UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/ A

(Amendment No.1)

 

 

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended September 30, 2013

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

 

For the transition period from ___________ to ______________.

 

 

COMMISSION FILE NUMBER:  333-171148

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.

(Exact Name of Small Business Issuer in its Charter)

 

Nevada (State of Incorporation)

27-1656207 (IRS Employer ID No.)

 

NO.1 Xinhua Road, He Ping District, Tianjin City 300021

(Address of principal executive offices)

 

86-2258900299

(Registrant’s telephone number)

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

 

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.001 per share	None

 

Securities Registered Pursuant to Section 12(g) of the Act:    None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐  Yes                                           ☑  No

 

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.

☑  Yes                                           ☐  No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐  Yes                                           ☑  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer☐		Accelerated filer  ☐
Non-accelerated filer ☐		Smaller Reporting Company ☑

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☑                                           No  ☐

 

 

As of February 13, 2014, the issuer had 10,193,000 outstanding shares of Common Stock.

 

 

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K (the “Amended 10-K”) of Hengyi International Industries Group, Inc. (the “Company”) amends the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the Securities and Exchange Commission (the “SEC”) on December 27, 2013 (the “Original 10-K”). The Amended 10-K is being filed, in response to SEC comments in a letter dated February 7, 2014, to amend the Original 10-K as follows:

1.

To amend and restate Part II, Item 8, “Financial Statements and Supplementary Data” for the purpose of including a revised Report of Independent Registered Public Accounting Firm, which now includes the cumulative period from December 17, 2009, the date of inception, through September 30, 2013 in the scope and opinion paragraphs of such report;

2.

To amend and restate Part II, Item 9A, “Controls and Procedures” to include Management’s Annual Report on Internal Control Over Financial Reporting as required by Item 308(a) of Regulation S-K.

Except as set forth above, the Amended 10-K is identical to the Original 10-K. The Amended 10-K does not reflect events occurring after the filing of the Original 10-K and no attempt has been made in the Amended 10-K to modify or update other disclosures as presented in the Original 10-K. Accordingly, this Amended 10-K should be read in conjunction with the Company’s filings with the SEC subsequent to the filing of the Original 10-K. Additionally, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company has attached to the Amended 10-K updated certifications executed as of the date of the Amended 10-K by the Company’s chief executive officer and chief financial officer as required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002. These updated certifications are attached as Exhibits 31.1, 31.2, 32.1, and 32.2 to the Amended 10-K.

 

 

TABLE OF CONTENTS

 

		Page #
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	6
Item 2.	Properties	6
Item 3.	Legal Proceedings	6
Item 4.	Mine Safety Disclosures	6
PART II
Item 5.	Market for the Registrant’s Common Stock and Related Stockholder Matters	7
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8.	Financial Statements and Supplementary Data	15
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	15
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	15
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	16
Item 11.	Executive Compensation	18
Item 12.	Security Ownership of Certain Beneficial Owners and Management	19
Item 13.	Certain Relationships and Related Transactions, and Director Independence	20
Item 14.	Principal Accountant Fees and Services	20
PART IV
Item 15.	Exhibits and Financial Statements Schedules	22

  

 

Forward Looking Statements

 

All statements, other than statements of historical fact included in this Annual Report on Form 10-K (herein, "Annual Report") regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Annual Report, the words "could", "believe", "anticipate", "intend", "estimate", "expect", "project", and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Annual Report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and elsewhere in this Annual Report. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

 

Unless the context otherwise requires, references in this Annual Report to "registrant", "issuer", "we", "us", "our", "the Company" or "ours" refer to Hengyi International Industries Group Inc.

 

 

 

PART I

 

Our Background & Business

 

Hengyi International Industries Group Inc. (fk/a Lyons Liquors, Inc.) (a development stage company) (the "Company") was incorporated pursuant to the laws of the State of Nevada on December 17, 2009. We are a development stage company looking to enter the service industry, with a goal to acquire branded franchise hotels, such as multi-functional five-star hotel franchises and we are focused on establishing hotels in Tianjin, China. We have not yet commenced operations nor have we generated any revenues. We are currently in the process of developing a business and marketing plan for capital formation. Since our inception our day to day operation is working to ensure this goal. We have no plan, arrangement, commitment or understandings to engage in any type of merger or acquisition with another company. We are committed to developing our business plan, determining the market for our services, and marketing our capital formation plan to ensure the future success of our business. We have not sold any products or commenced any activities in the service industry, and have generated revenue since inception.

 

Marketing

 

With the development of China's economy, increase of tourism business and common household income, all the factors result in a growing demand of the hotel market, in particular high-end multi-functional five-star hotels and franchise business hotels. In Tianjin, although many hotels especially chain inns were established in the past few years, hotel operators are expecting more competition from high end hotels against chain inns

 

Competition

 

At present, there are many hotels in Tianjin. A hotel that is fully functional, reasonably priced and located in a flourishing downtown area with excellent service may compete with us in terms of customers and pricing strategies. Considering the huge market potential in China’s hotel industry and the low market entry threshold, there will be increasing competition in the hotel industry.

