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 July 31, 2014
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 333-176350
FUHUIYUAN INTERNATIONAL HOLDINGS
LIMITED
(Exact name of registrant as specified in its charter)
Nevada |
N/A |
(State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.) |
|
|
Suite 204, 15615 102 Avenue, Edmonton, Alberta,
Canada |
T5P 4X7 |
(Address of principal executive offices) |
(Zip Code) |
780 756 1668
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
issuers classes of common stock, as of the latest practicable date.
19,500,000 common shares issued and outstanding as of September 17,
2014.
Table of Contents
2
PART I FINANCIAL INFORMATION
Item 1. |
Financial Statements
|
Our unaudited interim consolidated financial statements for the
three months ended July 31, 2014 form part of this quarterly report. All
currency references in this report are to Canadian dollars unless otherwise
noted.
3
Fuhuiyuan International Holdings Ltd. |
INTERIM CONSOLIDATED BALANCE SHEETS |
Stated in Canadian Dollars |
(Unaudited) |
|
|
July 31,
|
|
|
April 30, |
|
|
|
2014 |
|
|
2014 |
|
ASSETS |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Due from related parties - Note 6 |
$ |
87,656 |
|
$ |
87,656 |
|
Total Assets |
$ |
87,656 |
|
$ |
87,656 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
$ |
187,536 |
|
$ |
163,400 |
|
Due to related parties Note 6 |
|
1,089 |
|
|
1,096 |
|
Total Liabilities |
|
188,625 |
|
|
164,496 |
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
Capital Stock |
|
|
|
|
|
|
Authorized 100,000,000
common shares, voting, par value $.0001
each
90,000,000 preferred shares, par value $.0001
each Issued
19,500,000 common shares (April 30, 2014 - 19,500,000) |
|
1,950 |
|
|
1,950 |
|
Additional paid in capital
|
|
107,916
|
|
|
107,916 |
|
Accumulated deficit |
|
(213,927 |
) |
|
(189,791 |
) |
Accumulated other
comprehensive income |
|
3,092 |
|
|
3,085 |
|
Total Stockholders' Deficit |
$ |
100,969 |
) |
$ |
(76,840 |
) |
Total Liabilities and
Stockholders' Deficit |
$ |
87,656 |
|
$ |
87,656 |
|
4
See Accompanying Notes
Fuhuiyuan International Holdings Ltd. |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS |
For the three month periods ended July 31, 2014 and 2013
|
Stated in Canadian Dollars |
(Unaudited) |
|
|
July 31, |
|
|
July 31, |
|
|
|
2014 |
|
|
2013 |
|
Expenses |
|
|
|
|
|
|
Administration fees |
$ |
5,775 |
|
$ |
1,313 |
|
Consulting fees |
|
1,575 |
|
|
- |
|
Office and
general |
|
4,139 |
|
|
37,001 |
|
Professional fees |
|
12,647 |
|
|
6,666 |
|
Total expenses |
|
24,136 |
|
|
44,980 |
|
Net loss |
|
(24,136 |
) |
|
(44,980 |
) |
|
|
|
|
|
|
|
Dividend attributable to noncontrolling
interest |
|
- |
|
|
662 |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Foreign currency
translation |
|
7 |
|
|
- |
|
Comprehensive loss |
|
(24,129 |
) |
|
(45,642 |
) |
|
|
|
|
|
|
|
Basic and diluted loss per
share |
$ |
(0.001 |
) |
$ |
(0.003 |
) |
|
|
|
|
|
|
|
Weighted average number of
shares outstanding |
|
19,500,000 |
|
|
15,000,000 |
|
5
See Accompanying Notes
Fuhuiyuan International Holdings Ltd. |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY |
For the Period from May 1, 2013 to July 31, 2014 |
Stated in Canadian Dollars |
(Unaudited) |
|
|
Common Stock |
|
|
|
|
|
|
|
|
Accumulated |
|
|
Equity |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
attributable to |
|
|
attributable to |
|
|
Total |
|
|
|
|
|
|
|
|
|
Paid in |
