UNITED AMERICAN CORP. (FORMERLY TELIPHONE USA CORP.) FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2017 (UNAUDITED)

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1 FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2017

2 FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 UNITED AMERICAN CORP Balance Sheets (Unaudited) September 30, September 30, ASSETS Current Assets Cash 8,178 54,759 Accounts receivable - - Total Current Assets 8,178 54,759 Total Assets 8,178 54,759 LIABILITIES Accounts payable and accrued liabilities 30,319 - Advances payable 68,097 54,759 Deposit for Shares 255,000 Total Liabilities 353,416 54,759 STOCKHOLDERS' DEFICIENCY Common stock, $0.001 par value 200,000,000 shares authorized, 105,627,417 issued 105, ,627 Additional paid in capital 4,806,242 4,806,242 Accumulated deficit (5,257,107) (4,911,869) Total Stockholders' Equity (345,238) - Total liabilities and stockholders' deficit 8,178 54,759 See notes to financial statements 1

3 FINANCIAL STATEMENTS UNITED AMERICAN CORP Statement of Operations For the 3 and 9 Month Period Ending September 30, 2017 and 2016 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, Sales Cost of sales Inventory, beginning of period Purchases Gross profit Operating expenses Selling and promotion 12,770 15,894 - Professional and consulting fees 165, ,212 - Transport 3,577 7,812 - Office and general 2,547 4,835 - Interest and bank charges 3,169 3,611 - Rent 21,731 25, , ,238 - Net earnings (loss) (208,802) (345,238) - See notes to financial statements 2

4 FINANCIAL STATEMENTS UNITED AMERICAN CORP Statement of Cash Flows For the 9 Months Ended September 30, 2017 and 2016 (Unaudited) September 30, September 30, Net Income (345,238) - Operating Activities Depreciation - - Adjustments to Net Income - - Changes in Accounts Receivable 30,319 - Changes in Inventories - - Changes in Other Operating Activities - - Total Cash Flow from Operating Activities 30,319 - Investing Activities Capital Expenditures - - Investments - - Other Cash Flows from Investing Activities - - Total Cash from Investing Activities - - Financing Activities Dividends Paid - - Sale/Purchase of Stock - - Net Borrowings - - Deposit for Shares 255,000 - Other Cash Flows from Financing Activities 65,639 52,340 Total Cash Flow from Financing Activities 320,639 52,340 Change in Cash and Cash Equivalents 5,720 52,340 See notes to financial statements 3

5 NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS United American Corp. (the Company ) was incorporated under the laws of the State of Florida on July 17, 1992 under the name American Financial Seminars, Inc. with authorized common stock of 1,000 shares at $1.00 par value. Since its inception the Company has made several name changes as noted below and on November 22, 2010 increased the authorized common stock to 200,000,000 shares with a par value of $ The following is a history of name changes in the past five years: Period January 12, 2017 to Present July 16, 2014 to January 12, 2017 January 13, 2011 to July 16, 2014 Name United American Corp. Teliphone USA Corp. New York Telecom Exchange Inc. The Company is currently in a development stage and is currently developing projects in several areas related to its experience in telecommunications. This includes projects related to mobile connectivity, social network posting technology and the development of an alternative secure blockchain network using the Public Switched Telephone Network or PSTN. POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ) and the regulations of the United States Securities and Exchange Commission. The financial statements and accompanying notes are the representations of the Company s management, who are responsible for their integrity and objectivity. Use of Estimates The preparation of financial statements in conformity with GAAP 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 reported amounts of revenues and expenses during the reporting periods. These estimates include, but are not limited to, management s estimate of the valuation allowances of our deferred tax assets. Actual results could differ from those estimates. 4

6 POLICIES (CONTINUED) Cash Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company has no cash equivalents as of September 30, 2017 and Accounts Receivable and Concentration of Credit Risk The Company s policy is to consider accounts receivable, net of allowance for returns and doubtful accounts, to be fully collectible. The Company would record an allowance based on management s estimate of the overall collectability of accounts receivable, considering historical losses and economic conditions. Based on these same factors, individual accounts would be charged off against the allowance when management determines those individual accounts are uncollectible. Credit extended to customers is generally uncollateralized. Past-due status is based on contractual terms. Since there are no outstanding accounts receivable, Management has determined that no allowance is required as of September 30, 2017 and Property and Equipment and Long-Lived Assets Property and equipment is stated at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets. FASB Codification Topic 360 Property, Plant and Equipment (ASC 360), requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The application of ASC 360 has not materially affected the Company s reported earnings, financial condition or cash flows. Intangible assets with definite useful lives are stated at cost less accumulated amortization. 5

