Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
May 31, 2017 | Jul. 17, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHINA GEWANG BIOTECHNOLOGY, INC. | |
Entity Central Index Key | 1,489,902 | |
Trading Symbol | CGWB | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 75,000,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2017 | Nov. 30, 2016 |
Current assets: | ||
Cash | $ 22,415,103 | $ 13,108,340 |
Accounts receivable | 14,336,885 | 11,205,011 |
Inventory | 168,267 | 107,830 |
Prepaid expenses | 2,852,914 | 5,540,051 |
Total current assets | 39,773,169 | 29,961,232 |
Property, plant and equipment, net | 104,289 | 128,767 |
Other assets: | ||
Deferred registration costs | 180,495 | 110,086 |
Equity investment | 10,669,359 | 6,003,412 |
TOTAL ASSETS | 50,727,312 | 36,203,497 |
Current liabilities: | ||
Accounts payable | 4,525,711 | 3,367,174 |
Taxes payable | 1,155,282 | 789,370 |
Accrued expenses and other payables | 312,325 | 193,090 |
Loans from third party | 228,359 | 228,238 |
Loans from stockholder | 407,677 | 237,639 |
Total current liabilities | 6,629,354 | 4,815,511 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock - $0.001 par value, 100,000,000 and 100,000,000 shares authorized, 75,000,000 and 75,000,000 shares issued and outstanding as of May 31, 2017 and November 30, 2016, respectively | 75,000 | 75,000 |
Additional paid-in capital | 16,980,102 | 16,980,102 |
Retained earnings | 27,082,001 | 15,026,053 |
Statutory reserve fund | 759,094 | 759,094 |
Other comprehensive (loss) | (1,211,862) | (1,707,064) |
Stockholders' equity before noncontrolling interests | 43,684,335 | 31,133,185 |
Noncontrolling interests | 413,623 | 254,801 |
Total stockholders' equity | 44,097,958 | 31,387,986 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 50,727,312 | $ 36,203,497 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2017 | Nov. 30, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 75,000,000 | 75,000,000 |
Common stock, shares outstanding | 75,000,000 | 75,000,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 22,264,734 | $ 5,437,183 | $ 43,406,866 | $ 6,655,281 |
Cost of goods sold | (14,645,390) | (3,025,001) | (28,599,695) | (3,367,609) |
Gross profit | 7,619,344 | 2,412,182 | 14,847,171 | 3,287,672 |
Operating expenses: | ||||
R&D expenses | 583,868 | 1,163,280 | ||
Selling and marketing | 1,407,424 | 649,302 | 2,852,337 | 919,973 |
General and administrative | 382,422 | 122,978 | 763,777 | 259,939 |
Total operating expenses | 2,373,714 | 772,280 | 4,779,394 | 1,179,912 |
Operating income | 5,245,630 | 1,639,902 | 10,067,777 | 2,107,760 |
Other income: | ||||
Interest income | 20,880 | 6,327 | 19,822 | 11,095 |
Other non-operating income | 1,335 | 1,490 | ||
Total other income | 20,880 | 6,327 | 21,157 | 12,585 |
Income before provision for income taxes | 5,266,510 | 1,646,229 | 10,088,934 | 2,120,345 |
Provision for income taxes | 1,319,811 | 416,553 | 2,546,163 | 539,969 |
Equity in income of investee | 2,512,935 | 408,275 | 4,665,947 | 408,275 |
Net income before noncontrolling interests | 6,459,634 | 1,637,951 | 12,208,718 | 1,988,651 |
Noncontrolling interests | (79,622) | (62,483) | (152,770) | (80,995) |
Net income attributable to common stockholders | $ 6,380,012 | $ 1,575,468 | $ 12,055,948 | $ 1,907,656 |
Earnings per common share-basic and diluted | $ 0.09 | $ 0.03 | $ 0.16 | $ 0.03 |
Weighted average shares outstanding-basic and diluted | 75,000,000 | 60,543,478 | 75,000,000 | 55,882,514 |
Comprehensive income | ||||
Net income before noncontrolling interests | $ 6,459,634 | $ 1,637,951 | $ 12,208,718 | $ 1,988,651 |
Foreign currency translation adjustment | 442,410 | (122,371) | 501,254 | (308,784) |
Total comprehensive income | 6,902,044 | 1,515,580 | 12,709,972 | 1,679,867 |
Comprehensive income attributable to noncontrolling interests | (70,774) | (72,978) | (146,718) | (82,171) |
Net comprehensive income attributable to common stockholders | $ 6,831,270 | $ 1,442,602 | $ 12,563,254 | $ 1,597,696 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 6 months ended May 31, 2017 - USD ($) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Non controlling Interests | Statutory Reserve Fund | Other Comprehensive Income (Loss) |
Balance at Nov. 30, 2016 | $ 31,387,986 | $ 75,000 | $ 16,980,102 | $ 15,026,053 | $ 254,801 | $ 759,094 | $ (1,707,064) |
Net income | 12,208,718 | 12,055,948 | 152,770 | ||||
Other comprehensive income | 501,254 | 6,052 | 495,202 | ||||
Balance at May. 31, 2017 | $ 44,097,958 | $ 75,000 | $ 16,980,102 | $ 27,082,001 | $ 413,623 | $ 759,094 | $ (1,211,862) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
May 31, 2017 | May 31, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 12,208,718 | $ 1,988,651 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 26,050 | 24,761 |
(Income) from equity investment | (4,665,947) | (408,275) |
Changes in operating assets and liabilities: | ||
(Increase) in accounts receivable | (3,131,874) | (3,330,508) |
(Increase) decrease in inventory | (60,437) | 134,534 |
Decrease (increase) in prepaid expenses | 2,687,137 | (1,346,283) |
Increase in accounts payable | 1,158,537 | 1,235,947 |
Increase in taxes payable | 365,912 | 342,454 |
Increase (decrease) in accrued expenses and other liabilities | 218,984 | (82,198) |
Net cash provided by (used in) operating activities | 8,807,080 | (1,440,917) |
Cash flows from investing activities: | ||
Purchase of equipment | (78,567) | |
Net cash (used in) investing activities | (78,567) | |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 9,848,200 | |
Net cash provided by financing activities | 9,848,200 | |
Effect of exchange rate changes on cash | 499,683 | (306,441) |
Net change in cash | 9,306,763 | 8,022,165 |
Cash, beginning | 13,108,340 | 8,669,034 |
Cash, end | 22,415,103 | 16,691,199 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | 2,234,942 | 264,032 |
Noncash investing activities: | ||
Payable for purchase of equity investment | 1,000,000 | |
Additional paid-in capital - equity in excess of purchase price of investee under common control | 466,652 | |
Noncash financing activities: | ||
Payment of accrued expenses and other payables by shareholder | $ 170,016 | $ 52,190 |
Organization
Organization | 6 Months Ended |
May 31, 2017 | |
Organization [Abstract] | |
ORGANIZATION | 1. ORGANIZATION China Gewang Biotechnology, Inc. (the “Company”), formerly known as Rich Star Development, was incorporated under the laws of the State of Nevada on May 29, 2009. From its inception until the closing of the reverse merger described below, the Company was a development-stage company in the business of sourcing and distributing food products, paper products, janitorial products, restaurant utensils and equipment to the food service industry in the PRC. On April 20, 2015, the Company completed a reverse merger transaction through a share exchange with the stockholders of Biotechnology International Holding Ltd. (“Biotechnology International”), whereby the Company acquired 100% of the outstanding shares of Biotechnology International in exchange for 32,000,000 shares of its common stock, representing 90.14% of the issued and outstanding shares of common stock. As a result of the reverse merger, Biotechnology International became the Company’s wholly-owned subsidiary and the former Biotechnology International stockholders became our controlling stockholders. The share exchange transaction was treated as a reverse acquisition, with Biotechnology International as the acquirer and the Company as the acquired party for accounting purposes. On January 8, 2015, the Company filed a certificate of amendment to its articles of incorporation to change its name from “Rich Star Development” to “China Gewang Biotechnology, Inc.” On July 20, 2016, the Company filed with the Nevada Secretary of State a Certificate of Amendment to its Articles of Incorporation. The Certificate of Amendment increased the number of authorized shares of common stock from 75 million to 100 million. Majority-owned subsidiary: Guangdong Gewang As a result of the transaction with Biotechnology International, the Company owns all of the issued and outstanding common stock of Hong Kong Gewang Holdings Group Limited (“Hong Kong Gewang”), a wholly-owned subsidiary of Biotechnology International, which in turn owns all of the issued and outstanding common stock of Gewang Selenium Enrichment Information Consulting (Shenzhen) Co., Ltd. (“Gewang Selenium”). Before August 8, 2016, the Company effectively and substantially controlled Guangdong Gewang Biotechnology Co., Ltd. (“Guangdong Gewang”) through a series of captive agreements between Guangdong Gewang and Gewang Selenium. Guangdong Gewang, incorporated under the laws of the People’s Republic of China (“PRC”) on June 2010, is primarily engaged in the sale of selenium supplements within the PRC. It is a member of the Chinese Selenium Supplements Association. On July 13, 2016, Gewang Selenium exercised its option to purchase all of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB10,000 (approximately US$1,500). The equity was purchased from Shili Zhang, Yun Zeng and Wei Xu. Shili Zhang was the Company’s CEO until April 8, 2016 and is the father of Mengdi Zhang, who was the beneficial owner of 22.7% of the Company's outstanding common stock at the time of the sale on July 13, 2016. The other two sellers are not affiliated with the Company. Upon application to the provincial government for registration of the transfer of equity, the Company was informed that Gewang Selenium would not be permitted to own 100% of Guangdong Gewang. Therefore, the parties modified the exercise of the option to provide that Gewang Selenium would purchase only 98% of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB 9,800 (approximately US$1,500). The remaining 2% of the registered equity was then sold by Yun Zeng to Haiping Wu for a price of RMB 200,000 (approximately US$30,400), which equaled 