|
|
Retained |
|
|
Comprehensive |
|
|
Fuhuiyuan |
|
|
noncontrolling |
|
|
Shareholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Income |
|
|
shareholders |
|
|
interest |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 1, 2013 |
|
15,000,000 |
|
$ |
1,500 |
|
$ |
73,261 |
|
$ |
(879,053 |
) |
$ |
- |
|
$ |
(804,292 |
) |
$ |
31,500 |
|
$ |
(772,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for 100% of
common shares of Fuhuiyuan International Group (Holdings) Limited |
|
7,500,000 |
|
|
750 |
|
|
49,307 |
|
|
- |
|
|
- |
|
|
50,057 |
|
|
- |
|
|
50,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of preferred
shares |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(26,500 |
) |
|
(26,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of subsidiary |
|
(3,000,000 |
) |
|
(300 |
) |
|
(14,652 |
) |
|
774,960 |
|
|
|
|
|
760,008 |
|
|
(5,000 |
) |
|
755,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the
year ended April 30, 2014 |
|
- |
|
|
- |
|
|
- |
|
|
(84,614 |
) |
|
3,085 |
|
|
(81,529 |
) |
|
- |
|
|
(81,529 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to noncontrolling interest |
|
- |
|
|
- |
|
|
- |
|
|
(1,084 |
) |
|
- |
|
|
(1,084 |
) |
|
- |
|
|
(1,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2014 |
|
19,500,000 |
|
|
1,950 |
|
|
107,916 |
|
$ |
(189,791 |
) |
|
3,085 |
|
|
(76,840 |
) |
|
- |
|
|
(76,840 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the
period ended July 31, 2014 |
|
- |
|
|
- |
|
|
- |
|
|
(24,136 |
) |
|
7 |
|
|
(24,129 |
) |
|
- |
|
|
(24,129 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2014 |
|
19,500,000 |
|
$ |
1,950 |
|
$ |
107,916 |
|
$ |
(213,927 |
) |
$ |
3,092 |
|
$ |
(100,969 |
) |
$ |
- |
|
$ |
(100,969 |
) |
6
See Accompanying Notes
Fuhuiyuan International Holdings Ltd. |
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the three month periods ended July 31, 2014 and 2013
|
Stated in Canadian Dollars |
(Unaudited) |
|
|
Jul-31 |
|
|
Jul-31 |
|
|
|
2014 |
|
|
2013 |
|
Operating activities |
|
|
|
|
|
|
Net loss for period |
$ |
(24,136 |
) |
$ |
(44,980 |
) |
|
|
|
|
|
|
|
Item not requiring outlay
(inflow) of cash |
|
|
|
|
|
|
Depreciation |
|
- |
|
|
861 |
|
|
|
|
|
|
|
|
Changes in non-cash working
capital balances |
|
|
|
|
|
|
Accounts
payable |
|
24,136 |
|
|
45,695 |
|
Income taxes receivable |
|
- |
|
|
3,202 |
|
Due to
(from) related parties |
|
- |
|
|
(17,911 |
) |
Net cash from
operating activities |
|
- |
|
|
(13,133 |
) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Redemption of preferred shares |
|
- |
|
|
(10,000 |
) |
Dividend |
|
- |
|
|
(662 |
) |
Net cash from financing
activities |
|
- |
|
|
(10,662 |
) |
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents during the period |
|
- |
|
|
(23,795 |
) |
Cash and cash equivalents, beginning of the
period |
|
- |
|
|
24,398 |
|
Cash and cash equivalents,
end of the period |
$ |
- |
|
$ |
603 |
|
|
|
|
|
|
|
|
Supplemental information |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
$ |
- |
|
$ |
- |
|
Income taxes paid |
$ |
- |
|
$ |
- |
|
7
See Accompanying Notes
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS |
JULY 31, 2014 |
(UNAUDITED) |
|
Stated in
Canadian dollars |
NOTE 1 NATURE AND CONTINUANCE OF
OPERATIONS
Fuhuiyuan International Holdings Limited (Fuhuiyuan or the
Corporation), formerly KWest Investment International Ltd., was incorporated
in the state of Nevada, United States on December 8, 2009.
