Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended |
Feb. 28, 2014 | |
Document And Entity Information | ' |
Entity Registrant Name | 'China Tianfeihong Wine Inc |
Entity Central Index Key | '0001501225 |
Document Type | '10-Q |
Document Period End Date | 28-Feb-14 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--08-31 |
Is Entity a Well-known Seasoned Issuer? | 'No |
Is Entity a Voluntary Filer? | 'No |
Is Entity's Reporting Status Current? | 'No |
Entity Filer Category | 'Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 34,396,680 |
Document Fiscal Period Focus | 'Q2 |
Document Fiscal Year Focus | '2014 |
Balance_Sheets
Balance Sheets (USD $) | Feb. 28, 2014 | Aug. 31, 2013 |
Current assets: | ' | ' |
Cash | $5,302,421 | $3,994,502 |
Accounts receivable, net | 911,567 | 609,890 |
Inventory, net | 508,643 | 461,232 |
Prepaid expenses | 15,795 | ' |
Advances to suppliers | ' | 45,670 |
Total current assets | 6,738,426 | 5,111,294 |
Fixed assets, net | 72,260 | 104,054 |
Total Assets | 6,810,686 | 5,215,348 |
Current liabilities: | ' | ' |
Accounts payable | 1,579,167 | 788,588 |
Taxes payable | 72,630 | 31,222 |
Loan from stockholders | 26,814 | ' |
Accrued liabilities and other payables | 36,355 | 12,039 |
Total current liabilities | 1,714,966 | 831,849 |
Stockholders equity: | ' | ' |
Common stock, $0.0006 par value per share, 80,000,000shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of February 28, 2014 andAugust 31, 2013, respectively | 20,638 | 19,200 |
Additional paid-in capital | 726,548 | 812,159 |
Statutory reserve fund | 65,377 | ' |
Retained earnings | 3,924,165 | 3,336,756 |
Other comprehensive income | 227,636 | 124,618 |
Noncontrolling interests | 131,356 | 90,766 |
Stockholders equity before noncontrolling interests | 5,095,720 | 4,383,499 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | $6,810,686 | $5,215,348 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Feb. 28, 2014 | Aug. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 80,000,000 | 80,000,000 |
Common stock shares issued | 34,396,680 | 32,000,000 |
Common stock shares outstanding | 34,396,680 | 32,000,000 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended |
Feb. 28, 2014 | Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2013 | |
China Tianfeihong Wine Inc. | China Tianfeihong Wine Inc. | China Tianfeihong Wine | China Tianfeihong Wine | |
Revenue | $2,882,195 | $4,814,573 | $2,936,590 | $4,917,803 |
Cost of revenue | -1,889,147 | -3,200,407 | -1,884,749 | -3,158,869 |
Gross profit | 993,048 | 1,614,166 | 1,051,841 | 1,758,934 |
Operating expenses | ' | ' | ' | ' |
Selling and marketing | 312,077 | 509,614 | 285,201 | 469,812 |
General and administrative | 154,162 | 201,435 | 100,922 | 173,846 |
Total operating expenses | 466,239 | 711,049 | 386,123 | 643,658 |
Income from operations | 526,809 | 903,117 | 665,718 | 1,115,276 |
Interest income | 4,130 | 7,632 | 2,583 | 4,867 |
Income before provision for income taxes | 530,939 | 910,749 | 668,301 | 1,120,143 |
Provision for income taxes | 128,977 | 223,602 | 167,389 | 280,036 |
Net income | 401,962 | 687,147 | 500,912 | 840,107 |
Noncontrolling interests | -24,986 | -34,361 | -25,046 | -42,005 |
Net income attributable to common stockholders | 376,976 | 652,786 | 475,866 | 798,102 |
Earnings per common share, basic and diluted | $0.01 | $0.02 | $0.01 | $0.02 |
Weighted average shares outstanding, basic and diluted | 33,597,787 | 32,798,893 | 32,000,000 | 32,000,000 |
Comprehensive Income: | ' | ' | ' | ' |
Net Income | 401,962 | 687,147 | 500,912 | 840,107 |
Foreign currency translation adjustment | 76,490 | 109,246 | 18,940 | 32,335 |
Comprehensive income | 478,452 | 796,393 | 519,852 | 872,442 |
Comprehensive income attributable to noncontrolling interests | -40,574 | -40,589 | -43,559 | -43,622 |
Net Comprehensive income attributable to common stockholders | $437,878 | $755,804 | $476,293 | $828,820 |
Shareholders_Equity_Unaudited
Shareholders Equity (Unaudited) (USD $) | Common Stock | Additional Paid-In Capital | Statutory Reserve Fund | Retained Earnings / Accumulated Deficit | Other Comprehensive Income / Loss | Noncontrolling Interest | Total |
Beginning Balance at Aug. 31, 2013 | $19,200 | $812,159 | ' | $3,336,756 | $124,618 | $90,766 | $4,383,499 |
Reverse acquisition equity adjustments | 1,438 | -85,611 | ' | ' | ' | ' | -84,173 |
Net income | ' | ' | ' | 652,786 | ' | 34,361 | 687,147 |
Appropriation to statutory reserve | ' | ' | 65,377 | -65,377 | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | 103,018 | 6,229 | 109,247 |
Ending Blance at Feb. 28, 2014 | $20,638 | $726,548 | $65,377 | $3,924,165 | $227,636 | $131,356 | $5,095,720 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 6 Months Ended | |
Feb. 28, 2014 | Feb. 28, 2013 | |
Cash flows from operating activities: | ' | ' |
Net income | $687,147 | $840,107 |
Depreciation | 33,260 | 5,536 |
Changes in operating assets and liabilities: | ' | ' |
(Increase) in accounts receivable | -301,677 | -323,554 |
(Increase) in inventory | -47,411 | -186,594 |
(Increase) in prepaid expenses | -15,795 | ' |
Decrease in advances to suppliers | 45,670 | 26,390 |
Increase in accounts payable | 790,579 | 482,634 |
Increase in taxes payable | 41,408 | 5,841 |
Increase in accrued liabilities and other payables | 24,316 | 765 |
Net cash provided by operating activities | 1,257,497 | 851,125 |
Cash flows from investing activities: | ' | ' |
Purchase of equipment | -852 | ' |
Net cash (used in) investing activities | -852 | ' |
Cash flows from financing activities: | ' | ' |
Capital contributed by a stockholder | ' | 555,450 |
Loan from stockholder | 26,880 | ' |
Net cash provided by financing activities | 26,880 | 555,450 |
Effect of exchange rate changes on cash | 24,394 | 108,056 |
Net change in cash | 1,307,919 | 1,514,631 |
Cash, beginning | 3,994,502 | 1,908,784 |
Cash, end | 5,302,421 | 3,423,415 |
Cash paid for: | ' | ' |
Interest | ' | ' |
Income taxes | $187,213 | $218,100 |
NOTE_1_ORGANIZATION
NOTE 1. ORGANIZATION | 3 Months Ended |
Feb. 28, 2014 | |
Notes to Financial Statements | ' |
NOTE 1. ORGANIZATION | ' |
NOTE 1. ORGANIZATION | |
China Tianfeihong Wine, Inc. (the “Company”), formerly known as Zenitech Corporation, was incorporated under the laws of the State of Delaware on July 28, 2005. Since its inception until the closing of reverse acquisition transaction, the Company was a development-stage company in the business of developing, manufacturing, distributing and marketing of environmentally friendly floral sleeves and wrappers for the floriculture industry. | |
On August 1, 2013, the Company filed a certificate of amendment to its articles of incorporation to change its name from “Zenitech Corporation” to “China Tianfeihong Wine Inc. ” (the “Name Change”) and to effect a 1 for 6 reverse stock split (the “Reverse Split”) of its outstanding shares of common stock. Both the Name Change and the Reverse Split were approved by the FINRA. The Name Change and the Reserve Split went effective on August 12, 2013. Upon the effectiveness of the Reverse Split, the number of outstanding shares of the Company’s common stock decreased from 14,380,266 to 2,396,680 shares. The number of authorized shares of common stock continues to be 80,000,000 shares. | |