2% of the registered equity of Guangdong Gewang. Haiping Wu is a Director of Guangdong Gewang. The acquisition, as modified, was then approved by the provincial government on August 8, 2016. Prior to the acquisition, Gewang Selenium controlled Guangdong Gewang through a series of contractual agreements, which made Guangdong Gewang a variable interest entity, the effect of which was to cause the balance sheet and operating results of Guangdong Gewang to be consolidated with those of Gewang Selenium in the Company's financial statements. As a result of the acquisition by Gewang Selenium of the registered ownership of Guangdong Gewang, the balance sheet and operating results of Guangdong Gewang will hereafter continue to be consolidated with those of Gewang Selenium as its majority-owned subsidiary. The previous non-controlling interest was reclassified to additional paid-in-capital. The Company’s business, through its operating entity in China (Guangdong Gewang), consists of: Sale of selenium supplements Through a partnership with the Academy of Agricultural Sciences of Shangdong Province (the “Academy”), a highly regarded research institute in China, the Company has licensed the exclusive rights to contract for the manufacture and marketing of selenium products, comprised of two selenium capsules and one selenium powder, using three selenium formulas developed and owned by the Academy. Sale of selenium products Since March 2016, the Company has signed agreements with distributors to distribute 89 distinct selenium products to hundreds of retail stores. The products include processed foods such as selenium enriched porridge, ready to eat foods such as selenium-enriched peanuts, and ingredients such as selenium enriched flour. The Company is actively engaged in marketing healthy selenium rich foods including Selenium-Rich Maize Residue, Selenium-Rich Brown Rice. Selenium Enriched Black Beans, Selenium-Enriched Buckwheat Kernel and Selenium-Enriched Ormosia. These foods compliment the Company’s selenium supplements by raising awareness of the need for selenium in the diets of our target consumer market. Equity investment: Guangdong Tianmei On April 28, 2016, the Company's wholly-owned subsidiary, Biotechnology International, entered into an investment agreement with Guangdong Tianmei Selenium-Rich Beverage Chain Co., Ltd. (“Guangdong Tianmei”). Guangdong Tianmei was organized in May 2015, and is engaged in the business of distributing selenium-rich bottled water and also functions as a placement agent for a variety of products from various manufacturers, all within the PRC. The investment agreement provided that Biotechnology International would pay US$1,000,000 to acquire a 30% interest in an Australian corporation to be formed, which would indirectly own all of the equity in Guangdong Tianmei. The foregoing acquisition by Biotechnology International of 30% of Tianmei Beverage Group Corporation Limited, an Australian corporation ("Tianmei Australia"), was completed in May 2016. The $1,000,000 purchase price was paid in full on June 17, 2016. Concurrently. Tianmei Australia acquired ownership, through its wholly owned subsidiaries, of Guangdong Tianmei. On February 23, 2017, Guangdong Tianmei entered into an acquisition agreement with Chenzhou Qianlifeng Beverage Co., Ltd. (“Chenzhou Qianlifeng”). Chenzhou Qianlifeng specializes in the bottling and packaging of selenium-rich water. Chenzhou Qianlifeng had a contract with Guangdong Tianmei, to bottle the selenium-rich water under Guangdong Tianmei’s label. The acquisition agreement provided that Guangdong Tianmei would pay RMB 5,000,000 (approximately US$724,600) to acquire a 100% interest in Chenzhou Qianlifeng. The total purchase price was fully paid on February 23, 2017. As a result of the entry into the foregoing agreements, the Company has a corporate structure which is as follows: |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
May 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting and presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include those of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim consolidated financial statements of the Company as of May 31, 2017, and for the three and six months ended May 31, 2017 and 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) which apply to interim financial statements. Accordingly, they do not include all of the information and footnotes normally required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the three and six months ended May 31, 2017 are not necessarily indicative of the results to be expected for future quarters or for the year ending November 30, 2017. The interim consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K filed with the SEC. The Company uses the equity method of accounting for its 30% equity investment in Tianmei Australia. Under the equity method, investments are carried at cost and increased or decreased by the Company’s pro-rata share of earnings or losses. The carrying cost of this investment is also increased or decreased to reflect additional contributions or withdrawals of capital. Any difference in the book equity and the Company’s pro-rata share of the net assets of the investment will be reported as gain or loss at the liquidation of the investment. Losses in excess of the investment are recorded when the Company is committed to provide additional financial support. The Company uses the equity method for its investment because the Company has the ability to exercise significant influence over Tianmei Australia and its subsidiaries. The consolidated financial statements and notes thereto are presented in United States dollars (“US Dollar” or “US$” or “$”). Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Foreign currency translations Almost all of the Company assets are located in the PRC. The functional currency for the Company’s operations is the Renminbi (“RMB”). The Company uses the United States Dollar (“US Dollar” or “US$” or “$”) for financial reporting purposes. The financial statements of the Company have been translated into US Dollars in accordance with Financial Accounting Standards Board ("FASB”) Accounting Standards Codification ("ASC") Section 830, “ Foreign Currency Matters All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of income and comprehensive income, changes in stockholders’ equity and cash flows have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of the Company’s financial statements are recorded as other comprehensive income (loss). The exchange rates used to translate amounts in RMB into US Dollars for the purposes of preparing the financial statements are as follows: May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.1474 0.1452 Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1451 0.1537 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1454 0.1535 The exchange rate used to translate amounts in Australian Dollars into US Dollars for the purpose of preparing the financial statements are as follows: May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.7435 0.7388 Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7560 0.7492 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7505 0.7314 For the three months ended May 31, 2017 and 2016, foreign currency translation adjustments of and $(122,371), respectively, and for the six months ended May 31, 2017 and 2016, $501,254 and $(308,784), respectively, have been reported as other comprehensive income (loss). Other comprehensive income (loss) of the Company consists entirely of foreign currency translation adjustments. Although the PRC government regulations now allow convertibility of the RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that the RMB could be converted into US Dollars at that rate or any other rate. The value of the RMB against the US Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of the RMB may materially affect the Company’s financial condition in terms of US Dollar reporting. During the year ended December 31, 2016, the PRC devalued its currency by approximately 8%. Further devaluations of its currency could occur in the future. Revenue recognition Revenues are primarily derived from selling selenium supplements and selenium products to wholesale customers, contract distributors, and from our retail stores. The Company’s revenue recognition policies comply with FASB ASC 605 “ Revenue Recognition. Wholesale Revenue Wholesale revenue is recognized when title to the product is transferred to the distributors. Title is transferred upon receipt at the distributors’ locations, as determined by the specific sales terms. The Company pays distributors certain incentives for promoting and placing its products, which allows the Company to quickly expand its distribution network and sales volume. The costs associated with these incentives is deducted from gross revenue in the consolidated statements of income and comprehensive income Retail Revenue Company-operated retail store revenues are recognized when payment is tendered at the point of sale. The Company’s net revenues for the three and six months ended May 31, 2017 and 2016 were comprised as follows: Three months ended May 31, 2017 Three months ended May 31, 2016 Wholesale gross revenue-selenium supplements $ 3,145,551 $ 3,660,259 Wholesale gross revenue-selenium products 19,018,207 1,295,138 Less: promotion fees-selenium products, (2,090,364 ) - Wholesale revenues, net 20,073,394 4,955,397 Retail revenue-selenium supplements 1,254,615 481,786 Retail revenue-selenium products 936,725 - $ 22,264,734 $ 5,437,183 Six months ended Six months ended Wholesale gross revenue-selenium supplements $ 6,220,654 $ 3,660,259 Wholesale gross revenue-selenium products 37,031,232 2,124,223 Less: promotion fees-selenium products, (4,164,776 ) - Wholesale revenues, net 39,087,110 5,784,482 Retail revenue-selenium supplements 2,462,150 870,799 Retail revenue-selenium products 1,857,606 - $ 43,406,866 $ 6,655,281 