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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
  or
[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from   to  
Commission File Number 000-51693
UAN Cultural & Creative Co., Ltd.
(Exact name of registrant as specified in its charter)
Delaware   20-3303304
(State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)
1021 Hill Street, Suite 200, Three Rivers, Michigan 49093
(Address of principal executive offices) (Zip Code)
(586) 530-5605
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] YES [  ] NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
  [X] YES [  ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
  [  ] YES [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

  [  ] YES [  ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
53,672,708 common shares issued and outstanding as of November 21, 2012.
                                         
 
 

EXPLANATORY NOTE

 

In connection with the filing of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, UAN Cultural & Creative Co., Ltd. is relying on Release No. 68224 issued by the Securities and Exchange Commission (the “SEC”), titled “Order Under Section 17A and Section 36 of the Securities Exchange Act of 1934 Granting Exemptions from Specified Provisions of the Exchange Act and Certain Rules Thereunder,” which provides that filings by registrants unable to meeting filing deadlines due to Hurricane Sandy and its aftermath shall be considered timely so long as the filing is made on or before November 21, 2012, and the conditions contained therein are satisfied. The Company’s independent registered public accounting firm and other advisers are located in the greater New York area, and were adversely impacted by the lack of communications, transportation, electricity and facilities, and accordingly the Company was unable to file this Report by November 14, 2012 due to disruptions caused by Hurricane Sandy.

UAN CULTURAL & CREATIVE CO., LTD.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION 3
   
Item 1.    Financial Statements 3
   
Item 2.  Management's Discussion and Analysis of Financial Condition and Result of Operations 17
   
Item 3.   Quantitative and Qualitative Disclosure About Market Risks 28
   
Item 4.  Controls and Procedures 28
   
PART II - OTHER INFORMATION 28
   
Item 1.  Legal Proceedings 28
   
Item 1A.  Risk Factors 28
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 28
   
Item 3.  Defaults Upon Senior Securities 28
   
Item 4.  Mine Safety Disclosures 28
   
Item 5.  Other Information 28
   
Item 6.  Exhibits 29
   
SIGNATURES 30

 

2
 

 

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

 

Our unaudited interim financial statements for the three and nine month periods ended September 30, 2012 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

 

 

 

3
 

UAN Cultural & Creative Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

 

   September 30,
2012
  December 31,
2011
   (Unaudited)   
       
ASSETS          
Current Assets:          
Cash and cash equivalents  $120,172   $441,448 
Accounts and notes receivable   260,433    307,793 
Inventory   2,194    441,607 
Other current assets   81,081    118,933 
Total current assets   463,880    1,309,781 
           
Fixed assets, net (Note 4)   —      74,900 
Other assets   105,502    68,268 
Total assets  $569,382   $1,452,949 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities:          
Accounts payable  $56,372   $93,206 
Accrued expenses   38,178    123,974 
Notes payable   69,855    39,645 
Deposit from customers   —      31,925 
Other payables   2,627    6,457 
Due to officer & shareholder (Note 9)   25,322    99,991 
Income Taxes Payable (Note 5)   2,591    31,510 
Total current liabilities   194,945    426,708 
           
Long Term Notes Payable   75,676    58,998 
Total liabilities   270,621    485,706 
           
Commitments & Contingencies (Note 6)   —      —   
           
Stockholders' Equity (Notes 2, 7 and 8):          
Preferred stock, $.0001 par value, 5,000 shares authorized, 0 shares issued   —      —   
Common stock, $.0001 par value, 100,000,000 shares authorized, 53,672,708 shares issued and outstanding on December 31, 2011 and December 31, 2010.   5,367    5,367 
Common stock, Class B, $.0001 par value,12,000,000 shares authorized, 0 shares          
 issued and outstanding   —      —   
Additional paid-in-capital   3,048,134    3,048,134 
Accumulated deficit   (2,756,087)   (2,074,530)
Accumulated other comprehensive income (loss)   1,347    (11,728)
Total stockholders' equity   298,761    967,243 
Total liabilities and stockholders' equity  $569,382   $1,452,949 

 

See accompanying notes to financial statements.

 

4
 

 

UAN Cultural & Creative Co., Ltd. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

 

   For the Three Months Ended  For the Nine Months Ended
   September 30,
2012
  September 30,
2011
  September 30,
2012
  September 30,
2011
             
Revenue  $183,035   $760,769   $758,104   $1,834,345 
                     
Cost of Sales   66,192    339,523    578,292    747,657 
                     
Gross Profits   116,843    421,246    179,812    1,086,688 
                     
Operating expenses:                    
  Selling, general & administrative expenses   336,156    288,447    930,839    694,492 
       Total operating expenses   336,156    288,447    930,839    694,492 
                     
Income (Loss) from operations   (219,313)   132,799    (751,027)   392,196 
                     
Other income/(expenses)                    
Interest income/(expense), net   28    (3,459)   (6,597)   (11,299)
Other gains, net   (4)   —      2,229    —   
Gain on disposal of fixed assets   77,265    —      77,265    —   
       Total other income (expenses)   77,289    (3,459)   72,896    (11,299)
                     
Income (Loss) before provision for income taxes   (142,024)   129,340    (678,131)   380,897 
                     
Provision for income taxes (Note 5)   2,543    55,313    3,424    124,770 
                     
Net Income (Loss)  $(144,567)  $74,028   $(681,555)  $256,127 
                     
Weighted average number of common shares outstanding, basic   53,672,708    53,672,708    53,672,708    53,672,708 
                     
Net Income (Loss) per share, basic  $(0.003)  $0.001   $(0.013)  $0.005 
                     
Weighted average number of common shares outstanding, diluted   53,672,708    53,672,708    53,672,708    53,672,708 
                     
Net Income (Loss) per share, diluted  $(0.003)  $0.001   $(0.013)  $0.005 
                     
Comprehensive Income (Loss)                    
Net income (loss)  $(144,567)  $74,028   $(681,555)  $256,127 
Foreign currency translation gain (loss)   7,882    19,214    13,074    22,077 
Comprehensive income (loss)  $(136,684)  $93,242   $(668,481)  $278,204 

 

See accompanying notes to financial statements.

 

5
 

 

UAN Cultural & Creative Co., Ltd. and Subsidiaries

Consolidated Statement of Cash Flows

(Unaudited)

 

   For the Nine Months Ended
   September 30,
 2012
  September 30,
2011
       
Cash Flows from Operating Activities          
   Net income (loss) for the period  $(681,555)  $256,127 
   Depreciation and amortization expense   95,753    102,381 
   Gain on disposal of fixed assets   (77,265)     
   Adjustments to reconcile net (loss) to net cash used in operating activities:          
   Changes in operating assets and liabilities:          
      Increase in accounts and notes receivable   47,360    (312,934)
      (Increase) Decrease in inventory   439,413    (14,805)
      Increase in other assets   618    (88,186)
      Increase (Decrease) in accounts payable & accrued expenses   (122,630)   358,746 
      Increase in notes payable   46,888    —   
      Decrease in deposit from customers   (31,925)   —   
      Decrease in other payables   (3,830)   —   
      Increase in income tax payables   (28,919)   —   
Net cash provided by (used in) operating activities   (316,092)   301,329 
           
Cash Flows from Investing Activities          
   Disposal of fixed assets   161,564    —   
   Purchase of leasehold improvements   (105,154)   —   
Net cash provided by investing activities   56,410    —   
           
Cash Flows from Financing Activities          
   Repayment of advances from shareholders & officers   (74,669)   —   
Net cash used in financing activities   (74,669)   —   
           
Effect of exchange rate change on cash   13,075    (22,077)
           
Net increase (decrease) in cash and cash equivalents   (321,276)   279,252 
           
Cash and cash equivalents          
   Beginning of period   441,448    377,433 
           
   End of period  $120,172   $656,685 
           
Supplemental disclosure of cash flow information:          
   Interest paid  $27,317   $—   
   Income taxes paid  $—     $—   

 

See accompanying notes to financial statements.

