| NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Basis of Presentation The
accompanying consolidated financial statements ("CFS") are prepared in conformity with U.S. Generally Accepted Accounting
Principles (US GAAP). The functional currency of Bison, Yinhang US and Yinhang HK are U.S. dollars (USD).
The functional currency of HSWJ, Huashangjie, UKT, and Qianxian Media is Chinese Renminbi (RMB). The
accompanying financial statements are translated from RMB and presented in USD. Principles
of Consolidation The
accompanying consolidated financial statements include the accounts of Bison, Yinhang US, Yinhang HK, WOFE, Huashangjie, UKT, and
Qianxian Media, which are collectively referred to as the Company. All significant intercompany accounts and transactions
were eliminated in the consolidated financial statements. VIE Agreement The consolidated
financial statements include the financial statements of the Company, its subsidiaries and its VIE (HSJ, UKT and Qianxian Media)
for which the Companys subsidiary HSWJ is the primary beneficiary. On February 5, 2015, HSJ, UKT and Qianxian
Media and their shareholders entered into a series of agreements including Management Entrustment Agreement (MEA),
Exclusive Purchase Option Agreement, and Equity Pledge Agreement with HSWJ (or WFOE), and each of the shareholders
of these three companies granted HSWJ an irrevocable power of attorney through the Power of Attorney Authorization Agreement to
appoint HSWJ as its sole attorney-in-fact to exercise all of its rights as equity owner of these three companies. As a result of
these agreements, HSWJ has the right to control and administer the financial affairs and daily operations of these three companies
in all the aspects and has the right to manage and control all assets of these three companies. The equity holders of these three
companies as a group have no right to make any decision about these three companies activities without the consent of HSWJ.
In consideration for its services, HSWJ is entitled to receive quarterly management and consulting fees equal to all after-tax
profits, if any, of that quarter. If there are no net earnings after taxes, then no fee shall be paid. If the Companies sustain
losses, they will be carried over to the next quarterly period and deducted from the next quarters service fee (or net earnings).
These three companies have the right to require that HSWJ to pay back these three companies for the amount of any net loss incurred
by these three companies for any quarterly period given such losses have not been offset against a net profit. The term of the MEA will continue for
30 years, or until February 4, 2045, and will be extended automatically for successive 10 year periods thereafter, except that
the agreement will terminate (i) at the expiration of the initial 30-year term, or any 10-year renewal term, if WFOE notifies these
three companies not less than 30 days prior to the applicable expiration date that it does not want to extend the term, (ii) upon
prior written notice from WFOE, or (iii) upon the date WFOE acquires all of the assets, or at least 51% of the equity interests,
of these three companies. The shareholders of these three companies
irrevocably granted HSWJ or its designated person an exclusive purchase option to acquire, at any time, all of the assets or outstanding
shares of these three companies, to the extent permitted by PRC law. The purchase price for the shareholders
equity interests in these three companies was equal to the actual registered capital of these three companies, unless an appraisal
is required by the laws of China. The term of each Exclusive Purchase Option Agreement is same as the term indicated in MEA. Each shareholder of these three companies
executed an irrevocable power of attorney to appoint HSWJ as its solely attorney-in-fact to exercise all of its rights as equity
owner of these three companies, including but not limited to 1) attend the shareholders meetings of these three companies
and/or sign the relevant resolutions; 2) exercise all the shareholder's rights and shareholder's voting rights that the shareholder
is entitled to under the laws of the PRC and the Articles of Association of these three companies, including but not limited to
the sale or transfer or pledge or disposition of the shares in part or in whole; 3) designate and appoint the legal representative,
Chairman of the Board of Directors, Directors, Supervisors, the Chief Executive Officer, Financial Officer and other senior management
members of these three companies; and 4) execute the relevant share purchases and other terms stipulated in the Exclusive Purchase
Option and Share Pledge Agreements. To ensure and guarantee the execution
and performance of its obligation under of MEA, Exclusive Purchase Option Agreement and Power of Attorney Agreement by these three
companies and each of their shareholders, each shareholder pledged to HSWJ for their full ownership interests in these three companies.
