FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10–Q

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 30, 2016

 

or

 

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

 

For the transition period from ____________ to ________________

 

Commission file number: 000-55319

 

 

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 [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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

 

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 June 13, 2016, there were 74,976,241 shares of the issuer’s common stock, par value $0.0001 per share, outstanding.

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RESORT SAVERS, INC.

 

FORM 10-Q

FOR THE PERIOD ENDED APRIL 30, 2016

TABLE OF CONTENTS

 

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PART I – FINANCIAL INFORMATION

 

Item 1.      Unaudited Financial Statements.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's January 31, 2016 Form 10-K filed with the Securities and Exchange Commission on May 13, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending January 31, 2017.

 RESORT SAVERS, INC.

Index to Unaudited Condensed Consolidated Financial Statements

April 30, 2016

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RESORT SAVERS, INC.

Condensed Consolidated Interim Balance Sheets

The notes are an integral part of these financial statements.

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RESORT SAVERS, INC.

Condensed Consolidated Interim Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

 

The notes are an integral part of these financial statements.

RESORT SAVERS, INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

 

		Three Months Ended
		April 30,
		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(72,840	)		$	(60,865	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation			4,256				-
Loss on equity investment			-				30,692
Changes in operating assets and liabilities:
Accounts receivable			(7,153,231	)			-
Other receivable			1,108				-
Inventory			(8,277	)			-
Prepaid expenses and deposits			1,663,274				-
Accounts payable and accrued liabilities			18,784,574				4,568
Deposits received			(13,496,941	)			-
Tax payable			5,982				-
Other payable			(1,294	)			-
Net cash used in operating activities			(273,389	)			(25,605	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Worx			-				(1,300,000	)
Net cash used in investing activities			-				(1,300,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related parties			57,333				25,605
Net cash provided by financing activities			57,333				25,605
Effects on changes in foreign exchange rate			18,662				-
Net increase (decrease) in cash and cash equivalents			(197,394	)			(1,300,000	)
Cash and cash equivalents - beginning of period			226,638				1,300,000
Cash and cash equivalents - end of period		$	29,244			$	-
Supplemental Cash Flow Disclosures
Cash paid for interest		$	(52,164	)		$	-
Cash paid for income taxes		$	-			$	-
Non-Cash Investing and Financing Activity:
Investment in Worx - Borneo shares		$	-			$	350,000
Related party debt forgiven		$	62,854			$	25,605
Unrealized loss on available-for-sale securities		$	-			$	62,000

The notes are an integral part of these financial statements.

RESORT SAVERS, INC.

Notes to the Condensed Consolidated Interim Financial Statements

April 30, 2016

(Unaudited)

Resort Savers, Inc. (the “Company”) is a Nevada corporation incorporated on June 25, 2012. It is based in Shenzhen, the People’s Republic of China (the “PRC”). The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is January 31.

The Company makes investments and acquisitions into sound, transparent markets and industries throughout the world. The company has invested in a company principally engaged in the development and production of beverages, investment in agricultural business and import and export of products in the food and beverage industry, and a company principally engaged in the trading of oil, gas and lubricant. In Europe and worldwide, the Company is seeking to acquire and invest in global tourist and development assets that can be tailored to Chinese and American investment traveler.

Basis of Presentation

The Company prepares its financial statements in accordance with rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted ("GAAP") in the United States of America. The accompanying interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X and presented in US dollars.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's 10-K filed with the Securities and Exchange Commission on May 13, 2016.

Principles of Consolidation

At April 30, 2016, the principal subsidiaries of the Company were listed as follows:

* There were no significant transactions of Huaxin, Amuli and Tieshan Oil between March 31, 2016 and April 30, 2016. These three companies have no official English names. The English names used are for identification purpose only.

Foreign Currency Translation and Re-measurement

The Company translates its foreign operations to U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”.

The Company and its subsidiaries' functional currency and reporting currency is U.S. dollar, except Amuli and Tieshan Oil’s functional currency which is Chinese Renminbi (“RMB”).