On December 30, 2013, the Company completed a reverse acquisition transaction through a share exchange with the stockholders of Fanwei Hengchang Co., Ltd (BVI) (“Fanwei Hengchang), whereby the Company acquired 100% of the outstanding shares of Fanwei Hengchang in exchange for the issuance of 32,000,000 shares of the Company’s common stock, representing 93.03% of issued and outstanding shares of common stock. As a result of the reverse acquisition, Fanwei Hengchang became the Company’s wholly-owned subsidiary and the former Fanwei Hengchang’s stockholders became our controlling stockholders. The share exchange transaction was treated as a reverse acquisition, with Fanwei Hengchang as the acquirer and the Company as the acquired party for accounting purposes. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, the Company are referring to the business and financial information of Fanwei Hengchang and its consolidated subsidiaries and variable interest entity. | |
As a result of the acquisition of Fanwei Hengchang, the Company now owns all of the issued and outstanding capital stock of Changshi Tongrong Limited (Hong Kong) (“Changshi Tongrong”), which in turn owns all of the issued and outstanding capital stock of Changshitong Consulting (Shenzhen) Co. Ltd (“Changshitong Consulting”). In addition, the Company effectively and substantially controls Fujian Tianfeihong Wine Co., Ltd (“Fujian Tianfeihong”) through a series of captive agreements with Changshitong Consulting. | |
Subsequent to the closing of the Share Exchange Agreement, the Company conducts operations through controlled consolidated affiliate Fujian Tianfeihong. Fujian Tianfeihong is primarily engaged in distributing all kinds of fruit wine including green plum wine, loquat wine, olive wine, pomegranate wine, etc. to supermarkets and liquor stores. | |
On November 26, 2013, prior to the reverse acquisition transaction, Changshitong Consulting and Fujian Tianfeihong and its shareholders Jinxiang Fang and Zhiliang Fang entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Fujian Tianfeihong became Changshitong Consulting’s contractually controlled affiliate. The VIE Agreements included: | |
Exclusive Technical Service and Business Consulting Agreement: Pursuant to the Exclusive Technical Service and Business Consulting Agreement, Changshitong Consulting (WFOE) is to provide technical support and consulting services to Fujian Tianfeihong in exchange for (i) 95% of the total annual net profit of Fujian Tianfeihong plus (ii) RMB10,000 per month (U.S.$1,587). The Agreement has an unlimited term and only can be terminated upon written notice agreed to by both parties. | |
Proxy Agreement: Pursuant to the Proxy Agreement, Zhiliang Fang, Jinxiang Fang, Changshitong Consulting and Fujian Tianfeihong pursuant to which they each authorize Changshitong Consulting to designate someone to exercise their entire shareholder decision rights with respect to Fujian Tianfeihong. The Agreement has an unlimited term and only can be terminated upon written notice agreed to by both parties. | |
Share Pledge Agreement: a Share Pledge Agreement among Zhiliang Fang and Jinxiang Fang, Fujian Tianfeihong, and Changshitong Consulting under which the Fujian Tianfeihong Shareholders agree to pledge all of their equity in Fujian Tianfeihong to Changshitong Consulting to guarantee Fujian Tianfeihong’s and its shareholders’ performance of their obligations under the Exclusive Technical Service and Business Consulting Agreement, the Call Option Agreement and the Proxy Agreement. This Agreement remains effective until the obligations under the Exclusive Technical Service and Business Consulting Agreement, Call Option Agreement and Proxy Agreement have been fulfilled or terminated. | |
Call Option Agreement: a Call Option Agreement among Zhiliang Fang and Jinxiang Fang (together referred to as “Fujian Tianfeihong Shareholders”), and Changshitong Consulting under which the Fujian Tianfeihong Shareholders have granted to Changshitong Consulting the irrevocable right and option to acquire all of the equity interests in Fujian Tianfeihong to the extent permitted by PRC law. If PRC law limits the percentage of Fujian Tianfeihong that Changshitong Consulting may purchase at any time, then Changshitong Consulting may repeatedly exercise its option in such increments as may be allowed by PRC law. The exercise price of the option is RMB1.00 ($0.16) or the minimum price regulated by PRC laws if at that time there is any regulatory PRC laws regulating the minimum price. The Fujian Tianfeihong Shareholders agreed to refrain from taking certain actions which might harm the value of Fujian Tianfeihong or Changshitong Consulting’s option. This Agreement remains effective until all the call options under the Agreement have been transferred to Changshitong Consulting or its designated entities or natural persons. | |
The VIE Agreements with the Company’s Chinese affiliate and its shareholders, which relate to critical aspects of the Company’s operations, may not be as effective in providing operational control as direct ownership. In addition, these arrangements may be difficult and costly to enforce under PRC law. | |
As a result of the entry into the foregoing agreements, the Company has a corporate structure which is set forth as follows: | |
NOTE_2_SUMMARY_OF_SIGNIFICANT_
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||||
Feb. 28, 2014 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
BASIS OF ACCOUNTING AND PRESENTATION | |||||||||||
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting. The unaudited financial statements for the three and six months ended February 28, 2014, include China Tianfeihong Wine, Inc., Fanwei Hengchang, Changshi Tongrong and its wholly owned subsidiary, Changshitong Consulting and its VIE, Fujian Tianfeihong. The unaudited financial statements for the three and six months ended February 28, 2013 include Fujian Tianfeihong and Changshi Tongrong as all the other entities were not in existence at that time. All significant intercompany accounts and transactions have been eliminated in consolidation when applicable. | |||||||||||
The unaudited interim consolidated financial statements of the Company as of February 28, 2014 and for the three and six months periods ended February 28, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America 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 interim consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 8-K filed with the SEC. The results of operations for the three and six months ended February 28, 2014 are not necessarily indicative of the results to be expected for future quarters or for the year ending August 31, 2014. | |||||||||||
All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”). | |||||||||||
VARIABLE INTEREST ENTITY | |||||||||||
Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements the financial statements of its variable interest entities (“VIEs”). ASC 810 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. VIEs are those entities in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity. | |||||||||||
Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de facto agents, have the unilateral ability to exercise those rights. Fujian Tianfeihong’s actual stockholders do not hold any kick-out rights that affect the consolidation determination. | |||||||||||
Through the VIE agreements disclosed in Note 1, the Company is deemed the primary beneficiary of Fujian Tianfeihong. Accordingly, the results of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. Fujian Tianfeihong has no assets that are collateral for or restricted solely to settle their obligations. The creditors of Fujian Tianfeihong do not have recourse to the Company’s general credit. | |||||||||||
The following financial statement amounts and balances of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. | |||||||||||
February 28, | August 31, | ||||||||||
ASSETS | 2014 | 2013 | |||||||||
(Unaudited, in U.S. $) | (In U.S. $) | ||||||||||
Current assets: | |||||||||||
Cash | $ | 5,301,921 | $ | 3,994,502 | |||||||
Accounts receivable | 911,567 | 609,890 | |||||||||
Inventory | 508,643 | 461,232 | |||||||||
Prepaid expenses | 15,795 | - | |||||||||
Advances to suppliers | - | 45,670 | |||||||||
Total current assets | 6,737,926 | 5,111,294 | |||||||||
Fixed assets, net | 72,260 | 104,054 | |||||||||
TOTAL ASSETS | $ | 6,810,186 | $ | 5,215,348 | |||||||
LIABILITIES | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,579,167 | $ | 788,588 | |||||||
Payable to WFOE(1) | 378,730 | - | |||||||||
Taxes payable | 71,303 | 21,941 | |||||||||
Loan from stockholder | 26,814 | - | |||||||||
Accrued liabilities and other payables | 36,355 | 12,039 | |||||||||
Total current liabilities | 2,092,369 | 822,568 | |||||||||
TOTAL LIABILITIES | $ | 2,092,369 | $ | 822,568 | |||||||
-1 | Payable to WFOE represents outstanding amounts due to Changshitong Consulting Co. Ltd. under the Exclusive Technical Service and Business Consulting Agreement for consulting services provided to Fujian Tianfeihong in exchange for 95% of Fujian Tianfeihong’s net income. The monthly payments of RMB 10,000 (approximately US$1,636) have not been paid as of February 28, 2014. | ||||||||||
For the three months ended | For the six months ended | ||||||||||
February 28, | February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 2,882,195 | $ | 2,936,590 | $ | 4,814,573 | $ | 4,917,803 | |||
Net income (2) | $ | 398,663 | $ | 500,912 | $ | 687,211 | $ | 840,107 | |||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
For the six months ended | |||||||||||
February 28, | |||||||||||
2014 | 2013 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Net cash provided by operating activities | $ | 1,265,516 | $ | 851,125 | |||||||
Net cash (used in) investing activities | -852 | - | |||||||||
Net cash provided by financing activities | 26,880 | 555,450 | |||||||||
Effect of exchange rate changes on cash | 15,875 | 108,056 | |||||||||
Net increase in cash | 1,307,419 | 1,514,631 | |||||||||
The Company believes that Changshitong Consulting’s contractual agreements with Fujian Tianfeihong are in compliance with PRC law and are legally enforceable. The stockholders of Fujian Tianfeihong are also the senior management of the Company and therefore the Company believes that they have no current interest in seeking to act contrary to the contractual arrangements. However, Fujian Tianfeihong and its stockholders may fail to take certain actions required for the Company’s business or to follow the Company’s instructions despite their contractual obligations to do so. Furthermore, if Fujian Tianfeihong or its stockholders do not act in the best interests of the Company under the contractual arrangements and any dispute relating to these contractual arrangements remains unresolved, the Company will have to enforce its rights under these contractual arrangements through PRC law and courts and therefore will be subject to uncertainties in the PRC legal system. All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. As a result, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements, which may make it difficult to exert effective control over Fujian Tianfeihong, and its ability to conduct the Company’s business may be adversely affected. | |||||||||||
CHANGE OF FISCAL YEAR END DATE | |||||||||||
On December 30, 2013, the Board of Directors of the Company approved changing the fiscal year-end of the Company from December 31 to August 31 as a result of the Fanwei Hengchang Acquisition. | |||||||||||
USE OF ESTIMATES | |||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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 TRANSLATION | |||||||||||
Almost all Company assets are located in the PRC. The functional currency for the majority of 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 FASB ASC 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 amounts 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. | |||||||||||
The exchange rates used to translate amounts in RMB into US dollars for the purposes of preparing the financial statements are as follows: | |||||||||||
28-Feb-14 | 31-Aug-13 | ||||||||||
Balance sheet items, except for stockholders’ | |||||||||||
equity, as of periods end | 0.1632 | 0.1622 | |||||||||
For the three months | For the six months | ||||||||||
ended February 28, | ended February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Amounts included in the statements of income, | |||||||||||
statement of changes in stockholders’ equity and | |||||||||||
statements of cash flows for the periods | 0.1636 | 0.159 | 0.1632 | 0.1587 | |||||||
FOREIGN CURRENCY TRANSLATION (CONTINUED) | |||||||||||
For the three months ended February 28, 2014 and 2013, foreign currency translation adjustments of $76,490 and $18,940, respectively, have been reported as other comprehensive income. For the six months ended February 28, 2014 and 2013, foreign currency translation adjustments of $109,246 and $32,335 have been reported as other comprehensive income. Other comprehensive income of the Company consists entirely of foreign currency translation adjustments. Pursuant to ASC 740-30-25-17, “Exceptions to Comprehensive Recognition of Deferred Income Taxes,” the Company does not recognize deferred U.S. taxes related to the undistributed earnings of its foreign subsidiaries and, accordingly, recognizes no income tax expense or benefit from foreign currency translation adjustments. | |||||||||||
Although 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. | |||||||||||
REVENUE RECOGNITION | |||||||||||
Revenues are primarily derived from selling fruit wine to contracted distributor and retail. The Company’s revenue recognition policies comply with FASB ASC 605 “Revenue Recognition.” The Company recognizes product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) our price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured. The Company recognizes revenue for product sales upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery or that services have been rendered. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. | |||||||||||
The Company has no product return or sales discount allowance because goods delivered and accepted by customers are normally not returnable. | |||||||||||
The Company recognizes gift sample products as cost of goods sold in compliance with ASC 605-50-S99. As such, when the Company gives a customer a free product, the expense associated with this free product at the time of sale is classified as cost of revenue in income. | |||||||||||