7 POLICIES (CONTINUED) Property and Equipment and Long-Lived Assets The Company will assess the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable at the time they do have intangible assets. Factors the Company considers to be important which could trigger an impairment review include the following: 1. Significant underperformance relative to expected historical or projected future operating results; 2. Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and 3. Significant negative industry or economic trends. When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company will measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. Revenue Recognition The Company s policy is to recognize revenue when the following criteria have been met: Evidence of an arrangement exists. The Company will consider a customer purchase order, service agreement, contract, or equivalent document to be evidence of an arrangement. Delivery has occurred. Delivery is considered to have occurred when the Company has delivered the items detailed in the PO or contract. The fee is fixed or determinable. The Company will consider the fee to be fixed or determinable if the fee is not subject to refund or adjustment and payment terms are standard, which will be generally days. Collection is deemed reasonably assured. Collection will be deemed reasonably assured if it is expected that the customer will be able to pay amounts under the arrangement as payments become due. 6

8 POLICIES (CONTINUED) Uncertain Tax Positions The Company follows ASC , Accounting for Uncertainty in Income Taxes. This requires recognition and measurement of uncertain income tax positions using a more-likely-than-not approach. Management evaluates their tax positions on an annual basis. The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Fair Value of Financial Instruments ASC 825, Financial Instruments, requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company s financial instruments: The carrying amount of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses, stockholder advances, short term financing and convertible debt when the Company will recognize each of these will approximate fair value because of the short-term maturity of those instruments. The Company does not utilize derivative instruments. Recoverability of Long-Lived Assets The Company will review recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment is based primarily on the Company s ability to recover the carrying value of its longlived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell. Earnings Per Share of Common Stock Basic net income per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) may include additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented. An uncertain number of shares underlying convertible debt have been excluded from the computation of loss per share because their impact was anti-dilutive. 7

9 POLICIES (CONTINUED) Related Party Transactions Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction. Recently Issued Accounting Standards In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No , Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The amendments in this update provided guidance on eight specific cash flow issues. This update is to provide specific guidance on each of the eight issues, thereby reducing the diversity in practice in how certain transactions are classified in the statement of cash flows. ASU is effective for fiscal years and interim periods beginning after December 31, Early adoption is permitted. The Company is assessing the impact, if any, of implementing this guidance on its financial position, results of operations and liquidity. In February 2016, the FASB issued ASU No , Leases (Topic 842). ASU changes the accounting for leased assets, principally by requiring balance sheet recognition of assets under lease arrangements. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, The Company is currently in the process of evaluating the impact of the adoption of ASU on its financial statements. In May 2014, August 2015 and May 2016, the FASB issued ASU , Revenue from Contracts with Customers, ASU , Revenue from Contracts with Customers, Deferral of the Effective Date, and ASU , Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, respectively, which implement ASC Topic 606. ASC Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance under US GAAP, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. 8

10 POLICIES (CONTINUED) The amendments in these ASUs are effective for annual periods beginning after December 15, 2017, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, These ASUs may be applied retrospectively with accumulative adjustment to retained earnings in the year of adoption. The Company s assessing the impact, if any, of implementing this guidance on its financial position, results of operations and liquidity. In January 2017, the FASB issued ASU Intangibles Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The amendments in this update are required for public business entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The update is intended to simplify the annual or interim goodwill impairment test. A public business entity that is a U.S. SEC filer must adopt the amendments in this update for its annual or interim goodwill impairment tests in fiscal years beginning after December 15, Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, The Company s assessing the impact, if any, of implementing this guidance on its financial position, results of operations and liquidity. In January 2017, the FASB issued ASU Business Combinations (Topic 805), Clarifying the Definition of a Business. The amendments in this update are required for public business entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The update is intended to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. Public business entities must apply the amendments in this update to annual periods beginning after December 15, Early application is permitted under certain conditions. The Company s assessing the impact, if any, of implementing this guidance on its financial position, results of operations and liquidity. There were other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries or transactions that are not expected to have a material impact on the Company s financial position, results of operations or cash flows. Going Concern The Company has an accumulated deficit of $4,911,869 December 31, 2016 and 2015 and an accumulated deficit of $5,257,107 on September 30, During the nine month period ending September 30, 2017, the Company did not have operations other than collection of funds from US customers of TNW Network Inc. ( TNW), and the transfer of these deposits to TNW and therefore Management deems there is substantial doubt regarding the Company to continue as a going concern. 9