 

Employees

 

As of September 30, 2013, we had no employees other than our Chief Executive Officer and sole director, Mr. Yijun Hu and Chief Financial Officer, Ms. Ning Li. We anticipate that we will not hire any employees in the next twelve months unless we raise additional capital and we generate significant additional revenues from operations. Our success will depend on the ability and resources of our Chief Executive Officer (“CEO”), who is experienced in acquiring branded franchise hotels and has resources in relevant business.  If we lose the services of our CEO, we will be forced to either change our business plan and direction or cease operations in this specific business.

 

General

 

As stated above, we are a development stage company and to date we have not generated any revenues from our operations. Because we have not opened up any business, we may not be able to attract enough financing or interest from potential lenders or funding sources to commence operations.  If we cannot operate profitably, we may have to suspend or cease our operations.

 

 

Item 1A.    RISK FACTORS

 

Not required for smaller reporting companies.

 

Item 2.      PROPERTIES

 

Our business address is NO.1 Xinhua Road, He Ping District, Tianjin City 300021. Our office space is provided by our CEO to the Company free of charge. We believe this arrangement is adequate for our current needs and resources. 

 

At the present time, we do not intend to renovate, improve or develop properties.  We are not subject to competitive conditions for property and currently have no property to insure.  We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities. 

 

 

Item 3.      LEGAL PROCEEDINGS

 

There are no legal proceedings pending or threatened against us in the United States or elsewhere.

 

 

Item 4.      MINE SAFETY DISCLOSURES

 

Not Applicable.

 

PART II

 

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock is quoted on the “OTCBB”, under the symbol “HYIG”.  We are currently inactively trading at $1.00 and our trading volume is minimal.

 

Holders of Our Common Stock

 

As of the date of this filing, we had twenty-five (25) shareholders of our common stock.

 

As of September 30, 2013, the shareholders list from our transfer agent shows that there were 10,193,000 shares of common stock outstanding. Of those shares, 9,783,105 shares, or 95.98% percent of our outstanding common stock, were owned by Saverio Holdings Limited (“Saverio”), a company incorporated in British Virgin Islands. Mr. Yijun Hu is the sole director of Saverio.

 

Stock Option Grants

 

As of September 30, 2013, we had not granted any stock options.

 

Description of Our Capital Stock

 

General

 

Our authorized capital stock consists of 75,000,000 shares of common stock, par value $0.001 per share, and 0 shares of preferred stock. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control.

 

 

Common Stock

 

As of September 30, 2013, we had 10,193,000 shares of common stock issued and outstanding. 

 

The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.

 

All shares of common stock now outstanding are fully paid for and non-assessable.  We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of our securities.  All material terms of our common stock have been addressed in this section.

 

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.

 

Preferred Stock

 

As of September 30, 2013, we had not designated any series or class of preferred stock and no shares of preferred stock were issued or outstanding.

 

Dividends

 

We have not paid any cash dividends to shareholders.  The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic condit1ions, and other pertinent conditions.  It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Warrants

 

There are no outstanding warrants to purchase our securities.

 

Options

 

There are no options to purchase our securities outstanding.

 

 

Section 15(g) of the Securities Exchange Act of 1934

 

Our shares are currently covered by Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors. Rule 15g-2 declares unlawful any broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.  Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question. Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.  Rule 15g-5 requires that a broker dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.

 

Our common stock may remain subject to the foregoing rules for the foreseeable future. The application of the penny stock rules may affect our stockholder’s ability to sell their shares because some broker/dealers may not be willing to make a market in our common stock because of the burdens imposed upon them by the penny stock rules.

 

Item 6.

SELECTED FINANCIAL DATA

 

Not applicable. 

 

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

The following discussion and analysis of our Company’s financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements.

 

Overview

 

We are a development stage company, incorporated on December 17, 2009 under the laws of the State of Nevada, looking to enter the service industry specifically that we intend to acquire branded franchise hotels, in particular high-end multi-functional five-star hotels and franchise business hotels. We have not yet commenced operations and currently are in the process of developing a business and marketing plan for capital formation. We may acquire target company upon obtaining sufficient capital. However, there is no guarantee that we will be successful in raising the required capital. If we are not successful at raising any capital we may have to change our business plan to a more suitable business and industry sector to be able to raise capital or commence operations. Some possible options include such sectors as Technology, Clean Energy and Software Development. However, there can be no assurance that the raising of future equity or change in business sectors will be successful and that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The company has adopted its fiscal year end to be September 30.

 

Critical Accounting Policies

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company had a deficit accumulated during the development stage of $133,566 and a working capital and shareholder deficit of $12,507 and has no revenue generating operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

While the Company is attempting to execute its development strategy, the Company’s cash position may not be sufficient to support the Company's daily operations without significant financing. While the Company believes in the viability of its strategy to achieve revenue generating operations and in its ability to raise additional funds, there can be no assurances that these goals can be achieved. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to implement its business plan and to generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

During 2014, the Company intends to raise financing for the purpose of funding operating expenses and working capital.

 

However, there can be no assurance that the raising of future equity will be successful and that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Revenues Recognition

 

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company.