Shipping costs Shipping costs incurred by the Company are recorded as selling expenses. Shipping costs for the three and six months ended May 31, 2017 and 2016 were $20,045 and $24,427, respectively, $45,638 and $39,453, respectively. Advertising costs Advertising costs are charged to operations when incurred. For the three and months ended May 31, 2017 and 2016, advertising expenses were $437,957 and $23,057, respectively, $887,001 and $44,519, respectively. Cash and cash equivalents The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts receivable Accounts receivable are recorded at the contract amount after deduction of trade discounts and, allowances, if any, and do not bear interest. The allowance for doubtful accounts, when necessary, is the Company’s best estimate of the amount of probable credit losses from accounts receivable. The Company determines the allowance based on historical write-off experience, the level of past-due accounts based on the contractual terms of the receivable, the relationship with the customer and current economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of May 31, 2017 and November 30, 2016, accounts receivable was $14,336,885 and $11,205,011, respectively. The increase is primarily due to the recent sales with new wholesale distributors which has been subsequently fully collected. Therefore, the Company determined that an allowance for doubtful accounts was not necessary. Historically, the Company has not had any uncollectable accounts receivable. Inventory Inventory, comprised principally of boxed selenium capsules, selenium-glossy ganoderma capsules and selenium powder, is valued at the lower of cost or market. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of May 31, 2017 and November 30, 2016. Fair value of financial instruments FASB ASC 820, “Fair Value Measurement” Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access. Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly. Level 3 Inputs – Inputs based on valuation techniques that are both unobservable and significant to the overall fair value measurements. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable, taxes payable, accrued liabilities and other payables, and loan from stockholder, approximated their fair values due to the short nature of these financial instruments. There were no changes in methods or assumptions during the periods presented. Property and Equipment Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the prices paid to acquire the assets, and any expenditures that substantially increase an asset’s value or extends the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the periods benefited. Maintenance and repairs are generally expensed as incurred. The estimated useful lives for fixed asset categories are as follows: Furniture and equipment 3-5years Motor vehicles 4 years Prepaid expenses On January 5, 2011, the Company entered into a license agreement for the technology utilized for the manufacture of its selenium capsules and powder products from an unrelated third party for five years from January 2011 to December 2015. On December 30, 2015, the Company renewed the license agreement for another five years to December 2020 for $86,912 (RMB 600,000) each year. The related prepaid licensing fees as of May 31, 2017, and November 30, 2016 were $51,594 and $7,259, respectively. The license provides for renewal options. Since this agreement requires the advance payment of the annual licensing fee, there were no minimum payments remaining under this agreement as of May 31, 2017 and November 30, 2016. On September 30, 2016, the Company entered into a six-month agreement with an advertising company for $908,725 (RMB 6,000,000). On , 2017, the Company renewed the advertising agreement for another six months which started on April 1, 2017 and ends on September 30, 2017. As of May 31, 2017, and November 30, 2016, the unamortized balance of $589,640 and $605,816, respectively, was included in prepaid expenses on the balance sheet. Impairment of long-lived assets The Company applies FASB ASC 360, “ Property, Plant and Equipment Statutory reserve fund Pursuant to corporate law of the PRC, the Company is required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of the Company’s registered capital. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or used to increase registered capital, provided that the remaining reserve balance after use is not less than 25% of registered capital. The statutory reserve fund was $759,094 as of May 31, 2017 and November 30, 2016, respectively. As of November 30, 2016, the required statutory reserve fund has been fully funded. Income taxes The Company accounts for income taxes in accordance with FASB ASC 740, “ Income Taxes ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. As of May 31, 2017 and November 30, 2016, the Company does not have a liability for any unrecognized tax benefits. The Company’s tax filings are subject to examination by the tax authorities. The tax years of 2013, 2014 and 2015 remain open to examination by tax authorities in the PRC. The income tax laws of various jurisdictions in which the Company and its subsidiaries operate are summarized as follows: United States The Company is subject to United States tax at graduated rates from 15% to 35%. No provisions for income tax in the United States have been made as the Company had no U.S. taxable income for the three and six months ended May 31, 2017 and 2016. British Virgin Islands BVI”) Biotechnology International is incorporated in the BVI and is governed by the income tax laws of the BVI. According to current BVI income tax law, the applicable income tax rate for the Company is 0%. Hong Kong Hong Kong Gewang is incorporated in Hong Kong. Pursuant to the income tax laws of Hong Kong, the Company is not subject to tax on non-Hong Kong source income. The People's Republic of China (“PRC”) Gewang Selenium and Guangdong Gewang are subject to an Enterprise Income Tax at 25% and file their own tax returns. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
May 31, 2017 | |
Recently Issued Accounting Standards [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 3. RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers Revenue Recognition and uncertainty of revenue recognition. In August 2015, the FASB issued ASU No.2015-14 to defer the effective date of ASU No. 2014-09 for all entities by one year. For public business entities that follow U.S. GAAP, the deferral results in the new revenue standard being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. In March 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Principal versus Agent Considerations. In April 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Identifying Performance Obligations and Licensing. In April 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Narrow-Scope Improvements and Practical Expedients. In December 2016, the FASB issued Accounting Standards Update No. 2016-20, Revenue from Contracts with Customers, with respect to Technical Corrections and Improvements. We do not believe this standard will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases In July 2015, the FASB issued ASU 2015-11 (Subtopic 330), “ Simplifying the Measurement of Inventory In August 2014, the FASB issued authoritative guidance that requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern and requires additional disclosures if certain criteria are met. This guidance is effective for fiscal periods ending after December 15, 2016, with early adoption permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
May 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 4. RELATED PARTY TRANSACTIONS The Company entered into a one-year promotion agreement that expired on March 31, 2017 with Guangdong Tianmei, in which it holds an indirect 30% ownership interest and renewed the promotion agreement on March 31, 2017 for one year expiring on March 31, 2018. Under the agreement, Guangdong Tianmei introduced the Company to Guangzhou Huayuda Commerce and Trade Co., Ltd. (“Guangzhou Huayuda”), which initially had 14 supermarket stores and in August 2016 expanded to 200 stores. The Company sells selenium enriched products to these supermarkets and pays a monthly promotion fee to Guangdong Tianmei for each product sold in each store of RMB 108 (US$16.60). Sales to Guangzhou Huayuda were approximately RMB 5,366,000 (US$780,000) and RMB 1,154,000 (US$177,000), respectively, RMB 14,747,000 (US$2,144,000) and RMB 1,154,000 (US$177,000), respectively, for the three and six months ended May 31, 2017 and 2016. Promotion expenses incurred during the three and six months ended May 31, 2017 and 2016 were $357,373 and $20,421, respectively, $716,115 and $20,421, respectively. The Company entered into an agreement with Guangdong Tianmei on June 10, 2015 to license the use of the Company’s trademark for 10 years. Trademark revenue recorded for the three and six months ended May 31, 2017 and 2016 were $0 and $0, respectively, $1,412 and $1,490, respectively. The future commitment is approximately $1,400 each year. Equity investment On April 28, 2016, the Company's wholly-owned subsidiary, Biotechnology International, entered into an investment agreement with Guangdong Tianmei. At that time, 88% of the equity in Guangdong Tianmei was owned by two individuals who together directly or indirectly owned approximately 57% of the Company's outstanding shares. The investment agreement required that Biotechnology International pay US$1,000,000 to acquire a 30% interest in an Australian corporation, which would indirectly own 100% of the equity in Guangdong Tianmei. The acquisition by Biotechnology International of 30% of Tianmei Australia was completed in May 2016, at which time Tianmei Australia acquired ownership, through its wholly owned subsidiaries, of Guangdong Tianmei. The net worth of Guangdong Tianmei at the time of the acquisition was $4,888,840, 30% of which was $1,466,652. As the Company and Guangdong Tianmei were under common control at the time of the acquisition, the $466,652 by which the Company's share of the net book value of Guangdong Tianmei exceeded the purchase price had been recorded as an increase to additional paid-in capital. The changes in the equity investment are summarized as follows: Initial investment-April 28, 2016 $ 1,466,652 Pro rata share of net income for the year ended November 30, 2016 4,536,760 Investment, November 30, 2016 6,003,412 Pro rata share of net income for the six months ended May 31, 2017 4,665,947 Investment, May 31, 2017 $ 10,669,359 Th e following is summarized balance sheet information of the investee ended May 31, 2017: Current assets $ 51,625,008 Noncurrent assets $ 1,825,790 Current liabilities $ 3,123,635 Noncurrent liabilities $ - Equity $ 50,327,163 The following is a summary of results of operations of the investee for the six months ended May 31, 2017: Revenue $ 39,446,904 Cost of revenue (13,228,818 ) Expenses (12,383,619 ) Net income $ 13,834,467 |