6
 

UAN CULTURAL & CREATIVE CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1—ORGANIZATION AND BUSINESS OPERATIONS

 

UAN Cultural & Creative Co., Ltd. (formerly named Good Harbor Partners Acquisition Corp.) (“UAN CCC”) was incorporated in Delaware on August 10, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in the security industry. The registration statement for UAN CCC’s initial public offering (the “Offering”) was declared effective on March 8, 2006. The net proceeds of the offering were segregated in a trust account and the Company was obligated to return the segregated funds to the investors in the event it did not complete a business combination within 18 months (24 months, under certain circumstances). On November 15, 2007, UAN CCC announced the termination of its previously announced letters of intent for business combinations in the security industry. Because UAN CCC had not completed any business combination within the required time period, UAN CCC liquidated the segregated funds held in the trust account, returned the funds to the investors, redeemed the Class B Common Stock the investors acquired in the Offering and reconstituted UAN CCC as an ongoing business corporation. As a result of the foregoing, the Company became a public shell company.

 

On June 30, 2010, a change of control of UAN CCC occurred when eight purchasers acquired an aggregate of approximately 95.6% of the outstanding voting Common Stock of UAN CCC. In connection with these transactions, UAN CCC’s Board of Directors was reconstituted, and UAN CCC initiated a new business plan involving the sale and appraisal of authentic and high quality works of art, primarily paintings, initially in Taiwan. 

 

On February 14, 2012, UAN CCC through its director, established UAN Cultural and Creative Company Limited (“UAN HK”) in Hong Kong to take advantage of tax benefits.

 

On August 9, 2012, UAN CCC though its director and UAN HK, established UAN Yeh Cultural and Creative Company Limited Taiwan Branch (“UAN Yeh”) in Taiwan.

 

As at August 12, 2012, UAN HK became wholly owned subsidiary of UAN CCC with 10,000 capital shares authorized at HKD1.00 par value and 10,000 shares issued and outstanding.

 

The operation of the Old Taiwan Branch was ceased and subsequently transferred to UAN Yeh.

 

UAN CCC and its subsidiaries – UAN HK and UAN Yeh shall be collectively referred throughout as the “Company”.

 

To summarize the paragraphs above, the organization and ownership structure of the Company is currently as follows:

 

 

 

7
 

 

NOTE 2—OFFERING

 

In the Offering, effective March 8, 2006, the Company sold to the public an aggregate of 57,500 Series A Units and 529,000 Series B Units at a price of $85 and $101 per unit, respectively. Proceeds from the initial public offering totaled approximately $54.9 million, which was net of approximately $3.4 million in underwriting and other expenses. Each Series A Unit consists of two shares of the Company's common stock, and ten Class Z Warrants (a “Class Z Warrant”). Each Series B Unit consists of two shares of the Company's Class B common stock, and two Class W Warrants (a “Class W Warrant”).

 

The Class Z Warrants will expire on March 7, 2013 or earlier upon redemption. The Class W Warrants expired on March 7, 2011. The Company may redeem the outstanding Class Z Warrants with the prior consent of HCFP/Brenner Securities LLC (“HCFP”), the representative of the underwriters of the Offering, in whole and not in part, at a price of $0.50 per warrant at any time after the warrants become exercisable, upon a minimum of 30 days' prior written notice of redemption, and if, and only if, the last sale price of the Company’s common stock equals or exceeds $87.50 per share for a Class Z Warrant for any 20 trading days within a 30 trading day period ending three business days before the Company sent the notice of redemption.

 

At the closing of this offering, the Company sold to HCFP the underwriters for an aggregate of $100, an option (the “Underwriter's Purchase Option” or “UPO”) to purchase up to a total of 2,500 additional Series A Units and/or 23,000 additional Series B Units. The UPO expired on March 7, 2011.

 

The exercise price and number of shares of Common Stock issuable on exercise of the Class W warrants and Class Z warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. Such adjustment occurred as a result of the one-for-ten reverse split of the Company’s Common Stock effected on August 27, 2010 (the “Reverse Split”) and the number of shares of Common Stock purchasable under the Class Z warrants reduced tenfold and the exercise prices increased tenfold. However, the Class Z warrants will not be adjusted for issuances of Common Stock at a price below their respective exercise prices.

 

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

BASIS OF PRESENTATION

 

The Company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.

 

INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended December 31, 2011, included in the Company’s Form 10-K filed on April 13, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of the Company’s financial position and results of operations. The operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for any other interim period of a future year.

 

RECLASSIFICATION

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

 

USE OF ESTIMATES

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

8
 

 

CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents are deposits in financial institutions as well as short-term money market instruments with maturities of three months or less when purchased.

 

ACCOUNTS AND NOTES RECEIVABLE

 

These amounts represent sales to customers in the ordinary course of business. Ninety percent of the notes receivable are due within 90 days and the remainder balance within one year.

 

INVENTORY

 

Inventory consists principally of finished art pieces held for sale valued at the specific-cost to purchase each piece. The Company accounts for inventory at the lower of the specifically-identified-cost of each piece (or average cost per piece when purchased in lots of two or greater) or net realizable value. As art is sold, amounts removed from inventory are the same specific cost values at the time of purchase.

 

FIXED ASSETS, NET

 

Leasehold improvements are recorded at cost and are amortized over the length of lease which is a two-year period beginning in August 2010. Machinery and equipment are amortized on a straight-line basis over a two to five year period.

 

IMPAIRMENT OF LONG-LIVED ASSETS

 

The Company evaluates its long-lived assets for impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or estimates of future discounted cash flows. The Company has not identified any such impairment losses to date.

 

NOTES PAYABLE

 

Notes payable are amounts due to vendors or service providers which are classified into current and non-current portion based on its maturity date. These notes are non-interest.

 

CONCENTRATION OF CREDIT RISK

 

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

 

COMPREHENSIVE INCOME

 

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 220, “Comprehensive Income,” which establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of general-purpose financial statements.  The Company has chosen to report comprehensive income (loss) in the statements of income and comprehensive income.  Comprehensive income (loss) is comprised of net income and all changes to stockholders’ equity except those due to investments by owners and distributions to owners.

 

EARNINGS (LOSS) PER SHARE

 

Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average common shares outstanding for the period and Class B common stock outstanding prior to its redemption. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The average market price of the common shares is below the exercise price of the outstanding warrants therefore not included in the calculation for dilutive share.