 

Revenue is recognized at the time the product is delivered or the service is performed. Provision for sales returns will be estimated based on the Company’s historical return experience. Deferred revenue is recorded for amounts received in advance of the time at which delivery has occurred or services are performed and included in revenue at the date of delivery or completion of the related services.

 

Changes in Control of Registrant

 

On February 22, 2013, Shefali Vibhakar, the then Chief Executive Officer, Chief Financial Officer, sole Director of our company, and the owner of 10,000,000 shares of our common stock, representing approximately 98.10% of our outstanding shares, sold an aggregate of 9,883,105 of those shares, representing approximately 96.96% of our outstanding shares of common stock, to various buyers. Pursuant to the Stock Purchase Agreement dated February 20, 2013, the beneficial ownership of the 9,883,105 common stock is as follows:

 

 

Purchaser	Shares Purchased
Saverio Holdings Limited	9,783,105
Qiang Liu	20,000
Linzhou Wang	20,000
Hongkai Bai	20,000
Ruli Wang	10,000
Bibbin Li	10,000
Xiufang Hu	10,000
Zhongmiao Hu	10,000

 

Immediately prior to the closing on February 22, 2013, Ms. Shefali Vibhakar resigned as our Chief Executive Officer and Chief Financial Officer and Mr. Yijun Hu was appointed as Chief Executive Officer and the Chairman of the Board. In addition, Ms. Ning Li was appointed as our Chief Financial Officer.

 

Plan of Operations

 

We will attempt to acquire other assets or business operations that will maximize shareholder value. No specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or any transactions will be consummated.  We will seek to establish or acquire businesses or assets via the issuance of shares or debt. We currently have no agreements, arrangements or understandings with any person with regards to the acquisition of any other assets or business operations. In pursuing the foregoing goals, we may seek to expand or change the composition of the Board or make changes to our current capital structure, including issuing additional shares or debt and adopting a stock option plan.

  

Results of operations

 

Results of Operations for the Year Ended September 30, 2013, Compared to the Year Ended September 30, 2012.

 

Due to the fact that we are a development stage company in both periods, we had revenues of $0 for the years ended September 30, 2013 and 2012.  Our cost of goods sold and gross profits were $0 in both periods as well.

 

Our expenses of $21,537 during the year ended September 30, 2013 and $36,080 during the same period of 2012 consisted of general and administrative expenses, and professional fees. Besides professional fees, our expenses in 2012 also included the accrual of salary due to our former Chief Executive Officer.

 

The Company had a deficit accumulated during the development stage of $133,566 and has working capital and shareholder deficits of $12,507 and has no revenue generating operations.

 

Accounts payable and accrued expenses consist of trade payables from normal operations of the business. As of September 30, 2013 and 2012, the Company has accrued $0 and $82,612 in compensation and other amounts payable to its former president and CEO.

 

Liquidity and Capital Resources

 

As of September 30, 2013, we had cash of $0 as compared to $86 as of September 30, 2012. Net cash used in operating activities totaled $1,030 for the year ended September 30, 2013. This amount consists principally of the net loss offset by amounts accrued to payables for legal fees and accounting expenses.

 

Net cash used in operating activities totaled $46,644 for the period from December 17, 2009 (Inception) to September 30, 2013. This amount consists principally of the net loss offset by amounts accrued to payables for legal fees and accounting expenses and payables to our former officer.

 

Net cash provided by financing activities totaled $944 and $10,900 for the years ended September 30, 2013 and 2012, and $46,644 for the period from December 17, 2009 (Inception) to September 30, 2013. These amounts consist principally of cash received from the sale of common stock and advances from our officer.

  

In order for us to execute our business plan we will need to raise enough funds in debt or equity. The funds are needed for deposits, sales and marketing and working capital. There can be no assurance that we will be able to raise the funds needed to execute our business plan.

 

If we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations.  We do not anticipate the purchase or sale of any significant equipment. The foregoing represents our best estimate of our cash needs based on current planning and business conditions.  In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations.

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable

 

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements of the Company are presented following Item 15.

 

Item 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

We changed auditor from Kingery & Crouse PA to RBSM and then to HHC during the fiscal year ended September 30, 2013.

 

Effective April 8, 2013, upon the approval of the board of directors of the Company, the Company dismissed Kingery & Crouse PA, as the Company’s independent registered public accountant.

 

Although the report of Kingery & Crouse PA on the Company’s financial statements for the fiscal year ended September 30, 2012 and 2011 included an explanatory paragraph that noted substantial doubt about the Company’s ability to continue as a going concern. They did not contain any adverse opinion or a disclaimer of opinion, nor were they modified as to uncertainty, audit scope or accounting principles.

 

During the fiscal years ended September 30, 2012 and 2011 as well as the subsequent interim period preceding our decision to dismiss Kingery & Crouse PA, there have been no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Kingery & Crouse PA on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Kingery & Crouse PA, would have caused them to make reference thereto in their report on financial statements for such years.

 

On April 8, 2013, upon the approval of the board of directors of the Company, the Company engaged RBSM LLP (“RBSM”) as the independent registered public accounting firm for the Company. During the Company’s fiscal years ended September 30, 2012 and 2011 as well as the subsequent interim period preceding our decision to retain RBSM, the Company did not consult with RBSM regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.

