. |
STATUTORY RESERVES
STATUTORY RESERVES | 3 Months Ended |
Mar. 31, 2016 | |
STATUTORY RESERVES | |
STATUTORY RESERVES | NOTE 14. STATUTORY RESERVES As stipulated by the laws and regulations for enterprises operating in PRC, the subsidiaries of the Company are required to make annual appropriations to a statutory surplus reserve fund. Specifically, the subsidiaries of the Company are required to allocate 10 2,459 0 |
SHARES GRANTED AND ISSUED TO EM
SHARES GRANTED AND ISSUED TO EMPLOYEES | 3 Months Ended |
Mar. 31, 2016 | |
SHARES GRANTED AND ISSUED TO EMPLOYEES [Abstract] | |
SHARES GRANTED AND ISSUED TO EMPLOYEES | NOTE 15. SHARES GRANTED AND ISSUED TO EMPLOYEES On February 10, 2015, the Company determined to grant equity awards of 429,200 21,224 On November 27, 2015, the Company determined to grant equity awards of 75,000 3,709 The fair value of the shares granted was $ 0.04945 Major assumptions used for measuring the fair value as follow: ⋅ It is assumed that there will be no material change in the existing political, legal, technological, fiscal or economic condition which may adversely affect the business of the Company; ⋅ The Company will adhere to the terms that bond with the contracts and agreements; ⋅ The Company’s competitive advantages and disadvantages will not change significantly during the period. |
COMMITMENTS
COMMITMENTS | 3 Months Ended |
Mar. 31, 2016 | |
COMMITMENTS [Abstract] | |
COMMITMENTS | NOTE 16. COMMITMENTS The Company’s operating lease commitment as of March 31, 2016 and December 31, 2015 were $ 4,308 17,121 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17. SUBSEQUENT EVENTS On April 19, 2016, the Company grants equity awards of 151,000 7,467 The Company has evaluated subsequent events through the issuance of the consolidated financial statements and no other subsequent event is identified. |
SUMMARIES OF SIGNIFICANT ACCO22
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of preparation | a. Basis of preparation The accompanying consolidated balance sheet as of December 31, 2015, which has been derived from audited financial statements, and the unaudited interim consolidated financial statements as of March 31, 2016 and for the three month periods ended March 31, 2016 and 2015 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP), have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation. The interim financial information should be read in conjunction with the Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, previously filed with the SEC. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2016, its consolidated results of operations and cash flows for the three month periods ended March 31, 2016 and 2015, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
Principles of consolidation | b. Principles of consolidation The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries and VIEs. Upon consolidation, all balances and transactions between the Company and its subsidiaries and VIEs have been eliminated. |
Use of estimates | c. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include valuation allowances for receivables and recoverability of carrying amount and the estimated useful lives of long-lived assets. |
Cash and cash equivalents | d. Cash and cash equivalents Cash and cash equivalents include cash on hand, cash on deposit with various financial institutions in PRC and all highly-liquid investments with original maturities of three months or less at the time of purchase. Cash accounts are not insured or otherwise protected. Should any bank or trust company holding cash deposits become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash on deposits with that particular bank or other financial institutions. |
Property and equipment | e. Property and equipment Property and equipment mainly comprise computer equipment, hardware and office furniture. Property and equipment are recorded at cost less accumulated depreciation with no residual value. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: 5 years Computers 3 years Depreciation expense is allocated among Research and development expenses, Selling and marketing expenses and General and administrative expenses. When office equipment and electronic devices are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. |
Impairment of long-lived assets | f. Impairment of long-lived assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount of the asset and its fair value. There were no impairment losses for the three months ended March 31, 2016 and 2015, respectively. |
Revenue recognition | Revenue recognition The Company recognizes revenue in accordance with ASC 605, Revenue Recognition Online Membership Revenue Online membership revenue includes revenue from members for brand advertising services as well as others services. The Company has the arrangements with nonrefundable up-front fees model (“the Model”) to recognize revenue for the online membership business. We apply the Model, where a contract is signed to establish a fixed price for our services to be provided for a period of time as a membership enrollment, for a majority of our online membership revenue. Revenue is recognized ratably over the membership periods on a straight line basis, unless evidence suggests that the revenue is earned or obligations are fulfilled in a different pattern, over the contractual term of the arrangement or the expected period during which those specified services will be performed, whichever is longer. The Company provides advertisement placements to our advertising customers on our different Website channels and in different formats, which can include, among other things, banners, links, logos, buttons, rich media, pre-roll and post-roll video screens, pause video screens and content integration, as specified in the contracts with the members. The members can choose various on line services from the membership contracts based on their yearly membership. The Company recognizes revenue when all revenue recognition criteria are met. |