 

9
 

 

The computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2012 and 2011 is as follows:

 

   For the three months ended  For the nine months ended
   September 30,
2012
  September 30,
2011
  September 30,
2012
  September 30,
2011
Numerator:                    
Net Income/(Loss)  $(144,567)  $74,028   $(681,555)  $256,127 
Weighted average common shares outstanding – basic   53,672,708    53,552,708    53,672,708    53,552,708 
Dilution associated with W and Z warrants   —      —      —      —   
Weighted average common share outstanding – diluted   53,672,708    53,552,708    53,672,708    53,552,708 
Basic earnings (loss) per share  $(0.003)  $0.001   $(0.013)  $0.005 
Diluted earnings (loss) per share  $(0.003)  $0.001   $(0.013)  $0.005 

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

FASB ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting Standard Update. In September 2009, the FASB issued this Update to amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures”. Overall, for the fair value measurement of investments in certain entities that calculates net asset value per share (or its equivalent). The amendments in this Update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this Update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this Update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this Update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in GAAP on investments in debt and equity securities in paragraph 320-10-50-lB. The disclosures are required for all investments within the scope of the amendments in this Update regardless of whether the fair value of the investment is measured using the practical expedient. The amendments in this Update apply to all reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or non-recurring basis and, as of the reporting entity’s measurement date, if the investment meets certain criteria The amendments in this Update are effective for the interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.

 

REVENUES

 

The Company has two principal sources of revenue. Revenues related to the direct sale of art pieces from inventory and commissions on sale of art pieces sold on a consignment basis. The Company recognizes revenues at the time goods are delivered to the customers.

 

For the nine months ended September 30, 2012, three hundred ninety three (393) pieces of arts were sold from the inventory.

 

ADVERTISING COSTS

 

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. The Company incurred advertising expense of $157,657 and $5,921 for the three months ended September 30, 2012 and 2011, respectively, and $264,432 and $10,698 for the nine months ended September 30, 2012 and 2011, respectively.

 

10
 

 

SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

 

The Company reports all operations under one business segment, the sale of works of art. Two customers accounted for 92% of the Company’s revenues for nine months ended September 30, 2012. The Company generated 73% of revenues for the nine months ended September 30, 2011 through one Taiwan distributor. All sales revenues were generated in Taiwan. The following table sets forth information as to the revenue derived from those customers that accounted for more than 10% of our revenue for the nine months ended September 30, 2012 and 2011:

 

 

   2012  2011
Largest Customers                    
Espoir  $307,331    41%  $1,347,492    73%
Andwin   16,023    2%   131,428    7%
Roundex   383,634    51%   160,000    9%
Others   51,115    7%   195,425    11%
Total revenues  $758,104    100%  $1,834,345    100%

 

FOREIGN CURRENCY TRANSLATIONS

 

The functional currency of UAN CCC is U.S. Dollar (“USD”). 

The functional currency of UAN CCC’s branch operations in Taiwan is New Taiwan Dollar (“TWD”).

The functional currency of UAN CCC HK is Hong Kong Dollar (“HKD”).

The functional currency of UAN Yeh CCC is New Taiwan Dollar (“HKD”).

 

Transactions denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in earnings.

 

The consolidated financial statements of the Company are translated into U.S. dollars in accordance with the standard, “Foreign Currency Translation,” codified in ASC 830, using rates of exchange at the end of the period for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency combining financial statements into U.S. dollars are included in determining comprehensive income.

 

At September 30, 2012, the cumulative translation adjustments of $1,347, were classified as items of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet. For the three ended September 30, 2012 and 2011, other comprehensive (loss) income was $7,882 and $19,214, respectively. For the nine months ended September 30, 2012 and 2011, other comprehensive income was $13,074 and $22,077 respectively.

 

The exchange rates used to translate TWD amounts into USD at (1USD=TWD) as follows:

 

   Balance Sheet
Rate
  Average
Rate
 December 31, 2011    30.54    —   
 September 30, 2011    —      29.21 
 September 30, 2012    29.17    29.72 

 

 

The exchange rates used to translate HKD amounts into USD at (1USD=HKD) as follows:

 

   Balance Sheet
Rate
  Average
 Rate
 September 30, 2012    7.75    7.76 

 

11
 

 

INCOME TAXES

 

The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.  The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

 

The Company accounts for uncertainty in income taxes in accordance with FASB ASC 740-10 “Income Taxes-Overall”. The Company has elected to classify interest and penalties related to an uncertain position, if and when required, as part of interest expenses and other expenses, respectively, in the consolidated statements of income and comprehensive income. 

 

NEW ACCOUNTING PRONOUNCEMENTS

 

In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. Under this standard, entities testing long-lived intangible assets for impairment now have an option of performing a qualitative assessment to determine whether further impairment testing is necessary. If an entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. For the Company, this ASU is effective beginning January 1, 2013, with early adoption permitted under certain conditions. The adoption of this standard is not expected to have a material impact on the Company’s consolidated results of operations or financial condition.

 

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." This standard clarifies guidance on how to measure fair value and is largely consistent with existing fair value measurement principles. The ASU also expands existing disclosure requirements for fair value measurements and makes other amendments. For the Company, this ASU is effective prospectively beginning January 1, 2012. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” This standard requires entities to present items of net income and other comprehensive income either in a single continuous statement, or in separate, but consecutive, statements of net income and other comprehensive income. The new requirements do not change which components of comprehensive income are recognized in net income or other comprehensive income, or when an item of other comprehensive income must be reclassified to net income. Also, the earnings-per share computation does not change. However, the current option under existing standards to report other comprehensive income and its components in the statement of changes in equity is eliminated. In addition, the previous option to disclose reclassification adjustments in the notes to the financial statements is also eliminated, as reclassification adjustments will be required to be shown on the face of the statement under the new standard. For the Company, this ASU is effective retrospectively beginning January 1, 2012, with early adoption permitted. Since this standard impacts disclosure requirements only, its adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

 

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures About Offsetting Assets and Liabilities,” which creates new disclosure requirements regarding the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. Certain disclosures of the amounts of certain instruments subject to enforceable master netting arrangements or similar agreements would be required, irrespective of whether the entity has elected to offset those instruments in the statement of financial position. The ASU is effective January 1, 2013 with retrospective application required. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on the Company’s results of operations or financial condition.

 

In December 2011, the FASB released Accounting Standards Update No. 2011-12 (“ASU 2011-12”), “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The provisions of ASU 2011-12 became effective in fiscal years beginning after December 15, 2011. The adoption of ASU 2011-12 did not materially impact our financial statements.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

 

12
 

 

NOTE 4 – FIXED ASSETS, NET

 

The balances of fixed assets are as follows:

 

   September 30,
2012
  December 31,
2011
Leasehold Improvements  $—     $250,000 
Machinery & Equipment   —      534 
    —      250,534 
Accumulated Depreciation & Amortization   —      (175,634)
Net Fixed Assets  $—     $74,900 

 

The depreciation and amortization expense for the three and nine months ended September 30, 2012 and 2011 were $25,330, $28,405, $95,753 and $102,381, respectively.

 

On August 31, 2012, the Company disposed its fixed assets and recognized a gain of $77,265. 

 

NOTE 5 — INCOME TAXES

 

UAN CCC was established under the laws of the State of Delaware and is subject to U.S. federal income tax and Delaware state income tax.

 

UAN CCC’s Taiwan Branch operation in Taiwan and is subject to Taiwan tax laws. The income tax rate in Taiwan is 17%

 

The Company has not made a provision for U.S. income taxes on undistributed earnings of oversea subsidiaries (UAN CCC HK and UAN Yeh CCC) with which the Company intends to continue to reinvest. It is not practicable to estimate the amount of additional tax that might be payable on the foreign earnings if they were remitted as dividends, or lent to the Company, or if the Company should sell its stock in these subsidiaries.

