Fortune Valley Treasures, Inc. - Quarter Report: 2017 May (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 May 31, 2017
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: 333-200760
FORTUNE VALLEY TREASURES, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 32-0439333 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
19F,Lianhe Tower, 1069 Nanhai Ave, NanshanDistrict, Shenzhen, 518000, China |
518000 | |
| (Address of principal executive offices) | (Zip Code) |
(86)75586961406
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | . | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] | (Do not check if a smaller reporting company) | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
| Class | Shares outstanding as of June 20 2017 | |
| Common stock, $0.001 par value | 7,750,000 |
TABLE OF CONTENTS
| PAGE | ||
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 8 |
| Item 4. | Controls and Procedures | 8 |
| PART II – OTHER INFORMATION | 9 | |
| Item 1. | Legal Proceedings | 9 |
| Item 1A. | Risk Factors | 9 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 9 |
| Item 3. | Defaults Upon Senior Securities | 9 |
| Item 4. | Mine Safety Disclosures | 9 |
| Item 5. | Other Information | 9 |
| Item 6. | Exhibits | 9 |
| Signatures | 10 | |
| 2 |
PART I - FINANCIAL INFORMATION
The accompanying unaudited interim financial statements of Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.) as of May 31, 2017, have been prepared by our management in conformity with accounting principles generally accepted in the United States of America and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the nine-month period ended May 31, 2017 are not necessarily indicative of the results that can be expected for the year ending August 31, 2017.
As used in this Quarterly Report, the terms “we,” “us,” “our,” “Fortune Valley,” and the “Company” mean Fortune Valley Treasures, Inc. unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.
| 3 |
Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.)
Balance Sheets
| May 31, 2017 | August 31 , 2016 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Prepaid expenses | $ | 10,178 | $ | 8,833 | ||||
| Total Current Assets | $ | 10,178 | $ | 8,833 | ||||
| Total Assets | $ | 10,178 | $ | 8,833 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 16,098 | $ | 20,150 | ||||
| Due to related party | 58,717 | 3,000 | ||||||
| Total Current Liabilities | 74,815 | 23,150 | ||||||
| Total Liabilities | $ | 74,815 | $ | 23,150 | ||||
| Stockholders’ Deficit | ||||||||
| Common stock authorized: 75,000,000 shares, par value $0.001, 7,750,000 common shares issued and outstanding as of May 31, 2017 and August 31, 2016, respectively | 7,750 | 7,750 | ||||||
| Additional paid-in capital | 81,729 | 71,229 | ||||||
| Accumulated deficit | (154,116 | ) | (93,296 | ) | ||||
| Total Stockholders’ Deficit | (64,637 | ) | (14,317 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 10,178 | $ | 8,833 | ||||
The accompanying notes are an integral part of these unaudited financial statements
| F-1 |
Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.)
Statements of Operations
(Unaudited)
| For the Three Months Ended | For the Three Months Ended | For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Expenses | ||||||||||||||||
| General and administrative expenses | 17,588 | 14,209 | 60,820 | 43,375 | ||||||||||||
| Total operating expenses | 17,588 | 14,209 | 60,820 | 43,375 | ||||||||||||
| Loss from operations | $ | (17,588 | ) | $ | (14,209 | ) | $ | (60,820 | ) | $ | (43,375 | ) | ||||
| Other income (expense) | $ | - | $ | - | $ | - | $ | - | ||||||||
| Net loss | $ | (17,588 | ) | $ | (14,209 | ) | $ | (60,820 | ) | $ | (43,375 | ) | ||||
| Net Loss Per Common Share – Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| Weighted Average Common Shares Outstanding | 7,750,000 | 7,750,000 | 7,750,000 | 7,750,000 | ||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| F-2 |
Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.)
Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended | ||||||||
| May 31, 2017 | May 31 2016 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (60,820 | ) | $ | (43,375 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Expenses paid by related party on behalf of the Company | 66,217 | - | ||||||
| Prepaid expense | (1,345 | ) | (8,333 | ) | ||||
| Accounts payable | 6,448 | 9,997- | ||||||
| Cash Used in/from Operating Activities | 10,500 | (41,711 | ) | |||||
| Cash Flows From Financing Activities: | ||||||||
| Advances from related parties | - | 1,500 | ||||||
| Loan forgiven by former shareholder | (10,500 | ) | ||||||
| Cash Used in /from Financing Activities | (10,500 | ) | 1,500 | |||||
| Net Decrease in Cash and Cash Equivalents | - | (40,211 | ) | |||||
| Cash and Cash Equivalents at Beginning of period | - | 42,492 | ||||||
| Cash and Cash Equivalents at End of Period | $ | - | $ | 2,281 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | - | $ | - | ||||
| Non-Cash Investing and Financing Activity: | 1,500 | |||||||
| Loan forgiven by former shareholder | $ | 10,500 | $ | - | ||||
The accompanying notes are an integral part of these unaudited financial statements
| F-3 |
Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.)
Notes to Financial Statements
(Unaudited)
1. Nature of Operations
Fortune Valley Treasures, Inc., formerly Crypto-Services, Inc., was incorporated in the State of Nevada as a for-profit company on March 21, 2014 and established a fiscal year end of August 31. The Company is an early stage company which intended to offer an information based website at www.digitalcoindaily.com that would provide users with up to date information on the world of digital currencies.
Gordon Hum, the Company’s director, President, Treasurer, Secretary, Chief Executive Officer, Chief Financial Officer and holder of 3,500,000 shares of the Company’s common stock representing approximately 45.16% of the Company’s issued and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed to sell to twelve unrelated third parties all of his securities of the Company, for aggregate cash consideration of $35,000. On the same day, Edwin Jong, the Company’s director, Vice President and holder of 1,500,000 shares of the Company’s common stock representing approximately 19.35% of the Company’s issued and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed to sell to five unrelated third parties all of his securities of the Company, for aggregate cash consideration of $15,000. In connection with the sales of the Company’s securities, Gordon Hum and Edwin Jong resigned from all of their positions with the Company effective August 3, 2016. Concurrently, Xinlong Shen was appointed to serve as the sole director, President, Treasurer, Secretary, Chief Executive Officer and Chief Financial Officer of the Company. Effective December 14, 2016, the Company accepted the resignation of Xinlong Shen from the position of President, Secretary and Treasurer. He will remain on the Board as a director. Also effective December 14, 2016, the Company appointed Yumin Lin as the new President, Secretary and Treasurer. He will also serve as a director.
Effective August 28, 2016, shareholders of Crypto-Services, Inc. representing 54.19% of the Company’s issued stock approved changing the Company’s name from Crypto-Services, Inc., to Fortune Valley Treasures, Inc. The Company filed a Certificate of Amendment with the State of Nevada on September 21, 2016. Effective March 29, 2017, we received formal notification from FINRA that our request to change the Company name from Crypto-Services, Inc. to Fortune Valley Treasures, Inc. and to change our trading symbol from CRYT to FVTI have been approved. On March 30, 2017 our name and symbol change took effect with FINRA and on the OTCMarkets OTCQB platform.
Effective December 14, 2016, the Company executed a Sale and Purchase Agreement (the Agreement”) to acquire 100% of the shares and assets of DaXingHuaShang Investment Group Limited (“DIGL”), a company incorporated under the laws of Republic of Seychelles. Pursuant to the Agreement, the Company has agreed to issue 300 million shares of the Company to DIGL to acquire 100% of the shares and assets for a cost of $12 million reflecting the value of the rights, titles and interests in the business assets and all attendant or related assets of DIGL. Both partied agreed that this share issuance by the Company represents payment in full of the $12 million. As of the May 31, 2017, the agreement has not been closed and the Company has not yet increased the authorized shares and issue the 300 million shares.