Related parties | h. Related parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Earnings (loss) per common share | i. Earnings (loss) per share Basic earnings (loss) per share is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for all periods. Diluted earnings per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares outstanding, increased by common stock equivalents. Common stock equivalents represent incremental shares issuable upon exercise of outstanding warrants. However, potential common shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded. |
Foreign currency transactions and translations | j. Foreign currency transactions and translations An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The reporting currency of the Company is United States dollars (“U.S. dollars” or “$”), and the functional currency of HK Science & Technology is Hong Kong dollars (“HK dollar”). The functional currency of the Company’s PRC subsidiary and VIEs is the RMB, and PRC is the primary economic environment in which the Company operates. The reporting currency of these consolidated financial statements is U.S. dollars. For financial reporting purposes, the financial statements of the Company’s PRC subsidiary and VIEs, which are prepared using the RMB, are translated into the Company’s reporting currency, U.S. dollars. The financial statements of HK Science & Technology, which are prepared using the HK dollar, are translated into the Company’s reporting currency, U.S. dollars. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders' equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in owners’ equity. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income (loss) of the consolidated financial statements for the respective periods. March 31, December 31, ($1 = RMB) Balance sheet items, except for equity accounts 6.4494 6.4917 ($1 = HKD) Balance sheet items, except for equity accounts 7.7507 7.7507 Three Months Ended March 31, 2016 2015 ($1 = RMB) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 6.5405 6.1444 ($1 = HKD) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 7.7524 7.7556 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. Translations adjustments resulting from this process are included in accumulated other comprehensive loss in the shareholders’ equity were $ 65,843 68,167 |
Fair Value Measurements | k. Fair Value Measurements The Company applies the provisions of ASC Subtopic 820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ¨ Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ¨ Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ¨ Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. There were not transfers between level 1, level 2 or level 3 measurements for the three months ended March 31, 2016 and 2015, respectively. The carrying values of the Company’s financial assets and liabilities, including accounts receivables, other current assets, and accrued expenses and other current liabilities, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. |
Share-Based Compensation | l. Share-Based Compensation Pursuant to ASC Topic 718, Compensation - Stock Compensation |
Recently adopted accounting pronouncements | m. Recently adopted accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this update defers the effective date of ASU 2014-09 for all entities by one year to annual periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, interim and annual reporting periods after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. In April 2016, the FASB issued Accounting Standards Update 2016-10, Revenue from Contracts with Customers. These new standards will identify performance obligations. The Company is currently evaluating the effect of these new standards, including the transition method, to determine the impact on the Company's consolidated financial position, results of operations, cash flows, or related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), aimed at making leasing activities more transparent and comparable. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including today’s operating leases. For public business entities, the standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all entities. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In March, 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." This update was issued as part of a simplification effort for the accounting of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations, financial condition and cash flows. We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
VARIABLE INTEREST ENTITIES [Abstract] | |
Schedule of Balances of VIEs included in Financial Statements | The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements as of and for the three months ended March 31, 2016 and 2015, respectively: March 31, December 31, (Unaudited) Total assets $ 495,507 $ 586,746 Total liabilities $ 263,292 $ 265,795 For the Three Months Ended March 31, 2016 2015 (Unaudited) (Unaudited) Revenues $ 172,166 $ 397,276 Net income (loss) $ (35,544) $ 140,471 |