Leases
Leases | 6 Months Ended |
May 31, 2017 | |
Leases [Abstract] | |
LEASES | 5. LEASES The Company leases its warehouse and office space from an unrelated third party under a one-year operating lease. The lease required the Company to prepay the total rent of US$86,912 (RMB 600,000) in advance for one year. On June 29, 2016, the Company renewed the lease with total rent of approximately US$86,900 (RMB 600,000), which commenced on July 2, 2016 and expires on July 1, 2017. The following additional leases were in effect at May 31, 2017: ● The Company leases its flagship store in Guangzhou from an unrelated third party. The lease commenced on June 1, 2016 and was to expire on May 31, 2017, and was renewed for another year. The lease required the Company to prepay the rent of $154,514(RMB 960,000) in advance for one year. The Company paid the rent in June 2017. ● The Company leases its Foshan store, Longyan store and Zhuzhou store from three unrelated third parties. All three leases commenced on June 1, 2016 and were to expire on May 31, 2017 and were renewed for another year and expire on May 31, 2018. These leases each required the Company to prepay the rent of $61,912 (RMB 420,000) in advance for one year. The Company fully paid the rent in June 2017. Since these leases require the advance payment of the annual rent, there are no minimum payments remaining under these leases. Prepaid lease payments were $7,371 and $ 221,123 at May 31, 2017 and November 30, 2016, respectively. Rent expense for the three and six months ended May 31, 2017 and 2016 was $102,907 and $66,872, respectively, $205,028 and $133,557, respectively. |
Fixed Assets
Fixed Assets | 6 Months Ended |
May 31, 2017 | |
Fixed Assets [Abstract] | |
FIXED ASSETS | 6. FIXED ASSETS Fixed assets as of May 31, 2017 and November 30, 2016 are summarized as follows: May 31, 2017 November 30, Electronic equipment $ 127,785 $ 125,850 Motor vehicles 123,014 121,151 Office equipment 12,216 12,031 263,015 259,032 Less: accumulated depreciation (158,726 ) (130,265 ) Fixed assets - net $ 104,289 $ 128,767 For the three and six months ended May 31, 2017 and 2016, depreciation expense was $13,050 and $14,653, respectively, $26,050 and $24,761, respectively. |
Loans
Loans | 6 Months Ended |
May 31, 2017 | |
Loans [Abstract] | |
LOANS | 7. LOANS The Company obtained non-interest bearing demand loans from a former officer and stockholder, who resigned on April 8, 2016. The loans of $228,359 and $228,238 at May 31, 2017 and November 30, 2016, respectively, are reflected as loans from third party. The Company obtained non-interest bearing May 31, 2017 |
Income Taxes
Income Taxes | 6 Months Ended |
May 31, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 8. INCOME TAXES The provision for income taxes for the three and six months ended May 31, 2017 and 2016 consisted of the following: Three Months Ended May 31, Six Months Ended May 31, 2017 2016 2017 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Current $ 1,319,811 $ 416,553 $ 2,546,163 $ 539,969 Deferred - - - - $ 1,319,811 $ 416,553 $ 2,546,163 $ 539,969 No provisions for income taxes in the United States have been made. The Company did not generate any income in the United States or otherwise have any U.S. taxable income. The Company does not believe that it has any U.S. Federal income tax liabilities with respect to any transactions that the Company or any of its subsidiaries may have engaged in through May 31, 2017. However, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with this position, and therefore the Company ultimately could be liable for U.S. Federal income taxes, interest and penalties. The tax years ended November 30, 2016 and December 31, 2015 and 2014 remain open to examination by the IRS. The Company has not established deferred income taxes on accumulated undistributed earnings of Tianmei Australia. Such earnings are expected to remain reinvested indefinitely. Further, repatriation of all accumulated earnings would be impracticable to the extent that such earnings represents capital needed to support normal business operations. The Company did not file on time its U.S. federal income tax returns, including, without limitation, information returns on IRS Form 5471, “ Information Return of U.S. Persons with Respect to Certain Foreign Corporations |
Concentration of Credit and Bus
Concentration of Credit and Business Risks | 6 Months Ended |
May 31, 2017 | |
Concentration of Credit and Business Risks [Abstract] | |
CONCENTRATION OF CREDIT AND BUSINESS RISKS | 9. CONCENTRATION OF CREDIT AND BUSINESS RISKS Cash and cash equivalents Substantially all of the Company’s assets and bank accounts are in banks located in the PRC and are not covered by protection similar to that provided by the FDIC on funds held in United States banks. Major customers For the three and six months ended May 31, 2017, three customers accounted for 66% and 64% of total sales, respectively, the largest of which accounted for 25% and 25%, respectively. For the three and six months ended May 31, 2016, three customers accounted for 64% and 64% of total sales, respectively, the largest of which accounted for 29% and 27%, respectively. As of May 31, 2017, three customers accounted for 71% of trade accounts receivable, the largest of which accounted for 27%. As of November 30, 2016, three customers accounted for 64% of trade accounts receivable, the largest of which accounted for 24%. Vulnerability Due to Operations in the PRC The Company’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than twenty years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective. The economy in the PRC has recently started to narrow. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
May 31, 2017 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES On December 30, 2015, the Company entered into a technology usage agreement with the Academy for the right to use a non-patented selenium-enrichment technology for its supplements manufacturing. The agreement commenced on December 30, 2015 and expires on December 29, 2020. The annual fee of RMB 600,000 (approximately US$87,000) is required to be paid in advance before December 30 each year. As of September 1, 2016, the Company has a long-term agreement with the Academy . This agreement entitles the Company to the exclusive right of first refusal to use the research related to advanced selenium-enrichment techniques and technology that the Academy develops. The agreement calls for quarterly payments of approximately $579,700 (RMB 4,000,000). For the use of the techniques and/or technology developed, additional charges will be negotiated. The agreement expires on August 31, 2026. On April 8, 2016, Guangdong Gewang entered into a Performance Salary Assessment Agreement with the Company’s Chief Executive Officer (“CEO”). The agreement states that the CEO would receive additional monthly compensation of RMB 50,000 (approximately US$7,000), only when the monthly net income of Guangdong Gewang exceeds RMB 2,500,000 (approximately US$363,000). The agreement was to expire on April 7, 2017 and was renewed for an additional year. For the three and six months ended May 31, 2017, the CEO received $21,000 and $42,000, respectively, as additional monthly compensation. For the three and six months ended May 31, 2016, the CEO received $7,000 and $7,000, respectively, as additional monthly compensation. On July 1, 2016, the Company entered into three year agreements with four of its directors for total compensation of approximately $15,000 (RMB 110,000) per month. |
Parent Company Only Condensed F
Parent Company Only Condensed Financial Information | 6 Months Ended |
May 31, 2017 | |