On June 7, 2010, the Corporation acquired KWest Investments
& Development Inc. (KWest Alberta) of Edmonton, Alberta, Canada as its
wholly owned subsidiary. KWest Alberta. was incorporated on September 29, 2008
with its head office located in Edmonton, Alberta, Canada and is specialized in
real estate syndication.
On August 15, 2013, the Corporation entered into a share
exchange agreement with Fuhuiyuan International Group (Holdings) Limited
(Fuhuiyuan International). In exchange for all the outstanding shares of
common stock of Fuhuiyuan International, the Corporation issued an aggregate of
7,500,000 shares of common stock of the Corporation.
Fuhuiyuan International is a newly formed trading company and
it has recently entered into an agency agreement with Qingdao Fuhuiyuan
Investment Co. Ltd. (Qingdao Fuhuiyuan) in which Qingdao Fuhuiyuan has
appointed Fuhuiyuan International to act as its international agent to sell
Qingdao Fuhuiyuans products, including cosmetics, jewelry, fashion clothing and
accessories. Fuhuiyuan International collects payments made by overseas
customers on behalf of Qingdao Fuhuiyuan and oversees all related activities and
expenditures. In addition, Fuhuiyuan International handles all affairs relating
to overseas transportation, customs declaration, customs clearance and payment
of taxes.
On January 1, 2014, the Corporation sold one of its
subsidiaries, KWest Investments & Development Inc (See Note 5).
These consolidated interim financial statements have been
prepared in accordance with generally accepted accounting principles applicable
to a going concern, which assumes that the Corporation will be able to meet its
obligations and continue its operations for the next twelve months. Realization
values may be substantially different from carrying values as shown and these
financial statements do not give effect to adjustments that would be necessary
to the carrying values and clarification of assets and liabilities should the
Corporation be unable to continue as a going concern. At July 31, 2014, the
Corporation has not yet achieved profitable operations and has accumulated
losses of $213,927 since inception, both of which cast substantial doubt about
the Corporations ability to continue as a going concern. The Corporations
ability to continue as a going concern is dependent upon its ability to generate
future profitable operations and/or the financial contributions of its
shareholders through related party loans or new equity financing. There is no
assurance that any of these events will take place in the next twelve
months.
8
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS |
JULY 31, 2014 |
(UNAUDITED) |
|
Stated in
Canadian dollars |
NOTE 2 INTERIM REPORTING
The interim condensed consolidated financial statements, which
include the Corporation and its subsidiaries, KWest Investments &
Development Inc. and Fuhuiyuan International Group (Holdings) Limited, are
prepared under the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America. All significant
inter-company accounts and transactions have been eliminated. These financial
statements include 100% of the assets, liabilities, and net income or loss of
its wholly-owned subsidiaries.
While the information presented in the accompanying interim
condensed consolidated financial statements is unaudited, it includes all
adjustments, which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods presented in accordance with accounting principles generally
accepted in the United States of America. All adjustments are of a normal
recurring nature. It is suggested that these interim condensed consolidated
financial statements be read in conjunction with the Corporations April 30,
2014 annual consolidated financial statements. Operating results for the three
month period ended July 31, 2014 are not necessarily indicative of the results
that can be expected for the year ended April 30, 2015.
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
There have been no changes in accounting policies from those
disclosed in the notes to the audited consolidated financial statements for the
year ended April 30, 2014.
Functional currency
The Corporations functional currency is the Canadian dollar.
All amounts shown on these statements are stated in Canadian dollars.
NOTE 4 RECENT ACCOUNTING
PRONOUNCEMENTS
The Corporation adopts new pronouncements relating to generally
accepted accounting principles applicable to the Corporation as they are issued,
which may be in advance of their effective date. Management does not believe
that any recently issued, but not yet effective accounting standards, if
currently adopted, would have a material effect on the accompanying financial
statements.
9
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS |
JULY 31, 2014 |
(UNAUDITED) |
|
Stated in
Canadian dollars |
NOTE 5 DISPOSITION OF SUBSIDIARY
On January 17, 2014, the Corporation closed a Share Purchase
and Sale Agreement pursuant to which the Corporation sold to 4 shareholders 100%
of the issued and outstanding shares of common stock in its wholly owned
subsidiary, KWest Investments & Development Inc. (KWest Alberta). In
consideration, the 4 purchasers paid $110 ($100 USD) in cash and tendered to the
Corporation for cancellation 3,000,000shares of common stock in the Corporation.
