UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2014

 

OR

 

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______ to __________

 

COMMISSION FILE NUMBER: 000-55181

 

JISHANYE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware	46-1992903
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)

 

3F., No.10, Yuanxi 2nd Rd.,

Pingtung Agricultural Biotechnology Park,

Changzhi Township, Pingtung 908,

Taiwan, Republic of China

(Address of principal executive offices)

 

+00886 08 7621913

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  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). Yes x  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 filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

 

Large Accelerated Filer     ¨	Non-Accelerated Filer     ¨
Accelerated Filer     ¨	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 ¨ No x

 

As of July 31, 2014, there are a total of 12,500,001 shares of common stock issued and outstanding.

 

  

TABLE OF CONTENTS

 

PART I.  FINANCIAL INFORMATION		1
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	7
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	10
ITEM 4.	CONTROLS AND PROCEDURES	10
PART II. OTHER INFORMATION		10
ITEM 1.	LEGAL PROCEEDINGS	10
ITEM 1A.	RISK FACTORS	10
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	10
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	11
ITEM 4.	MINE SAFETY DISCLOSURES	11
ITEM 5.	OTHER INFORMATION	11
ITEM 6.	EXHIBITS	12
	SIGNATURES	13

 

  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described under Part 1 Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

 

Forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report, or that we filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.

 

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

OTHER PERTINENT INFORMATION

 

References in this report to “we,” “us,” “our” and the “Company” and words of like import  refer to Jishanye, Inc., and its subsidiaries.

 

References to Taiwan refer to Taiwan, Republic of China.

 

Our business is conducted in Taiwan using NTD, the currency of Taiwan, and our financial statements are presented in United States dollars (“USD” or “$”).   In this report, we refer to assets, obligations, commitments and liabilities in our financial statements in USD.   These dollar references are based on the exchange rate of NTD to USD, determined as of a specific date.   Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of USD which may result in an increase or decrease in the amount of our obligations (expressed in USD) and the value of our assets, including accounts receivable (expressed in USD).

 

  

PART I.  FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Balance Sheets

(Unaudited)

 

		June 30,				December 31,
		2014				2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	14,590			$	4,184
Accounts receivable			17,127				-
Inventory			926				-
Prepaid expenses			1,508				-
Other receivables			-				7,611
Total current assets			34,151				11,795
Property and equipment, net of accumulated depreciation			-				27,456
TOTAL ASSETS		$	34,151			$	39,251
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	191			$	191
Accrued expenses			6,972				2,331
Total current liabilities			7,163				2,522
Loan payable - related party			149,500				149,500
TOTAL LIABILITIES			156,663				152,022
STOCKHOLDERS' DEFICIT:
Common stock, $0.0001 par value; 100,000,000 shares authorized, 12,500,001 shares issued and outstanding			1,250				1,250
Additional paid-in capital			98,750				98,750
Accumulated other comprehensive income			186				84
Accumulated deficit			(222,698	)			(212,855	)
Total stockholders' deficit			(122,512	)			(112,771	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	34,151			$	39,251

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Statements of Operations

and Comprehensive Income (Loss)

(Unaudited)

 

		Three Months				Three Months				Six Months				Six Months
		Ended				Ended				Ended				Ended
		June 30,				June 30,				June 30,				June 30,
		2014				2013				2014				2013
Revenues		$	17,785			$	5,032			$	17,785			$	21,409
Cost of revenues			656				2,298				656				9,300
Gross profit			17,129				2,734				17,129				12,109
Operating expenses:
Selling			-				3,429				-				18,979
General and administrative			11,422				33,594				25,523				77,186
Total operating expenses			11,422				37,023				25,523				96,165
Income (loss) from operations			5,707				(34,289	)			(8,394	)			(84,056	)
Other income (expense):
Other income			107				717				107				555
Interest income			-				31				-				57
Loss fromsale of property and equipment			-				-				(1,556	)			-
Total other income (expense)			107				748				(1,449	)			612
Net income (loss)			5,814				(33,541	)			(9,843	)			(83,444	)
Other comprehensive income (loss)
Foreign currency translation income (loss)			578				(691	)			102				(2,498	)
Comprehensive gain (loss)		$	6,392			$	(34,232	)		$	(9,741	)		$	(85,942	)
Weighted average common shares outstanding:
Basic and diluted			12,500,001				12,500,001				12,500,001				12,500,001
Earnings (Loss) per common share:
Basic and diluted		$	0.00			$	(0.00	)		$	(0.00	)		$	(0.00	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Statements of Cash Flows

(Unaudited)

 