11 POLICIES (CONTINUED) These financial statements of the Company have been prepared assuming that the Company will among other things, execute its business plan and continue to perform services for TNW. The financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties. The Company plans to raise additional capital to carry out its business plan. The Company s ability to raise additional capital through future equity and debt securities issuances is unknown. Obtaining additional financing, the successful development of the Company s contemplated plan of operations, ultimately, to profitable operations are necessary for the Company to continue operations. NOTE 3 - ADVANCES PAYABLE On April 1, 2017, the Company entered into an agreement with TNW Networks Inc., a Canadian company, to provide TNW with banking services in the United States. This agreement superseded a similar arrangement with Teliphone Navigata-Westel Communication Inc. dated June 14, 2014 Under the agreement, the Company collects certain of TNW s receivables in the Company s bank account and remits the funds to TNW net of any direct charges (including bank fees, processing charges, merchant fees, etc.) and net of any payments made from the bank account on TNW s behalf. The advance payable represents funds collected as per the agreement but not yet remitted to TNW. As of September 30, 2017, the Company had advances payable of $68,097. NOTE 4- STOCKHOLDERS EQUITY Common Stock As of September 30, 2017 and 2016 the Company had 200,000,000 shares of common stock authorized with a par value of $ As of September 30, 2017 and 2016, the Company had 105,627,417 shares issued and outstanding Stock Options and Warrants During the period May 26, 2017 to June 1, 2017 the Company executed share subscription agreements for private placements in the Company. Subscriptions totalled 3,550,000 shares at a cost of $0.10 per share which each share having a single warrant exercisable at $0.10 for a period of 2 years from the date of the subscription agreement. The Company has received funds under the subscription agreements which it has used for operations in 2017 but has not yet issued the shares associated with these subscriptions. The Company expects to issue the shares from treasury prior to December 31,

12 NOTE 5- PROVISION FOR INCOME TAXES The provision (benefit) for income taxes for the years ended December 31, 2016 and 2015 differs from the amount which would be expected as a result of applying the statutory tax rates to the losses before income taxes due primarily to the valuation allowance to fully reserve net deferred tax assets. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. As of December 31, 2016 and 2015 Deferred tax assets: Net operating loss before non-deductible items $ (491,187) Tax rate 34% Total deferred tax assets 167,004 Less: Valuation allowance (167,004) Net deferred tax assets $ - As of December 31, 2016, the Company has a net operating loss carry forward of $491,187 expiring through The Company has provided a valuation allowance against the full amount of the deferred tax asset due to management s uncertainty about its realization. Furthermore, the net operating loss carry forward may be subject to further limitation pursuant to Section 382 of the Internal Revenue Code.. NOTE 6- OPERATIONS Operations On May 1, 2017, the Company began the development of its business plan to commence operations in the areas of mobile connectivity, social media posting technology and the development of BlockNum new form of blockchain network which uses the Public Switched Telephone Network or PSTN. BlockNum is currently the Company s primary area of focus as Management has determined this represents the best potential return for the Company. 11

13 NOTE 6- OPERATIONS (CONTINUED) BlockNum BlockNum is a Distributed Ledger Technology ( DLT ) which uses the Public Switched Telephone Network ( PSTN ) to support secure transactions through a Public Switched Telephone Blockchain Network ( PSTBN ). BlockNum is a highly permissioned blockchain with an access control layer for the blockchain nodes based on SIP messaging with communication occurring solely via SIP over IP protocol. The PSTN provides a large installed decentralized network base and when combined with SIP messaging, is an immensely secure system which is instantly scalable to allow the BlockNum to reach any person in the world who has a phone and phone number. BlockNum will operate on the principle of Proof of Consensus (or PoC) as opposed to Proof of Work Proof of Stake blockchains. Proof of Consensus focusses on determining that consensus has been achieved (the consensus event ) within a network of decentralized distributed ledgers and where the ledgers are held within a combination of trusted and independent anonymous nodes. Transaction consensus is achieved through a second layer of token nodes whose sold function is to approve or deny a transaction in a consensus event. This approach makes BlockNum PoC transactions equally robust as the current alternatives, but the Company believes it will be much faster and significantly more energy efficient. BlockNum is designed therefore be the first blockchain that is green and ecologically sound. BlockNum is being developed internally by the Company s President and Management and a patent application for the technology is currently being prepared for submission to the United States Patent and Trademark Office (USPTO). The Company is currently seeking further investment for the development and launch of BlockNum. 12