As a result of the disposition, the Corporation eliminated the
following accounts and amounts from its consolidated balance sheet
Cash |
$ |
29,576 |
|
Current assets |
|
52,400 |
|
Property and equipment |
|
31,723 |
|
Current liabilities |
|
(594,632 |
) |
Long-term liabilities |
|
(274,074 |
)
|
Additional paid in capital |
|
(20,389 |
) |
Preferred shares
noncontrolling interest |
|
5,000 |
|
NOTE 6 RELATED PARTY TRANSACTIONS AND
BALANCES
The following are related transaction balances with related
parties for the period ended July 31, 2014:
|
|
July 31, 2014 |
|
|
April 30, 2014 |
|
|
|
Current |
|
|
Non-Current |
|
|
Current |
|
|
Non-Current |
|
Due to related party |
$ |
1,089 |
|
$ |
- |
|
$ |
1,096 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from related party |
$ |
87,656 |
|
$ |
- |
|
$ |
87,656 |
|
$ |
- |
|
Current advances from related parties represent advances from a
shareholder, advances from a Corporation with common management and advances
from a party related to a shareholder. The advances are without interest and
have no specified repayment terms.
10
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS |
JULY 31, 2014 |
(UNAUDITED) |
|
Stated in
Canadian dollars |
NOTE 7 - CAPITAL STOCK
On April 28, 2010, the Corporation issued 5,445,000 common
shares of the Corporation for gross proceed of $92,817 by way of private
placement.
On June 7, 2010, the Corporation issued 9,555,000 common shares
of the Corporation in exchange for 100% of the outstanding common shares of
KWest Investments & Development Inc. The transaction was accounted for as a
reverse merger and a retroactive recapitalization.
On August 15, 2013, the Corporation issued 7,500,000 common
shares of in exchange for all the outstanding shares of common stock of
Fuhuiyuan International.
On January 31, 2014, the Corporation cancelled 3,000,000 common
shares of the Corporation as a result of the disposal of its subsidiary (See
Note 5).
As at July 31, 2014, there were no warrants or options
outstanding.
11
Item 2. |
Management's Discussion and Analysis of
Financial Condition and Results of Operations |
Forward-Looking Statements
This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.
These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs and the risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our unaudited financial statements which have
been prepared in conformity with accounting principles generally accepted in the
United States. It should be read in conjunction with our financial statements
and the notes thereto included elsewhere herein.
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 consolidated financial statements are stated in Canadian
Dollars (CDN$) 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 Canadian Dollars (CDN$) 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 Fuhuiyuan International Holdings Limited and our
wholly-owned subsidiary, Fuhuiyuan International Group (Holdings) Limited, a
British Virgin Island corporation, unless otherwise indicated.
General Overview
We were incorporated on December 8, 2009 under the laws of the
State of Nevada. We have one wholly-owned subsidiary, Fuhuiyuan International
Group (Holdings) Limited, a British Virgin Islands corporation. Our principal
executive offices are located at Suite 204, 15615 102 Avenue, Edmonton, Alberta,
T5P 4X7. Our telephone number is (780) 756-1668. Our fiscal year end is April
30.
On July 16, 2013, our board of directors and a majority of our
stockholders approved a change of name of our company from KWest Investment
International Ltd. to Fuhuiyuan International Holdings Limited. A Certificate of
Amendment was filed with the Nevada Secretary of State on July 29, 2013, with an
effective date of August 7, 2013. The amendment was approved by Financial
Industry Regulatory Authority (FINRA) with an effective date of August 7, 2013.
Our trading symbol is KWIT. Our CUSIP number is 359535 101.
12
On June 7, 2010 we entered into a share exchange agreement with
KWest Investments & Development Inc. (KWest Alberta) and all of its
shareholders whereby we acquired KWest Alberta and its 10% ownership in the
Sturgeon County Property in Alberta for 9,555,000 shares of our common stock.