SHIPPING COSTS | |||||||||||
Shipping costs incurred by the Company are recorded in general and administrative expenses. Shipping costs for the three and six months ended February 28, 2014 were $125,154 and $210,148, respectively; shipping costs for the three and six months ended February 28, 2013 were $120,808 and $205,435, respectively. | |||||||||||
VULNERABILITY DUE TO OPERATIONS IN 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, effective or continue. | |||||||||||
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, 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 of accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and 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 February 28, 2014 and August 31, 2013, the Company considers accounts receivable of $911,567 and $609,890, respectively, are fully collectible. For the periods presented, the Company did not write off any accounts receivable as bad debts. | |||||||||||
INVENTORY | |||||||||||
Inventory, comprised principally of bottled wine, is valued at the lower of cost or market value. The value of inventories is determined using the first-in, first-out method. | |||||||||||
The Company estimates an inventory allowance for estimated unmarketable inventories. Inventory amounts are reported net of such allowances. There were no allowances for inventory as of February 28, 2014 and August 31, 2013. | |||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||
FASB ASC 820, “Fair Value Measurement,” defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. | |||||||||||
FIXED ASSETS | |||||||||||
Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the prices paid to acquire the assets, and any expenditures that substantially increase the 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 assets categories are as follows: | |||||||||||
Computers and equipment 3 years | |||||||||||
Motor vehicles 4 years | |||||||||||
Fixtures and furniture 5 years | |||||||||||
IMPAIRMENT OF LONG-LIVED ASSESTS | |||||||||||
The Company applies FASB ASC 360, “Property, Plant and Equipment,” which addresses the financial accounting and reporting for the recognition and measurement of impairment losses for long-lived assets. In accordance with ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company may recognize the impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to those assets. No impairment of long-lived assets was recognized for the periods presented. | |||||||||||
INCOME TAXES | |||||||||||
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of February 28, 2014 and August 31, 2013, the company has no deferred tax assets or liabilities. | |||||||||||
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 February 28, 2014 and August 31, 2013, the Company does not have a liability for any unrecognized tax benefits. | |||||||||||
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 provision for income tax in the United States has been made as the Company had no U.S. taxable income for the three and six months ended February 28, 2014 and 2013. | |||||||||||
PRC | |||||||||||
Changshitong Consulting and its VIE, Fujian Tianfeihong are subject to an Enterprise Income Tax at 25% and file their own tax returns. Consolidated tax returns are not permitted in China. | |||||||||||
BVI | |||||||||||
Fanwei Hengchang 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 | |||||||||||
Changshi Tongrong 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. | |||||||||||
Advertising Costs | |||||||||||
Advertising costs are charged to operations when incurred. For the three months ended February 28, 2014 and 2013, advertising expense was $94,888 and $55,809, respectively. For the six months ended February 28, 2014 and 2013, advertising expenses was $135,782 and $65,594, respectively. | |||||||||||
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. For six months ended February 28, 2014, a statutory reserve of $65,377 was required to be allocated by the Company. |
NOTE_3_RECENTLY_ISSUED_ACCOUNT
NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS | 3 Months Ended |
Feb. 28, 2014 | |
Notes to Financial Statements | ' |
NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS | ' |
NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS | |
In July 2013, FASB issued ASU No. 2013-11, Presentation of an Unrecognized Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception exists to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax of the applicable jurisdiction does not require the entity to use, and entity does not intend to use, the deferred tax asset for such a purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU No. 2013-11 is effective for fiscal years and interim periods beginning after December 15, 2013 and is not expected to have a material impact on the Company's consolidated financial statements. | |
On March 5, 2013, the FASB issued ASU 2013-05 to provide guidance for whether to release cumulative translation adjustments (“CTA”) upon certain derecognition events. The update was issued to resolve the diversity in practice about whether Subtopic ASC 810-10, “Consolidation-Overall,” or ASC 830-30, “Foreign Currency Matters-Translation of Financial Statements,” applies to such transactions. ASU 2013-05 is effective prospectively for all entities with derecognition events after the effective date. For public entities, the guidance is effective for fiscal years, and interim periods within those years, beginning after December 31, 2013. ASC 830-30 applies when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. Consequently, the CTA is released into net income only if the transaction results in complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets resided. Otherwise, no portion of the CTA is released. The adoption of this pronouncement is not expected to have a material effect on the Company’s consolidated financial statements. |
NOTE_4_FAIR_VALUE_OF_FINANCIAL
NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Feb. 28, 2014 | |
Fair Value Disclosures [Abstract] | ' |
NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS | ' |
NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FASB ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy: | |
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 prices or 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 measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of February 28, 2014 and August 31, 2013, none of the Company’s assets and | |
liabilities were required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, payables and accrued liabilities, approximate their fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented. |
NOTE_5_FIXED_ASSETS
NOTE 5. FIXED ASSETS | 3 Months Ended | ||||
Feb. 28, 2014 | |||||
Property, Plant and Equipment [Abstract] | ' | ||||
NOTE 5. FIXED ASSETS | ' | ||||
NOTE 5. FIXED ASSETS | |||||
Fixed assets are summarized as follows: | |||||
February 28, | August 31, | ||||
2014 | 2013 | ||||
(Unaudited) | |||||
Computers and equipment | $ | 24,724 | $ | 23,732 | |
Motor vehicles | 149,145 | 148,269 | |||
Fixtures and furniture | 13,937 | 13,856 | |||