 

Prior to filing a Form 8-K reporting such change, the Company provided Kingery & Crouse PA with a copy of the foregoing disclosures in the Form 8-K and Kingery & Crouse PA furnished the Company with a letter addressed to the Securities and Exchange Commission stating that it agreed with the Company's statements in the Form 8-K. A copy of the letter furnished by Kingery & Crouse PA was filed as an exhibit to that Form 8-K.

 

On December 2, 2013, upon the approval of its Board of Directors, Hengyi International Industries Group Inc.(the “Company”) dismissed RBSM LLP (“RBSM”) as the Company’s independent registered public accounting firm. RBSM had served as the Company’s independent registered public accountant since its engagement on April 8, 2013.

 

During the interim period ended March 31, 2013 and June 30, 2013 and through the date of this report, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and RBSM on any matter of accounting principles or practices, financial statement disclosure, auditing scope or procedure, which disagreements, if not resolved to the satisfaction of RBSM, would have caused it to make reference to the subject matter of the disagreement in their reports on financial statements for such periods.

 

On December 2, 2013, the Company provided RBSM with a copy of this Form 8-K prior to its filing with the SEC and requested RBSM to furnish a letter addressed to the SEC stating whether it agrees with the statements made above in response to Item 304(a) of Regulation S-K and if not, stating with respect in which it does not agree. We have not received any response letter from RBSM yet.

 

On December 2, 2013, upon the approval of the board of directors of the Company, the Company engaged HHC as its independent registered public accounting firm for the year ended December 31, 2013. The engagement was approved by the Company’s Board of Directors on December 2, 2013.

 

During the two most recent fiscal years ended December 31, 2012 and any subsequent period prior to RBSM’s engagement, and during the period prior to the engagement of HHC, neither the Company nor anyone on the Company's behalf consulted with HHC regarding either (i) the application of accounting principles to a specified transaction, either contemplated or proposed, or (ii) the type of audit opinion that might be rendered on the Company's financial statements, either written or oral advice in reaching a decision as to any accounting, auditing or financial reporting issues, or (iii) any matter that was either the subject of a disagreement as described in Items 304(a)(1)(iv) or an event of the type described in Item 304(a)(1)(v) of Regulation S-K.

Item 9A. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer, and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer, and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. This is because of our limited operations and we just have a few employees, therefore we lack any segregation of duties and responsibilities. We intend to add additional employees as needed and as our operations expand of which there can be no assurance. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Management's Annual Report on Internal Control Over Financial Reporting.

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2013. Based on that assessment, our Chief Executive Officer and Chief Financial Officer have determined and concluded that, as of September 30, 2013, the Company’s internal control over financial reporting were not effective.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control our financial reporting as of September 30, 2013, the Company determined that the following items constituted a material weakness:

 

·

The Company does not have an independent audit committee in place, which would provide oversight of the Company’s officers, operations and financial reporting function;

·

The Company’s accounting department, which consists of a limited number of personnel, does not provide adequate segregation of duties; and

·

The Company does not have effective controls over period end financial disclosure and reporting processes.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the permanent exemption of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

 

Changes in Internal Control Over Financial Reporting. During the year ended September 30, 2013, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

Item 9B.    OTHER INFORMATION

 

None.

 

PART III

 

 

Item 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Executive Officers and Directors

 

The following table sets forth information regarding our executive officers, certain other officers and directors as of September 30, 2013:

 

Name		Age		Position
Mr. Yijun Hu		40		Chief Executive Officer and Director
Ms. Ning Li		37		Chief Financial Officer

 

Background of Officers and Directors

 

The following biographies describe the business experience of our executive officers and directors:

 

Yijun Hu– Chief Executive Officer and Director

 

Mr. Yijun Hu, has been our Chief Executive Officer and sole director since Shefali Vibhakar sold her the common stock in February 2013. Mr. Yijun Hu, is responsible for establishing the company’s business model to be implemented at Hengyi. He has served as our President and CEO since inception. Mr. Yijun Hu is responsible for the strategic direction and overall day to day operations. He has a wealth of experience in running or developing acquired branded franchise hotels. As of September 30, 2013, Mr. Yijun Hu already had owned four Home Inns.

 

Ning Li– Chief Financial Officer

 

Ms. Ning Li. has been our Chief Financial Officer in February 2013. Ms. Ning Li graduated from Tianjin University of Finance & Economics and has engaged in financial work for years, gaining extensive experience in finance and management.

 

No officer, director or persons nominated for such positions, promoter or significant employee has been involved in the last ten years (10 YEARS) in any of the following:

	-	Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
	-	Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
	-	Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
	-	Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Election of Directors and Officers

 

Holders of our common stock are entitled to one (1) vote for each share held on all matters submitted to a vote of the stockholders, including the election of directors. Cumulative voting with respect to the election of Directors is not permitted by our Articles of Incorporation. Our Board of Directors is elected at the annual meeting of the stockholders or at a special meeting called for that purpose. Each director holds office until the next annual meeting of the stockholders or until the director’s successor is elected and qualified. If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, the vacancy may be filled by a vote of the Board of Directors, by the stockholders at the next annual stockholders’ meeting or by the stockholders at a special meeting of stockholders called for that purpose.