KWest Alberta is a business specializing in land banking, real estate
syndication and management. On June 10, 2009, KWest Alberta acquired a 75 acre
parcel of land located in Sturgeon County, Alberta. The parcel is situated about
2 miles east of Redwater, Alberta and 3¾ miles north of the Alberta Industrial
Heartland which is targeted to be the future site for oil sand upgraders (heavy
oil processing facilities) in Alberta.
Concurrently with the purchase of the Sturgeon Country
property, KWest Alberta sold a 90% ownership interest in the property, to Kimura
Lake Estate Inc., KWest Alberta maintains a 10% ownership interest in the 75
acre parcel of land for Kimura Lake Estate and maintains a 10% ownership
interest. Our former officers and directors, Stolfin Wong and Eric Lo are also
directors and officers of Kimura Lake Estate Inc. and of the corporation from
which we originally acquired the property.
As a management company, through KWest Alberta, we were to
assist Kimura Lake Estate in syndicating the land through our sales team by
splitting the full parcel into separate half acre (1 unit) and one acre (2
units) units of undivided interest with individual land titles issued by the
Alberta Government Land Title Office and sold off to land investors. Our 10%
interest provided us with 15 units of undivided interest not for syndication and
Kimura Lake Estate had 135 units (90%) of undivided interest to syndicate. Once
the land was syndicated, our plan was to work with engineers, planners and
architects to get all the approvals and plans required, thereby increasing the
value of the land. We endeavored to generate revenue in the form of management
fees derived from managing syndicated land as well as the sale of subdivided
land parcels. However, we did not generate any revenues from our management of
the Sturgeon Property.
On January 17, 2014, we entered into and closed a share
purchase and sale agreement dated January 1, 2014 pursuant to which we sold to
four shareholders of our company, namely Stolfin Wong, our former president and
director, Eric Lo, our former secretary and director, Hon Ming Tony Wong, and
Willie Chan, 100% of the issued and outstanding securities in our wholly owned
subsidiary, KWest Alberta. In consideration of the sale of KWest Alberta, the
four purchasers tendered to our company for cancellation 3,000,000 common shares
in our capital stock and a payment of $100.
Our Current Business
On August 22, 2013, we entered into a share exchange agreement
dated August 15, 2013, with Fuhuiyuan International Group (Holdings) Limited, a
British Virgin Islands corporation (Fuhuiyuan BVI) and the sole shareholder of
Fuhuiyuan BVI, pursuant to which we agreed to purchase 100% of the issued and
outstanding securities of Fuhuiyuan BVI in consideration of the issuance of
7,500,000 shares of our common stock (being 33.33% of our issued and outstanding
voting securities). On October 31, 2013, we completed the acquisition and
Fuhuiyuan BVI began operating as our wholly owned subsidiary. Upon closing, Ms.
Jinglan Dong and Mr. Bowen Dong were appointed to our board of directors.
Fuhuiyuan BVI is a newly formed trading company which holds
certain sales agency rights, pursuant to an agency agreement dated June 30,
2013, to act as international sales agent for Qingdao Fuhuiyuan Investment Co.
Ltd. (Qingdao Fuhuiyuan), a China based purveyor of cosmetics, footwear,
clothing and fashion accessories. Pursuant to the agency agreement, Fuhuiyuan
BVI will be responsible for collecting payments made by overseas customers on
behalf of Qingdao Fuhuiyuan as well as overseeing all sales related activities
and expenditures, including overseas transportation, customs declaration,
customs clearance and payment of taxes. In consideration of the agency services
provided by Fuhuiyuan BVI, Qindao Fuhuiyuan will pay to Fuhuiyuan BVI 20% of the
gross value of sales under the agency agreement. The agency agreement is for a
perpetual term and may be terminated by either party with two months notice.
13
Qingdao Fuhuiyuan is a multi-industry business based out of
Qingdao, China, having established a foundation in the luxury goods sector.
Since 2007, the company has been engaged in the production and distribution of
cosmetics, leather goods, and jewelry, primarily in China. Over the years, the
company oversaw the establishment of a number of operating subsidiaries in each
industry which include: Beautyoung (Hong Kong) International Co., Ltd., Qingdao
Beautyoung Cosmetics Co., Ltd., Meizhonghui Trading Co., Ltd., and Fuyuan
Jewelry Co., Ltd. Within its umbrella of subsidiaries, the company maintains a
diversified brand portfolio of domestic Chinese brands, namely, Ying Cui Cao Ben
Cosmetics, Dangcing Leather, and Fuyuan Jewelry.