Parent Company Only Condensed Financial Information [Abstract] | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 11. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION The following is the condensed financial information of China Gewang Biotechnology, Inc., the US parent, consisting of the balance sheet as of November 30, 2016, and statements of income and cash flows for the year ended November 30, 2016. Condensed Balance Sheet ASSETS November 30, 2016 Other receivable from Guangdong Gewang $ 14,848,200 Investment in subsidiaries 10,516,759 Equity investment 6,003,412 TOTAL ASSETS $ 31,368,371 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accrued expenses $ 33,375 Loans from third party 220,396 Loans from stockholder 236,216 Total current liabilities 489,987 Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 authorized, 75,000,000 shares issued and outstanding as of November 30, 2016 75,000 Additional paid-in capital 16,980,102 Retained earnings 14,771,252 Statutory reserve fund 759,094 Other comprehensive (loss) (1,707,064 ) Total stockholder’s equity 30,878,384 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 31,368,371 Condensed Statement of Income For the year ended November 30, 2016 Revenues: Share of earnings from investment in subsidiaries $ 8,821,783 Equity investment 4,536,760 Operating expenses: General and administrative 188,852 Net income $ 13,169,691 Condensed Statement of Cash Flows For the year ended November 30, 2016 Cash flows from operating activities: Net income $ 13,169,691 Adjustments to reconcile net income to net cash provided by (used in) operating activities Share of earnings from investment in subsidiaries (8,821,783 ) Share of earnings from equity investment (4,536,760 ) Increase in accrued expenses and other liabilities 188,852 Net cash provided by (used in) operating activities - Net change in cash - Cash, beginning of period - Cash, end of period $ - Noncash financing activities: Payment of accrued expenses and other payables by shareholder $ 298,938 Basis of Presentation The Company records its investment in its subsidiaries and its equity investment under the equity method of accounting. Such investments are presented as “Investment in subsidiaries” and “Equity investment” on the condensed balance sheet and the subsidiaries profits are presented as “Share of earnings from investment in subsidiaries” and “Share of earnings from equity investment” on the condensed statement of income. Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. The parent only financial information has been derived from the Company’s consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements. There were no cash transactions in the US parent company during the year ended November 30, 2016. Restricted Net Assets Under the PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the Company in the form of dividend payments, loans or advances. The restricted net assets of the Company’s PRC subsidiaries were approximately $31,368,000 as of November 30, 2016. The Company’s operations and revenues are conducted and generated in the PRC, and all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulations in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to the PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars. Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by its subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiaries exceed 25% of the consolidated net assets of the Company. |
Subsequent Events
Subsequent Events | 6 Months Ended |
May 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS The Company’s management has performed subsequent events procedures through July 12, 2017, which is the date the consolidated financial statements were available to be issued. There were no subsequent events requiring adjustment to or disclosure in the consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
May 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of accounting and presentation | Basis of accounting and presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include those of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim consolidated financial statements of the Company as of May 31, 2017, and for the three and six months ended May 31, 2017 and 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) which apply to interim financial statements. Accordingly, they do not include all of the information and footnotes normally required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the three and six months ended May 31, 2017 are not necessarily indicative of the results to be expected for future quarters or for the year ending November 30, 2017. The interim consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K filed with the SEC. The Company uses the equity method of accounting for its 30% equity investment in Tianmei Australia. Under the equity method, investments are carried at cost and increased or decreased by the Company’s pro-rata share of earnings or losses. The carrying cost of this investment is also increased or decreased to reflect additional contributions or withdrawals of capital. Any difference in the book equity and the Company’s pro-rata share of the net assets of the investment will be reported as gain or loss at the liquidation of the investment. Losses in excess of the investment are recorded when the Company is committed to provide additional financial support. The Company uses the equity method for its investment because the Company has the ability to exercise significant influence over Tianmei Australia and its subsidiaries. The consolidated financial statements and notes thereto are presented in United States dollars (“US Dollar” or “US$” or “$”). |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Foreign currency translations | Foreign currency translations Almost all of the Company assets are located in the PRC. The functional currency for the Company’s operations is the Renminbi (“RMB”). The Company uses the United States Dollar (“US Dollar” or “US$” or “$”) for financial reporting purposes. The financial statements of the Company have been translated into US Dollars in accordance with Financial Accounting Standards Board ("FASB”) Accounting Standards Codification ("ASC") Section 830, “ Foreign Currency Matters All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of income and comprehensive income, changes in stockholders’ equity and cash flows have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of the Company’s financial statements are recorded as other comprehensive income (loss). The exchange rates used to translate amounts in RMB into US Dollars for the purposes of preparing the financial statements are as follows: May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.1474 0.1452 Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1451 0.1537 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1454 0.1535 The exchange rate used to translate amounts in Australian Dollars into US Dollars for the purpose of preparing the financial statements are as follows: May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.7435 0.7388 Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7560 0.7492 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7505 0.7314 For the three months ended May 31, 2017 and 2016, foreign currency translation adjustments of and $(122,371), respectively, and for the six months ended May 31, 2017 and 2016, $501,254 and $(308,784), respectively, have been reported as other comprehensive income (loss). Other comprehensive income (loss) of the Company consists entirely of foreign currency translation adjustments. Although the PRC government regulations now allow convertibility of the RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that the RMB could be converted into US Dollars at that rate or any other rate. The value of the RMB against the US Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of the RMB may materially affect the Company’s financial condition in terms of US Dollar reporting. During the year ended December 31, 2016, the PRC devalued its currency by approximately 8%. Further devaluations of its currency could occur in the future. |
Revenue recognition | Revenue recognition Revenues are primarily derived from selling selenium supplements and selenium products to wholesale customers, contract distributors, and from our retail stores. The Company’s revenue recognition policies comply with FASB ASC 605 “ Revenue Recognition. Wholesale Revenue Wholesale revenue is recognized when title to the product is transferred to the distributors. Title is transferred upon receipt at the distributors’ locations, as determined by the specific sales terms. The Company pays distributors certain incentives for promoting and placing its products, which allows the Company to quickly expand its distribution network and sales volume. The costs associated with these incentives is deducted from gross revenue in the consolidated statements of income and comprehensive income Retail Revenue Company-operated retail store revenues are recognized when payment is tendered at the point of sale. The Company’s net revenues for the three and six months ended May 31, 2017 and 2016 were comprised as follows: Three months ended May 31, 2017 Three months ended May 31, 2016 Wholesale gross revenue-selenium supplements $ 3,145,551 $ 3,660,259 Wholesale gross revenue-selenium products 19,018,207 1,295,138 Less: promotion fees-selenium products, (2,090,364 ) - Wholesale revenues, net 20,073,394 4,955,397 Retail revenue-selenium supplements 1,254,615 481,786 Retail revenue-selenium products 936,725 - $ 22,264,734 $ 5,437,183 Six months ended Six months ended Wholesale gross revenue-selenium supplements $ 6,220,654 $ 3,660,259 Wholesale gross revenue-selenium products 37,031,232 2,124,223 Less: promotion fees-selenium products, (4,164,776 ) - Wholesale revenues, net 39,087,110 5,784,482 Retail revenue-selenium supplements 2,462,150 870,799 Retail revenue-selenium products 1,857,606 - $ 43,406,866 $ 6,655,281 |
Shipping costs | Shipping costs Shipping costs incurred by the Company are recorded as selling expenses. Shipping costs for the three and six months ended May 31, 2017 and 2016 were $20,045 and $24,427, respectively, $45,638 and $39,453, respectively. |
Advertising costs | Advertising costs Advertising costs are charged to operations when incurred. For the three and months ended May 31, 2017 and 2016, advertising expenses were $437,957 and $23,057, respectively, $887,001 and $44,519, respectively. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Accounts receivable | Accounts receivable Accounts receivable are recorded at the contract amount after deduction of trade discounts and, allowances, if any, and do not bear interest. The allowance for doubtful accounts, when necessary, is the Company’s best estimate of the amount of probable credit losses from accounts receivable. The Company determines the allowance based on historical write-off experience, the level of past-due accounts based on the contractual terms of the receivable, the relationship with the customer and current economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of May 31, 2017 and November 30, 2016, accounts receivable was $14,336,885 and $11,205,011, respectively. The increase is primarily due to the recent sales with new wholesale distributors which has been subsequently fully collected. Therefore, the Company determined that an allowance for doubtful accounts was not necessary. Historically, the Company has not had any uncollectable accounts receivable. |