 

Director Compensation

 

Our director currently does not receive any compensation for their roles as members of our Board of Directors and no director receives a salary as a director.

 

Item 11.  EXECUTIVE COMPENSATION

 

The table below summarizes all compensation awarded to, earned by, or paid to our Chief Executive Officer and Chief Financial Officer, our most highly compensated executive officers other than our PEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us for each of the latest fiscal years ended September 30, 2013 and 2012.

 

Name		Title			Year			Salary			Bonus			Stock awards			Option awards			Non equity incentive plan compensation			Non qualified deferred compensation			All other compensation			Total
Yijun Hu			CEO			2013			0			0			0			0			0			0			0			0
Ning Li			CFO			2013			0			0			0			0			0			0			0			0
Shefali Vibhakar			CEO			2012			24,000			0			0			0			0			0			0			24,000

 

 

Yijun Hu and Ning Li did not hold any position in the fiscal year ended September 30, 2012.

 

We do not currently pay the salary to CEO and CFO during 2013. We do not anticipate paying any monetary compensation to our officers and sole director at this time or in the near future.

 

Stock Option Grants

 

We have not granted any stock options to the executive officers since our inception.

 

Compensation Agreements

 

None

 

Indemnification

 

Under our Articles of Incorporation and Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

 

 

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of September 30, 2013, information regarding the beneficial ownership of our common stock: (i) by each of our directors and executive officers; (ii) by all directors and executive officers as a group; or (iii) by all persons known to us to own 5% or more of our outstanding shares of common stock. The mailing address for each of the persons indicated is our corporate headquarters.

 

Beneficial ownership is determined under the rules of the SEC. In general, these rules attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities and include, among other things, securities that an individual has the right to acquire within sixty (60) days. Unless otherwise indicated, the stockholders identified in the following table have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Shareholders		# of Shares			Percentage
Saverio Holdings Limited			9,783,105			95.98	%
All directors and executive officers as a group [1 person]			9,783,105			95.98	%

 

(1) This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 10,193,000 shares of common stock outstanding as of September 30, 2013.

 

(1)  As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within sixty (60) days.

 

(2) Saverio Holdings Limited personally owns 9,783,105 shares of our common stock. The percentages in the above table are computed based upon a total of 10,193,000 shares or common stock being outstanding on September 30, 2013.

 

Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 

None

 

Item 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

We have not paid HHC, our current auditor the audit fee, audit related fee, tax or other fees for the fiscal year ended September 30, 2013 as of today.

 

We have paid RBSM LLP, our former auditor, audit and review fee of $2,000 for the fiscal year ended September 30, 2013.

 

We have paid Kingery & Crouse PA, our former auditor, audit and review fee of $6,000 for the fiscal year ended September 30, 2012.

 

Audit& Review fees consist of amounts billed for professional services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly reports, services performed in connection with filings with the Securities & Exchange Commission and related comfort letters and other services that are normally provided by RBSM LLP as of December 2, 2013 and provided by HHC from December 2, 2013 until today in connection with statutory and regulatory filings or engagements.

 

The Company has not designated a formal audit committee.  However, as defined in Sarbanes-Oxley Act of 2002, the entire Board of Directors (Board), in the absence of a formally appointed committee, is, by definition, the Company’s audit committee.

 

In discharging its oversight responsibility as to the audit process, commencing with the engagement of HHC, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence as required by applicable accounting standards.  The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors’ independence.

  

The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in the appropriate Statement(s) on Auditing Standards.

 

The Board reviewed the audited financial statements of the Company as of and for the year ended September 30, 2013 and the period from December 17, 2009 (Inception) through September 30, 2013 with management and the independent auditors.  Management has the sole ultimate responsibility for the preparation of the Company’s financial statements and the independent auditors have the responsibility for their examination of those statements.

 

Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved the Company’s audited financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended September 30, 2013 for filing with the U. S. Securities and Exchange Commission.

 

The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.

 

PART IV

 

Item 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)              Financial Statements

 

(b)              Exhibits

 

 

Hengyi International Industries Group Inc.

(A Development Stage Company)

FORM 10-K

YEAR ENDED SEPTEMBER 30, 2013

 

TABLE OF CONTENTS

 

			Page
	PART I
Item 1.	Financial Statements
	Balance Sheets as of  September 30, 2013 and 2012		F-1
	Statements of Operations for the Years ended September 30, 2013 and 2012, and the Period from December 17, 2009 (Inception) through September 30, 2013.		F-2
	Statement of Stockholders’ Deficit for the period from December 17, 2009 (Inception) through September 30, 2013		F-3
	Statements of Cash Flows for the Years ended September 30, 2013 and 2012 and the Period from December 17, 2009 (Inception) through September 30, 2013		F-4
	Notes to the Financial Statements		F-5

 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Shareholders and Board of Directors

Hengyi International Industries Group Inc.