Results of Operations
The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the quarter
ended July 31, 2014, which are included herein.
Our operating results for the three months ended July 31, 2014
and 2013 are summarized as follows:
|
|
Three
Months Ended |
|
|
|
July
31, |
|
|
|
2014 |
|
|
2013 |
|
Revenue |
$ |
Nil |
|
$ |
Nil |
|
Cost of goods sold |
$ |
Nil |
|
$ |
Nil |
|
Administration fees |
$ |
5,775 |
|
$ |
1,313 |
|
Consulting fees |
$ |
1,575 |
|
$ |
Nil |
|
Depreciation |
$ |
Nil |
|
$ |
861 |
|
Office and general |
$ |
4,139 |
|
$ |
28,642 |
|
Professional fees |
$ |
12,647 |
|
$ |
6,666 |
|
Rent
|
$ |
Nil |
|
$ |
7,498 |
|
Net Income (Loss) |
$ |
(24,136 |
)
|
$ |
(44,980 |
)
|
For the three months ended July 31, 2014, our net loss
decreased by $20,844 as compared to the three months ended July 31, 2013 to
$24,136. Our expenses decreased primarily due to the decrease of office and
general expenses.
Liquidity and Financial Condition
Working Capital
|
|
At |
|
|
At |
|
|
|
July 31, |
|
|
April 30, |
|
|
|
2014 |
|
|
2014 |
|
Current Assets |
$ |
87,656l
|
|
$ |
87,656 |
|
Current Liabilities |
$ |
188,625 |
|
$ |
164,496 |
|
Working Capital (Deficit) |
$ |
(100,969 |
)
|
$ |
(76,840 |
)
|
Our total current assets as of July 31, 2014 were $87,656 as
compared to total current assets of $87,656 as of April 30, 2014. Our total
current liabilities as of July 31, 2014 were $188,625 as compared to total
current liabilities of $164,496 as of April 30, 2014. The increase in current
liabilities was primarily attributed to the increase in accounts payable.
14
Cash Flows
|
|
Three
Months Ended |
|
|
|
July
31, |
|
|
|
2014 |
|
|
2013 |
|
Net Cash Provided by (Used
in) Operating Activities |
$ |
Nil |
|
$ |
(13,133 |
)
|
Net Cash Provided by (Used in) Investing
Activities |
$ |
Nil |
|
$ |
Nil |
|
Net Cash Provided by (Used
in) Financing Activities |
$ |
Nil |
|
$ |
(10,662 |
) |
Increase (Decrease) in Cash and Cash
Equivalents During the Period |
$ |
Nil |
|
$ |
(23,795 |
)
|
Operating Activities
Cash used in operating activities during the three months ended
July 31, 2014 increased from $13,133 compared to cash used in operating
activities for the three months ended July 31, 2013 to $90,778 which was
primarily due to an increase in accounts payable.
Investing Activities
Cash provided by investing activities during the three months
ended July 31, 2014 increased from $Nil for the three months ended July 31, 2013
to $90,778 which was primarily due to a related party advancement made during
the quarter.
Financing Activities
There were no financing activities during the three month
period ended July 31, 2014.
Cash Requirements
We will require additional funds to fund our budgeted expenses
over the next 12 months. These funds may be raised through equity financing,
debt financing, or other sources, which may result in further dilution in the
equity ownership of our shares. There is still no assurance that we will be able
to maintain operations at a level sufficient for an investor to obtain a return
on his investment in our common stock. Further, we may continue to be
unprofitable. We need to raise additional funds in the immediate future in order
to proceed with our budgeted expenses.
Specifically, we estimate our operating expenses and working
capital requirements for the next 12 months to be as follows:
Description
|
Estimated
Completion Date |
Estimated
Expenses ($) |
Legal and accounting fees |
12 months |
$50,000 |
Management and operating costs |
12 months |
$100,000 |
Salaries and consulting fees |
12 months |
$100,000 |
General and administrative expenses |
12 months |
$25,000 |
Total |
|
$275,000 |
We plan to use a portion of the above funds for expenses
related to our subsidiary, Fuhuiyuan BVI.