SUMMARIES OF SIGNIFICANT ACCO24
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Schedule of Depreciation of Property and Equipment | Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: 5 years Computers 3 years |
Schedule of Exchange Rates for Foreign Currency Translation | The exchange rates used for foreign currency translation were as follows: March 31, December 31, ($1 = RMB) Balance sheet items, except for equity accounts 6.4494 6.4917 ($1 = HKD) Balance sheet items, except for equity accounts 7.7507 7.7507 Three Months Ended March 31, 2016 2015 ($1 = RMB) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 6.5405 6.1444 ($1 = HKD) Items in the statements of operations and comprehensive income(loss), and statements of cash flows 7.7524 7.7556 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
EARNINGS (LOSS) PER SHARE [Abstract] | |
Schedule of Reconciliation of Basic and Diluted Earnings (Loss) Per Share Computations | The following is a reconciliation of the basic and diluted earnings (loss) per share computations for the three months ended March 31, 2016 and 2015: For the Three Months Ended March 31, 2016 2015 (Unaudited) (Unaudited) Net income (loss) $ (38,195) $ 140,471 Weighted average shares used in basic and diluted computation 65,679,533 65,409,009 Earnings/(loss) per share: Basic and diluted $ (0.0006) $ 0.0021 |
PREPAID EXPENSES AND OTHER CU26
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | |
Schedule of Prepayments and Other Current Assets | At March 31, 2016 and December 31, 2015, prepayment and other current assets consists of: December 31, 2016 2015 (Unaudited) Prepayment to advertisement and internet resources providers $ 5,011 $ 3,419 Other current assets 14,747 13,985 $ 19,758 $ 17,404 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following: March 31, 2016 December 31, 2015 (Unaudited) Office and other equipment $ 97,468 $ 92,665 Computers 61,487 61,087 Property and equipment, cost 158,955 153,752 Less: accumulated depreciation (150,514) (148,067) Property and equipment, net $ 8,441 $ 5,685 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
ADVANCE FROM CUSTOMERS AND DEFERRED REVENUE [Abstract] | |
Schedule of Advanced from Customers and Deferred Revenue | As of March 31, 2016 and December 31, 2015, deferred revenue consists of the following: March 31, 2016 December 31, 2015 (Unaudited) Deferred revenue, current $ 14,090 $ 26,366 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
OTHER CURRENT LIABILITIES [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities consists of the following: March 31, 2016 December 31, 2015 (Unaudited) Payroll payable $ 23,779 $ 21,736 Other payable 1,827 1,778 Total $ 25,606 $ 23,514 |
TAXATION (Tables)
TAXATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
TAXATION [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the provision for income taxes determined at the U.S. federal corporate income tax rate to the Company’s effective income tax rate is as follows: March 31, 2016 March 31, 2015 (Unaudited) (Unaudited) US federal rate 34 % 34 % Taxable income (loss) $ (29,527) $ 206,422 Computed expected income tax (expense)/ benefit 10,039 (70,183) Reconciliation items: Rate differential for domestic earnings (2,657) 18,578 Non-deductible expenses (439) (185) Valuation allowance on deferred tax assets (15,611) (14,161) Effective income tax expense $ (8,668) $ (65,951) |
DESCRIPTION OF BUSINESS AND O31
DESCRIPTION OF BUSINESS AND ORGANIZATION (Details Textual) - shares | 1 Months Ended | |||
Oct. 29, 2012 | Jan. 21, 2012 | Mar. 31, 2016 | Dec. 31, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 10.00% | |||
Common stock, shares outstanding | 65,679,533 | 65,679,533 | ||
Science & Technology Media [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Shares issued | 50,000,000 | |||
Percent of diluted outstanding shares held | 95.02% | |||
Shares cancelled | 10,000,000 | |||
Ownership percentage | 100.00% | |||
Common stock, shares outstanding | 52,620,030 | |||
Dalian [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Remaining equity interest percentage | 15.00% | |||
Percentage of net profit collected | 85.00% |
GOING CONCERN AND LIQUIDITY (De
GOING CONCERN AND LIQUIDITY (Details Textual) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||||
Accumulated deficit | $ 1,064,472 | $ 1,023,818 | ||
Cash and cash equivalents | 449,462 | $ 561,578 | $ 482,421 | $ 909,922 |
Net Income (Loss) Attributable to Parent | $ (38,195) | $ 140,471 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Variable Interest Entities [Line Items] | |||
Total assets | $ 550,899 | $ 586,746 | |
Total liabilities | 265,819 | $ 265,795 | |
Revenues | 172,166 | $ 397,276 | |
Net income (loss) | $ (38,195) | $ 140,471 |
SUMMARIES OF SIGNIFICANT ACCO34
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Office and other equipment [Member] | |
Summary Of Significant Accounting Policies Additional Textual [Line Items] | |
Property and equipment, estimated useful lives | 5 years |
Computers [Member] | |
Summary Of Significant Accounting Policies Additional Textual [Line Items] | |
Property and equipment, estimated useful lives | 3 years |
SUMMARIES OF SIGNIFICANT ACCO35
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
RMB [Member] | |||
Exchange Rates Used for Foreign Currency Translation [Line Items] | |||