The Company's subsidiaries, whose records are not maintained in that company's functional currency, re-measure their records into their functional currency as follows:

·

Monetary assets and liabilities at exchange rates in effect at the end of each period

·

Nonmonetary assets and liabilities at historical rates

·

Revenue and expense items at the average rate of exchange prevailing during the period

Gains and losses from these re-measurements were not significant and have been included in the Company's results of operations.

·

Assets and liabilities at the rate of exchange in effect at the balance sheet date

·

Equities at historical rate

·

Revenue and expense items at the average rate of exchange prevailing during the period

Adjustments arising from such translations are included in accumulated other comprehensive income in shareholders’ equity.

 

		Three months ended April 30, 2016		Year ended January 31, 2016
Average RMB: US$ exchange rate for the three month-period ended April 30, 2016 and the twelve month-period ended January 31, 2016		0.1536		0.1556
Spot RMB:US$ exchange rate as at April 30, 2016 and January 31, 2016		0.1544		0.1514

 

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 disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Machinery

5 ~ 10 years

Recent Accounting Pronouncements

In May 2014 and again in August 2015, the Financial Accounting Standards Board issued amended accounting guidance on revenue recognition that will be applied to all contracts with customers. The objective of the new guidance is to improve comparability of revenue recognition practices across entities and to provide more useful information to users of financial statements through improved disclosure requirements. This guidance is effective for annual and interim periods beginning in 2019. Early adoption is permitted, but only beginning in 2018. The Company is currently assessing the impact of adoption on its consolidated financial statements.

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company's management believes that these recent pronouncements will not have a material effect on the Company's financial statements.

NOTE 3 - GOING CONCERN

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet had sufficient revenues to cover its operating cost, and requires additional capital to commence its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.  These factors raise substantial doubt about its ability to continue as a going concern.

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In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan to obtain such resources for the Company include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.  The Company had $29,244 and $226,638 in cash and cash equivalents as at April 30, 2016 and January 31, 2016, respectively.

NOTE 5 – ACCOUNTS RECEIVABLES

The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of April 30, 2016. No bad debts were written off for the three months ended April 30, 2016 and 2015. The Company’s accounts receivable consists of only trade receivables. As at April 30, 2016 and January 31, 2016, the Company had accounts receivable of $32,201,041 and $25,047,810, respectively.

 

		April 30, 2016				January 31, 2016
0 – 30 days		$	8,210,643			$	14,579,804
90-120 days			89,750				-
Over 1 year			23,900,648				10,468,006
		$	32,201,041			$	25,047,810

NOTE 6 – INVENTORY

Inventories are stated at the lower of cost or market value. Cost is computed using weighted average cost, which approximates actual cost, on a first-in, first-out basis.  Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete or in excess of future needs. Items determined to be obsolete are reserved for. The Company provides for the possible inability to sell its inventories by providing an excess inventory reserve. As at April 30, 2016 and January 31, 2015, the Company had inventory of $8,277 and $0, respectively and determined that no reserve was required.

NOTE 7 – PREPAYMENTS

The prepayments of $15,187 and $1,678,461 as at April 30, 2016 and January 31, 2016, respectively, were made to the major suppliers of the Company to secure the supply of the raw materials of oil category.

NOTE 8 – EQUIPMENT

During the periods ended April 30, 2016 and 2015, the Company recorded depreciation of $4,256 and $0, respectively.

NOTE 9 - INVESTMENT

NOTE 10 – GOODWILL

NOTE 11 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 12 – SHORT-TERM LOAN

There are no provisions in the Company’s bank borrowings that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business.

The Industrial and Commercial Bank of China is the lender of the loan. The interest rate is the interbank offered rate announced by the PRC authority on the business day just before the release of the loan, plus 51 basis point, which is 5.06% per annum. The term of borrowing is 1 year, which was renewed as at December 31, 2015. The amount is denominated in Renminbi of RMB 20,000,000. The loan is secured by the personal guarantee of one of the shareholders, Yeung Po Kam, and of his wife in an unlimited amount.