15
We intend to meet our cash requirements for the next 12 months
through a combination of cash flow from operations and either debt financing or
equity financing by way of private placements. We currently do not have any
arrangements in place to complete any private placement financings and there is
no assurance that we will be successful in completing any such financings on
terms that will be acceptable to us.
If we are not able to generate or raise the full $275,000 to
implement our business plan as anticipated, we will scale our business
development in line with available capital. Our primary priority will be to
retain our reporting status with the Securities and Exchange Commission which
means that we will first ensure that we have sufficient capital to cover our
legal and accounting expenses. Once these costs are accounted for, in accordance
with how much financing we are able to secure, we will focus on expanding our
operations, particularly with our subsidiary, Fuhuiyuan BVI.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
Critical Accounting Policies
The summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial statements and
notes are the representations of our companys management, who is responsible
for their integrity and objectivity. The consolidated financial statements have
been prepared in accordance with the instructions to form 10-Q, and therefore,
do not included all the information necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Our company's significant accounting
policies are more fully described in Note 2 to the audited consolidated
financial statements contained in our company's Annual Report on Form 10-K for
the year ended April 30, 2014. There were no material changes to our company's
significant accounting policies or the estimates made pursuant to those policies
during the most recent quarter.
Recent Accounting Pronouncements
Our company adopts new pronouncements relating to generally
accepted accounting principles applicable to our company as they are issued,
which may be in advance of their effective date. Management does not believe
that any recently issued, but not yet effective accounting standards, if
currently adopted, would have a material effect on the accompanying financial
statements.
Item 3. |
Quantitative and Qualitative Disclosure
About Market Risk |
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item 4. |
Controls and Procedures
|
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act 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
president (our principal executive officer, principal financial officer and
principal accounting officer), as appropriate to allow timely decisions
regarding required disclosure.
16
We carried out an evaluation, under the supervision and with
the participation of our management, including our president (our principal
executive officer, principal financial officer and principal accounting
officer), of the effectiveness of the design and operation of our disclosure
controls and procedures as of quarter covered by this report. Based on the
evaluation of these disclosure controls and procedures the president (our
principal executive officer, principal financial officer and principal
accounting officer) concluded that our disclosure controls and procedures were
effective.
Changes in Internal Controls
During the quarter 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 us, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our company.
As a small reporting company, we are not required to provide
the information required by this Item.
Item 2. |
Unregistered Sales of Equity Securities and
Use of Proceeds |
None.
Item 3. |
Defaults Upon Senior Securities
|
None.
Item 4. |
Mine Safety Disclosures
|
Not applicable.
Item 5. |
Other Information |
None.
Exhibit |
Description |
Number |
|
|
|
(2) |
Plan of Acquisition,
Reorganization, Arrangement, Liquidation or Succession |
|
|
2.1 |
Share Exchange Agreement with KWest Investments &
Development Inc., dated June 7, 2010 (Incorporated by reference to our
Registration Statement on Form S-1 filed on August 16, 2011) |
|
|
(3) |
(i) Articles of
Incorporation, (ii) Bylaws |
|
|
3.1 |
Articles of Incorporation of KWest Investment
International Ltd. (Incorporated by reference to our Registration
Statement on Form S-1 filed on August 16, 2011) |
17
Exhibit |
Description |
Number |
|
|
|
3.2 |
Certificate of Amendment filed with the Nevada Secretary
of State on January 8, 2010 (Incorporated by reference to our Registration
Statement on Form S-1 filed on August 16, 2011) |
|
|
3.3 |
Bylaws of KWest Investment International Ltd.