If either these three companies or their equity owners are in breach of the Agreements, then HSWJ shall be entitled to require
the equity owners of these three companies to transfer their equity interests in these three companies to it. As a result of these agreements, HSWJ
is considered the primary beneficiary of HSJ, UKT and Qianxian Media, and HSWJ can consolidate the results of operations of these
companies, as HSWJ contractually controls the management of these Companies, and the Companies and their shareholders granted an
irrevocable proxy to HSWJ or its designee, as defined by ASC Topic 810, Consolidation of Variable Interest Entities,
an Interpretation of Accounting Research Bulletin No. 51, which requires certain VIEs to be consolidated by the primary beneficiary
of the entity if that primary beneficiary of the entity is subject to a majority of the risk of loss for the VIE or is entitled
to receive a majority of the VIEs residual returns. However, the
VIE is monitored by the Company to determine if any events have occurred that could cause its primary beneficiary status to change.
These events include:
a. The legal entity's governing documents or contractual arrangements are changed in a manner that changes the characteristics or adequacy of the legal entity's equity investment at risk.
b. The equity investment or some part thereof is returned to the equity investors, and other interests become exposed to expected losses of the legal entity.
c. The legal entity undertakes additional activities or acquires additional assets, beyond those anticipated at the later of the inception of the entity or the latest reconsideration event, that increase the entity's expected losses.
d. The legal entity receives an additional equity investment that is at risk, or the legal entity curtails or modifies its activities in a way that decreases its expected losses. There has been
no change in the VIE structure, and none of the events listed in a-d above have occurred as of June 30, 2015. Going
Concern The
Company incurred net losses of $ 1.87 million for the six months ended June 30, 2015. The Company also had a shareholders' deficit
of $8.42 million as of June 30, 2015. These conditions raise a substantial doubt about the Companys ability to continue
as a going concern. The company is currently in a strategic changing of current business model to rural e-commerce trading platform,
which integrates e-commerce and electronic administrative affairs of village, and targets the users from village and rural area.
The Company is currently test running the rural e-commerce trading platform, expects the official operation within a few months.
With existing resources for the sales and marketing channels including over 8,000 agents, and huge market for internet users in
the rural area, the managements expects a healthy growth of the business; the management also intends to raise additional financing
through debt and equity financing or through other means that it deems necessary, with a view to moving forward and sustaining
prolonged growth in its strategy phases. However, no assurance can be given that the Company will be successful in raising additional
capital. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Use
of Estimates In
preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements,
as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management,
include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving
inventories. Actual results could differ from those estimates. Cash and Equivalents For
financial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or
less to be cash equivalents. Inventory Inventory
mainly consists of point of sales machines, health monitoring wristwatches and tablets, etc. Inventory is valued at the lower of
average cost or market, cost being determined on a moving weighted average method. Inventory cost includes labor and production
overheads. Property
and Equipment Property
and equipment are stated at cost, less accumulated depreciation. Major repairs and betterments that significantly extend original
useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed
as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are
removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is
provided using shorter of useful life of the property or the unit of depletion method. For shorter-lived assets the straight-line
method over estimated lives ranging from 3 to 7 years is used as follows:
Office Equipment 3-5 years
Furniture 7 years
Electronic Equipment 5 years Impairment of Long-Lived Assets Long-lived assets, which include property
and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable, but at least annually. Recoverability of long-lived assets
to be held and used is measured by comparing of the carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by it. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment
charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value (FV). FV is generally
determined using the assets expected future discounted cash flows or market value, if readily determinable. Based on its
review, the Company Income Taxes The Company When tax returns are filed, it is likely
that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about their merits or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized
in the financial statements in the period during which, based on all available evidence, management believes it is more likely
than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if
any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition
threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with
the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any
associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized
tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in
the statements of income. At June 30, 2015 and December 31, 2014, the Company Revenue Recognition The Companys Company Company The Company grants perpetual access