 

UAN CCC HK was established in Hong Kong and is subject to Hong Kong tax laws. However, there is no Hong Kong based income; therefore, there is no income tax impact from Hong Kong.

 

UAN Yeh CCC was established in Taiwan and is subject to Taiwan tax laws. The income tax rate in Taiwan is 17%.

 

UAN CCC has cumulative net operating tax loss carryover (the “NOL”) of approximately $2.7 million at September 30, 2012, which are not likely to be fully realized and consequently a full valuation allowance has been established relating to this deferred tax assets. The final portion of the NOL will expires in 20 years.

 

UAN CCC has foreign tax credit carryover of approximately (the “FTC”) $37,000 at September, 2012. The final portion of the FTC will expire in 10 years.

 

Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. The deferred income tax asset related to the above noted NOL in the amount of approximately $2.7 million and FTC in the amount of $37,000 has been reduced by a related allowance of equal amount at September 30, 2012.

 

Income/(Loss) before Income Taxes for the nine months ended September 30 were as follows:

 

   For the nine months ended
   September 30,
2012
  September 30,
2011
United States  $(188,947)  $(336,799)
Hong Kong   (128)   —   
Taiwan   (489,056)   717,696 
Total Income (Loss) before Tax  $(678,131)  $380,897 

 

13
 

 

Provisions for Income Taxes for the nine months ended September 30 were as follows:

 

   For the nine months ended
   September 30,
2012
  September 30,
2011
United States  $—     $2,762 
Hong Kong   —      —   
Taiwan   3,424    122,008 
Total Tax Expense  $3,424   $124,770 

 

Reconciliations of statutory rates to effective tax rates for the nine months ended September 30 were as follows:

 

   For the
nine months ended
   September 30,
2012
US Statutory Tax Rate   39.0%
TW Foreign Tax Rate   17.0%
Hong Kong Foreign Tax Rate   0.0%
US State Income Tax Rate Effected   0.0%
Foreign Tax Credit   -17.0%
Net Operating Loss Carryforward   -39.0%
Effective Worldwide Tax Rate   0.0%

 

NOTE 6—COMMITMENTS & CONTINGENCIES

 

Solicitation Services

The Company has engaged HCFP, on a non-exclusive basis, to act as its agent for the solicitation of the exercise of the Company’s Class W Warrants and Class Z Warrants. In consideration for solicitation services, the Company will pay HCFP a commission equal to 5% of the exercise price for each Class W Warrant and Class Z Warrant exercised after March 8, 2007 if the exercise is solicited by HCFP. No solicitation services have been provided to date.

 

Operating Leases

In August 2010, the Company entered into a two-year real estate operating lease for its initial gallery location in Taiwan which expired in August 2012.

 

In November 2011, the Company entered into an office space lease agreement for additional space located in Taiwan.

 

In January 2012, the Company entered into a two year lease for its second gallery location in Tainan, Taiwan.

 

The leases above were cancelled when the Company disposed its property in August 2012.

 

In September 2012, the Company entered into an office space lease agreement in Zhongli, Taiwan.

 

Rent expenses incurred were $18,567 and $8,233 for the three months ended September 30, 2012 and 2011, respectively. Rent expenses incurred were $48,210, and $27,190 for the nine months ended September 30, 2012 and 2011, respectively.

 

On October 7, 2011, the Company entered into a three years automobile lease agreement. The lease is cancelled on August 31, 2012.

 

On June 5, 2012, the Company entered into a three years automobile lease agreement.

 

Automobile lease expenses incurred were $21,782 and $0 for the three months ended September 30, 2012 and 2011, respectively; and $43,763 and $0 for nine months ended September 30, 2012 and 2011, respectively.  

 

14
 

 

Future aggregate minimum office lease payments and automobile lease payments will be as follows:

 

Year   Amounts
2012    $                           20,035
2013                               75,854
2014                                 69,855
2015                                 29,106
Total    $                      194,850

 

NOTE 7—CAPITAL STOCK

 

Preferred Stock

 

The Company is authorized to issue up to 5,000 shares of Preferred Stock with such designations, voting, and other rights and preferences as may be determined from time to time by the Board of Directors.

 

Common Stock and Class B Common Stock

 

The Company’s certificate of incorporation was amended to increase the authorization to issue shares of common stock from 80,000,000 to 100,000,000 on August 27, 2010. This amendment also effected a one-for-ten reverse split of the Company’s Common Stock.

 

On November 1, 2010 the Company completed an “offshore” private offering of its common stock to investors who qualified as “Non U.S. Persons” under Regulation S of the Securities Act of 1933. This offering for 50,000,000 shares of Common Stock at a price of $0.02 per share has generated gross proceeds to the Company of $999,718. David Chen-Te Yen, Director, at the time of this transaction owned approximately 42.0% of our common stock,

 

As of September 30, 2012, there are 44,150,490 shares of common stock available for future issuance, after appropriate reserves for the issuance of common stock in connection with the Class Z Warrants, the Underwriters Purchase Option and the officer’s and director’s Class Z Warrants. The Company currently has no commitments to issue any shares of common stock.

 

NOTE 8—WARRANTS AND OPTION TO PURCHASE COMMON STOCK

 

In addition to shares of Common Stock common outstanding as of September 30, 2012, the following shares of Common Stock, which take into account the Reverse Split, are reserved for issuance pursuant to outstanding warrants:

 

575,000 shares of Common Stock underlying the outstanding Class Z warrants sold in the IPO on March 8, 2006. We refer to these warrants as the “IPO Warrants.”

 

247,500 shares of Common Stock underlying the outstanding Class Z warrants issued to former officers and directors of the Company. Specifically, an aggregate of 247,500 Class W warrants and 247,500 Class Z warrants were sold to former officers and directors for an aggregate of $247,500 (or a purchase price of $0.50 per warrant). These warrants have the same terms as the other Class Z and Class W warrants, including an exercise price of $50 per share. We refer to these warrants as the “Affiliate Warrants.”

 

Class W Warrants

 

Each Class W warrant entitles the registered holder to purchase one share of our Common Stock at a price of $50 per share. The Class W warrants expired on March 7, 2011.

 

15
 

 

Class Z Warrants

 

Each Class Z warrant entitles the registered holder to purchase one share of our Common Stock at a price of $50 per share, subject to adjustment as discussed below, at any time commencing on the later of:

 

the completion of a Business Combination as further described in the IPO registration statement; and

 

March 8, 2007.

 

The Class Z warrants will expire on March 7, 2013. There are 822,500 shares of Common Stock underlying the outstanding Class Z warrants as of September 30, 2012.

 

The exercise price and number of shares of Common Stock issuable on exercise of the Class Z warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. Such adjustment occurred as a result of the one-for-ten reverse split of the Company’s Common Stock effected on August 27, 2010 (the “Reverse Split”) and the number of shares of Common Stock purchasable under the Class Z warrants reduced tenfold and the exercise prices increased tenfold. However, the Class Z warrants will not be adjusted for issuances of Common Stock at a price below their respective exercise prices.

 

No warrants will be exercisable unless at the time of exercise a prospectus relating to Common Stock issuable upon exercise of the warrants is current and the Common Stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to meet these conditions and to maintain a current prospectus relating to Common Stock issuable upon exercise of the warrants until the expiration of the warrants. However we have not done so, since we do not believe it to be likely that the warrants will be exercised given the current price of our Common Stock is significantly below the exercise price of the warrants.