(Incorporated by reference to our Registration Statement on Form S-1 filed
on December 13, 2011) |
|
|
3.4 |
Certificate of Amendment (Incorporated by reference to
our Current Report on Form 8-K filed on August 7, 2013) |
|
|
3.3 |
Certificate of Incorporation for Fuhuiyuan International
Group (Holdings) Limited, a British Virgin Islands corporation
(Incorporated by reference to our Current Report on Form 8-K filed on
October 31, 2013) |
|
|
(4) |
Instruments Defining the Rights of Security Holders,
Including Indentures |
|
|
4.1 |
Instrument Defining the Right of Holders Form of Share
Certificate (Incorporated by reference to our Registration Statement on
Form S-1 filed on August 16, 2011) |
|
|
(10) |
Material Contracts |
|
|
10.1 |
Land Purchase Agreement dated June 10, 2009 (Incorporated
by reference to our Registration Statement on Form S-1 filed on August 16,
2011) |
|
|
10.2 |
Land Sale Agreement dated June 12, 2009 (Incorporated by
reference to our Registration Statement on Form S-1 filed on August 16,
2011) |
|
|
10.3 |
Share Exchange Agreement dated August 15, 2013 with
Fuhuiyuan International Group (Holdings) Limited and its Selling
Shareholders (Incorporated by reference to our Current Report on Form 8-K
filed on August 28, 2013) |
|
|
10.4 |
International Trading Agency Agreement between with
Fuhuiyuan International Group (Holdings) Limited and Qingdao Fuhuiyuan
Investment Co. Ltd. (Incorporated by reference to our Current Report on
Form 8-K filed on October 31, 2013) |
|
|
10.5 |
Share Purchase and Sale Agreement dated January 1, 2014
with KWest Investments & Development Inc., and the Selling
Shareholders (Incorporated by reference to our Current Report on Form 8-K
filed on January 22, 2014) |
|
|
(21) |
List of Subsidiaries |
|
|
21.1 |
Fuhuiyuan International Group (Holdings) Limited, a
British Virgin Islands corporation |
|
|
(31) |
Rule 13a-14(d)/15d-14(d) Certifications |
|
|
31.1* |
Section 302 Certification under the Sarbanes-Oxley Act of
2002 of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer |
|
|
(32) |
Section 1350 Certifications |
|
|
32.1* |
Section 906 Certification under the Sarbanes-Oxley Act of
2002 of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer |
|
|
101** |
Interactive Data Files |
|
|
101.INS |
XBRL Instance Document |
101.SCH |
XBRL Taxonomy Extension Schema Document |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF |
XBRL Taxonomy Extension Definition 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. |
18
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.
|
FUHUIYUAN INTERNATIONAL HOLDINGS
|
|
LIMITED |
|
(Registrant) |
|
|
|
|
|
|
Dated: September 19, 2014 |
/s/
Jinglan Dong |
|
Jinglan Dong |
|
President, Chief Executive Officer, Chief
Financial |
|
Officer, Treasurer, Secretary and Director
|
|
(Principal Executive Officer, Principal
Financial Officer |
|
and Principal Accounting Officer)
|
19
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jinglan Dong, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of
Fuhuiyuan International Holdings Limited; |
|
|
2. |
Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report; |
|
|
3. |
Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report; |
|
|
4. |
The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have: |
|
(a) |
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
|
|
(b) |
Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
|
|
(c) |
Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
|
(d) |
Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the
equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and |
|
|
|
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal control over financial
reporting. |
Date: September 19, 2014 |
|
|
/s/ Jinglan
Dong |
Jinglan Dong |
President, Chief Executive Officer, Chief Financial |
Officer, Treasurer, Secretary and Director |
(Principal Executive Officer, Principal Financial |
Officer and Principal Accounting Officer)
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Jinglan Dong, hereby certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) |
the Quarterly Report on Form 10-Q of Fuhuiyuan
International Holdings Limited for the period ended July 31, 2014 (the
"Report") fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and |
|
|
(2) |
the information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of Fuhuiyuan International Holdings
Limited. |
Dated: September 19, 2014
/s/ Jinglan
Dong |
Jinglan Dong |
President, Chief Executive Officer, Chief Financial
Officer, |
Treasurer, Secretary and Director |
(Principal Executive Officer, Principal Financial Officer
and |
Principal Accounting Officer) |
Fuhuiyuan International Holdings Limited
|
A signed original of this written statement required by Section
906, or other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Fuhuiyuan
International Holdings Limited and will be retained by Fuhuiyuan International
Holdings Limited and furnished to the Securities and Exchange Commission or its
staff upon request.
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