(A Development Stage Company)

 

We have audited the accompanying balance sheet of Hengyi International Industries Group Inc. (a Development Stage Company) (the “Company”) as of September 30, 2013 and the related statement of operations, changes in stockholders’ deficiency and cash flow for the year ended September 30, 2013, and for the period from December 17, 2009 (date of inception) through September 30, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

The financial statements of the Company for the period December 17, 2009 (date of inception) to September 30, 2012 were audited by the Company’s predecessor auditor, Kingery & Crouse PA (the “Former Auditors”). The cumulative statements of operations, changes in stockholders’ deficit and cash flows for the period from December 17, 2009 (date of inception) to September 30, 2013 include amounts for the period December 17, 2009 (date of inception) to September 30, 2012. Our opinion, insofar as it relates to the amounts included for the period December 17, 2009 (date of inception) to September 30, 2012, is based solely on the report of the Former Auditors. The Former Auditors’ reports, dated various dates, expressed unqualified opinions and included explanatory paragraphs describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern. The Former Auditors reports have been furnished to us, and our opinion, insofar as it related to the amounts included for such prior periods, is based solely on the reports of other auditors. The financial statements for the period from December 17, 2009 (date of inception) to September 30, 2012 reflect a development stage net loss.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2013 and the results of its operations and its cash flow for the year ended September 30, 2013, and for the period December 17, 2009 (date of inception) to September 30, 2013, in conformity with accounting principles generally accepted in the United States.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has incurred significant losses since inception. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans, with respect to these matters are also described in Note 5 to the financial statements. The financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

 

 

/s/ HHC

Forest Hills, New York

December 27, 2013

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Shareholders and Board of Directors

Lyons Liquors, Inc.

(A Development Stage Company)

 

We have audited the accompanying balance sheet of Lyons Liquors, Inc. (a development stage Company) as of September 30, 2012, and the related statements of operations, stockholders' (deficit), and cash flows for year ended September 30, 2012, and the period from inception (December 17, 2009) to September 30, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing, the accounting principles used and significant estimates by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lyons Liquors, Inc. as of September 30, 2012, and the results of its operations, and its cash flows for the year ended September 30, 2012, and the period from inception (December 17, 2009) to September 30, 2012, in conformity with accounting principles generally and accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has incurred significant losses from operations and has working capital and stockholder deficiencies. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also discussed in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Kingery & Crouse PA

Tampa, Florida

December 21, 2012

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.
(f/k/a Lyons Liquors, Inc.)
(a development stage company)
BALANCE SHEETS
		September 30,				September 30,
		2013				2012
ASSETS
CURRENT ASSETS
Cash		$	—			$	86
Total Current Assets			—				86
OTHER ASSETS
Deposits			—				797
TOTAL ASSETS		$	—			$	883
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses		$	12,507			$	1,000
Accounts Payable and Accrued Expenses - Officer			—				82,612
Total Current Liabilities			12,507				83,612
STOCKHOLDERS' DEFICIT
Common Stock - Par value $0.001; Authorized: 75,000,000; Shares issued and outstanding: 10,193,000 shares			10,193				10,193
Additional Paid-In Capital			110,866				19,107
Deficit accumulated during the development stage			(133,566	)			(112,029	)
Total Stockholders' Deficit			(12,507	)			(82,729	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	—			$	883
The accompanying notes are an integral part of these financial statements.

 

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.
(f/k/a Lyons Liquors, Inc.)
(a development stage company)
STATEMENTS OF OPERATIONS
Years Ended September 30, 2013 and 2012, and
Inception (December 17, 2009) through September 30, 2013
										Inception to
		For the Years Ended September 30,								September 30,
		2013				2012				2013
REVENUE		$	—			$	—			$	—
OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE EXPENSES			21,537				36,080				133,566
TOTAL OPERATING EXPENSES			21,537				36,080				133,566
LOSS BEFORE INCOME TAXES			(21,537	)			(36,080	)			(133,566	)
INCOME TAXES			—				—				—
NET LOSS		$	(21,537	)		$	(36,080	)		$	(133,566	)
Net Loss Per Common Share, basic & diluted		$	(0.00	)		$	(0.00	)
Weighted Common Shares Outstanding, basic & diluted			10,193,000				10,193,000
The accompanying notes are an integral part of these financial statements.

 

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.
(a development stage company)
STATEMENT OF STOCKHOLDERS' DEFICIT
Inception (December 17, 2009) through September 30, 2013
												DEFICIT
												ACCUMULATED
												DURING THE
			COMMON STOCK						PAID-IN			DEVELOPMENT
			SHARES			AMOUNT			CAPITAL			STAGE			TOTAL
Stock issued as founder’s shares on January 13, 2010, at $0.001 per share for cash			10,000,000		$	10,000		$	—		$	—		$	10,000
Stock issued for cash from January through June 2010, at $0.10 per share			160,000			160			15,840			—			16,000
Net Loss												(29,679)			(29,679)
Balance, September 30, 2010			10,160,000			10,160			15,840			(29,679)			(3,679)
Stock issued for cash during August 2011, at $0.10 per share			23,000			23			2,277			—			2,300
Stock issued for services during August 2011, at $0.10 per share			10,000			10			990			—			1,000
Net Loss			—			—			—			(46,270)			(46,270)
Balance, September 30, 2011			10,193,000			10,193			19,107			(75,949)			(46,649)
Net Loss			—			—			—			(36,080)			(36,080)
Balance, September 30, 2012			10,193,000			10,193			19,107			(112,029)			(82,729)
Deposits and accounts payable forgiven by former principal shareholder			—			—			91,759			—			91,759
Net Loss			—			—			—			(21,537)			(21,537)
Balance, September 30, 2013			10,193,000		$	10,193		$	110,866		$	(133,566)		$	(12,507)
The accompanying notes are an integral part of these financial statements.