2. Going Concern
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period ended May 31, 2017, the Company had recurring losses and net cash used in operations, and had accumulated deficit of $154,116 as of May 31, 2017. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
3. Basis of Presentation
The accompanying unaudited interim 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, and should be read in conjunction with the audited financial statements and notes thereto for the year ended August 31, 2016 contained in the Company’s Form 10-K/A filed with the Securities and Exchange Commission on February 17, 2017. 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 interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the Company’s Form 10-K/A have been omitted. These financial statements and notes are presented in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year end is August 31.
| F-4 |
4. Related Party Transactions
| a) | Our former CEO Gordon Hum assumed $10,500 accrued liabilities occurred before his resignation on August 3, 2016 and paid off on November 30, 2016. Gordon Hum forgave the repayment of $10,500 from the Company, which was recorded as gain on liabilities paid by former shareholder. | |
| b) | As of May 31, 2017, the Company was indebted to the then-CEO Xinlong Shen in the amount of $55,717, which is non-interest bearing, unsecured, and due on demand. This is an advance from Xinlong Shen to finance the operation of the Company. | |
| c) | A friend of Xinlong Shen provided non-compensated financial reporting services from August 2016 to May, 2017. | |
| d) | Our principal executive office of the Company is provided by a friend of Xinlong Shen at no charge. |
5. Subsequent Event
Effective December 14, 2016, the Company executed a Sale and Purchase Agreement (the Agreement”) to acquire 100% of the shares and assets of DaXingHuaShang Investment Group Limited (“DIGL”), a company incorporated under the laws of the Republic of Seychelles. Pursuant to the Agreement, the Company has agreed to issue 300 million shares of the Company to DIGL to acquire 100% of the shares and assets for a cost of $12 million reflecting the value of the rights, titles and interests in the business assets and all attendant or related assets of DIGL. Both parties agreed that this share issuance by the Company represents payment in full of the $12 million. Effective May 24,2017,the Company issued the statement that they would effect the Amendment to our Articles of Incorporation and increase our authorized capital from 75,000,000 common shares with a par value of $0.001 to 2,000,000,000 common shares with a par value of $0.001. There will be no change to the issued and outstanding common shares as a result of the increase in our authorized capital. As of May 31, 2017, the agreement has not been closed and the Company has not yet increased the authorized shares and issue the 2000 million shares.
| F-5 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| ● | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; | |
| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); · | |
| ● | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and | |
| · | ||
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also 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 accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
| 4 |
Overview
Fortune Valley Treasures, Inc. (the “Company”), formerly Crypto-Services, Inc. was incorporated in the State of Nevada as a for-profit company on March 21, 2014 and established a fiscal year end of August 31. The Company is an early stage company which intended to offer an information based website at www.digitalcoindaily.com that would provide users with up to date information on the world of digital currencies.
Gordon Hum, the Company’s director, President, Treasurer, Secretary, Chief Executive Officer, Chief Financial Officer and holder of 3,500,000 shares of the Company’s common stock representing approximately 45.16% of the Company’s issued and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed to sell to twelve unrelated third parties all of his securities of the Company, for aggregate cash consideration of $35,000. On the same day, Edwin Jong, the Company’s director, Vice President and holder of 1,500,000 shares of the Company’s common stock representing approximately 19.35% of the Company’s issued and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed to sell to five unrelated third parties all of his securities of the Company, for aggregate cash consideration of $15,000. In connection with the sales of the Company’s securities, Gordon Hum and Edwin Jong resigned from all of their positions with the Company effective August 3, 2016. Concurrently, Xinlong Shen was appointed to serve as the sole director, President, Treasurer, Secretary, Chief Executive Officer and Chief Financial Officer of the Company. Effective December 14, 2016, Company accepted the resignation of Xinlong Shen from the position of President, Secretary and Treasurer. He will remain on the Board as a director. Also effective December 14, 2016, the Company appointed Yumin Lin as the new President, Secretary and Treasurer. He will also serve as a director.