 

No fractional shares will be issued upon exercise of the Class Z warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of Common Stock to be issued to the warrant holder.

 

NOTE 9—RELATED PARTY TRANSACTIONS

 

At September 30, 2012, David Chen-Te Yen (Chairman, director and shareholder of the Company) has an outstanding receivable of $34,283 from the Company which was advanced to commence the Taiwan operations.

 

At September 30, 2012, Yuan-Hao Chang (shareholder and consultant to the Company) has an outstanding payable of $10,374 to the Company.

 

At September 30, 2012, Parashar Patel (shareholder and CEO of the Company) has an outstanding receivable of $1,414 from the Company which Mr. Patel advanced to the Company to pay certain Company’s expenses.

 

The above related parties’ amounts are due upon demand and non-interest bearing.

 

In July 2010, Mr. David Chen-Te Yen (Chairman, director, and shareholder of the Company) loaned the Company $300,000 in demand notes bearing interest at 8%. This demand note was repaid on December 3, 2010. The related accrued interest of $8,482 remains unpaid at September 30, 2012.

 

In July 2010, Mr. Yuan-Ho Chang (shareholder and consultant to the Company) loaned the Company $200,000 in demand notes bearing interest at 8%. This demand note was repaid on November 1, 2011. Interest expenses incurred on the notes were $7,241 and $11,835 for the nine months ended September 30, 2012 and 2011, respectively. The related accrued interest of $27,317 was repaid in March 2012.

 

 

16
 

Item 2.  Management's Discussion and Analysis of Financial Condition and Result of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms we", "us", "our" and "our company" mean UAN Cultural & Creative Co., Ltd., and our subsidiaries, UAN Cultural and Creative Company Limited (“UAN Hong Kong”), a Hong Kong company and UAN Yeh Cultural and Creative Company Limited a Taiwan company, unless otherwise indicated.

Description of Business

Background

We were formed on August 10, 2005 as a shell company to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an entity that has an operating business in the security industry.

We completed an initial public offering on March 15, 2006 based on that business plan. Stockholder funds raised in the offering were segregated in a trust account and we were obligated to return the segregated funds to the investors in the event that we did not complete a business combination within 18-months (24 months, under certain circumstances). By the end of the 18-month period we had not engaged in any operations, generated any revenues, or incurred any debt or expenses other than in connection with the initial public offering. Since we were not able to consummate our business plan and no business combination was completed within the required time period, we liquidated the segregated funds held in the trust account, returned the funds to the investors in the offering, redeemed the Class B common stock the investors acquired in the offering and reconstituted our company as an ongoing business corporation. As a result of the foregoing, we became a public shell company.

The securities issued in our initial public offering consisted of Class A common stock, which is now regular common stock; Class W warrants; Class Z warrants; Class B common stock, which was redeemed from the stockholders when the funds raised in the initial public offering were returned to them and is no longer outstanding; Class A units, which consisted of two shares of Class A common stock and ten Class Z warrants; and Class B units, which consisted of two shares of Class B common stock and two Class W warrants.

17
 

 

We experienced a change in control on June 30, 2010, both at the stockholder and director levels, as the result of the purchase of 35,095,100 shares of our common stock, approximately 95.6% of our common stock which was issued and outstanding on that date, by eight persons and the simultaneous reconstitution of our board of directors. Our new board of directors has created a new business plan and we have initiated that business involving the sale and appraisal of authentic and high quality works of art, primarily paintings, initially in Taiwan.

In July 2010, two of our stockholders, David Chen-Te Yen and Yuan-Hao Chang, loaned us $300,000 and $200,000, respectively. David Chen-Te Yen is our President and the chairman of our board of directors, and owns approximately 42.1% of our common stock. These loans were evidenced by demand promissory notes bearing interest at the rate of 8% per annum, compounded daily. The $300,000 loan from David Chen-Te Yen was repaid in December 2010; accrued interest of $8,482 remains unpaid at September 30, 2012. The $200,000 loan from Yuan-Hao Chang was repaid on November 1, 2011; accrued interest of $27,317 was paid prior to March 2012. At September 30, 2012, the outstanding working capital advances payable to shareholders and officers were $35,697.

In August 2010, we changed our name to UAN Cultural & Creative Co., Ltd. and effected a one-for-ten reverse stock split of our common stock. We commenced operations in August 2011.

In October and November 2010, we completed an “offshore” private placement of 50,000,000 shares of common stock at a price of $0.02 per share, which generated gross proceeds of $1,000,000.

We have used the funds from these loans and from our private placement to initiate and further our art business plan. We hope to fund continuing operations and grow our business with the income we generate from operations. However, there can be no assurance that we will not incur operating losses in the future, in which case additional funds may be required for us to continue as a going concern. We cannot predict the amount of additional funds that we may require.

On February 14, 2012, our company, established UAN Cultural and Creative Company Limited (“UAN Hong Kong”) in Hong Kong to take advantage of tax benefits.

On August 9, 2012, our company and UAN Hong Kong, established UAN Yeh Cultural and Creative Company Limited Taiwan Branch in Taiwan.

As at August 12, 2012, UAN Hong Kong became wholly owned subsidiary of our company with 10,000 capital shares authorized at HKD1.00 par value and 10,000 shares issued and outstanding.

The operation of the old Taiwan Branch was ceased and subsequently transferred to UAN Yeh.

Our Current Business

Recently, we have changed our distribution practice as our business was negatively impacted due to the economic downturn in Taiwan. We have closed our art galleries and sold the underlying assets. We currently offer on a selective basis high value collection paintings to our customers in antique or art auction events through various brokers. We continue to offer on a selective basis customized paintings to our customers through our sales representatives, which include commemorative portraits painted by student artists whom we retain as independent contractors at a low cost to us. In addition, we offer paintings for sale through our website, www.uanusa.com. We expect our new distribution practice will cut our overhead costs and improve profits.

In July 2010, we commenced our operation when we opened our initial art gallery in Luzhu Township, Taiwan. We also acquired furniture, fixtures and improvements, at a cost of $250,000, such that the gallery would provide a showcase of our arts collections. We commenced operations from this location because most of our officers and directors live nearby, are familiar with the area, and believe it to have an excellent market potential for our artworks. On March 23, 2012, we opened our second gallery in Tainan, Taiwan. We also acquired furniture, fixtures and improvements, at a cost of approximately $100,000. We also rented approximately 100 square feet of wall space in an art gallery in Chicago, in which we displayed a small number of artworks for a period of approximately 90 days.

18
 

Our galleries provided elegant and comfortable settings from which we sold our artworks and conducted art shows, exhibitions, private showings, meetings, cocktail parties and other gatherings for the benefit of both our customers and featured artists. We generally offered for sale paintings that we purchased for resale and paintings we hold for sale on a consignment basis.

In August 2012, we have closed our art galleries and sold the underlying assets.

To date we have sold approximately 1,900 paintings from inventory and seven paintings on consignment. Our sale prices for the paintings we hold in inventory are typically recommended by our chief art consultant, Mr. Yung Chien Wu, who also recommends the paintings we acquire and the prices we pay to the artists. Our profit margin with respect to the paintings we sell from inventory varies from painting to painting. We generally pay the artist 50% of the amount we realize on consignment sales.