Inventory | Inventory Inventory, comprised principally of boxed selenium capsules, selenium-glossy ganoderma capsules and selenium powder, is valued at the lower of cost or market. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of May 31, 2017 and November 30, 2016. |
Fair value of financial instruments | Fair value of financial instruments FASB ASC 820, “Fair Value Measurement” Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access. Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly. Level 3 Inputs – Inputs based on valuation techniques that are both unobservable and significant to the overall fair value measurements. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable, taxes payable, accrued liabilities and other payables, and loan from stockholder, approximated their fair values due to the short nature of these financial instruments. There were no changes in methods or assumptions during the periods presented. |
Property and Equipment | Property and Equipment Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the prices paid to acquire the assets, and any expenditures that substantially increase an asset’s value or extends the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the periods benefited. Maintenance and repairs are generally expensed as incurred. The estimated useful lives for fixed asset categories are as follows: Furniture and equipment 3-5years Motor vehicles 4 years |
Prepaid expenses | Prepaid expenses On January 5, 2011, the Company entered into a license agreement for the technology utilized for the manufacture of its selenium capsules and powder products from an unrelated third party for five years from January 2011 to December 2015. On December 30, 2015, the Company renewed the license agreement for another five years to December 2020 for $86,912 (RMB 600,000) each year. The related prepaid licensing fees as of May 31, 2017, and November 30, 2016 were $51,594 and $7,259, respectively. The license provides for renewal options. Since this agreement requires the advance payment of the annual licensing fee, there were no minimum payments remaining under this agreement as of May 31, 2017 and November 30, 2016. On September 30, 2016, the Company entered into a six-month agreement with an advertising company for $908,725 (RMB 6,000,000). On , 2017, the Company renewed the advertising agreement for another six months which started on April 1, 2017 and ends on September 30, 2017. As of May 31, 2017, and November 30, 2016, the unamortized balance of $589,640 and $605,816, respectively, was included in prepaid expenses on the balance sheet. |
Impairment of long-lived assets | Impairment of long-lived assets The Company applies FASB ASC 360, “ Property, Plant and Equipment |
Statutory reserve fund | Statutory reserve fund Pursuant to corporate law of the PRC, the Company is required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of the Company’s registered capital. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or used to increase registered capital, provided that the remaining reserve balance after use is not less than 25% of registered capital. The statutory reserve fund was $759,094 as of May 31, 2017 and November 30, 2016, respectively. As of November 30, 2016, the required statutory reserve fund has been fully funded. |
Income taxes | Income taxes The Company accounts for income taxes in accordance with FASB ASC 740, “ Income Taxes ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. As of May 31, 2017 and November 30, 2016, the Company does not have a liability for any unrecognized tax benefits. The Company’s tax filings are subject to examination by the tax authorities. The tax years of 2013, 2014 and 2015 remain open to examination by tax authorities in the PRC. The income tax laws of various jurisdictions in which the Company and its subsidiaries operate are summarized as follows: United States The Company is subject to United States tax at graduated rates from 15% to 35%. No provisions for income tax in the United States have been made as the Company had no U.S. taxable income for the three and six months ended May 31, 2017 and 2016. British Virgin Islands BVI”) Biotechnology International is incorporated in the BVI and is governed by the income tax laws of the BVI. According to current BVI income tax law, the applicable income tax rate for the Company is 0%. Hong Kong Hong Kong Gewang is incorporated in Hong Kong. Pursuant to the income tax laws of Hong Kong, the Company is not subject to tax on non-Hong Kong source income. The People's Republic of China (“PRC”) Gewang Selenium and Guangdong Gewang are subject to an Enterprise Income Tax at 25% and file their own tax returns. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
May 31, 2017 | |
Summary of Significant Accounting Policies [Line Items] | |
Schedule of net revenues | Three months ended May 31, 2017 Three months ended May 31, 2016 Wholesale gross revenue-selenium supplements $ 3,145,551 $ 3,660,259 Wholesale gross revenue-selenium products 19,018,207 1,295,138 Less: promotion fees-selenium products, (2,090,364 ) - Wholesale revenues, net 20,073,394 4,955,397 Retail revenue-selenium supplements 1,254,615 481,786 Retail revenue-selenium products 936,725 - $ 22,264,734 $ 5,437,183 Six months ended Six months ended Wholesale gross revenue-selenium supplements $ 6,220,654 $ 3,660,259 Wholesale gross revenue-selenium products 37,031,232 2,124,223 Less: promotion fees-selenium products, (4,164,776 ) - Wholesale revenues, net 39,087,110 5,784,482 Retail revenue-selenium supplements 2,462,150 870,799 Retail revenue-selenium products 1,857,606 - $ 43,406,866 $ 6,655,281 |
Schedule of estimated useful lives of fixed assets | Furniture and equipment 3-5years Motor vehicles 4 years |
RMB [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Schedule of exchange rates of balance sheet items | May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.1474 0.1452 |
Schedule of exchange rates of statements of income and comprehensive income, changes in stockholders' equity and cash flows items | Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1451 0.1537 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.1454 0.1535 |
Australian Dollars [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Schedule of exchange rates of balance sheet items | May 31, 2017 November 30, 2016 (Unaudited) Balance sheet items, except for stockholders’ equity, as of periods end 0.7435 0.7388 |
Schedule of exchange rates of statements of income and comprehensive income, changes in stockholders' equity and cash flows items | Three Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7560 0.7492 Six Months Ended May 31, 2017 May 31, 2016 (Unaudited) (Unaudited) Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented 0.7505 0.7314 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
May 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of changes in equity investment | Initial investment-April 28, 2016 $ 1,466,652 Pro rata share of net income for the year ended November 30, 2016 4,536,760 Investment, November 30, 2016 6,003,412 Pro rata share of net income for the six months ended May 31, 2017 4,665,947 Investment, May 31, 2017 $ 10,669,359 |
Summary of balance sheet of investee | Current assets $ 51,625,008 Noncurrent assets $ 1,825,790 Current liabilities $ 3,123,635 Noncurrent liabilities $ - Equity $ 50,327,163 |
Schedule of results of operations of the investee | Revenue $ 39,446,904 Cost of revenue (13,228,818 ) Expenses (12,383,619 ) Net income $ 13,834,467 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 6 Months Ended |
May 31, 2017 | |
Fixed Assets [Abstract] | |
Schedule of fixed assets | May 31, 2017 November 30, Electronic equipment $ 127,785 $ 125,850 Motor vehicles 123,014 121,151 Office equipment 12,216 12,031 263,015 259,032 Less: accumulated depreciation (158,726 ) (130,265 ) Fixed assets - net $ 104,289 $ 128,767 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
May 31, 2017 | |
Income Taxes [Abstract] | |
Schedule of provision for income taxes | Three Months Ended May 31, Six Months Ended May 31, 2017 2016 2017 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Current $ 1,319,811 $ 416,553 $ 2,546,163 $ 539,969 Deferred - - - - $ 1,319,811 $ 416,553 $ 2,546,163 $ 539,969 |
Parent Company Only Condensed24
Parent Company Only Condensed Financial Information (Tables) | 6 Months Ended |
May 31, 2017 | |
Parent Company Only Condensed Financial Information [Abstract] | |
Summary of condensed balance sheet | ASSETS November 30, 2016 Other receivable from Guangdong Gewang $ 14,848,200 Investment in subsidiaries 10,516,759 Equity investment 6,003,412 TOTAL ASSETS $ 31,368,371 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accrued expenses $ 33,375 Loans from third party 220,396 Loans from stockholder 236,216 Total current liabilities 489,987 Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 authorized, 75,000,000 shares issued and outstanding as of November 30, 2016 75,000 Additional paid-in capital 16,980,102 Retained earnings 14,771,252 Statutory reserve fund 759,094 Other comprehensive (loss) (1,707,064 ) Total stockholder’s equity 30,878,384 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 31,368,371 |
Summary of condensed statements of income | For the year ended November 30, 2016 Revenues: Share of earnings from investment in subsidiaries $ 8,821,783 Equity investment 4,536,760 Operating expenses: General and administrative 188,852 Net income $ 13,169,691 |