		Six Months				Six Months
		Ended				Ended
		June 30,				June 30,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(9,843	)		$	(83,444	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expenses			494				3,530
Loss from sale of property and equipment			1,556				-
Change in operating assets and liabilities:
Accounts receivable			(17,127	)			1,840
Other receivables			7,611				1,633
Inventory			(926	)			3,750
Deposits			-				4,897
Prepaid expenses and other current assets			(1,508	)			-
Other assets			-				(6,695	)
Accrued expenses			1,454				2,035
Advances from customers			-				(1,092	)
Other payables			-				3,048
Net cash used in operating activities			(18,289	)			(70,498	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property and equipment			-				(52,501	)
Payments for purchase of intangible assets			-				(2,477	)
Proceeds from sales of property and equipment			28,327				-
Net cash provided by (used in) investing activities			28,327				(54,978	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable - related party			-				149,500
Net cash provided by financing activities			-				149,500
Effect of exchange rate changes on cash and cash equivalents			368				(841	)
NET INCREASE IN CASH			10,406				23,183
CASH, BEGINNING OF PERIOD			4,184				16,302
CASH, END OF PERIOD		$	14,590			$	39,485
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

JISHANYE, INC. AND SUBSIDARY

(Formerly Yambear Bio-Tech, Inc.)

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1 - Organization and Basis of Presentation

 

Jishanye, Inc. (formerly Yambear Bio-Tech, Inc.) (the “Company” or “Jishanye”) was incorporated in the State of Delaware on April 12, 2012. On October 25, 2013, the Company amended its Certificate of Incorporation to change the Company's name to "Jishanye, Inc." which was approved by the Board on October 24, 2013. The Company, through its subsidiary is engaged in selling enzymes products to public consumers in Taiwan. In addition, beginning in June 2014 we began to provide funeral management services to consumers across Taiwan, and intend to expand business operations by offering death care management consultancy services to small and medium-sized enterprises of Taiwan, Hong Kong and mainland China in the future. The Company’s goal is to establish an international brand on death care management consultancy services with high quality and name recognition.

 

The unaudited consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes. The results for the three and six months ended June 30, 2014, are not necessarily indicative of the results to be expected for the year ending December 31, 2014.

  

Note 2 - Going Concern

 

The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate continuation of the Company as a going concern. As of June 30, 2014, the Company has accumulated deficit of $222,698. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Major shareholders will continue to fund the Company until it is able to sustain positive cash flows from operations. 

  

Note 3 - Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements were prepared in conformity with US GAAP. The Company’s functional currency is the New Taiwanese Dollar (“NTD”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Jishanye and its wholly-owned subsidiary, Jishanye (Taiwan), Inc. All significant intercompany transactions and balances were eliminated in consolidation.

 

Foreign Currency

 

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income (“OCI”).

 

  

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Specific estimates include the collectability of accounts receivable and the valuation of inventory, Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in hand and in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

 

Property and Equipment

 

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated life of the asset.

 

Income Taxes

 

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards (“NOLs”). If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized

 

Revenue Recognition

 

Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Service revenue is recognized when persuasive evidence of an arrangement exists, service has provided, the fee is fixed or determinable, and collectability is probable. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

   

Sales represent the invoiced value of products, net of value-added tax (“VAT”). All of the Company’s products sold in Taiwan are subject to a value-added tax of 5% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government.

  

Basic and Diluted Earnings (Loss) Per Common Share

 

Basic earnings per share is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no options, warrants or other instruments convertible into common stock outstanding during the six months ended June 30, 2014 and 2013, therefore basic and diluted loss per share are the same.

 

Subsequent Events

 

The Company’s management reviewed all material events from June 30, 2014 through the issuance date of these financial statements for disclosure consideration.

 

  

Note 4 - Related Party

 

Loan Payable

 

In 2013, the Company issued a promissory note to a shareholder for $149,500. The promissory note is interest free and is due on demand. As of June 30, 2014, the entire balance was outstanding.

 

Employment Agreement

 

Pursuant to an employment agreement between the Company and Hsin-Lung Lin dated September 1, 2012, Hsin-Lung earns a salary of NTD32,000 (approximately $1,102) per month to serve as Chief Executive Officer of the Company. The employment agreement is for an indefinite term. Either party may terminate the agreement with at least 30 days prior notice.

 

Note 5 - Sale of Property and Equipment

 

On January 2014, the Company sold a vehicle to a third party for cash of $25,143. Additionally, the Company received $3,184 from the third party for reimbursement to the dealer. Net book value of the vehicle on the selling date was $26,965. The Company recorded a loss of $1,556 on disposal of the vehicle, and other comprehensive loss from the effect of exchange rate changes was $266.

 

Note 6 - Business Segments

 

The Company is made up of two operation segments: Death Care and Enzyme. Before June 2014, the Company was engaged in selling enzymes products to public consumers in Taiwan. Beginning in June 2014, the Company began providing death care management consultancy services to consumers across Taiwan.