187,806 | 185,857 | ||||
Less: Accumulated depreciation | -115,546 | -81,803 | |||
$ | 72,260 | $ | 104,054 | ||
For the three months ended February 28, 2014 and 2013, depreciation expense was $22,700 and $2,795, respectively. For the six months ended February 28, 2014 and 2013, depreciation expense was $33,260 and $5,536, respectively. | |||||
NOTE_6_ACCRUED_LIABILITIES_AND
NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES | 3 Months Ended | ||||
Feb. 28, 2014 | |||||
Payables and Accruals [Abstract] | ' | ||||
NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES | ' | ||||
NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES | |||||
Accrued liabilities consisted of the following: | |||||
February 28, | August 31, | ||||
2014 | 2013 | ||||
(Unaudited) | |||||
Accrued payroll | $ | 9,290 | $ | 9,783 | |
Professional fees | 20,999 | - | |||
Other | 6,066 | 2,256 | |||
$ | 36,355 | $ | 12,039 |
NOTE_7_INCOME_TAXES
NOTE 7. INCOME TAXES | 3 Months Ended | ||||||||
Feb. 28, 2014 | |||||||||
Schedule of Investments [Abstract] | ' | ||||||||
NOTE 7. INCOME TAXES | ' | ||||||||
NOTE 7. INCOME TAXES | |||||||||
The provision for income taxes consisted of the following: | |||||||||
For the three months ended | For the Six months ended | ||||||||
February 28, | February 28, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Current | $ | 128,977 | $ | 167,389 | $ | 223,602 | $ | 280,036 | |
Deferred | - | - | - | - | |||||
$ | 128,977 | $ | 167,389 | $ | 223,602 | $ | 280,036 | ||
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 February 28, 2014. However, there can be no assurance that the IRS will agree with this position, and therefore the Company ultimately could be liable for U.S. federal income taxes, interest and penalties. |
NOTE_8_LEASES
NOTE 8. LEASES | 3 Months Ended | ||||||
Feb. 28, 2014 | |||||||
Accounting Policies [Abstract] | ' | ||||||
NOTE 8. LEASES | ' | ||||||
NOTE 8. LEASES | |||||||
The Company leases two offices under five-year and eight-year operating leases from two unrelated third parties, which expired on April 22, 2014 for five-year lease and June 30, 2017 for eight-year lease. These leases provide for renewal options. | |||||||
These leases require the Company to pay the total rent for one year of $60,288 (RMB 369,414). For the five-year leasing property, rental is increased by 10% for each following year. The related prepayment of $15,795 was included in the prepaid expenses on the consolidated balance sheets as of February 28, 2014. | |||||||
The minimum future rentals under these leases as of February 28, 2014 are as follows: | |||||||
Period Ending | |||||||
August 31, | Amount | ||||||
2014 | $ | 7,181 | |||||
2015 | 43,085 | ||||||
2016 | 43,085 | ||||||
2017 | 35,904 | ||||||
$ | 129,255 | ||||||
Rent expense charged to operations for the three and six months ended February 28, 2014 were $15,109 and $30,144, respectively, and rent expense charged to operations for the three and six months ended February 28, 2013 were $14,303 and $28,553, respectively. |
NOTE_9_CONCENTRATION_OF_CREDIT
NOTE 9. CONCENTRATION OF CREDIT AND BUSINESS RISK | 3 Months Ended |
Feb. 28, 2014 | |
Risks and Uncertainties [Abstract] | ' |
NOTE 9. CONCENTRATION OF CREDIT AND BUSINESS RISK | ' |
NOTE 9. CONCENTRATION OF CREDIT AND BUSINESS RISK | |
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 three months ended February 28, 2014 and 2013, sales to no single customer exceeded 10% of the Company’s gross revenue. | |
For six months ended February 28, 2014, sales to no single customer exceeded 10% of the Company’s gross revenue. For six months ended February 28, 2013, there was one customer which individually accounted for more than 10% of the Company’s gross revenue. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_1
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||||
Feb. 28, 2014 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
BASIS OF ACCOUNTING AND PRESENTATION | |||||||||||
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting. The unaudited financial statements for the three and six months ended February 28, 2014, include China Tianfeihong Wine, Inc., Fanwei Hengchang, Changshi Tongrong and its wholly owned subsidiary, Changshitong Consulting and its VIE, Fujian Tianfeihong. The unaudited financial statements for the three and six months ended February 28, 2013 include Fujian Tianfeihong and Changshi Tongrong as all the other entities were not in existence at that time. All significant intercompany accounts and transactions have been eliminated in consolidation when applicable. | |||||||||||
The unaudited interim consolidated financial statements of the Company as of February 28, 2014 and for the three and six months periods ended February 28, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America 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 interim consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 8-K filed with the SEC. The results of operations for the three and six months ended February 28, 2014 are not necessarily indicative of the results to be expected for future quarters or for the year ending August 31, 2014. | |||||||||||
All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”). | |||||||||||
VARIABLE INTEREST ENTITY | ' | ||||||||||
VARIABLE INTEREST ENTITY | |||||||||||
Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements the financial statements of its variable interest entities (“VIEs”). ASC 810 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. VIEs are those entities in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity. | |||||||||||
Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de facto agents, have the unilateral ability to exercise those rights. Fujian Tianfeihong’s actual stockholders do not hold any kick-out rights that affect the consolidation determination. | |||||||||||
Through the VIE agreements disclosed in Note 1, the Company is deemed the primary beneficiary of Fujian Tianfeihong. Accordingly, the results of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. Fujian Tianfeihong has no assets that are collateral for or restricted solely to settle their obligations. The creditors of Fujian Tianfeihong do not have recourse to the Company’s general credit. | |||||||||||
The following financial statement amounts and balances of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. | |||||||||||
February 28, | August 31, | ||||||||||
ASSETS | 2014 | 2013 | |||||||||
(Unaudited, in U.S. $) | (In U.S. $) | ||||||||||
Current assets: | |||||||||||
Cash | $ | 5,301,921 | $ | 3,994,502 | |||||||
Accounts receivable | 911,567 | 609,890 | |||||||||
Inventory | 508,643 | 461,232 | |||||||||
Prepaid expenses | 15,795 | - | |||||||||
Advances to suppliers | - | 45,670 | |||||||||
Total current assets | 6,737,926 | 5,111,294 | |||||||||
Fixed assets, net | 72,260 | 104,054 | |||||||||
TOTAL ASSETS | $ | 6,810,186 | $ | 5,215,348 | |||||||
LIABILITIES | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,579,167 | $ | 788,588 | |||||||
Payable to WFOE(1) | 378,730 | - | |||||||||
Taxes payable | 71,303 | 21,941 | |||||||||
Loan from stockholder | 26,814 | - | |||||||||
Accrued liabilities and other payables | 36,355 | 12,039 | |||||||||