Effective August 28, 2016, shareholders of the Company representing 54.19% of the Company’s issued stock approved changing the Company’s name from Crypto-Services, Inc., to Fortune Valley Treasures, Inc. The Company filed a Certificate of Amendment with the State of Nevada on September 21, 2016. Effective March 29, 2017, we received formal notification from FINRA that our request to change the Company name from Crypto-Services, Inc. to Fortune Valley Treasures, Inc. and to change our trading symbol from CRYT to FVTI have been approved. On March 30, 2017 our name and symbol change took effect with FINRA and on the OTC Markets OTCQB platform.
Effective December 14, 2016, the Company has accepted the resignation of Xinlong Shen from the position of President, Secretary and Treasurer. He will remain on the Board as a Director.
Also effective December 14, 2016, the Company announced the appointment of Yumin Lin to the Board of Directors in the position of President, Secretary and Treasurer. He will also serve as a Director.
We have had limited operations and have been issued a “going concern” opinion by our auditor, based upon our reliance on the sale of our common stock as the sole source of funds for our future operations.
Plan of Operation
We are an early stage company devoting substantially all of our efforts to establishing a new business for which our planned principal operations have not yet commenced. We believe our current equity at risk is sufficient to finance our current activities.
Our auditors have issued a going concern opinion on our audited financial statements for the year ended August 31, 2016.This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we launch our business platform. There is no assurance we will ever reach this point. Accordingly, we must raise cash from other sources. Our only other source for cash at this time is investments by others or loans from our shareholders or officers. We have no assurances that such loans will become available upon acceptable terms when the funds are required for our operations.
Results of Operations
Our operating results for the three and nine months ended May 31, 2017 and 2016 are summarized in the table below.
| For the Three Months Ended | For the Three Months Ended | For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| General and administrative | $ | 17,588 | $ | 14,209 | $ | 60,820 | $ | 43,375 | ||||||||
| Net Loss | $ | (17,588 | ) | $ | (14,209 | ) | $ | (60,820 | ) | $ | (43,375 | ) | ||||
| 5 |
Revenues
We did not generate any revenue during the three-month period and nine-month period ended May 31, 2017 and 2016.
Operating Expenses
Our expenses were $60,820 for the nine months ended May 31, 2017 as compared to $43,375 for the nine months ended May 31, 2016. The increase for the nine months was directly related to the expenses related to consulting and professional fees related to our reporting responsibilities with the Securities and Exchange Commission (the “SEC”).
Our expenses were $17,588 for the three months ended May 31, 2017 as compared to $14,209 for the three months ended May 31, 2016. The increase for the three months is related to consulting and professional fee related to our reporting responsibilities with the SEC.
Capital Resources and Liquidity
Working Capital
| May 31, 2017 | August 31, 2016 | |||||||
| Current Assets | $ | 10,178 | $ | 8,833 | ||||
| Current Liabilities | $ | 74,815 | $ | 23,150 | ||||
| Working Capital (Deficiency) | $ | (64,637 | ) | $ | (14,317 | ) | ||
Current Assets was $10,178 as of May 31, 2017 as compared to $8,833 as of August 31, 2016. The increase was due to increase in prepaid expense to OTC markets, for our annual quotation fee for the OTCBB. Current liabilities was $74,815 as of May 31, 2017 compared to $23,150 as of August 31, 2016. The increase was mainly due to an increase of $55,717 for amounts owing to a related party for paying operating expenses of the Company.