25% of the principal of the loan is to be repaid in the eleventh month of the term. The remaining is to be repaid on the maturity of the loan. The loan agreement contains provisions requiring payment of default interest in the event of default, and without specific financial covenants. Management of the Company believes the Company is in material compliance with the terms of the loan agreement.

During the periods ended April 30, 2016 and 2015, the Company incurred interest of $52,164 and $0, respectively. On April 30, 2016 and January 31, 2016, the Company had $3,088,000 and $3,080,000 short-term loan, respectively. The difference was a result of change of exchange rate.

NOTE 13 - DEPOSITS RECEIVED

At April 30, 2016 and January 31, 2016, the deposits received from customers, who were unrelated to the Company, was $0 and $13,496,941 respectively.

 

 

Preferred Stock

The Company has authorized 15,000,000 shares of preferred stock with a par value of $0.0001 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.  No shares of preferred stock have been issued.

Common Stock

The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001 per shares. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

During the year ended January 31, 2016, the Company issued the following shares:

·

20,955 common shares to an unaffiliated investor for cash subscription paid before January 31, 2015

·

5,000,000 common shares to an unaffiliated investor in exchange of 1,000,000 common shares of BRI

·

3,033,926 common shares to a shareholder in Amuli, for the shareholder’s 60% interest in Amuli.

·

4,800,000 common shares to Mr. Yang Boajin, a shareholder in Tieshan Oil, for his 51% interest in Tieshan Oil.

 

During the three-month period ended April 30, 2016, no shares were issued by the Company.

As at April 30, 2016 and January 31, 2016, the Company had 74,976,241 common shares issued and outstanding.

The Company has no stock option plan, warrants or other dilutive securities.

Contingently Issuable Common Stock

Pursuant to the Agreement, the Company issued 6,000,000 shares of its common stock, par value $0.0001, to Mr. Baojin, and Mr. Baojin delivered to Huaxin an ownership interest in Tieshan Oil such that Huaxin owns 51% of all ownership interests in Tieshan Oil, provided that 1,200,000 shares of the Company’s common stock (20% of the common stock to be delivered to Mr. Baojin) will be withheld by the Company for a period of 12 months in order to secure against breach by Mr. Baojin of his representations and warranties contained in the agreement, as well as to secure the fulfillment of his covenants and further obligations under the agreement. Accordingly, the Company excludes these shares from the calculation of common stock outstanding.

Additional Paid-In Capital

During the year ended January 31, 2016, related parties contributed additional paid-in capital in the amount of $95,669, to fund operating expenses.

During the period ended April 30, 2016, related parties contributed additional paid-in capital in the amount of $62,854, to fund operating expenses.

NOTE 15 – RELATED PARTY TRANSACTIONS

In support of the Company's efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.

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During the three-month period ended April 30, 2016, related parties, who are shareholders of the Company, forgave debt, in the amount of $62,854 for payments made on behalf of the Company for operating expenses. The amount has been recognized as a contribution to capital.

The Company does not have employment contracts with its key employees, including the controlling shareholders who are officers of the Company.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

NOTE 16 – COMMITMENTS AND CONTINGENCIES

The Company has no commitments or contingencies as of April 30, 2016 and January 31. 2016.

From time to time the Company may become a party to litigation matters involving claims against the Company.  Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company’s financial position or results of operations.

NOTE 17 - SEGMENTED INFORMATION

At April 30, 2016 and January 31, 2016, the Company operates in two industry segments, health beverage and oil and gas, and one geographic segment, China, where majority current assets and equipment are located.

NOTE 18 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date these financial statements were available to be issued.  Based on our evaluation no material events have occurred that require disclosure.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations. ​

Forward-Looking Statements

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." You should carefully review the risks described in this Annual Report on Form 10-K and in other documents we file from time to time with the Securities and Exchange Commission ("SEC"). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-Q to the "Company," "Resort Savers," "we," "us," or "our" are to Resort Savers, Inc.