Results of Operations

Three Months Ended September 30, 2012 and September 30, 2011

    Three Months Ended  
    September 30,  
    2012     2011  
Revenue $ 183,085   $ 760,769  
             
Cost of Sales $ 66,192   $ 339,523  
Operating Expenses $ 336,156   $ 288,447  
Interest Expense (Income) $ 28   $ (3,459 )
Other gains, net $ (4 ) $ Nil  
Gain on disposal of fixed assets $ 77,265   $ Nil  
Provision for Income Tax $ 2,543   $ 55,312  
Net Income (Loss) $ (144,567 ) $ 74,028  

 

Sales revenues for the three months ended September 30, 2012 and 2011 were $183,085 and $760,769, respectively, a decrease of $577,684 or approximately 75.9%. Our sales decline during the period was attributable to an economic downturn in Taiwan, which has significantly affected our business. We have changed our distribution practice to increase our sales and to cut cost.

Cost of Sales and Gross Profit

Cost of sales for the three months ended September 30, 2012 and 2011 were $66,192 and $339,523, respectively, a decrease of $273,330. Our gross profit for the three months ended September 30, 2012 and 2011 were $116,843 and $421,246, respectively. Gross margin for the three months ended September 30, 2012 and 2011 were approximately 63.8% and 55.4%, respectively. The increase in gross profit is primarily due to our new distribution practice.

19
 

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2012 and 2011 were $336,156 and $288,447, respectively, an increase of $47,709 or approximately 16.5%. Our major operating expenses for the three months ended September 30, 2012 consisted of advertising expenses of $157,657, salaries and related expenses of $33,721, rent expenses in the amount of $40,349, professional fees in the amount of $9,772 and leasehold improvement amortization of $25,330, compared to advertising expenses of $5,921, salaries and related expenses of $40,985, rent in the amount of $8,233, professional fees in the amount of $55,981, and leasehold improvement amortization of $28,405 for the three months ended September 30, 2011. We increased our advertising expenses, payroll related expenses and rent expenses primarily as a result of opening our second gallery in Tainan, Taiwan.

Other Income/(Expenses)

Other income for the three months ended September 30, 2012 amounted to $77,289, as compared to other expenses $3,459 for the three months ended September 30, 2011. These income and expenses consist of interest income /(expense), other gains and gain on disposal of fixed assets.

Provision for Income Tax

Income tax provision for the three months ended September 30, 2012 was $2,543, compared to $55,313 for the three months ended September 30, 2011, a decrease of $52,770. . We have certain tax deferred assets such as net operating loss and foreign tax credit.

Net Income (Loss)

We had a net loss from operations of $144,547 for the three months ended September 30, 2012, compared to net income of $74,028 incurred in the three months ended September 30, 2011. Our net loss was attributable to lower sales revenue and the increase in our selling, general and administrative expenses.

 

Nine Months Ended September 30, 2012 and September 30, 2011

    Nine Months Ended  
    September 30,  
    2012     2011  
Revenue $ 758,104   $ 1,834,345  
             
Cost of Sales $ 578,292   $ 747,657  
Operating Expenses $ 930,839   $ 694,492  
Interest Expense (Income) $ (6,597 ) $ (11,299 )
Other Gains, net $ 2,229   $ Nil  
Gains on Disposal of Fixed Assets $ 77,265   $ Nil  
Provision for Income Tax $ 3,424   $ 124,770  
Net Income (Loss) $ (681,555 ) $ 256,127  

 

20
 

Revenues

Sales revenues for the six months ended September 30, 2012 and 2011 were $758,204 and $1,834,345, respectively, a decrease of $1,076,241 or approximately 58.7%. Our sales decline during the period was attributable primarily to an economic downturn in Taiwan, which has significantly affected our business. The decrease in revenues was also attributable to a decline in sales during the first quarter of 2012, because relatively little commerce is conducted in Taiwan during Chinese New Year, which is celebrated over a two-week period commencing in late January or early February, and to the redecoration of the gallery space for exhibits of the artworks during the first quarter of 2012, which resulted in delay of sales activities.

Cost of Sales and Gross Profit

Cost of sales for the nine months ended September 30, 2012 and 2011 were $578,292 and $747,657, respectively, a decrease of $169,365. Our gross profit for the nine months ended September 30, 2012 and 2011 were $179,812 and $1,086,688, respectively. Gross margin for the nine months ended September 30, 2012 and 2011 were approximately 23.7% and 59.2%, respectively. The decrease in gross profit reflects the sale of ten high-value paintings below our cost during the nine months ended September 30, 2012. These paintings were sold at negative gross margin of approximately 14% and accounted for approximately 42% of gross sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2012 and 2011 were $930,839 and $694,492, respectively, an increase of $236,347 or approximately 34%. Our major operating expenses for the nine months ended September 30, 2012 consisted of advertising expenses of $264,432, salaries and related expenses of $116,008, rent expenses in the amount of $91,973, professional fees in the amount of $95,005 and leasehold improvement amortization and depreciation of $95,273, compared to advertising expenses of $10,698, salaries and related expenses of $106,240, rent in the amount of $27,190, professional fees in the amount of $160,969, and leasehold improvement amortization of $102,381 for the nine months ended September 30, 2011. We increased our advertising expenses, payroll related expenses, and rent expenses primarily as a result of opening our second gallery in Tainan, Taiwan.

Other Income/(Expenses)

Other income for the nine months ended September 30, 2012 amounted to $72,896, as compared to other expense $11,299 for the nine months ended September 30, 2011. These expenses consist of interest income/(expense), other gains, gain on disposal of fixed assets.

Provision for Income Tax

Income tax provision for the nine months ended September 30, 2012 was $3,424 compared to $124,770 for the nine months ended September 30, 2011, a decrease of $121,346. . We have certain tax deferred assets such as net operating loss and foreign tax credit.

Net Income (Loss)

We had a net loss from operations of $681,555 for the nine months ended September 30, 2012, compared to net income of $256,127 incurred in the nine months ended September 30, 2011. Our net loss was attributable to the sales of ten high-value paintings below our cost, in addition to lower sales revenue and the increase in our selling, general and administrative expenses.

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Liquidity and Capital Resources

Working Capital

    At     At  
    September 30,     December 31,  
    2012     2011  
Current Assets $ 463,880   $ 1,309,781  
Current Liabilities $ 194,945   $ 426,708  
Working Capital (Deficit) $ 268,935   $ 883,073  

 

Cash Flows

 

    Nine Months     Nine Months  
    Ended     Ended  
    September 30,     September 30,  
    2012     2011  
Net Cash used in Operating Activities $ (316,092 ) $ 301,329  
Net Cash provided by (used in) Investing Activities $ 56,410   $ Nil  
Net Cash provided by Financing Activities $ 74,669   $ Nil  

 

As of September 30, 2012, our total assets were $569,382, total liabilities were $270,621, and shareholders’ equity was $298,761, compared to $1,452,949, $485,706 and $967,243, respectively, as of December 31, 2011. Current assets at September 30, 2012 were $463,880, including cash and cash equivalents of $120,172, accounts receivables of $260,433, and inventory of $2,194, compared to $441,448, $307,793 and $441,607, respectively, at December 31, 2011. Included in total assets as of September 30, 2012 are other assets of $81,081, compared to $118,933 as of December 31, 2011.

As of September 30, 2012, total liabilities were $270,621, consisting of accounts payable of $56,372, accrued expenses of $38,178, notes payable of $69,855, other payables of $2,627, due to officer and shareholder of $25,322 and income taxes payable of $2,591. As of December 31, 2011, total liabilities were $485,706, consisting of accounts payable of $93,206, accrued expenses of $123,974, notes payable of $39,645, deposit from customers of $31,925, other payables of $6,457, due to officer and shareholder of $99,991 and income taxes payable of $31,510. 