to platform usage to certain customers. Revenue and commission costs for such licenses are recorded over a five-year estimated
customer turnover period. This period is based on the Company's historical experience of customers activity. Deferred Revenue and Prepaid Commission HSJ provides platform-hosting services
to end users which advertise their products on its website. The end users are solicited through independent sales agents. The agents
solicit end customers at their designated territories to advertise end customers products on HSJs website for a fee
determined by the sales agents. The sales agents are HSJs customers and they pay a fee to HSJ. However, the fees paid by
the agents to HSJ are not determined by reference to the fees they receive from end users. Some agents make periodic payments for
the periods they use the HSJs platform service; some pay the entire fees at once, at the outset of the relationship; and
others pay the entire fee over five years. These fees are HSJs main revenue source. Fee received is recorded as deferred
revenue and amortized over five years. Certain agents get the right to use
the platform for an agreed upon period and pay in installments over five years, even though their use right might be greater than
five years. Lump sum payers and some payers which pay over five years are given the right to use the system in perpetuity assuming
all amounts are paid. HSJ provides rebates in the form of cash or points credit to sales agents ranging from 20% - 30% of the platform-usage
fee. Such rebates are treated like sales commissions. HSJ paid commissions when fees are received from agents are recorded as prepaid
commission; such prepaid commission is expensed when the corresponding revenue is recognized. Cost of Revenue Cost of revenue (COR)
consists primarily of cost of purchasing inventory, commissions paid to sales agents and amortization of the web hosting platform
cost. Write-down of inventory to lower of cost or market is also recorded in COR. Concentration of Credit Risk The operations of the Company Company Company Statement
of Cash Flows In accordance with ASC Topic 230, Statement
of Cash Flows, Fair Value (FV) of
Financial Instruments Certain of the Company Company Fair Value Measurements and Disclosures ASC Topic 820, Fair Value Measurements and Disclosures, defines
FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for
FV measures. The three levels are defined as follow:
● 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
● Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement. As of June 30, 2015 and December 31,
2014, the Company Foreign
Currency Translation and Comprehensive Income (Loss) The
functional currency of the Company is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency.
Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated
at the average rate of exchange prevailing during the reporting period. Translation
adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders
equity as Accumulated other comprehensive income. Gains and losses resulting from foreign currency transactions are
included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance
sheet date. The
Company uses FASB ASC Topic 220, Comprehensive Income. Comprehensive income (loss) is comprised of net income (loss)
and all changes to the statements of stockholders equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders. Comprehensive income (loss) for the six and three months ended June 30, 2015 and 2014
consisted of net loss and foreign currency translation adjustments. Basic and Diluted Earnings per Share
(EPS) Basic
EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS
is computed similar to basic net income per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and
if the additional common shares were dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible
shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method for
the outstanding options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury
stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later)
and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted
method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at
the time of issuance, if later). The Company did not have any dilutive shares at June 30, 2015. Segment Reporting SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information requires use of the management approach model for segment
reporting, codified in FASB ASC Topic 280. The management approach model is based on the way a companys management organizes
segments within the company for making operating decisions and assessing performance. Reportable segments are based on products
and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company has three operating segments:
1) providing Internet platform services; 2) on-line and physical stores to sell featured products labeled with UKT trademark, and
3) providing advertising-supported website and magazine to publicize the information and news regarding urban and rural areas such
as agriculture polices and agriculture related videos to attract advertising source income. These operating segments were determined
based on the nature of the products offered or services provided. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding
how to allocate resources and in assessing performance. The Companys chief operating decision makers direct the allocation
of resources to operating segments based on the profitability, cash flows, and other measurement factors of each respective segment. The Company evaluates performance based
on several factors, of which the primary financial measure is business segment income before taxes. The following table shows the
operations of the Company's reportable segments for six and three months ended June 30, 2015 and 2014, and as of June 30, 2015
and December 31, 2014, respectively.