Corporate Overview

Resort Savers, Inc. (the “Company” or “Resort Savers” or “RSSV”) was incorporated in the State of Nevada on June 25, 2012.  The Company was authorized to issue 1,000,000,000 shares of common stock, par value $0.0001 per share, and 15,000,000 shares of preferred stock, par value $0.0001 per share.  Our fiscal year end is January 31.  Resort Savers has limited cash on hand.  We have sustained losses since inception and have relied solely upon the sale of our securities for funding.  Resort Savers has never declared bankruptcy, been in receivership, or been involved in any kind of legal proceeding.

From January 2015 through March 2015, the Company, by and through its wholly owned subsidiary, Xing Rui International Investment Holding Group Co., Ltd., a Seychelles corporation (“Xing Rui”), acquired 20,068,750 common shares of Worx America, Inc. (“Worx”), a private company based in Houston, Texas, in exchange for $1,650,000 cash and 1,000,000 shares of common stock of BRI with a value of $350,000 were paid by the Company to Worx in exchange of 20,068,750 common shares of Worx, representing 20% of Worx's the then issued and outstanding voting common stock on a fully converted and diluted basis.  More specifically, (i) on January 28, 2015, $350,000 cash was paid by the Company to Worx in exchange of 5,403,728 common shares of Worx and (ii) on March 20, 2015, $1,300,000 cash and 1,000,000 shares of common stock of BRI with a value of $350,000 were paid by the Company to Worx in exchange of 14,665,022 common shares of Worx. This investment was accounted for under equity method with initial cost of $2,000,000.

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Worx designs automated solutions for industrial, environmental and energy industries to improve efficiency and systems output.  The Worx automated robotic tank cleaning system reduces tank cleaning time, reduces or eliminates the need for personnel to enter tanks, and may reduce the volume of solvents used to clean a tank. Actual results vary from tank to tank and may involve variables including the product in the tank, physical condition of the tank such as corrosion, or amount of sludge accumulated. Worx is currently refining its product line to improve speed and efficiency.  Our investment in Worx has facilitated this development. We hope that our investment into what we believe is an important technology will give us early access to the technology, establish relationships in the industry, and allow us to assist Worx with the launch of its commercial products in China and other parts of Asia.

On October 1, 2015, the Company’s wholly-owned subsidiary, Xing Rui, by and through a newly formed People’s Republic of China (the “PRC”) corporation subsidiary Huaxin Changrong (Shenzhen) Technology Service Company Limited (“Huaxin”), completed a purchase from Xu Xiao Yun of sixty percent (60%) of the shares of Shenzhen Amuli Industrial Development Co. Ltd., a PRC corporation (“Amuli”), for 3,033,926 shares of the Company’s common stock.  The purchase price was valued $2,400,000.

Apart from the transactions described above, neither the Company nor any of its subsidiaries has a material relationship with either Mr. Xu Xiao Yun or Amuli.

Amuli is in development to become a large producer of the health beverage drink Kvass. Amuli has purchased equipment and is currently expanding its production facilities that are forecasted to generate sales and profits in 2016.

On October 9, 2015, we amended our certificate of incorporation to increase the maximum number of shares of common stock that the Company shall be authorized to have outstanding at any time to 1,000,000,000 shares.

On January 29, 2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Mr. Yang Baojin, a citizen of the PRC, and Huaxin, which is a wholly owned subsidiary of Xing Rui, whereas Xing Rui itself is a wholly owned subsidiary of the Company. Mr. Baojin is the president and majority owner of Beijing Yandong Tieshan Oil Products Co., Ltd., a corporation organized under the laws of the PRC (“BYTOC”).