Summary of condensed statements of cash flows | For the year ended November 30, 2016 Cash flows from operating activities: Net income $ 13,169,691 Adjustments to reconcile net income to net cash provided by (used in) operating activities Share of earnings from investment in subsidiaries (8,821,783 ) Share of earnings from equity investment (4,536,760 ) Increase in accrued expenses and other liabilities 188,852 Net cash provided by (used in) operating activities - Net change in cash - Cash, beginning of period - Cash, end of period $ - Noncash financing activities: Payment of accrued expenses and other payables by shareholder $ 298,938 |
Organization (Details)
Organization (Details) | Aug. 08, 2016USD ($) | Aug. 08, 2016CNY (¥) | Jul. 13, 2016USD ($) | Jul. 13, 2016CNY (¥) | Feb. 23, 2017USD ($) | Feb. 23, 2017CNY (¥) | Apr. 28, 2016USD ($) | Apr. 20, 2015shares | May 31, 2017shares | Nov. 30, 2016shares | Jul. 20, 2016shares |
Organization (Textual) | |||||||||||
Equity of ownership percentage | 30.00% | ||||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||||||||
Biotechnology International Holding Ltd. [Member] | |||||||||||
Organization (Textual) | |||||||||||
Acquired percentage of biotechnology international | 100.00% | ||||||||||
Shares of common stock | 32,000,000 | ||||||||||
Equity of ownership percentage | 90.14% | ||||||||||
Articles of Incorporation [Member] | Maximum [Member] | |||||||||||
Organization (Textual) | |||||||||||
Common stock, shares authorized | 100,000,000 | ||||||||||
Articles of Incorporation [Member] | Minimum [Member] | |||||||||||
Organization (Textual) | |||||||||||
Common stock, shares authorized | 75,000,000 | ||||||||||
Gewang Selenium [Member] | |||||||||||
Organization (Textual) | |||||||||||
Equity of ownership percentage | 98.00% | 98.00% | 22.70% | 22.70% | |||||||
Payments to purchase price of equity | $ 1,500 | ¥ 9,800 | $ 1,500 | ¥ 10,000 | |||||||
Yun Zeng [Member] | Haiping Wu [Member] | |||||||||||
Organization (Textual) | |||||||||||
Equity of ownership percentage | 2.00% | 2.00% | |||||||||
Sale of equity price | $ 30,400 | ¥ 200,000 | |||||||||
Guangdong Tianmei [Member] | |||||||||||
Organization (Textual) | |||||||||||
Acquired percentage of biotechnology international | 30.00% | ||||||||||
Payments to purchase price of equity | $ | $ 1,000,000 | ||||||||||
Investment agreement payments, description | The $1,000,000 purchase price was paid in full on June 17, 2016. | ||||||||||
Chenzhou Qianlifeng [Member] | |||||||||||
Organization (Textual) | |||||||||||
Equity of ownership percentage | 100.00% | 100.00% | |||||||||
Payments to acquire biotechnology international | $ 724,600 | ¥ 5,000,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details) - $ / shares | May 31, 2017 | Nov. 30, 2016 |
RMB [Member] | ||
Summary of Significant Accounting Policies [Line Items] | ||
Balance sheet items, except for stockholders' equity, as of periods end | $ 0.1474 | $ 0.1452 |
Australian Dollars [Member] | ||
Summary of Significant Accounting Policies [Line Items] | ||
Balance sheet items, except for stockholders' equity, as of periods end | $ 0.7435 | $ 0.7388 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 1) - $ / shares | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |
RMB [Member] | ||||
Summary of Significant Accounting Policies [Line Items] | ||||
Amounts included in the statements of income and comprehensive income, changes in stockholders' equity and cash flows for the periods presented | $ 0.1451 | $ 0.1537 | $ 0.1454 | $ 0.1535 |
Australian Dollars [Member] | ||||
Summary of Significant Accounting Policies [Line Items] | ||||
Amounts included in the statements of income and comprehensive income, changes in stockholders' equity and cash flows for the periods presented | $ 0.7560 | $ 0.7492 | $ 0.7505 | $ 0.7314 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | ||||
Wholesale gross revenue-selenium supplements | $ 3,145,551 | $ 3,660,259 | $ 6,220,654 | $ 3,660,259 |
Wholesale gross revenue-selenium products | 19,018,207 | 1,295,138 | 37,031,232 | 2,124,223 |
Less: promotion fees-selenium products, | (2,090,364) | (4,164,776) | ||
Wholesale revenues, net | 20,073,394 | 4,955,397 | 39,087,110 | 5,784,482 |
Retail revenue-selenium supplements | 1,254,615 | 481,786 | 2,462,150 | 870,799 |
Retail revenue-selenium products | 936,725 | 1,857,606 | ||
Revenues | $ 22,264,734 | $ 5,437,183 | $ 43,406,866 | $ 6,655,281 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 3) | 6 Months Ended |
May 31, 2017 | |
Motor vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives for fixed asset | 4 years |
Furniture and equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives for fixed asset | 5 years |
Furniture and equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives for fixed asset | 3 years |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details Textual) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Sep. 30, 2016USD ($) | Sep. 30, 2016CNY (¥) | Dec. 30, 2015USD ($) | Dec. 30, 2015CNY (¥) | May 31, 2017USD ($) | May 31, 2016USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Nov. 30, 2016USD ($) | |
Summary of Significant Accounting Policies (Textual) | |||||||||
Percentage of equity | 30.00% | 30.00% | |||||||
Foreign currency translation adjustment | $ 442,410 | $ (122,371) | $ 501,254 | $ (308,784) | |||||
Currency transactions, Description | The PRC devalued its currency by approximately 8%. | ||||||||
Shipping costs | 20,045 | 24,427 | $ 45,638 | 39,453 | |||||
Advertising costs | 437,957 | $ 23,057 | 887,001 | $ 44,519 | |||||
Accounts receivable | 14,336,885 | 14,336,885 | $ 11,205,011 | ||||||
License renewal cost per year | $ 86,912 | ¥ 600,000 | |||||||
Prepaid licensing fees | 51,594 | 51,594 | 7,259 | ||||||
Statutory reserve fund | 759,094 | 759,094 | 759,094 | ||||||
Advertising revenue | $ 908,725 | ¥ 6,000,000 | |||||||
Unamortized balance | $ 589,640 | $ 589,640 | $ 605,816 | ||||||
Statutory reserve fund, Description | Company is required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of the Company's registered capital. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years' losses, if any, and may be utilized for business expansion or used to increase registered capital, provided that the remaining reserve balance after use is not less than 25% of registered capital. | ||||||||
Maximum [Member] | |||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||
Effective income tax rate | 35.00% | ||||||||
Minimum [Member] | |||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||
Effective income tax rate | 15.00% | ||||||||
PRC [Member] | |||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||
Effective income tax rate | 25.00% | ||||||||
BVI [Member] | |||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||
Effective income tax rate | 0.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | 7 Months Ended |
May 31, 2017 | Nov. 30, 2016 | |
Related Party Transactions [Abstract] | ||
Investment, Beginning | $ 6,003,412 | $ 1,466,652 |
Pro rata share of net income for the year ended November 30, 2016 | 4,536,760 | |
Pro rata share of net income for the six months ended May 31, 2017 | 4,665,947 | |
Investment, Ending | $ 10,669,359 | $ 6,003,412 |
Related Party Transactions (D32
Related Party Transactions (Details 1) | May 31, 2017USD ($) |
Related Party Transactions [Abstract] | |
Current assets | $ 51,625,008 |
Noncurrent assets | 1,825,790 |
Current liabilities | 3,123,635 |
Noncurrent liabilities | |
Equity | $ 50,327,163 |
Related Party Transactions (D33
Related Party Transactions (Details 2) | 6 Months Ended |
May 31, 2017USD ($) | |
Related Party Transactions [Abstract] | |
Revenue | $ 39,446,904 |
Cost of revenue | (13,228,818) |
Expenses | (12,383,619) |
Net income | $ 13,834,467 |
Related Party Transactions (D34
Related Party Transactions (Details Textual) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||
Mar. 31, 2017USD ($) | Mar. 31, 2017CNY (¥) | Apr. 28, 2016USD ($) | May 31, 2017USD ($)Stores | May 31, 2017CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | May 31, 2017USD ($)Stores | May 31, 2017CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | Nov. 30, 2016USD ($) | Aug. 31, 2016Stores | |
Related Party Transactions (Textual) | |||||||||||||
Trademark revenue | $ 0 | $ 1,412 | $ 0 | $ 1,490 | |||||||||
Equity of ownership percentage | 30.00% | 30.00% | |||||||||||
Promotions expenses | $ 357,373 | 716,115 | $ 20,421 | 20,421 | |||||||||
Equity investment | $ 1,466,652 | 10,669,359 | 10,669,359 | $ 6,003,412 | |||||||||
Guangdong Tianmei [Member] | |||||||||||||
Related Party Transactions (Textual) | |||||||||||||
Future commitment | 1,400 | $ 1,400 | |||||||||||
License agreement, description | The Company entered into an agreement with Guangdong Tianmei on June 10, 2015 to license the use of the Company's trademark for 10 years. | The Company entered into an agreement with Guangdong Tianmei on June 10, 2015 to license the use of the Company's trademark for 10 years. | |||||||||||
Ownership interest, percentage | 30.00% | 30.00% | |||||||||||
Monthly promotion fee | $ 16.60 | ¥ 108 | |||||||||||
Promotion agreement expiration date | Mar. 31, 2018 | Mar. 31, 2018 | |||||||||||
Equity investment | $ 466,652 | $ 466,652 | |||||||||||
Guangzhou Huayuda [Member] | |||||||||||||
Related Party Transactions (Textual) | |||||||||||||
Number of stores | Stores | 14 | 14 | 200 | ||||||||||
Sales | $ 780,000 | ¥ 5,366,000 | $ 177,000 | ¥ 1,154,000 | $ 2,144,000 | ¥ 14,747,000 | $ 177,000 | ¥ 1,154,000 | |||||
Equity investment agreement [Member] | Biotechnology International Holding Ltd. [Member] | |||||||||||||
Related Party Transactions (Textual) | |||||||||||||
Investment agreement, description | At that time, 88% of the equity in Guangdong Tianmei was owned by two individuals who together directly or indirectly owned approximately 57% of the Company's outstanding shares. | ||||||||||||
Pay to acquire business | $ 1,000,000 | ||||||||||||
Ownership interest, percentage | 30.00% | ||||||||||||