Total current liabilities | 2,092,369 | 822,568 | |||||||||
TOTAL LIABILITIES | $ | 2,092,369 | $ | 822,568 | |||||||
-1 | Payable to WFOE represents outstanding amounts due to Changshitong Consulting Co. Ltd. under the Exclusive Technical Service and Business Consulting Agreement for consulting services provided to Fujian Tianfeihong in exchange for 95% of Fujian Tianfeihong’s net income. The monthly payments of RMB 10,000 (approximately US$1,636) have not been paid as of February 28, 2014. | ||||||||||
For the three months ended | For the six months ended | ||||||||||
February 28, | February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 2,882,195 | $ | 2,937,135 | $ | 4,814,573 | $ | 4,917,803 | |||
Net income (2) | $ | 398,663 | $ | 502,261 | $ | 687,211 | $ | 840,107 | |||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
For the six months ended | |||||||||||
February 28, | |||||||||||
2014 | 2013 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Net cash provided by operating activities | $ | 1,265,516 | $ | 851,125 | |||||||
Net cash (used in) investing activities | -852 | - | |||||||||
Net cash provided by financing activities | 26,880 | 555,450 | |||||||||
Effect of exchange rate changes on cash | 15,875 | 108,056 | |||||||||
Net increase in cash | 1,307,419 | 1,514,631 | |||||||||
The Company believes that Changshitong Consulting’s contractual agreements with Fujian Tianfeihong are in compliance with PRC law and are legally enforceable. The stockholders of Fujian Tianfeihong are also the senior management of the Company and therefore the Company believes that they have no current interest in seeking to act contrary to the contractual arrangements. However, Fujian Tianfeihong and its stockholders may fail to take certain actions required for the Company’s business or to follow the Company’s instructions despite their contractual obligations to do so. Furthermore, if Fujian Tianfeihong or its stockholders do not act in the best interests of the Company under the contractual arrangements and any dispute relating to these contractual arrangements remains unresolved, the Company will have to enforce its rights under these contractual arrangements through PRC law and courts and therefore will be subject to uncertainties in the PRC legal system. All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. As a result, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements, which may make it difficult to exert effective control over Fujian Tianfeihong, and its ability to conduct the Company’s business may be adversely affected. | |||||||||||
CHANGE OF FISCAL YEAR END DATE | ' | ||||||||||
CHANGE OF FISCAL YEAR END DATE | |||||||||||
On December 30, 2013, the Board of Directors of the Company approved changing the fiscal year-end of the Company from December 31 to August 31 as a result of the Fanwei Hengchang Acquisition. | |||||||||||
USE OF ESTIMATES | ' | ||||||||||
USE OF ESTIMATES | |||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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 TRANSLATION | ' | ||||||||||
FOREIGN CURRENCY TRANSLATION | |||||||||||
Almost all Company assets are located in the PRC. The functional currency for the majority of 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 FASB ASC 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 amounts 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. | |||||||||||
The exchange rates used to translate amounts in RMB into US dollars for the purposes of preparing the financial statements are as follows: | |||||||||||
28-Feb-14 | 31-Aug-13 | ||||||||||
Balance sheet items, except for stockholders’ | |||||||||||
equity, as of periods end | 0.1632 | 0.1622 | |||||||||
For the three months | For the six months | ||||||||||
ended February 28, | ended February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Amounts included in the statements of income, | |||||||||||
statement of changes in stockholders’ equity and | |||||||||||
statements of cash flows for the periods | 0.1636 | 0.159 | 0.1632 | 0.1587 | |||||||
FOREIGN CURRENCY TRANSLATION (CONTINUED) | |||||||||||
For the three months ended February 28, 2014 and 2013, foreign currency translation adjustments of $76,490 and $18,940, respectively, have been reported as other comprehensive income. For the six months ended February 28, 2014 and 2013, foreign currency translation adjustments of $109,246 and $32,335 have been reported as other comprehensive income. Other comprehensive income of the Company consists entirely of foreign currency translation adjustments. Pursuant to ASC 740-30-25-17, “Exceptions to Comprehensive Recognition of Deferred Income Taxes,” the Company does not recognize deferred U.S. taxes related to the undistributed earnings of its foreign subsidiaries and, accordingly, recognizes no income tax expense or benefit from foreign currency translation adjustments. | |||||||||||
Although 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. | |||||||||||
REVENUE RECOGNITION | ' | ||||||||||
REVENUE RECOGNITION | |||||||||||
Revenues are primarily derived from selling fruit wine to contracted distributor and retail. The Company’s revenue recognition policies comply with FASB ASC 605 “Revenue Recognition.” The Company recognizes product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) our price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured. The Company recognizes revenue for product sales upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery or that services have been rendered. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. | |||||||||||
The Company has no product return or sales discount allowance because goods delivered and accepted by customers are normally not returnable. | |||||||||||
The Company recognizes gift sample products as cost of goods sold in compliance with ASC 605-50-S99. As such, when the Company gives a customer a free product, the expense associated with this free product at the time of sale is classified as cost of revenue in income. | |||||||||||
SHIPPING COSTS | ' | ||||||||||
SHIPPING COSTS | |||||||||||
Shipping costs incurred by the Company are recorded in general and administrative expenses. Shipping costs for the three and six months ended February 28, 2014 were $125,154 and $210,148, respectively; shipping costs for the three and six months ended February 28, 2013 were $120,808 and $205,435, respectively. | |||||||||||
VULNERABILITY DUE TO OPERATIONS IN PRC | ' | ||||||||||
VULNERABILITY DUE TO OPERATIONS IN 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, effective or continue. | |||||||||||
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. | |||||||||||
INVENTORY | ' | ||||||||||
INVENTORY | |||||||||||
Inventory, comprised principally of bottled wine, is valued at the lower of cost or market value. The value of inventories is determined using the first-in, first-out method. | |||||||||||
The Company estimates an inventory allowance for estimated unmarketable inventories. Inventory amounts are reported net of such allowances. There were no allowances for inventory as of February 28, 2014 and August 31, 2013. | |||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||
FASB ASC 820, “Fair Value Measurement,” defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. | |||||||||||