The Exchange Agreement provides that the Company will issue 6,000,000 shares of its common stock to Mr. Baojin, and Mr. Baojin will deliver to Huaxin an ownership interest in BYTOC such that Huaxin will own 51% of all ownership interests in BYTOC, provided that 1,200,000 shares of the Company’s common stock (20% of the common stock to be delivered to Mr. Baojin) will be withheld by the Company for a period of 12 months in order to secure against breach by Mr. Baojin of his representations and warranties contained in the Agreement, as well as to secure the fulfillment of his covenants and further obligations under the Exchange Agreement (the “Exchange”).  Therefore, pursuant to the terms of the Exchange Agreement, on January 29, 2016, the Company issued 4,800,000 shares of its common stock to Mr. Baojin.

BYTOC is principally engaged in the trading of oil, gas and lubricant products within the PRC. Apart from the transactions pursuant to the Exchange Agreement, neither the Company nor any of its subsidiaries has a material relationship with either Mr. Baojin or BYTOC.

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Under the Exchange Agreement, Mr. Baojin guarantees, for five years, that BYTOC will have an annual net income of Renminbi (the currency of the PRC – “RMB”) 10 million.  To the extent that in any year the actual net income of BYTOC is less than RMB 10 million, then Mr. Baojin will pay Huaxin a cash payment equal to 51% of the shortfall.

The Exchange Agreement was approved by a written consent of the Board of Directors of the Company on January 29, 2016 and the closing of the transactions under the Exchange Agreement occurred concurrently with the execution and delivery of the Exchange Agreement.

As a result of the closing of the transactions under the Exchange Agreement, Huaxin now owns a majority of the ownership interest of BYTOC.  Pursuant to the Exchange Agreement, as soon as reasonably practicable following the closing, the parties will amend the articles of association and bylaws of BYTOC so as to require a vote of the majority of the ownership interests in BYTOC to (i) approve the acquisition of BYTOC by means of a merger, (ii) approve the sale of substantially all assets of BYTOC, (iii) liquidate, dissolve or wind-up the business and affairs of BYTOC, (iv) amend, alter or repeal any provision of the articles of association or bylaws of BYTOC, (v) create any class or series of capital stock of BYTOC, (vi) pay or declare any dividend or make any distribution on any shares of capital stock of BYTOC, (vii) issue any debt security, and/or (viii) elect each member of the board of directors of BYTOC.

The total value of the exchange, based on the value of the Company’s common stock as of the close of trading on January 28, 2016, was $3,435,000.

On May 12, 2015, the Company, by and through its wholly-owned subsidiary, Xing Rui signed a definitive Letter of Intent with the stockholders of Kashi Jinju Colour Printing Packaging Co. LTD., a PRC corporation ("Kashi Jinju") which manufactures cardboard boxes. The stockholders of Kashi Jinju and the Company intend to enter into a share exchange, wherein the stockholders of Kashi Jinju will exchange 80% of the issued and outstanding shares of stock of Kashi Jinju for 32,000,000 shares of the Company’s common stock.  As of April 30, 2016, the Company and Kashi Jinju are still working towards satisfying conditions of the Letter of Intent, including regulatory approvals and licensing in the PRC, which are required to close the transaction.

Our Board of Directors will be primarily responsible for investigating combination opportunities. However, we believe that business opportunities may also come to our attention from various sources, including professional advisors such as attorneys, accountants, securities broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited proposals. We have no plan, understanding, agreements or commitments with any individual for such person to act as a finder of opportunities for us.

We do not propose to restrict our search for business opportunity to any particular geographical area or industry, and, therefore, we are unable to predict the nature of our future business operations. Our management's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the period ended April 30, 2016, together with notes thereto, which are included in this report.

Results of Operations

During the period ended April 30, 2016, the Company generated revenues of $21,999,360 with $21,809,079 cost of goods sold, incurred operating expenses of $209,671 and other expenses of $52,164, and had a net loss of $72,840.

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The following table provides selected financial data about our company for the period ended April 30, 2016 and the year ended January 31, 2016.

The following summary of our results of operations, for the quarters ended April 30, 2016 and 2015.

