Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Dec. 02, 2014 | |
Document And Entity Information | ||
Entity Registrant Name | China Tianfeihong Wine Inc | |
Entity Central Index Key | 1501225 | |
Document Type | 10-K | |
Document Period End Date | 31-Aug-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -23 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $0 | |
Entity Common Stock, Shares Outstanding | 34,396,680 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2014 |
Balance_Sheets
Balance Sheets (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Current assets: | ||
Cash | $5,229,261 | $3,994,502 |
Accounts receivable | 431,940 | 609,890 |
Inventory, net | 375,750 | 461,232 |
Prepaid income taxes | 50,348 | |
Prepaid expenses | 40,625 | |
Advances to suppliers | 45,670 | |
Total current assets | 6,127,924 | 5,111,294 |
Fixed assets, net | 48,113 | 104,054 |
Total Assets | 6,176,037 | 5,215,348 |
Current liabilities: | ||
Accounts payable | 682,030 | 788,588 |
Taxes payable | 19,465 | 31,222 |
Loans from stockholder | 24,339 | |
Accrued liabilities and other payables | 72,981 | 12,039 |
Total current liabilities | 798,815 | 831,849 |
Stockholders equity: | ||
Common stock, $0.0006 par value per share, 80,000,000 shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of August 31, 2014 and August 31, 2013, respectively | 20,638 | 19,200 |
Additional paid-in capital | 726,548 | 812,159 |
Statutory reserve fund | 420,406 | 333,676 |
Retained earnings | 3,865,318 | 3,003,080 |
Other comprehensive income | 203,702 | 124,618 |
Stockholders equity before noncontrolling interests | 5,236,612 | 4,292,733 |
Noncontrolling interests | 140,610 | 90,766 |
Total stockholders equity | 5,377,222 | 4,383,499 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | $6,176,037 | $5,215,348 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Aug. 31, 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 $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Income Statement [Abstract] | ||
Revenue | $7,469,997 | $8,681,546 |
Cost of goods sold | -5,019,086 | -5,660,269 |
Gross profit | 2,450,911 | 3,021,277 |
Operating expenses | ||
Selling and marketing | 838,339 | 889,005 |
General and administrative | 298,548 | 295,841 |
Total operating expenses | 1,136,887 | 1,184,846 |
Income from operations | 1,314,024 | 1,836,431 |
Interest income | 17,350 | 11,941 |
Income before provision for income taxes | 1,331,374 | 1,848,372 |
Provision for income taxes | 332,871 | 468,033 |
Net income | 998,503 | 1,380,339 |
Noncontrolling interests | -49,535 | -49,820 |
Net income attributable to common stockholders | 948,968 | 1,330,519 |
Earnings per common share, basic and diluted | $0.03 | $0.04 |
Weighted average shares outstanding, basic and diluted | 33,597,787 | 32,000,000 |
Comprehensive income : | ||
Net income | 998,503 | 1,380,339 |
Foreign currency translation adjustment | 79,393 | 94,704 |
Comprehensive income | 1,077,896 | 1,475,043 |
Comprehensive income attributable to noncontrolling interests | -49,844 | -50,526 |
Comprehensive income attributable to common stockholders | $1,028,052 | $1,424,517 |
Shareholders_Equity
Shareholders Equity (USD $) | Common Stock | Additional Paid-In Capital | Statutory Reserve Fund | Retained Earnings | Other Comprehensive Income | Noncontrolling Interest | Total |
Beginning Balance at Aug. 31, 2012 | $19,200 | $244,309 | $200,624 | $1,805,613 | $30,620 | $40,240 | $2,340,606 |
Capital contribution by shareholder | 567,850 | 567,850 | |||||
Net income | 1,330,519 | 49,820 | 1,380,339 | ||||
Appropriation to statutory reserve | 133,052 | -133,052 | |||||
Foreign currency translation adjustment | 93,998 | 706 | 94,704 | ||||
Ending Balance at Aug. 31, 2013 | 19,200 | 812,159 | 333,676 | 3,003,080 | 124,618 | 90,766 | 4,383,499 |
Capital contribution by shareholder | 1,438 | -85,611 | -84,173 | ||||
Net income | 948,968 | 49,535 | 998,503 | ||||
Appropriation to statutory reserve | 86,730 | -86,730 | |||||
Foreign currency translation adjustment | 79,084 | 309 | 79,393 | ||||
Ending Balance at Aug. 31, 2014 | $20,638 | $726,548 | $420,406 | $3,865,318 | $203,702 | $140,610 | $5,377,222 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash flows from operating activities: | ||
Net income | $998,503 | $1,380,339 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 57,025 | 41,620 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 177,950 | -138,648 |
Decrease (increase) in inventory | 85,482 | -9,964 |
(Increase) in prepaid income tax | -50,348 | |
(Increase) in prepaid expenses | -40,625 | |
Decrease (Increase) in advances to suppliers | 45,670 | -4,094 |
(Decrease) increase in accounts payable | -106,558 | 159,653 |
(Decrease) increase in taxes payable | -11,757 | 64,248 |
Increase in accrued liabilities and other payables | 60,942 | 241 |
Net cash provided by operating activities | 1,216,284 | 1,443,575 |
Cash flows from investing activities: | ||
Purchase of equipment | -849 | |
Net cash (used in) investing activities | -849 | |
Cash flows from financing activities: | ||
Capital contributed by stockholder | 559,910 | |
Proceeds from stockholder loans | 24,369 | |
Net cash provided by financing activities | 24,369 | 559,910 |
Effect of exchange rate changes on cash | -5,045 | 82,233 |
Net change in cash | 1,234,759 | 2,085,718 |
Cash, beginning | 3,994,502 | 1,908,784 |
Cash, end | 5,229,261 | 3,994,502 |
Cash paid for: | ||
Interest | ||
Income taxes | $380,640 | $458,752 |
1_ORGANIZATION
1. ORGANIZATION | 12 Months Ended |
Aug. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 the 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. The Name Change and the Reserve Split were 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 remained at 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 the 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 the business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to is 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 indirectly 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 agreements with Changshitong Consulting. | |
