| DISCONTINUED OPERATION | 3. DISCONTINUED OPERATION On January 28, 2016, Cloudweb concluded a Share Exchange Agreement entered into with Liao Zhi De, whereby Cloudweb issued 2,500,000 shares of its common stock to Mr. Liao in exchange for 100% of the issued and outstanding equity interests of . Data Cloud owns 100% of the issued and outstanding equity interests of which it purchased from James Holland for US$72,000 (GBP 47,000) on November 25, 2015. WHS has been providing web hosting solutions for approximately ten (10) years and became a UK private limited company in 2012. In connection with the Share Exchange Agreement, Cloudweb elected to enter into the web hosting industry. As a result of the Share Exchange Agreement, Liao Zhi De became the sole executive officer and sole member of the Board of Directors of Cloudweb. Mr. Liao also controls Letterston Investments Ltd., which acquired 250,000,000 shares of common stock of Cloudweb on January 28, 2016. Therefore, Mr. Liao controls approximately 81% of Cloudweb’s issued and outstanding shares of common stock. The business combination as a result of the Share Exchange Agreement is deemed to be a reverse acquisition pursuant to SEC guidance, ASC 805-40-25-1, which provides that the merger of a private operating company into a public corporation with nominal net assets typically results in the owners and management of the private company having actual or effective operating control of the combined company after the transaction, with shareholders of the former public entity continuing only as passive investors. These transactions are considered to be capital transactions in substance, rather than business combinations. That is, the transaction is equivalent to the issuance of stock by the private company for the net monetary assets of the public corporation, accompanied by a recapitalization. The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible should be recorded. Accordingly, Cloudweb (the legal acquirer) is considered the accounting acquiree and Data Cloud (the legal acquire) is considered the accounting acquirer. The consolidated financial statements of the combined entity will in substance be those of Data Cloud, with assets and liabilities, and revenues and expenses, of Cloudweb being included effective from the date of completion of the Share Exchange Transaction. Cloudweb is deemed to be a continuation of the business of Data Cloud. The outstanding stock of Cloudweb prior to the Share Exchange Transaction will be accounted for at its net book value and no goodwill will be recognized. Upon the closing, the Company changed its business from the global exclusive distribution of Formigli Bicycles to enter into the web hosting industry. the Company reflects the operations of Formigli Bicycle as discontinued operations as at the fiscal year ended December 31, 2015. Assets and Liabilities from discontinued operations December 31, 2015 December 31, 2014 ASSETS Current assets Accounts receivable - 3,694 Total current assets - 3,694 LIABILITIES Current liabilities Accounts payable $ 4,926 $ 14,806 Accounts payable, related party 167,885 35,000 Customer deposits - 3,897 Total current liabilities 172,811 53,703 Total liabilities 172,811 53,703 The results of the discontinued operations are as follows: Year ended December 31, 2015 2014 Net sales $ 73,383 $ 61,426 Cost of goods sold 39,038 46,452 Gross profit 34,345 14,974 Selling, general and administrative expenses (172,736 ) (80,348 ) Financing expenses (10,000 ) - Income (loss) from discontinued operations (148,391 ) (65,374 ) Year Ended December 31, 2015 Year Ended December 31, 2014 Cash Flows From Discontinued Activities Net loss from discontinued operations $ (148,391 ) $ (65,374 ) Adjustments to reconcile net income to net cash provided from operating activities: Stock issued for services provided - 24,500 Changes in operating assets and liabilities: Deferred offering costs 10,000 (10,000 ) Accounts payable (9,880 ) 14,806 Accounts payable – related party 132,885 35,000 Accounts receivable 3,694 (3,694 ) Customer deposits (3,897 ) 3,897 Net cash provided used by discontinued activities (15,589 ) (865 ) Exclusive Global Distribution Agreement under discontinued operation On June 1, 2014, the Company (hereinafter referred to as “Distributor”) entered into a global exclusive distribution agreement (“Agreement”) with Formigli, the producer of bicycle frame sets from Italy (“Products”), having business address at Emidio Spinucci 16/a, Firenz, Italia 50141 (hereinafter referred to as “Manufacturer”). The Company is not related to Formigli manufacturing and is in no way affiliated with Cloudweb beyond the terms of the Agreement. Under the terms of the Agreement, Distributor desires to secure from Manufacturer, and Manufacturer is willing to grant to Distributor, the exclusive right to market, sell and distribute
Manufacturer’s Products globally with the exception of Italy and direct global website, direct all retail, wholesale sales and team sponsorship sales exported out of the country from Manufacturer’s (hereinafter referred to as the “Territory”). Distributor will be granted rights to www.formigli.com www.formigli.it Under the Agreement, Manufacturer appoints Distributor as its sole and exclusive distributor for the sale and distribution of the products in and throughout the Territory. The term of this agreement shall be for a period of five years commencing on June 1, 2014 and terminating on June 1, 2019 and shall thereafter continue in effect unless either party shall notify the other of its intention to terminate the agreement by giving at least 12 months written notice prior to any specified termination date. This agreement was assigned to our former officer and director, Ms. Amy Chaffe, as part of the change in business effected in the first quarter of fiscal 2016. |