The following summary of comprehensive loss, for the quarters ended April 30, 2016 and 2015.

For the three months ended April 30, 2016 and April 30, 2015

Revenues

The Company generated revenues of $21,999,360 and $0 during the three months ended April 30, 2016 and April 30, 2015, respectively.

Operating expenses

For the three months ended April 30, 2016, total operating expenses were $209,671, which included professional fees in the amount of $35,652 and general and administrative expenses of $174,019. For the three months ended April 30, 2015, total operating expenses were $30,173, which included professional fees in the amount of $28,673 and general and administrative expenses of $1,500. The increase in professional fees, management fees and general and administrative expenses were primary related to the Company's ongoing regulatory requirements.

Interest expense

During the three months ended April 30, 2016 and 2015, the Company recognized interest expense of $52,164 and $0, respectively.

Loss on investment

During the three months ended April 30, 2015, the Company recognized $30,692 loss from its investment in Worx based on its proportionate share of Worx's net loss during March 20, 2015 to April 30, 2015. During the three months ended April 30, 2016, the Company did not recognize investment loss. The Company lost significant influence on Worx on May 1, 2015. As a result, the equity method was suspended and the cost method was applied since then.

Net loss

For the three months ended April 30, 2016, the Company had a net loss of $72,840, as compared to a net loss for the three months ended April 30, 2015 of $60,865.

Comprehensive income loss

For the three months ended April 30, 2016, the Company had comprehensive income of $10,622 as foreign currency translation adjustment. For the three months ended April 30, 2015, the Company had a proportionate unrealized loss from Worx's investment held for sale of $62,000, as indicated in the statement of other comprehensive income.

There is no historical financial information about us on which to base an evaluation of our performance.  We are a development stage company and have not generated revenues from operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in developing our website, and possible cost overruns due to the price and cost increases in supplies and services.

If we are unable to meet our needs for cash from either our operations, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.

 

 

 

As at April 30, 2016, the Company's cash balance was $29,244 compared to $226,638 as at January 31, 2016. The decrease in cash was primarily due to operating losses associated with the business operations of BYOTC during the months ended 2016.

As at April 30, 2016, the Company had current assets of $32,256,770 compared with current assets of $26,957,038 and the Company had current liabilities of $27,814,628 compared with current liabilities of $22,519,828 as at January 31, 2016.

As at April 30, 2016, our company had a working capital of $4,442,142 compared with working capital of $4,437,210 as at January 31, 2016. The increase in working capital was primarily attributed to the increase in accounts receivable of $7,152,231 and increase in accounts payable and accrued liabilities of $18,721,720 and the decrease in prepaid expense and deposits off $1,663,274 and decrease deposits received of $13,496,941.

Cash Flow from Operating Activities

During the three months ended April 30, 2016, our company used $262,727 in cash from operating activities compared to cash used by operating activities of $25,605, during the three months ended April 30, 2015. 

Cash Flow from Investing Activities

During the three months ended April 30, 2016, our company used $0 compared to cash used $1,300,000 in investment of Worx for investing activities during the three months ended April 30, 2015.

Cash Flow from Financing Activities

During the three months ended April 30, 2016, our company received $57,333 loans from related parties compared to $25,605 of loan from related party for the three months ended April 30, 2015.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. ​

As a "smaller reporting company", we are not required to provide the information required by this Item.

Item 4.  Controls and Procedures.

Management's Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended April 30, 2016, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II – OTHER INFORMATION ​

Item 1.  Legal Proceedings. ​

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A.  Risk Factors. ​ ​

As a "smaller reporting company", we are not required to provide the information required by this Item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. ​

During the quarter ended April 30, 2016, we did not issue any unregistered shares of common stock.

Item 3.  Defaults Upon Senior Securities. ​

None.

Item 4.  Mine Safety Disclosures. ​

Not applicable.

Item 5.  Other Information. ​

None.

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Item 6.  Exhibits. ​

 

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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 on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

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