Foreign currency translation, Balance sheet items, except for equity accounts | 6.4494 | 6.4917 | |
Foreign currency translation, Items in the statements of operations and comprehensive income(loss), and statements of cash flows | 6.5405 | 6.1444 | |
HKD [Member] | |||
Exchange Rates Used for Foreign Currency Translation [Line Items] | |||
Foreign currency translation, Balance sheet items, except for equity accounts | 7.7507 | 7.7507 | |
Foreign currency translation, Items in the statements of operations and comprehensive income(loss), and statements of cash flows | 7.7524 | 7.7556 |
SUMMARIES OF SIGNIFICANT ACCO36
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ 65,843 | $ 68,167 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Loss Share [Line Items] | ||
Net income (loss) | $ (38,195) | $ 140,471 |
Weighted average shares used in basic and diluted computation | 65,679,533 | 65,409,009 |
Earnings/(loss) per share: | ||
Basic and diluted | $ (0.0006) | $ 0.0021 |
CONCENTRATION OF RISK (Details
CONCENTRATION OF RISK (Details Textual) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Sales [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 93.00% | |
Sales [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 46.00% | |
Sales [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 19.00% | |
Sales [Member] | Customer Three [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 12.00% | |
Supplier [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 10.00% | 10.00% |
PREPAID EXPENSES AND OTHER CU39
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Prepaid Expenses And Other Current Assets [Line Items] | ||
Prepayment to advertisement and internet resources providers | $ 5,011 | $ 3,419 |
Other current assets | 14,747 | 13,985 |
Total | $ 19,758 | $ 17,404 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, cost | $ 158,955 | $ 153,752 |
Less: accumulated depreciation | (150,514) | (148,067) |
Property and equipment, net | 8,441 | 5,685 |
Office and other equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, cost | 97,468 | 92,665 |
Computers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, cost | $ 61,487 | $ 61,087 |
PROPERTY AND EQUIPMENT (Detai41
PROPERTY AND EQUIPMENT (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 1,456 | $ 6,812 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Revenue From Related Parties | $ 159,890 | $ 0 | |
Xie He Si Decoration Co., Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Amount due to affiliated company | $ 80,778 | $ 80,251 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Advance From Customers And Deferred Revenue [Line Items] | ||
Deferred revenue, current | $ 14,090 | $ 26,366 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Other Current Liabilities [Line Items] | ||
Payroll payable | $ 23,779 | $ 21,736 |
Other payable | 1,827 | 1,778 |
Total | $ 25,606 | $ 23,514 |
TAXATION (Details)
TAXATION (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Effective Tax Rate Reconciliation [Line Items] | ||
US federal rate | 34.00% | 34.00% |
Taxable income (loss) | $ (29,527) | $ 206,422 |
Computed expected income tax (expense)/ benefit | 10,039 | (70,183) |
Reconciliation items: | ||
Rate differential for domestic earnings | (2,657) | 18,578 |
Non-deductible expenses | (439) | (185) |
Valuation allowance on deferred tax assets | (15,611) | (14,161) |
Effective income tax expense | $ (8,668) | $ (65,951) |
TAXATION (Details Textual)
TAXATION (Details Textual) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Effective Tax Rate Reconciliation [Line Items] | ||
Effective tax rate | 29.00% | 32.00% |
Statutory rate | 25.00% | 25.00% |
Business Tax and relevant surcharge | Revenue of our membership and advertising planning services are subject to 5% business tax and 0.6% total surcharge of the gross service income for the business incurred prior to October 31, 2013. | |
Value Added Tax and relevant surcharge | Revenue of our membership and advertising planning services are subject to 6% value added tax (VAT) and 0.72% total surcharge of the gross service income for the business incurred on and after November 1, 2013. |
STATUTORY RESERVES (Details Tex
STATUTORY RESERVES (Details Textual) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 10.00% | |
Statutory Accounting Practices, Statutory Capital and Surplus Required | $ 2,459 | $ 0 |
SHARES GRANTED AND ISSUED TO 48
SHARES GRANTED AND ISSUED TO EMPLOYEES (Details Textual) - USD ($) | Feb. 10, 2015 | Nov. 27, 2015 | Mar. 31, 2016 |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||
Price per share | $ 0.04945 | ||
2 part-time consultants and 46 employees [Member] | |||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||
Stock issued for services (in shares) | 429,200 | ||
Stock issued for services | $ 21,224 | ||
One part-time consultant [Member] | |||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||
Stock issued for services (in shares) | 75,000 | ||
Stock issued for services | $ 3,709 |
COMMITMENTS (Details Textual)
COMMITMENTS (Details Textual) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Commitments And Contingencies [Line Items] | ||
Operating lease commitment payable in one year | $ 4,308 | $ 17,121 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - Subsequent Event [Member] | 1 Months Ended |
Apr. 19, 2016USD ($)shares | |
Stock Issued During Period, Shares, Issued For Services | shares | 151,000 |
Stock Issued During Period, Value, Issued For Services | $ | $ 7,467 |