Cash and cash equivalents as of September 30, 2012 decreased by $321,276 as compared to December 31, 2011. Our working capital was $268,935 and $883,073 at September 30, 2012 and December 31, 2011, respectively.

The decrease in cash resulted from the payment of certain accounts payables, accrued liabilities and related party loans, combined with an decrease in expenditures for inventory.

Net cash used in our operating activities in the nine months ended September 30, 2012 was $316,092, as compared to net cash provided of $301,329 for the nine months ended September 30, 2011. 

Net cash provided by investing activities in the nine months ended September 30, 2012 was $56,410, compared to $Nil in the nine months ended September 30, 2011. The net increase in cash provided by investing activities in 2012 resulted primarily from disposal of fixed assets and expenditures for leasehold improvements.

Net cash used in financing activities in the nine months ended September 30, 2012 was $74,669, compared to $Nil in the nine months ended September 30, 2011. The net increase in cash used in financing activities in 2012 resulted primarily from repayment of advances from shareholders and officers.

22
 

In July 2010, two of our stockholders, David Chen-Te Yen and Yuan-Hao Chang, loaned us $300,000 and $200,000, respectively. David Chen-Te Yen is our president and the chairman of our board of directors, and owns approximately 42.1% of our common stock. These loans were evidenced by demand promissory notes bearing interest at the rate of 8% per annum, compounded daily. The $300,000 loan from David Chen-Te Yen was repaid in December 2010; accrued interest of $8,482 remains unpaid at September 30, 2012. The $200,000 loan from Yuan-Hao Chang was repaid on November 1, 2011; accrued interest of $27,317 was paid prior to March 2012. In October and November 2010 we completed an “offshore” private placement of 50,000,000 shares of our common stock at a price of $0.02 per share, which generated gross proceeds of approximately $1,000,000. In order for us to successfully engage in this or any business, we may need to raise additional capital. There can be no assurance that we will be able to raise additional capital, on terms favorable to us or at all.

Critical Accounting Policies

Basis of Presentation

Our company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.

Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our company’s audited financial statements and footnotes thereto for the year ended December 31, 2011, included in our company’s Form 10-K filed on April 13, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, our company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of our company’s financial position and results of operations. The operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for any other interim period of a future year.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents are deposits in financial institutions as well as short-term money market instruments with maturities of three months or less when purchased.

Accounts and Notes Receivable

These amounts represent sales to customers in the ordinary course of business. Ninety percent of the notes receivable are due within 90 days and the remainder balance within one year.

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Inventory

Inventory consists principally of finished art pieces held for sale valued at the specific-cost to purchase each piece. Our company accounts for inventory at the lower of the specifically-identified-cost of each piece (or average cost per piece when purchased in lots of two or greater) or net realizable value. As art is sold, amounts removed from inventory are the same specific cost values at the time of purchase.

Fixed Assets, Net

Leasehold improvements are recorded at cost and are amortized over the length of lease which is a two-year period beginning in August 2010. Machinery and equipment are amortized on a straight-line basis over a two to five year period.

Impairment of Long-Lived Assets

Our company evaluates its long-lived assets for impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or estimates of future discounted cash flows. Our company has not identified any such impairment losses to date.

Notes Payable

Notes payable are amounts due to vendors or service providers which are classified into current and non-current portion based on its maturity date. These notes are non-interest.

Concentration of Credit Risk

Financial instruments that potentially subject our company to a significant concentration of credit risk consist primarily of cash and cash equivalents. Our company maintains deposits in federally insured financial institutions in excess of federally insured limits. However, management believes our company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Comprehensive Income

Our company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 220, “Comprehensive Income,” which establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of general-purpose financial statements.  Our company has chosen to report comprehensive income (loss) in the statements of income and comprehensive income.  Comprehensive income (loss) is comprised of net income and all changes to stockholders’ equity except those due to investments by owners and distributions to owners.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average common shares outstanding for the period and Class B common stock outstanding prior to its redemption. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The average market price of the common shares is below the exercise price of the outstanding warrants therefore not included in the calculation for dilutive share.

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The computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2012 and 2011 is as follows:

    For the three months ended   For the nine months ended
    September 30,
2012
  September 30,
2011
  September 30,
2012
  September 30,
2011
Numerator:                                
Net Income/(Loss)   $ (144,567 )   $ 74,028     $ (681,555 )   $ 256,127  
Denominator                                
Weighted average common shares outstanding – basic     53,672,708       53,552,708       53,672,708       53,552,708  
Dilution associated with W and Z warrants     —         —         —         —    
Weighted average common share outstanding – diluted     53,672,708       53,552,708       53,672,708       53,552,708  
Basic earnings (loss) per share   $ (0.003 )   $ 0.001     $ (0.013 )   $ 0.005  
Diluted earnings (loss) per share   $ (0.003 )   $ 0.001     $ (0.013 )   $ 0.005  

 

Fair Value of Financial Instruments

FASB ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting Standard Update. In September 2009, the FASB issued this Update to amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures”. Overall, for the fair value measurement of investments in certain entities that calculates net asset value per share (or its equivalent). The amendments in this Update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this Update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this Update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this Update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in GAAP on investments in debt and equity securities in paragraph 320-10-50-lB. The disclosures are required for all investments within the scope of the amendments in this Update regardless of whether the fair value of the investment is measured using the practical expedient. The amendments in this Update apply to all reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or non-recurring basis and, as of the reporting entity’s measurement date, if the investment meets certain criteria The amendments in this Update are effective for the interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.

Revenues

Our company has two principal sources of revenue. Revenues related to the direct sale of art pieces from inventory and commissions on sale of art pieces sold on a consignment basis. Our company recognizes revenues at the time goods are delivered to the customers.

For the nine months ended September 30, 2012, three hundred ninety three (393) pieces of arts were sold from the inventory.

Advertising Costs

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Our company incurred advertising expense of $157,527 and $5,921 for the three months ended September 30, 2012 and 2011, respectively, and $264,432 and $10,698 for the nine months ended September 30, 2012 and 2011, respectively.

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Segment Reporting and Geographic Information

Our company reports all operations under one business segment, the sale of works of art. Two customers accounted for 92% of our company’s revenues for nine months ended September 30, 2012. Our company generated 73% of revenues for the nine months ended September 30, 2011 through one Taiwan distributor. All sales revenues were generated in Taiwan.

Foreign Currency Translations

The functional currency of UAN CCC is U.S. Dollar (“USD”). 

The functional currency of UAN CCC’s branch operations in Taiwan is New Taiwan Dollar (“TWD”).

The functional currency of UAN CCC HK is Hong Kong Dollar (“HKD”).

The functional currency of UAN Yeh CCC is New Taiwan Dollar (“HKD”).

Transactions denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in earnings.

The consolidated financial statements of our company are translated into U.S. dollars in accordance with the standard, “Foreign Currency Translation,” codified in ASC 830, using rates of exchange at the end of the period for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency combining financial statements into U.S. dollars are included in determining comprehensive income.

At September 30, 2012, the cumulative translation adjustments of $1,347, were classified as items of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet. For the three ended September 30, 2012 and 2011, other comprehensive (loss) income was $7,882 and $19,214, respectively. For the nine months ended September 30, 2012 and 2011, other comprehensive income was $13,074 and $22,077 respectively.