 

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.
(f/k/a Lyons Liquors, Inc.)
(a development stage company)
STATEMENTS OF CASH FLOWS
Years Ended September 30, 2013 and 2012, and
Inception (December 17, 2009) through September 30, 2013
										Inception to
		For the Years Ended September 30,								September 30,
		2013				2012				2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(21,537	)		$	(36,080	)		$	(133,566	)
(Increase) in Deposits			—				—				(797	)
Common shares issued for services			—				—				1,000
Increase in accounts payable and accrued expenses			14,507				1,000				15,507
Increase in accounts payable and accrued expenses - officer			6,000				24,000				71,212
Total adjustments to net income			20,507				25,000				86,922
Net cash used in operating activities			(1,030	)			(11,080	)			(46,644	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash flows provided by (used in) investing activities			—				—				—
CASH FLOWS FROM FINANCING ACTIVITIES
Officer loans			1,000				10,900				18,400
Common shares issued for cash			—				—				28,300
Contribution of Capital			(56	)							(56	)
Net cash provided by financing activities			944				10,900				46,644
Net increase (decrease) in cash			(86	)			(180	)			—
Cash - beginning of period			86				266				—
CASH - END OF PERIOD		$	—			$	86			$	—
Cash paid for:
Interest		$	—			$	—			$	—
Income taxes		$	—			$	—			$	—
Deposits and accounts payable forgiven by former principal stockholder		$	91,759			$	—			$	91,759
The accompanying notes are an integral part of these financial statements.

 

HENGYI INTERNATIONAL INDUSTRIES GROUP INC.

(f/k/a Lyons Liquors, Inc.)

(A Development Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

 

Note 1 – Organization, Business and Operations

 

Hengyi International Industries Group Inc. (f/k/a Lyons Liquors, Inc.) (a development stage company) (the “Company”) was incorporated under the laws of the State of Nevada on December 17, 2009 under the name Lyons Liquors, Inc.

 

On February 22, 2013, Shefali Vibhakar, the then Chief Executive Officer, Chief Financial Officer, sole Director of the Company, and the owner of 10,000,000 shares of the Company’s common stock, representing approximately 98.10% of the Company’s outstanding shares, sold an aggregate of 9,883,105 of those shares, representing approximately 96.96% of outstanding shares of common stock, to various buyers. As the result, Saverio Holdings Limited (“Saverio”) obtained 9,783,105 shares of the 9,883,105 shares. Mr. Yijun Hu is the sole director of Saverio and appointed as the Company’s Chairman and Chief Executive Officer.

 

Effectively March 21, 2013, the Company filed with the State of Nevada Certificate of Amendment of Certificate of Incorporation changing the name from Lyons Liquors, Inc. to Hengyi International Industries Group Inc.

 

On April 15, 2013, the Articles of Incorporation were amended to change the name of the corporation to Hengyi International Industries Group Inc. The Company intends to seek business opportunities such as a merger, acquisition or other business transaction that will cause the Company to have business operations in the current fiscal year.  The Company anticipates that any cash requirements it may have over the next twelve months will be funded by its principal stockholders.  These fees are believed to be immaterial.

 

Note 2 – Development Stage Company

 

The Company has not generated significant revenues to date; accordingly, the Company is considered a development stage enterprise as defined in ASC 915, "Accounting and Reporting for Development Stage Companies." The Company is subject to a number of risks similar to those of other companies in an early stage of development.

  

Note 3 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

Management acknowledges its responsibility for the preparation of the accompanying financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations for the years presented. The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All necessary adjustments have been made to present the financial statements in accordance with U.S. GAAP.  The Company’s functional currency is United States Dollars (“USD”). The financial statements include all adjustments that, in the opinion of management, are necessary to make the financial statements not misleading.

 

Use of Estimates

 

The preparation of 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 the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Actual results may differ from these estimates and assumptions.

 

Income Taxes

 

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”).  Under ASC 740-10-25, 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.  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. Under ASC 740-10-25, 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.

 

		For the Year Ended September 30,
		2013		2012
Expected income tax recovery (expense) at the statutory rate of 34%	$	(7,300)	$	(12,000)
Tax effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes)		—		—
Change in valuation allowance		7,300		12,000
Provision for income taxes	$	—	$	—

 

The components of deferred income taxes are as follow:

 

		For the Year Ended September 30,
		2013		2012
Deferred income tax asset:
Net operating loss carry forwards	$	16,500	$	9,200
Valuation allowance		(16,500)		(9,200)
Deferred income taxes	$	—	$	—

 

As of September 30, 2013, the Company has a net operating loss carryforward for tax purposes of approximately $55,000 available to offset future taxable income through 2032. The principal difference between the NOL for book purposes and tax purposes results from accrued officer salaries contributed to capital and common shares issued for services. The increases in the valuation allowance at September 30, 2013 and 2012 were $7,300 and $12,000, respectively. The utilization of the Company’s NOL may be limited because of a possible change in ownership as defined under Section 382 of Internal Revenue Code. Such change in ownership, for purposes of utilization of the Company’s NOL’s under Section 382, may have occurred with the change of company ownership that occurred on February 22, 2013.