Subsequent to the closing of the Share Exchange Agreement, the Company conducts operations through its controlled consolidated affiliate. Fujian Tianfeihong. Fujian Tianfeihong is primarily engaged in distributing fruit wine including green plum wine, loquat wine, olive wine and pomegranate wine to supermarkets and liquor stores in the People’s Republic of China (“PRC”). | |
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.$1,627). The Agreement has an unlimited term and only can be terminated upon written agreement of both parties. | |
Proxy Agreement: Pursuant to the Proxy Agreement, Zhiliang Fang and Jinxiang Fang, 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 agreement of both parties. | |
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 they 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 (US$0.16) or the minimum price required by PRC laws if at that time there is any 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 equity interests under the Agreement have been transferred to Changshitong Consulting or its designated entities or natural persons. | |
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. | |
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: | |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
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 consolidated financial statements for the year ended August 31, 2014, include China Tianfeihong Wine, Inc., Fanwei Hengchang, Changshi Tongrong and its wholly owned subsidiary, Changshitong Consulting and its VIE, Fujian Tianfeihong. The consolidated financial statements for the year ended August 31, 2013 include Fanwei Hengchang, Changshi Tongrong and Fujian Tianfeihong, as all the other entities were not in existence at that time. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
The consolidated financial statements for the years ended August 31, 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 financial statements. | |||||||||||
All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”). | |||||||||||
RECLASSIFICATION | |||||||||||
The consolidated financial statements for the period ended August 31, 2013 have been reclassified to conform to the headings and classifications used in the August 31, 2014 consolidated financial statements. | |||||||||||
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 balances of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. | |||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||
TOTAL ASSETS(1) | $ | 6,175,646 | $ | 5,215,348 | |||||||
TOTAL LIABILITIES(1) | $ | 781,126 | $ | 831,849 | |||||||
(1) Total assets and liabilities of the VIE is reported net of intercompany balances that have been eliminated with the VIE consolidation. | |||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Revenue | $ | 7,469,997 | $ | 8,681,546 | |||||||
Net income (2) | $ | 990,688 | $ | 1,380,339 | |||||||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Net cash provided by operating activities | $ | 1,214,686 | $ | 1,443,575 | |||||||
Net cash (used in) investing activities | (849 | ) | — | ||||||||
Net cash provided by financing activities | 24,369 | 559,910 | |||||||||
Effect of exchange rate changes on cash | (3,837 | ) | 82,233 | ||||||||
Net increase in cash | 1,234,369 | 2,085,718 | |||||||||
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 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 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 consolidated 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 consolidated financial statements are as follows: | |||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||
Consolidated balance sheet items, except for stockholders’ equity, as of the year end | 0.1625 | 0.1622 | |||||||||
Amounts included in the statements of income, | 0.1627 | 0.1599 | |||||||||
statement of changes in stockholders’ equity and | |||||||||||
statements of cash flows for the year | |||||||||||
For the years ended August 31, 2014 and 2013, foreign currency translation adjustments of $79,393 and $94,704, respectively, have been reported as other comprehensive income (loss). 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 wines to contract distributors and retail establishments. 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) the 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. 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 returns or sales discounts and allowances 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 goods sold. | |||||||||||
SHIPPING COSTS | |||||||||||
Shipping costs incurred by the Company are recorded in selling and marketing expenses. Shipping costs for the years ended August 31, 2014 and 2013 were $324,261 and $368,581, 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 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 August 31, 2014 and 2013, the Company considers accounts receivable of $431,940 and $609,890, respectively, 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 periodically estimates an inventory allowance for estimated unmarketable inventories. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of August 31, 2014 and 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 price paid to acquire the asset, 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 asset categories are as follows: | |||||||||||
Computers and equipment 3 years | |||||||||||
Motor vehicles 4 years | |||||||||||
Fixture and furniture 5 years | |||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS | |||||||||||