The exchange rates used to translate TWD amounts into USD at (1USD=TWD) as follows:

    Balance Sheet
Rate
  Average
Rate
  December 31, 2011       30.54       —    
  September 30, 2011       —         29.21  
  September 30, 2012       29.17       29.72  

 

The exchange rates used to translate HKD amounts into USD at (1USD=HKD) as follows:

    Balance Sheet
Rate
  Average
 Rate
  September 30, 2012       7.75       7.76  
                     

 

Income Taxes

Our company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. Our company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.  The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

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Our company accounts for uncertainty in income taxes in accordance with FASB ASC 740-10 “Income Taxes-Overall”. Our company has elected to classify interest and penalties related to an uncertain position, if and when required, as part of interest expenses and other expenses, respectively, in the consolidated statements of income and comprehensive income. 

New Accounting Pronouncements

In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. Under this standard, entities testing long-lived intangible assets for impairment now have an option of performing a qualitative assessment to determine whether further impairment testing is necessary. If an entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. For our company, this ASU is effective beginning January 1, 2013, with early adoption permitted under certain conditions. The adoption of this standard is not expected to have a material impact on our company’s consolidated results of operations or financial condition.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." This standard clarifies guidance on how to measure fair value and is largely consistent with existing fair value measurement principles. The ASU also expands existing disclosure requirements for fair value measurements and makes other amendments. For our company, this ASU is effective prospectively beginning January 1, 2012. The adoption of this standard did not have a material impact on our company’s consolidated results of operations or financial condition.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” This standard requires entities to present items of net income and other comprehensive income either in a single continuous statement, or in separate, but consecutive, statements of net income and other comprehensive income. The new requirements do not change which components of comprehensive income are recognized in net income or other comprehensive income, or when an item of other comprehensive income must be reclassified to net income. Also, the earnings-per share computation does not change. However, the current option under existing standards to report other comprehensive income and its components in the statement of changes in equity is eliminated. In addition, the previous option to disclose reclassification adjustments in the notes to the financial statements is also eliminated, as reclassification adjustments will be required to be shown on the face of the statement under the new standard. For our company, this ASU is effective retrospectively beginning January 1, 2012, with early adoption permitted. Since this standard impacts disclosure requirements only, its adoption did not have a material impact on our company’s consolidated results of operations or financial condition.

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures About Offsetting Assets and Liabilities,” which creates new disclosure requirements regarding the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. Certain disclosures of the amounts of certain instruments subject to enforceable master netting arrangements or similar agreements would be required, irrespective of whether the entity has elected to offset those instruments in the statement of financial position. The ASU is effective January 1, 2013 with retrospective application required. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on our company’s results of operations or financial condition.

In December 2011, the FASB released Accounting Standards Update No. 2011-12 (“ASU 2011-12”), “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The provisions of ASU 2011-12 became effective in fiscal years beginning after December 15, 2011. The adoption of ASU 2011-12 did not materially impact our financial statements.

Our company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

27
 

Off-Balance Sheet Arrangements

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

Item 3.   Quantitative and Qualitative Disclosure About Market Risks

We are a smaller reporting company and are not required to provide the information under this item. 

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Controls

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Item 1A.  Risk Factors

We are a smaller reporting company and are not required to provide the information under this item.

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

Not applicable.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

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Item 6.  Exhibits

 

Item 6.  Exhibits

 

Exhibit Number Description
(3) Articles of Incorporation; Bylaws
3.1 Certificate of Incorporation (incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
3.2 Form of Amended and Restated Certificate of Incorporation (incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
3.3 Bylaws(incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
3.4 Form of Amended and Restated Bylaws (incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
3.5 Amendment to Certificate of Incorporation dated January 31, 2008 (incorporated by reference to our Current Report on Form 8-K filed on February 1, 2008)
3.6 Form of Amended and Restated Certificate of Incorporation dated January 31, 2008 (incorporated by reference to our Current Report on Form 8-K filed on February 1, 2008)
3.8 Amendment to Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on June 20, 2008)
  Certificate of Amendment of Certificate of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on October 12, 2010)
(10) Material Contracts
10.1 Form of Registration Rights Agreement between our company and the Initial Securityholders (incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
10.2 Form of Warrant Agreement between our company and American Stock Transfer & Trust Company (incorporate by reference to our Registration Statement on Form S-1 filed on September 15, 2005)
10.3 Promissory Note dated May 12, 2009 between our company and Ralph Sheridan (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2009)
10.4 Promissory Note dated May 12, 2009 between our company and Ira Scott Greenspan (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2009)
10.5 Promissory Note dated May 12, 2009 between our company and William McClusky (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2009)
10.6 Promissory Note dated May 12, 2009 between our company and Hummingbird Value Fund, LP (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2009)
10.7 Repurchase Agreement dated June 18, 2009 between our company and HCFP Brenner Holdings, LLC (incorporated by reference to our Current Report on Form 8-K filed on June 24, 2009)
10.8 Common Stock Purchase Agreement dated June 18, 2009 between our company and The Tarsier Nanocap Value Fund, LP (incorporated by reference to our Current Report on Form 8-K filed on June 24, 2009)
10.9 Form of Common Stock Purchase Agreement dated November 13, 2009 (incorporated by reference to our Quarterly Report on Form 10-Q filed on November 16, 2009)
10.10 Tenancy Agreement dated August 25, 2010 LP (incorporated by reference to our Current Report on Form 8-K filed on October 12, 2010)
10.12 Demand Promissory Note dated July 23, 2010 between our company and David Chen-Te Yen (incorporated by reference to our Registration Statement on Form S-1 filed on October 12, 2010)
10.13 Demand Promissory Note dated July 23, 2010 between our company and Yuan-Hao Chang (incorporated by reference to our Registration Statement on Form S-1 filed on October 12, 2010)
10.14 Tenancy Agreement dated April 5, 2012 between our company and the landlord April 5, 2012 (incorporated by reference to our Annual Report on Form 10-K filed on April 13, 2012)

 

 
 

 

Exhibit Number Description
10.15 Contractors Agreement dated January 10, 2012 between our company and Chengbang Interior Decoration Co., Ltd. (incorporated by reference to our Annual Report on Form 10-K filed on April 13, 2012)
10.16 Car Lease Agreement dated May 28, 2012 between our company and Taiwan Life Insurance Co., Ltd. (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 20, 2012)
(14) Code of Ethics
14.1 Code of Ethics (incorporated by reference to our Annual Report on Form 10-K filed on March 7, 2011)
(21) Subsidiaries of Registrant
21.1

UAN Cultural and Creative Company Limited, a Hong Kong company

UAN Yeh Cultural and Creative Company Limited Taiwan, a Taiwan company

(31) Rule 13a-14(a)/15d-14(a) Certifications
31.1* Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)  Section 1350 Certifications
32.1* Certification of the Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of the Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(101)** Interactive Data Files
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.

 

   
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

 

 

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SIGNATURES

 

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

    UAN Cultural & Creative Co., Ltd.
     
Dated:  November 21, 2012   By: /s/ Parashar Patel
      Parashar Patel
      Chief Executive Officer, Secretary and Director
      (Principal Executive Officer)
       
       
Dated:  November 21, 2012   By: /s/ Chung Hua Yang
      Chung Hua Yang
      Chief Financial Officer
      (Principal Financial Officer and Chief Accounting Officer)

 

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