 

The Company’s income tax returns since inception are subject to audit by regulatory authorities.

 

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future.

 

Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.

 

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations.

 

FASB ASC Topic 740, Income Taxes provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. ASC Topic 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

 

We recognize tax liabilities in accordance with ASC Topic 740 and we adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

 

Basic and Diluted Loss per Share

 

The Company reports loss per share in accordance with FASB ASC 260 “Earnings per share”. The Company’s basic earnings per share are computed using the weighted average number of shares outstanding for the periods presented. Diluted earnings per share are computed based on the assumption that any dilutive options or warrants were converted or exercised. Dilution is computed by applying the treasury stock method.  Under this method, the Company’s outstanding stock warrants are assumed to be exercised, and funds thus obtained were assumed to be used to purchase common stock at the average market price during the period. There were no dilutive instruments outstanding during the years ended September 30, 2013 and 2012. However, if present, a separate computation of diluted loss per share would not have been presented, as these common stock equivalents would have been anti-dilutive due to the Company's net loss.

 

Fair Value of Financial Instruments

 

Effective January 1, 2008, the Company adopted ASC 820, Fair Value Measurements and Disclosure (“ASC 820”) for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

 

ASC 820 defines fair value as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The Company did not identify any assets and liabilities that are required to be presented on the condensed balance sheets at fair value in accordance with the relevant accounting standards.

 

The carrying values of accounts payables and debts approximate their fair values due to the short maturities of these instruments.

 

Revenue Recognition

 

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

 

Revenue is recognized at the time the product is delivered or the service is performed. Provision for sales returns will be estimated based on the Company’s historical return experience. Deferred revenue is recorded for amounts received in advance of the time at which delivery has occurred or services are performed and included in revenue at the date of delivery or completion of the related services.

Stock-Based Compensation

 

The Company accounts for stock based compensation in accordance with ASC 718 Stock Compensation. This Statement requires that the cost resulting from all share-based transactions be recorded in the financial statements. The Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.

Business Segments

 

The Company operates in one segment and therefore segment information is not presented. 

 

Recent Pronouncements

 

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, the Company has not determined whether implementation of such proposed standards would be material to our financial statements.

Note 4 – Stockholders’ Deficiency

 

Common Stock includes 75,000,000 shares authorized at a par value of $0.001.

 

On January 13, 2010, the Company issued 10,000,000 shares of common stock for cash at $0.001 per share for a total value of $10,000 to its founder.

 

From January through September 2010, the Company issued 160,000 shares of common stock for cash at $0.10 per share or a value of $16,000, including 100,000 shares for $10,000 to an affiliate.

 

During August 2011 the Company issued 23,000 shares of common stock for cash aggregating $2,300 and 10,000 shares of common stock valued at $.10 per share (the selling price of recently issued shares) for services.

 

On February 22, 2013, Shefali Vibhakar, the then Chief Executive Officer, Chief Financial Officer, sole Director of the Company, and the owner of 10,000,000 shares of the Company’s common stock, representing approximately 98.10% of the Company’s outstanding shares, sold an aggregate of 9,883,105 of those shares, representing approximately 96.96% of outstanding shares of common stock, to various buyers. As the result, Saverio Holdings Limited (“Saverio”) obtained 9,783,105 shares of the 9,883,105 shares. Mr. Yijun Hu is the sole director of Saverio and appointed as the Company’s Chairman and Chief Executive Officer.

 

Note 5 – Going Concern

 

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company is in the development stage and has experienced a loss from operations as a result of its investment necessary to achieve its operating plan, which is long-range in nature. The Company has no revenues and has incurred net losses through September 30, 2013, aggregating $133,566. In addition, the Company has working capital deficit of $12,507 and stockholders’ deficiency of $12,507 at September 30, 2013.

 

The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, increase ownership equity and develop profitable operations. In addition, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which the Company operates.

 

The Company is pursuing financing for its operations and seeking additional private investments. In addition, the Company is seeking to expand its revenue base. Failure to secure such financing or to raise additional equity capital and to expand its revenue base may result in the Company depleting its available funds and not being able pay its obligations.

 

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

(b)  Exhibits

  

Ex. No.		Document Description
31.1*		Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certificate of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certificate of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*	Filed herewith.

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf on September 30, 2012 by the undersigned, thereunto authorized.

 

 

 

	HENGYI INTERNATIONAL INDUSTRIES GROUP INC.
	/s/ Yijun Hu
	Chief Executive Officer and Director
	/s/ Li Ning
	Chief Financial Officer and Director

Date: February 14, 2014

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities on the date(s) indicated.

 

 

SIGNATURE		TITLE	DATE
/s/ Yijun Hu		Chief Executive Officer	February 14, 2014
Yijun Hu

 

/s/ Ning Li		Chief Financial Officer	February 14, 2014
Ning Li