 

The balance sheets as of June 30, 2014 and December 31, 2013 and the income statement information for the three months ended and six months ended June 30, 2014 and 2013 of each segment is presented in US Dollars as follows:

 

		June 30, 2014																December 31, 2013
		Death Care				Enzyme				Corporate				Total				Death Care				Enzyme				Corporae				Total
Current Assets			16,750				1,303				16,098				34,151				-				-				11,795				11,795
Fixed Assets			-				-				-				-				-				-				27,456				27,456
Total assets			16,750				1,303				16,098				34,151				-				-				39,251				39,251
Current Liabilities			139				5,926				1,097				7,163				-				2,098				424				2,522
Long-Term Liabilities			-				-				149,500				149,500				-				-				149,500				149,500
Stockholders' Deficit			16,233				(110,731	)			(28,014	)			(122,512	)			-				(94,926	)			(17,845	)			(112,771	)
Total Liabilities and Stockholders' Deficit			16,373				(104,805	)			122,583				34,151				-				(92,828	)			132,079				39,251

 

 

		Three Months Ended June 30, 2014																Three Months Ended June 30, 2013
		Death Care				Enzyme				Corporate				Total				Death Care				Enzyme				Corporate				Total
Revenues			16,600				1,185				-				17,785				-				5,032				-				5,032
Cost of Revenues			-				656				-				656				-				2,298				-				2,298
Gross Profit			16,600				529				-				17,129				-				2,734				-				2,734
Operating Expenses			196				8,811				2,415				11,422				-				20,226				16,797				37,023
Other Income (Expenses)			-				-				107				107				-				-				748				748
Net Income (Loss)			16,404				(8,282	)			(2,308	)			5,814				-				(17,492	)			(16,049	)			(33,541	)

 

		Six Months Ended June 30, 2014																Six Months Ended June 30, 2013
		Death Care				Enzyme				Corporation				Total				Death Care				Enzyme				Corporation				Total
Revenues			16,600				1,185				-				17,785				-				21,409				-				21,409
Cost of Revenues			-				656				-				656				-				9,300				-				9,300
Gross Profit			16,600				529				-				17,129				-				12,109				-				12,109
Operating Expenses			367				16,334				8,822				25,523				-				57,572				38,593				96,165
Other Income (Expenses)			-				-				(1,449	)			(1,449	)			-				-				612				612
Net Income (Loss)			16,233				(15,805	)			(10,271	)			(9,843	)			-				(45,463	)			(37,981	)			(83,444	)

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read this Management’s Discussion and Analysis in conjunction with the Consolidated Financial Statements and the related notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

 

Overview

 

We were incorporated in the State of Delaware on April 12, 2012 under the name “Yambear Bio-Tech, Inc.” On October 24, 2013, we changed our corporate name to “Jishanye, Inc.” Through our subsidiary we are engaged in selling enzymes products to public consumers in Taiwan. Beginning in June 2014 the Company began providing death care management consultancy services to consumers across Taiwan.

 

The Company currently provides death care consultancy services to consumers across Taiwan. Our goal is to offer death care management consultancy services to small and medium-sized enterprises of Taiwan, Hong Kong and mainland China and establish an international brand with high quality and name recognition.

 

The Company will provide a variety of death care management consultancy services which cover the purchase of cemetery property, funeral and cemetery merchandises and funeral services. In addition, the Company is capable of offering consultancy services for pre-arranged funeral and pre-arranged death care contracts.

 

Going Concern

 

The consolidated financial statements included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation as a going concern. We have an accumulated deficit of $222,698 since exception, and have incurred non-recurring revenue. These conditions raise substantial doubt as to our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Major shareholders will continue to fund the Company until it is able to sustain positive cash flows from operations.

 

Results of Operations

 

Comparison of the three months ended June 30, 2014 and 2013

 

Revenues. For the three months ended June 30, 2014 and 2013, we had revenue of $17,785 and $5,032, respectively. The increase was mainly due to consulting revenue of $16,600 generated by the Company as result of our new line of death care management consulting business.

 

  

Cost of revenues. For the three months ended June 30, 2014 and 2013, we had cost of revenues of $656 and $2,298, respectively. For the three months ended June 30, 2014, a Company’s director provided some consulting services on behalf of the Company without any charge to the Company. As the result, cost of revenues is lower while the Company generated more revenue.

 

Selling expenses. For the three months ended June 30, 2014 and 2013, we had selling expense of $0 and $3,429, respectively. The decrease was because we revised our business plans and decided not to spent money to promote the original enzyme business.

 

General and administrative expenses. For the three months ended June 30, 2014 and 2013, we had general and administrative expenses of $11,422 and $33,594, respectively. The decrease was because we were revising our business plans and tried to control and minimize our spending in 2014.