FIXED ASSETS | ' | ||||||||||
FIXED ASSETS | |||||||||||
Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the prices paid to acquire the assets, and any expenditures that substantially increase the 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 assets categories are as follows: | |||||||||||
Impairment of Long Lived Assets | ' | ||||||||||
IMPAIRMENT OF LONG-LIVED ASSESTS | |||||||||||
The Company applies FASB ASC 360, “Property, Plant and Equipment,” which addresses the financial accounting and reporting for the recognition and measurement of impairment losses for long-lived assets. In accordance with ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company may recognize the impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to those assets. No impairment of long-lived assets was recognized for the periods presented. | |||||||||||
INCOME TAXES | ' | ||||||||||
INCOME TAXES | |||||||||||
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of February 28, 2014 and August 31, 2013, the company has no deferred tax assets or liabilities. | |||||||||||
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 February 28, 2014 and August 31, 2013, the Company does not have a liability for any unrecognized tax benefits. | |||||||||||
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 provision for income tax in the United States has been made as the Company had no U.S. taxable income for the three and six months ended February 28, 2014 and 2013. | |||||||||||
PRC | |||||||||||
Changshitong Consulting and its VIE, Fujian Tianfeihong are subject to an Enterprise Income Tax at 25% and file their own tax returns. Consolidated tax returns are not permitted in China. | |||||||||||
BVI | |||||||||||
Fanwei Hengchang 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 | |||||||||||
Changshi Tongrong 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. | |||||||||||
Advertising Costs | ' | ||||||||||
Advertising Costs | |||||||||||
Advertising costs are charged to operations when incurred. For the three months ended February 28, 2014 and 2013, advertising expense was $94,888 and $55,809, respectively. For the six months ended February 28, 2014 and 2013, advertising expenses was $135,782 and $65,594, respectively. | |||||||||||
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. For six months ended February 28, 2014, a statutory reserve of $65,377 was required to be allocated by the Company. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_2
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||||
Feb. 28, 2014 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
Consolidated Financial Statements | ' | ||||||||||
February 28, | August 31, | ||||||||||
ASSETS | 2014 | 2013 | |||||||||
(Unaudited, in U.S. $) | (In U.S. $) | ||||||||||
Current assets: | |||||||||||
Cash | $ | 5,301,921 | $ | 3,994,502 | |||||||
Accounts receivable | 911,567 | 609,890 | |||||||||
Inventory | 508,643 | 461,232 | |||||||||
Prepaid expenses | 15,795 | - | |||||||||
Advances to suppliers | - | 45,670 | |||||||||
Total current assets | 6,737,926 | 5,111,294 | |||||||||
Fixed assets, net | 72,260 | 104,054 | |||||||||
TOTAL ASSETS | $ | 6,810,186 | $ | 5,215,348 | |||||||
LIABILITIES | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,579,167 | $ | 788,588 | |||||||
Payable to WFOE(1) | 378,730 | - | |||||||||
Taxes payable | 71,303 | 21,941 | |||||||||
Loan from stockholder | 26,814 | - | |||||||||
Accrued liabilities and other payables | 36,355 | 12,039 | |||||||||
Total current liabilities | 2,092,369 | 822,568 | |||||||||
TOTAL LIABILITIES | $ | 2,092,369 | $ | 822,568 | |||||||
-1 | Payable to WFOE represents outstanding amounts due to Changshitong Consulting Co. Ltd. under the Exclusive Technical Service and Business Consulting Agreement for consulting services provided to Fujian Tianfeihong in exchange for 95% of Fujian Tianfeihong’s net income. The monthly payments of RMB 10,000 (approximately US$1,636) have not been paid as of February 28, 2014. | ||||||||||
For the three months ended | For the six months ended | ||||||||||
February 28, | February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 2,882,195 | $ | 2,936,590 | $ | 4,814,573 | $ | 4,917,803 | |||
Net income (2) | $ | 398,663 | $ | 500,912 | $ | 687,211 | $ | 840,107 | |||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
For the six months ended | |||||||||||
February 28, | |||||||||||
2014 | 2013 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Net cash provided by operating activities | $ | 1,265,516 | $ | 851,125 | |||||||
Net cash (used in) investing activities | -852 | - | |||||||||
Net cash provided by financing activities | 26,880 | 555,450 | |||||||||
Effect of exchange rate changes on cash | 15,875 | 108,056 | |||||||||
Net increase in cash | 1,307,419 | 1,514,631 | |||||||||
Balance Sheet Items | ' | ||||||||||
28-Feb-14 | 31-Aug-13 | ||||||||||
Balance sheet items, except for stockholders’ | |||||||||||
equity, as of periods end | 0.1632 | 0.1622 | |||||||||
For the three months | For the six months | ||||||||||
ended February 28, | ended February 28, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Amounts included in the statements of income, | |||||||||||
statement of changes in stockholders’ equity and | |||||||||||
statements of cash flows for the periods | 0.1636 | 0.159 | 0.1632 | 0.1587 | |||||||
NOTE_5_FIXED_ASSETS_Tables
NOTE 5. FIXED ASSETS (Tables) | 3 Months Ended | ||||
Feb. 28, 2014 | |||||
Property, Plant and Equipment [Abstract] | ' | ||||
Fised Assets | ' | ||||
February 28, | August 31, | ||||
2014 | 2013 | ||||
(Unaudited) | |||||
Computers and equipment | $ | 24,724 | $ | 23,732 | |
Motor vehicles | 149,145 | 148,269 | |||
Fixtures and furniture | 13,937 | 13,856 | |||
187,806 | 185,857 | ||||
Less: Accumulated depreciation | -115,546 | -81,803 | |||
$ | 72,260 | $ | 104,054 |
NOTE_6_ACCRUED_LIABILITIES_AND1
NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES (Tables) | 6 Months Ended | ||||||||
Feb. 28, 2014 | |||||||||
Note 6. Accrued Liabilities And Other Payables Tables | ' | ||||||||
Accrued Liabilities | ' | ||||||||
February 28, | August 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Accrued payroll | $ | 9,290 | $ | 9,783 | |||||
Professional fees | 20,999 | — | |||||||
Other | 6,066 | 2,256 | |||||||
$ | 36,355 | $ | 12,039 |
NOTE_7_INCOME_TAXES_Tables
NOTE 7. INCOME TAXES (Tables) | 3 Months Ended | ||||||||
Feb. 28, 2014 | |||||||||
Schedule of Investments [Abstract] | ' | ||||||||
Schedule of Income Tax Expense Benefits | ' | ||||||||
For the three months ended | For the Six months ended | ||||||||
February 28, | February 28, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Current | $ | 128,977 | $ | 167,389 | $ | 223,602 | $ | 280,036 | |
Deferred | - | - | - | - | |||||
$ | 128,977 | $ | 167,389 | $ | 223,602 | $ | 280,036 |
NOTE_8_LEASES_Tables
NOTE 8. LEASES (Tables) | 3 Months Ended | ||||||
Feb. 28, 2014 | |||||||
Accounting Policies [Abstract] | ' | ||||||
Schedule of Lease | ' | ||||||
Period Ending | |||||||
August 31, | Amount | ||||||
2014 | $ | 7,181 | |||||
2015 | 43,085 | ||||||
2016 | 43,085 | ||||||
2017 | 35,904 | ||||||
$ | 129,255 |
NOTE_1_ORGANIZATION_Details_Na