Six Months Ended June 30,
2015 2014
Revenue:
Internet platform services $ 2,564,024 $ 4,141,151
On-line and physical UKT stores 13,829 500,453
Advertising income from website and magazine 175,131 194,369
Consolidated $ 2,752,984 $ 4,835,973
Operating income (loss):
Internet platform services $ (674,379 ) $ (295,327 )
On-line and physical UKT stores (187,667 ) 1,859
Advertising income from website and magazine (12,416 ) (161,713 )
WOFE and holding company (744,898 ) -
Consolidated $ (1,619,360 ) $ (455,179 )
Net income (loss):
Internet platform services $ (926,770 ) $ 230,839
On-line and physical UKT stores (184,744 ) 10,917
Advertising income from website and magazine (32,391 ) (180,826 )
WOFE and holding company (730,065 ) -
Consolidated $ (1,873,970 ) $ 60,930
Depreciation and amortization:
Internet platform services $ 86,452 $ 82,475
On-line and physical UKT stores 11,415 2,183
Advertising income from website and magazine 695 1,833
Consolidated $ 98,562 $ 86,491
Three Months Ended June 30,
2015 2014
Revenue:
Internet platform services $ 1,226,518 $ 2,972,149
On-line and physical UKT stores 126 432,820
Advertising income from website and magazine 87,412 100,535
Consolidated $ 1,314,056 $ 3,505,504
Operating income (loss):
Internet platform services $ (374,854 ) $ 513,360
On-line and physical UKT stores (94,747 ) 15,109
Advertising income from website and magazine (6,336 ) (73,123 )
WOFE and holding company (371,482 ) -
Consolidated $ (847,419 ) $ 455,346
Net income (loss):
Internet platform services $ (551,973 ) $ 325,017
On-line and physical UKT stores (94,084 ) 24,030
Advertising income from website and magazine (16,327 ) (82,912 )
WOFE and holding company (356,478 ) -
Consolidated $ (1,019,062 ) $ 266,135
Depreciation and amortization:
Internet platform services $ 43,306 $ 62,895
On-line and physical UKT stores 3,959 1,099
Advertising income from website and magazine 161 917
Consolidated $ 47,426 $ 64,911
Total assets:
As of June 30, 2015
As of December 31, 2014
Internet platform services $ 11,340,936 $ 13,210,486
On-line and physical UKT stores 58,073 103,881
Advertising income from website and magazine 451,236 569,223
WOFE and holding company 2,321,384 3,052,255
Intercompany elimination (3,046,496) (2,826,826)
Consolidated $ 11,125,133 $ 14,109,019 New Accounting Pronouncements In February
2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) - Amendments to the Consolidation Analysis, which provides
guidance for reporting entities that are required to evaluate whether they should consolidate certain legal entities. In accordance
with ASU 2015-02, all legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 is effective
for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15,
2015. Early adoption is permitted. The Company does not anticipate that this adoption will have a significant impact on its consolidated
financial position and results of operations. The FASB issued ASU No. 2014-12, Compensation
- Stock Compensation (ASC Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance
Target Could Be achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting,
and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance
target should not be reflected in estimating the grant date FV of the award. This update further clarifies that compensation cost
should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in
this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier
adoption is permitted. The adoption of this standard is not expected to have a material impact on the Companys consolidated
financial position and results of operations. The FASB issued ASU No. 2014-09, Revenue
from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605
- Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires an entity recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively
to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized
at the date of initial application. The adoption of this standard is not expected to have a material impact on the Companys
consolidated financial position and results of operations. In August 2014, the FASB issued Presentation
of Financial Statements Going Concern. This standard requires management to evaluate for each annual and interim reporting
period whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one
year after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain
disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance
is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December
15, 2016. Early application is permitted. The Company does not anticipate that this adoption will have a significant impact on
the disclosures related to its consolidated financial position and results of operations. As
of June 30, 2015, there is no recently issued accounting standards not yet adopted that would have a material effect on the Companys
consolidated financial statements. |