Cash Flows
| For the Nine Months Ended, | ||||||||
| May 31, 2017 | May 31, 2016 | |||||||
| Net cash used in operating activities | $ | (10,500 | ) | $ | (41,711 | ) | ||
| Net cash used in investing activities | $ | - | $ | - | ||||
| Net cash used in/ provided by financing activities | $ | (10,500 | ) | $ | 1,500 | |||
| Net change in cash | $ | - | $ | (40,211 | ) | |||
Net cash from operations was $10,500 for the nine-months period ended May 31, 2017 compared to net cash used in operations of $41,711 for the period ended May 31, 2016. The increase in cash inflow is because of operating expense being paid by a related party. As of May 31, 2017, the Company was indebted to this related party in the amount of $55,717, which is non-interest bearing, unsecured, and due on demand.
Net cash used in investing activities and financing activities was $0 for the period ended May 31, 2017.
Net cash used in financing activities was $10,500 for the nine-months period ended May 31, 2017 compared to net cash from financing activities of $1,500 for the period ended May 31, 2017. It represents loan forgiven by a related party, which is a non-cash item.
| 6 |
We have substantial capital resource requirements and have incurred significant losses since inception. As of May 31, 2017, we had $0 in cash. Based upon our current business plans, we will need considerable cash investments to be successful. Such capital requirements are in excess of what we have in available cash and what we currently have commitment for. Therefore, we do not have enough available cash to meet our obligations over the next twelve (12) months.
Anticipated Cash Requirements
We will require additional funds to fund our budgeted expenses over the next 12 months. These funds may be raised through, equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.
We anticipate that our cash expenses over the next 12 months will be approximately $50,000 as described in the table below. These estimates may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders or other sources.
| Description | Estimated Expenses | |||
| Legal and accounting fees | $ | 34,000 | ||
| Marketing and advertising | - | |||
| Investor relations and capital raising | - | |||
| Management and operating costs | - | |||
| Salaries and consulting fees | 15,000 | |||
| General and administrative expenses | 1,000 | |||
| Total | $ | 50,000 | ||
Our general and administrative expenses for the year will consist primarily of transfer agent fees, bank and interest charges and general office expenses. The professional fees are related to our regulatory filings throughout the year and include legal, accounting and auditing fees.
Based on our planned expenditures, we will require approximately $50,000 to proceed with our business plan over the next 12 months. As of May 31, 2017, we had $0 cash on hand. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.
We intend to raise the balance of our cash requirements for the next 12 months from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us.
Even though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for funding our operations as we do not have sufficient tangible assets to secure any such financing. We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide any assurance that we will be able to raise sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing, we may be forced to abandon our business plan.
Going Concern
During the period ended May 31, 2017, the Company had net operating loss and net cash used in operation, and had accumulated deficit of $154,116 as of May 31, 2017. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| 7 |
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable because we are a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our president (our principal executive officer and principal financial officer), as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our president (our principal executive officer and principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of quarter covered by this report. Based on the evaluation of these disclosure controls and procedures the president (our principal executive officer and 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 due to we did not maintain effective controls over the control environment. Specifically, the Board does not currently have a director who qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. The Company does not have sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. The Company also lacks accounting personnel with technical knowledge in certain debt and equity transactions and qualified personnel with an appropriate level of SEC filing knowledge and experience. Because of the size of the Company’s administrative staff, controls related to the segregation of certain duties have not been developed and the Company has not been able to adhere to them. Additionally, the Company does not have a well-established procedure to identify, approve, and report related party transactions. The Company filed a Form 10-K on December 13, 2016 without obtaining the approval of the Company’s auditors. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
Changes in Internal Controls
During the quarter covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 8 |
None.
Not applicable because we are a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
Exhibit No. |
Description | |
| 31.1 | Certification Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) | |
| 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted 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 † | |
| * | In accordance with SEC Release 33-8238, Exhibits 32.1 is furnished and not filed. | |
| † | Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| 9 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FORTUNE VALLEY TREASURES, INC. . | ||
| Date: June 16, 2017 | By: | /s/ Yumin Lin |
Yumin Lin Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) | ||
| 10 |