NOTE 1. ORGANIZATION (Details Narrative) (USD $) | 3 Months Ended | ||||
Feb. 28, 2014 | Dec. 30, 2013 | Nov. 26, 2013 | Aug. 31, 2013 | Aug. 01, 2013 | |
Notes to Financial Statements | ' | ' | ' | ' | ' |
Reverse Stock Split | 0.16 | ' | ' | ' | ' |
Pre-Reverse Split Shares Outstanding | ' | ' | ' | ' | 14,380,266 |
Shares Outstanding | 34,396,680 | ' | ' | 32,000,000 | 2,396,680 |
Common shares Authorized | 80,000,000 | ' | ' | 80,000,000 | 80,000,000 |
Percent of Shares | ' | 100.00% | ' | ' | ' |
Amount of Profits Owed | ' | ' | 95.00% | ' | ' |
Monthly Payment in $US | ' | ' | $1,587 | ' | ' |
Exchange Rate | ' | ' | 0.16 | ' | ' |
Shares Issued | 32,000,000 | ' | ' | ' | ' |
Percent of shares issued to Fanwei Hengchang | ' | 93.03% | ' | ' | ' |
NOTE_2_SUMMARY_OF_SIGNIFICANT_3
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fujian Tianfeihong Consolidated Balance Sheet (Details) (USD $) | Feb. 28, 2014 | Aug. 31, 2013 | Feb. 28, 2013 | Aug. 31, 2012 | ||
Current assets: | ' | ' | ' | ' | ||
Cash | $5,302,421 | $3,994,502 | $3,423,415 | $1,908,784 | ||
Inventory | 508,643 | 461,232 | ' | ' | ||
Prepaid expenses | 15,795 | ' | ' | ' | ||
Total current assets | 6,738,426 | 5,111,294 | ' | ' | ||
Fixed assets, net | 72,260 | 104,054 | ' | ' | ||
TOTAL ASSETS | 6,810,686 | 5,215,348 | ' | ' | ||
Current liabilities: | ' | ' | ' | ' | ||
Accounts payable | 1,579,167 | 788,588 | ' | ' | ||
Taxes payable | 72,630 | 31,222 | ' | ' | ||
Total current liabilities | 1,714,966 | 831,849 | ' | ' | ||
Fujian Tianfeihong | ' | ' | ' | ' | ||
Current assets: | ' | ' | ' | ' | ||
Cash | 5,301,921 | 3,994,502 | ' | ' | ||
Accounts receivable | 911,567 | 609,890 | ' | ' | ||
Inventory | 508,643 | 461,232 | ' | ' | ||
Prepaid expenses | 15,795 | ' | ' | ' | ||
Advances to suppliers | ' | 45,670 | ' | ' | ||
Total current assets | 6,737,926 | 5,111,294 | ' | ' | ||
Fixed assets, net | 72,260 | 104,054 | ' | ' | ||
TOTAL ASSETS | 6,810,186 | 5,215,348 | ' | ' | ||
Current liabilities: | ' | ' | ' | ' | ||
Accounts payable | 1,579,167 | 788,588 | ' | ' | ||
Payable to WFOE(1) | 378,730 | [1] | ' | [1] | ' | ' |
Taxes payable | 71,303 | 21,941 | ' | ' | ||
Loan from stockholder | 26,814 | ' | ' | ' | ||
Accrued liabilities and other payables | 36,355 | 12,039 | ' | ' | ||
Total current liabilities | 2,092,369 | 822,568 | ' | ' | ||
TOTAL LIABILITIES | $2,092,369 | $822,568 | ' | ' | ||
[1] | Payable to WFOE represents outstanding amounts due to Changshitong Consulting Co. Ltd. under the Exclusive Technical Service and Business Consulting Agreement for consulting services provided to Fujian Tianfeihong in exchange for 95% of Fujian Tianfeihong?s net income. The monthly payments of RMB 10,000 (approximately US$1,636) have not been paid as of February 28, 2014. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_4
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Exchange Rates Used to Translate Amounts (Details) | 3 Months Ended | 6 Months Ended | |||||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | Nov. 26, 2013 | Feb. 28, 2014 | Aug. 31, 2013 | |
Balance Sheet Items | Balance Sheet Items | ||||||
Exchange Rate Used for financial Statements | ' | ' | ' | ' | 0.16 | 0.1632 | 0.1622 |
Exchange Rate Used for amounts included in the statements of income, statements of changes in stockholders' equity and statements of cash flows for the period | 0.1636 | 0.159 | 0.1632 | 0.1587 | ' | ' | ' |
NOTE_2_SUMMARY_OF_SIGNIFICANT_5
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fujian Tainfeihong Consolidated Income Statement (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||||||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | |||||
Net income (2) | ' | ' | $687,147 | $840,107 | ||||
Fujian Tianfeihong | ' | ' | ' | ' | ||||
Revenue | 4,814,573 | 4,814,573 | 2,882,195 | 2,936,590 | ||||
Net income (2) | $687,211 | [1] | $840,107 | [1] | $398,663 | [1] | $500,912 | [1] |
[1] | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_6
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fujian Tianfeihong Consolidated Statements of Cash Flows (Details) (USD $) | 6 Months Ended | |
Feb. 28, 2014 | Feb. 28, 2013 | |
Net cash provided by operating activities | $1,257,497 | $851,125 |
Net cash (used in) investing activities | -852 | ' |
Net cash provided by financing activities | 26,880 | 555,450 |
Effect of exchange rate changes on cash | 24,394 | 108,056 |
Fujian Tianfeihong | ' | ' |
Net cash provided by operating activities | 1,265,516 | 851,125 |
Net cash (used in) investing activities | -852 | ' |
Net cash provided by financing activities | 26,880 | 555,450 |
Effect of exchange rate changes on cash | 15,875 | 108,056 |
Net increase in cash | $1,307,419 | $1,514,631 |
NOTE_2_SUMMARY_OF_SIGNIFICANT_7
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 8 Months Ended | ||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' |
Foreign Currency Translation | $76,490 | $18,940 | $109,246 | $32,335 | ' |
Shipping Cost | 125,154 | 210,148 | 120,808 | 205,435 | ' |
Account Receivable | 911,567 | ' | -301,677 | -323,554 | 609,890 |
U.S. Tax Rate Low | 15.00% | ' | ' | ' | ' |
U.S. Tax High | 3500.00% | ' | ' | ' | ' |
PRC Tax Rate | 25.00% | ' | ' | ' | ' |
Advertising Cost | 94,888 | 55,809 | 135,782 | 65,594 | ' |
Statutory Reserve | $65,377 | ' | $65,377 | ' | $65,377 |
NOTE_5_FIXED_ASSETS_Fixed_Asse
NOTE 5. FIXED ASSETS - Fixed Assets (Details) (USD $) | Feb. 28, 2014 | Aug. 31, 2013 |
Property, Plant and Equipment [Abstract] | ' | ' |
Computers and equipment | $24,724 | $23,732 |
Motor vehicles | 149,145 | 148,269 |
Fixtures and furniture | 13,937 | 13,856 |
Total Fixed Assets | 187,806 | 185,857 |
Less: Accumulated depreciation | -115,546 | -81,803 |
Fixed Assets Net | $72,260 | $104,054 |
NOTE_5_FIXED_ASSETS_Details_Na
NOTE 5. FIXED ASSETS (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 8 Months Ended | |
Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' | ' |
Depreciation Expense | $2,795 | $33,260 | $5,536 | $22,700 |
NOTE_6_ACCRUED_LIABILITIES_AND2
NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES - Accrued Liabilities (Details Narrative) (USD $) | Feb. 28, 2014 | Aug. 31, 2013 |
Payables and Accruals [Abstract] | ' | ' |
Accrued payroll | $9,290 | $9,783 |
Professional fees | 20,999 | ' |
Other | 6,066 | 2,256 |
Total Accrued Liabilities | $36,355 | $12,039 |
NOTE_7_INCOME_TAXES_Schedule_o
NOTE 7 . INCOME TAXES - Schedule of Income Tax Expense Benefits (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | |
Note 7 . Income Taxes - Schedule Of Income Tax Expense Benefits Details Narrative | ' | ' | ' | ' |
Current | $128,977 | $167,389 | $223,602 | $280,036 |
Deferred | ' | ' | ' | ' |
Tax Benefit/ Expense | $128,977 | $167,389 | $223,602 | $280,036 |
NOTE_8_LEASES_Minimum_Future_R
NOTE 8. LEASES - Minimum Future Rentals (Details Narrative) (USD $) | Feb. 28, 2014 |
Accounting Policies [Abstract] | ' |
2014 | $7,181 |
2015 | 43,085 |
2016 | 43,085 |
2017 | 35,904 |
Thereafter | $129,255 |
NOTE_8_LEASES_Details_Narrativ
NOTE 8. LEASES (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Rent Expense | $15,109 | $14,303 | $30,144 | $28,553 |
Increase in Rent | 10.00% | ' | 10.00% | ' |
Prepaid Rent | 15,795 | ' | 15,795 | ' |
Total Rent For One Year | $60,288 | ' | $60,288 | ' |