Equity of ownership percentage | 100.00% | ||||||||||||
Equity investment agreement [Member] | Guangdong Tianmei [Member] | |||||||||||||
Related Party Transactions (Textual) | |||||||||||||
Ownership interest, percentage | 30.00% | 30.00% | |||||||||||
Net worth of acquisition time | $ 4,888,840 | $ 4,888,840 | |||||||||||
Equity investment | $ 1,466,652 | $ 1,466,652 |
Leases (Details)
Leases (Details) | Jun. 29, 2016USD ($) | Jun. 29, 2016CNY (¥) | May 31, 2017USD ($) | May 31, 2016USD ($) | May 31, 2017USD ($) | May 31, 2017CNY (¥) | May 31, 2016USD ($) | Nov. 30, 2016USD ($) |
Leases (Textual) | ||||||||
Prepaid lease payments | $ 7,371 | $ 7,371 | $ 221,123 | |||||
Rent expense | $ 102,907 | $ 66,872 | 205,028 | $ 133,557 | ||||
Warehouse and office space [Member] | ||||||||
Leases (Textual) | ||||||||
Prepayment of total rent | $ 86,900 | ¥ 600,000 | 86,912 | ¥ 600,000 | ||||
Lease expiration date | Jul. 1, 2017 | Jul. 1, 2017 | ||||||
Flagship store [Member] | ||||||||
Leases (Textual) | ||||||||
Prepayment of total rent | $ 154,514 | ¥ 960,000 | ||||||
Lease expiration date | May 31, 2017 | May 31, 2017 | ||||||
Foshan store [Member] | ||||||||
Leases (Textual) | ||||||||
Prepayment of total rent | $ 61,912 | ¥ 420,000 | ||||||
Lease expiration date | May 31, 2017 | May 31, 2017 | ||||||
Longyan store [Member] | ||||||||
Leases (Textual) | ||||||||
Prepayment of total rent | $ 61,912 | ¥ 420,000 | ||||||
Lease expiration date | May 31, 2017 | May 31, 2017 | ||||||
Zhuzhou store [Member] | ||||||||
Leases (Textual) | ||||||||
Prepayment of total rent | $ 61,912 | ¥ 420,000 | ||||||
Lease expiration date | May 31, 2017 | May 31, 2017 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | May 31, 2017 | Nov. 30, 2016 |
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 263,015 | $ 259,032 |
Less: accumulated depreciation | (158,726) | (130,265) |
Fixed assets - net | 104,289 | 128,767 |
Electronic equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | 127,785 | 125,850 |
Motor vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | 123,014 | 121,151 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 12,216 | $ 12,031 |
Fixed Assets (Details Textual)
Fixed Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |
Fixed Assets (Textual) | ||||
Depreciation expense | $ 13,050 | $ 14,653 | $ 26,050 | $ 24,761 |
Loans (Details)
Loans (Details) - USD ($) | May 31, 2017 | Nov. 30, 2016 |
Loans (Textual) | ||
Loans from third party | $ 228,359 | $ 228,238 |
Loans from stockholder | $ 407,677 | $ 237,639 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |
Income Taxes [Abstract] | ||||
Current | $ 1,319,811 | $ 416,553 | $ 2,546,163 | $ 539,969 |
Deferred | ||||
Provision for income taxes | $ 1,319,811 | $ 416,553 | $ 2,546,163 | $ 539,969 |
Concentration of Credit and B40
Concentration of Credit and Business Risks (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
May 31, 2017Customer | May 31, 2016Customer | May 31, 2017Customer | May 31, 2016Directors | Nov. 30, 2016Customer | |
Concentration of Credit and Business Risks (Textual) | |||||
Percentage of credit concentration | 25.00% | 29.00% | 25.00% | 27.00% | |
Accounts Receivable [Member] | |||||
Concentration of Credit and Business Risks (Textual) | |||||
Number of customers | 3 | 3 | |||
Accounts Receivable [Member] | Maximum [Member] | |||||
Concentration of Credit and Business Risks (Textual) | |||||
Percentage of credit concentration | 71.00% | 64.00% | |||
Accounts Receivable [Member] | Minimum [Member] | |||||
Concentration of Credit and Business Risks (Textual) | |||||
Percentage of credit concentration | 27.00% | 24.00% | |||
Sales [Member] | |||||
Concentration of Credit and Business Risks (Textual) | |||||
Percentage of credit concentration | 66.00% | 64.00% | 64.00% | 64.00% | |
Number of customers | 3 | 3 | 3 | 3 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Sep. 01, 2016USD ($) | Sep. 01, 2016CNY (¥) | Apr. 08, 2016USD ($) | Apr. 08, 2016CNY (¥) | Dec. 30, 2015USD ($) | Dec. 30, 2015CNY (¥) | May 31, 2017USD ($) | May 31, 2016USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jul. 01, 2016USD ($)Directors | Jul. 01, 2016CNY (¥)Directors | Apr. 08, 2016CNY (¥) |
Commitments and Contingencies (Textual) | |||||||||||||
Annual fee for technology usage agreement | $ 87,000 | ¥ 600,000 | |||||||||||
Technology usage agreement commenced date | Dec. 30, 2015 | Dec. 30, 2015 | |||||||||||
Technology usage agreement expires | Dec. 29, 2020 | Dec. 29, 2020 | |||||||||||
Annual payments for long-term agreement | $ 579,700 | ¥ 4,000,000 | |||||||||||
Compensation agreement expires date | Aug. 31, 2026 | Aug. 31, 2026 | |||||||||||
Directors [Member] | Three Year Agreements [Member] | |||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||
Due to all related parties | $ 15,000 | ¥ 110,000 | |||||||||||
Number of directors | 4 | 4 | |||||||||||
Chief Executive Officer [Member] | Conditional Compensation Agreement [Member] | |||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||
Due to all related parties | $ 7,000 | ¥ 50,000 | |||||||||||
Monthly net income | $ 363,000 | ¥ 2,500,000 | $ 21,000 | $ 7,000 | $ 42,000 | $ 7,000 | |||||||
Compensation agreement expires date | Apr. 7, 2017 | Apr. 7, 2017 |
Parent Company Only Condensed42
Parent Company Only Condensed Financial Information (Details) - USD ($) | May 31, 2017 | Nov. 30, 2016 | Apr. 28, 2016 |
ASSETS | |||
Equity investment | $ 10,669,359 | $ 6,003,412 | $ 1,466,652 |
TOTAL ASSETS | 50,727,312 | 36,203,497 | |
Current liabilities: | |||
Loans from third party | 228,359 | 228,238 | |
Loans from stockholder | 407,677 | 237,639 | |
Total current liabilities | 6,629,354 | 4,815,511 | |
Stockholders' equity: | |||
Common stock, $0.001 par value, 100,000,000 authorized, 75,000,000 shares issued and outstanding as of November 30, 2016 | 75,000 | 75,000 | |
Additional paid-in capital | 16,980,102 | 16,980,102 | |
Retained earnings | 27,082,001 | 15,026,053 | |
Statutory reserve fund | 759,094 | 759,094 | |
Other comprehensive (loss) | (1,211,862) | (1,707,064) | |
Total stockholder's equity | 43,684,335 | 31,133,185 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 50,727,312 | 36,203,497 | |
Parent Company [Member] | |||
ASSETS | |||
Other receivable from Guangdong Gewang | 14,848,200 | ||
Investment in subsidiaries | 10,516,759 | ||
Equity investment | 6,003,412 | ||
TOTAL ASSETS | 31,368,371 | ||
Current liabilities: | |||
Accrued expenses | 33,375 | ||
Loans from third party | 220,396 | ||
Loans from stockholder | 236,216 | ||
Total current liabilities | 489,987 | ||
Stockholders' equity: | |||
Common stock, $0.001 par value, 100,000,000 authorized, 75,000,000 shares issued and outstanding as of November 30, 2016 | 75,000 | ||
Additional paid-in capital | 16,980,102 | ||
Retained earnings | 14,771,252 | ||
Statutory reserve fund | 759,094 | ||
Other comprehensive (loss) | (1,707,064) | ||
Total stockholder's equity | 30,878,384 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 31,368,371 |
Parent Company Only Condensed43
Parent Company Only Condensed Financial Information (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | Nov. 30, 2016 | |
Revenues: | |||||
Equity investment | $ 2,512,935 | $ 408,275 | $ 4,665,947 | $ 408,275 | |
Operating expenses: | |||||
General and administrative | $ 382,422 | $ 122,978 | 763,777 | 259,939 | |
Net income | $ 12,208,718 | $ 1,988,651 | |||
Parent Company [Member] | |||||
Revenues: | |||||
Share of earnings from investment in subsidiaries | $ 8,821,783 | ||||
Equity investment | 4,536,760 | ||||
Operating expenses: | |||||
General and administrative | 188,852 | ||||
Net income | $ 13,169,691 |
Parent Company Only Condensed44
Parent Company Only Condensed Financial Information (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | Nov. 30, 2016 | |
Cash flows from operating activities: | |||||
Net income | $ 12,208,718 | $ 1,988,651 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||||
Share of earnings from equity investment | $ 2,512,935 | $ 408,275 | 4,665,947 | 408,275 | |
Increase in accrued expenses and other liabilities | 218,984 | (82,198) | |||
Net cash provided by (used in) operating activities | 8,807,080 | (1,440,917) | |||
Net change in cash | 9,306,763 | 8,022,165 | |||
Cash, beginning | 13,108,340 | 8,669,034 | $ 8,669,034 | ||
Cash, end | 22,415,103 | 16,691,199 | 22,415,103 | 16,691,199 | 13,108,340 |
Noncash financing activities: | |||||
Payment of accrued expenses and other payables by shareholder | 170,016 | 52,190 | |||
Parent Company [Member] | |||||
Cash flows from operating activities: | |||||
Net income | 13,169,691 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||||
Share of earnings from investment in subsidiaries | (8,821,783) | ||||
Share of earnings from equity investment | 4,536,760 | ||||
Increase in accrued expenses and other liabilities | 188,852 | ||||
Net cash provided by (used in) operating activities | |||||
Net change in cash | |||||
Cash, beginning | |||||
Cash, end | |||||
Noncash financing activities: | |||||
Payment of accrued expenses and other payables by shareholder | $ 298,938 |
Parent Company Only Condensed45
Parent Company Only Condensed Financial Information (Details Textual) - USD ($) | 12 Months Ended | |
Nov. 30, 2016 | May 31, 2017 | |
Parent Company Only Condensed Financial Information (Textual) | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 75,000,000 | 75,000,000 |
Common stock, shares outstanding | 75,000,000 | 75,000,000 |
Restricted Net Assets [Member] | ||
Parent Company Only Condensed Financial Information (Textual) | ||
Variable interest entity amount | $ 31,368,000 | |
Restricted net assets, Percentage | 25.00% | |
Parent Company [Member] | ||
Parent Company Only Condensed Financial Information (Textual) | ||
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 100,000,000 | |
Common stock, shares issued | 75,000,000 | |
Common stock, shares outstanding | 75,000,000 |