 

Net income(loss). For three months period ended June 30, 2014 and 2013, our net income (loss) was $5,814 and ($33,541), respectively. The increase was mainly due to us generating consulting revenue of $16,600 and also us trying to control and minimize our costs and operating expenses in 2014.

 

Comparison of the six months ended June 30, 2014 and 2013

 

Revenues. For the six months ended June 30, 2014 and 2013, we had revenue of $17,785 and $21,409, respectively. The decrease was mainly due to significant decrease in sales of our enzyme products in 2014.

 

Cost of revenues. For the six months ended June 30, 2014 and 2013, we had cost of revenues of $656 and $9,300, respectively. The decrease was a direct result of the decrease in sales of enzyme products.

 

Selling expenses. For the six months ended June 30, 2014 and 2013, we had selling expense of $0 and $18,979, respectively. The decrease was due to a revision in our business plan where the Company stopped spending funds to promote the original enzyme business.

 

General and administrative expenses. For the six months ended June 30, 2014 and 2013, we had general and administrative expenses of $25,523 and $77,186, respectively. The decrease was due to a revision in our business plans which resulted in controlling and minimizing general and administrative spending in 2014, including selling and general and administrative expenses.

 

Net loss. For six months period ended June 30, 2014 and 2013, our net loss was $9,843 and $83,444, respectively. The decrease was a combination of increasing consulting revenues and the Company spending less in costs and operating expenses.

 

Liquidity and Capital Resources

 

On July 16, 2012, we raised $100,000 from the sale of 12,500,001 shares of our common stock and we received $149,500 from the issuance of a loan payable that were used to fund our operations in 2013. As of June 30, 2014, we had cash on hand of $14,590.

 

We used $18,289 and $70,498 of cash in our operations for the six months ended June 30, 2014 and 2013, respectively, the decrease is mainly attributable to our scaling down of the enzyme selling business.

 

We received $28,327 and used $54,978 of cash in investing activities for the six months ended June 30, 2014 and 2013. The change is due to the sale of Company property and equipment in 2014 and the purchase of property and equipment in 2013.

 

We used $0 and $149,500 of cash in financing activities for the six months ended June 30, 2014 and 2013, respectively. The decrease was due to not having any financing activities for the six-month period ended June 30, 2014.

 

We plan to fund our operations from loans from our major shareholders and plan to raise equity capital by offering shares of our common stock to investors.

 

On January 15, 2013, our Chief Executive Officer, Chief Financial Officer and Chairman of the Board, Mr. Lin Hsin-Lung, extended a loan in the amount of $149,500 to the Company. The loan is due on demand and has no interest obligations.  

 

The estimated budget for 2014 is as follows:

 

Salaries and benefits		$	115,663
Management overhead			5,783
Professional fees			5,917
General overhead			15,750
Total		$	143,113

 

 

  

We believe we will be able to raise the necessary capital to carry out our business plan, but there is no guarantee that we will be able to do so.

 

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Foreign Currency

 

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income (“OCI”).

 

Revenue Recognition

 

Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Service revenue is recognized when persuasive evidence of an arrangement exists, service has provided, the fee is fixed or determinable, and collectability is probable. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

  

Sales represent the invoiced value of products, net of value-added tax (“VAT”). All of the Company’s products sold in Taiwan are subject to a value-added tax of 5% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government.

 

JOBS Act

 

We are an “emerging growth company” as defined in the recently-enacted JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not “emerging growth companies.” As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain reporting and disclosure requirements, which may make our future public filings different than that of other public companies.

 

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

  

We will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a “large accelerated filer” as defined under the federal securities laws.

  

Recent Accounting Pronouncements

 

The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s financial statements.

 

Off-Balance Sheet Arrangements

 

None.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 4. INTERNAL CONTROLS OVER FINANCIAL REPORTING.

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934are designed to ensure that information required to be disclosed 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 rules and forms of the Securities and Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as of June 30, 2014 and, based on his evaluation, have concluded that the disclosure controls and procedures were not effective due to the material weaknesses, which is that we did not sufficiently segregate duties over incompatible functions at our corporate headquarters.

 

Changes in internal control over financial reporting

 

During the three months ended June 30, 2014, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

  

PART II.  OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS.

 

Not applicable

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

  

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

N/A.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 

ITEM 6. EXHIBITS

 

(a)           Exhibits:

 

Exhibit
Number		Description of Exhibit
31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1*		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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.

   

*The certification attached as Exhibits 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

  

  

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: August 19, 2014	By:	/s/ Hsin-Lung Lin
	Name:	Hsin-Lung Lin
	Its:	Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer and Principal Financial and Accounting Officer)