The accompanying notes to financial statements are an integral part of these statements.
The accompanying notes to financial statements are an integral part of these statements.
The accompanying notes to financial statements are an integral part of these statements.
The accompanying notes to financial statements are an integral part of these statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
Organization
Lazuriton Nano Biotechnology (U.S.A.) Inc., a company in the developmental stage (the “Company”), was incorporated on June 2, 2015 in the State of Nevada. The Company has conducted limited business operations and had no revenues from operations since its inception. The Company’s business plan is to market and distribute Nano fertilizers products.
On March 9, 2020, Lazuriton Co., Ltd, a wholly-owned subsidiary was established in the Republic of China, Taiwan. The subsidiary was established for business operations in Taiwan. In May 2021, the subsidiary was terminated by the local government due to inactivity.
Going Concern
These consolidated financial statements were prepared on the basis of accounting principles applicable to going concern, which assumes the realization of assets and discharge of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company had incurred net loss of $20,900 and $21,473 for the six months ended June 30, 2021 and 2020, respectively, and had accumulated deficit of $600,677 and $579,777 as of June 30, 2021 and December 31, 2020, respectively, and it had no revenue from operations.
The Company faces all the risks common to companies at development stage, including capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. The Company's losses raise substantial doubt about its ability to continue as a going concern. The Company's financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
The Company is currently addressing its liquidity issue by continually seeking additional funds through private placements of its securities and/or capital contributions and loans by Chih-Yuan Hsiao, the President and a member of the board of directors. The Company believes its current and future plans enable it to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time, however. If the Company is unable to obtain additional financing, it may be required to reduce the scope of our business development activities, which could harm its business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts which may differ from those in the accompanying consolidated financial statements.
Principle of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.
Classification
Certain classifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss or accumulated deficit.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.
Net Loss Per Share
Basic loss per share is computed by dividing net income by weighted average number of shares of common stock outstanding during each period. Diluted income per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. At June 30, 2021 and December 31, 2020, the Company did not have any outstanding common stock equivalents; therefore, a separate computation of diluted loss per share is not presented.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The deferred income tax assets were $0 as of both June 30, 2021 and December 31, 2020, respectively.
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognizes deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities by using enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.
Foreign Currency Translation and Transactions
The reporting and functional currency of the Company is the USD. The functional currency of Lazuriton Co., Ltd, a wholly owned subsidiary of the Company, is the New Taiwanese Dollar (“TWD”).
For financial reporting purposes, the financial statements of the Company’s Taiwan subsidiary, which are prepared using the TWD, are translated into the Company’s reporting currency, USD. Assets and liabilities are translated using the exchange rate on the balance sheet date. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. Stockholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ deficit.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange difference, presented as foreign currency transaction gain (loss), is included in the accompanying condensed consolidated statements of operations.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.
NOTE 2. ACCRUED EXPENSES
Accrued expenses consist of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Accrued professional fees
|
|
$
|
93,829
|
|
|
$
|
73,829
|
|
Accrued edgar agent service fees
|
|
|
868
|
|
|
|
868
|
|
Accrued transfer agent fees
|
|
|
3,900
|
|
|
|
3,000
|
|
Total
|
|
$
|
98,597
|
|
|
$
|
77,697
|
|
NOTE 3. DUE TO RELATED PARTIES
The Company has received advances from its officers and shareholders for working capital purposes. As of June 30, 2021 and December 31, 2020, there were $243,428 and $243,428 advances outstanding, respectively. The Company has agreed that the outstanding balances bear 0% interest rate and are due upon demand after 30 days written notice by the officer and shareholder.
NOTE 4. INCOME TAXES
United States of America
The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the period. The applicable income tax rate for the Company was 21% for the six months ended June 30, 2021 and 2020.
As of June 30, 2021, the Company had net operating loss carryforwards of approximately $600,677 that may be available to reduce future years’ taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Taiwan
The Company’s subsidiary is incorporated in Taiwan. The Taiwan Income Tax Law imposes a unified enterprise income tax rate of 20% on all enterprises with taxable income greater than approximately $4,274 (NT$120,000). No income tax liabilities existed as of June 30, 2021 due to its inactivity.
The provision for federal income tax consists of the following for the six months ended June 30, 2021 and 2020, respectively:
|
|
For the Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
Current Operations
|
|
$
|
4,389
|
|
|
$
|
4,509
|
|
Less: valuation allowance
|
|
|
(4,389
|
)
|
|
|
(4,509
|
)
|
Net provision for Federal income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of June 30, 2021 and December 31, 2020, respectively:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
126,142
|
|
|
$
|
121,753
|
|
Less: valuation allowance
|
|
|
(126,142
|
)
|
|
|
(121,753
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The differences between the effective rate reflected in the provision for income taxes on loss before taxes and the amounts determined by applying the applicable statutory U.S. tax rate are analyzed below:
|
|
For the Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
U.S. statutory federal tax benefit
|
|
|
(21
|
)%
|
|
|
(21
|
)%
|
Change in deferred tax asset valuation allowance
|
|
|
21
|
%
|
|
|
21
|
%
|
Taiwan statutory tax benefit
|
|
|
(20
|
)%
|
|
|
(20
|
)%
|
Change in deferred tax asset valuation allowance
|
|
|
20
|
%
|
|
|
20
|
%
|
Provision for income taxes
|
|
|
-
|
%
|
|
|
-
|
%
|
For the six months ended June 30, 2021 and 2020, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.
NOTE 5. SUBSEQUENT EVENT
Management has evaluated subsequent events through the date which the financial statements are available to be issued. All subsequent events requiring recognition as of June 30, 2021 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”