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 August 31, 2014 and 2013, the Company had 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 August 31, 2014 and 2013, the Company does not have accruals for uncertain tax positions. | |||||||||||
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 taxes in the United States has been made as the Company had no U.S. taxable income for the years ended August 31, 2014 and 2013 because it is the Company's intention to indefinitely reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional US income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. | |||||||||||
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 the 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 years ended August 31, 2014 and 2013, advertising expense was $234,939 and $166,566, respectively. | |||||||||||
STATUTORY RESERVE FUND | |||||||||||
Pursuant to the 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 the year ended August 31, 2014 and 2013, a statutory reserve of $86,730 and $133,052 was required to be allocated by the Company, respectively. |
3_RECENTLY_ISSUED_ACCOUNTING_S
3. RECENTLY ISSUED ACCOUNTING STANDARDS | 12 Months Ended |
Aug. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
3. RECENTLY ISSUED ACCOUNTING STANDARDS | NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS |
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. | |
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition”. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new rule also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Companies are permitted to adopt this new rule following either a full or modified retrospective approach. Early adoption is not permitted. The Company has not yet determined the potential impacts of this updated authoritative guidance on its consolidated financial statements. | |
In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which amends the requirements for reporting discontinued operations. Under ASU 2014-08, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, this ASU requires additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2014, with early adoption permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements. | |
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 did not have a material impact on the Company's consolidated financial statements. |
4_FAIR_VALUE_OF_FINANCIAL_INST
4. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | ||
Aug. 31, 2014 | |||
Fair Value Disclosures [Abstract] | |||
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 August 31, 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, accounts receivable, accounts payable 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. |
5_FIXED_ASSETS
5. FIXED ASSETS | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
5. FIXED ASSETS | NOTE 5. FIXED ASSETS | ||||||||
Fixed assets are summarized as follows: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Computers and equipment | $ | 24,618 | $ | 23,732 | |||||
Motor vehicles | 148,504 | 148,269 | |||||||
Fixtures and furniture | 13,878 | 13,856 | |||||||
187,000 | 185,857 | ||||||||
Less: Accumulated depreciation | (138,887 | ) | (81,803 | ) | |||||
Fixed assets, net | $ | 48,113 | $ | 104,054 | |||||
For the years ended August 31, 2014 and 2013, depreciation expense was $57,025 and $41,620 respectively. |
6_ACCRUED_LIABILITIES_AND_OTHE
6. ACCRUED LIABILITIES AND OTHER PAYABLES | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
6. ACCRUED LIABILITIES AND OTHER PAYABLES | NOTE 6. ACCRUED LIABILITIES AND OTHER PAYABLES | ||||||||
Accrued liabilities and other payables consisted of the following: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Accrued payroll | $ | 9,250 | $ | 9,783 | |||||
Professional fees | 47,941 | — | |||||||
Other | 15,790 | 2,256 | |||||||
Accrued liabilities and other payables | $ | 72,981 | $ | 12,039 | |||||
7_LEASES
7. LEASES | 12 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Leases [Abstract] | |||||||
7. LEASES | NOTE 7. LEASES | ||||||
The Company leases office space under an eight-year operating lease from an unrelated third party, expiring on June 30, 2017. This lease has a renewal option. This lease requires the Company to pay the total rent in advance for one year of RMB 264,000 (US$43,006). The monthly rent charge was increased from RMB 22,000 (USD $3,579) to RMB 25,000 (USD $4,068) commencing July 2014. | |||||||
The minimum future rentals under this lease as of August 31, 2014 are as follows: | |||||||
Period Ending | |||||||
August 31, | Amount | ||||||
2015 | $ | 48,810 | |||||
2016 | 48,810 | ||||||
2017 | 40,675 | ||||||
$ | 138,295 | ||||||
The Company had an operating lease for other office space at a monthly rent of approximately $1,429 that expired on April 22, 2014 and was not renewed. | |||||||
Rent expense for the years ended August 31, 2014 and 2013 was $53,934 and $55,003, respectively. |
8_INCOME_TAXES
8. INCOME TAXES | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Income Tax Disclosure [Abstract] | |||||||||||
8. INCOME TAXES | NOTE 8. INCOME TAXES | ||||||||||
The provision for income taxes consisted of the following: | |||||||||||
For the year ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Current | $ | 332,871 | $ | 468,033 | |||||||
Deferred | — | — | |||||||||
$ | 332,871 | $ | 468,033 | ||||||||
The Company is required to file income tax returns in both the PRC and the United States. PRC tax filings for the tax year ended December 31, 2013 were examined by the PRC tax authorities before May 31, 2014. The tax filings were accepted and no adjustments were proposed by the PRC tax authorities. | |||||||||||
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 August 31, 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. |
9_RELATED_PARTY_TRANSACTIONS
9. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2014 | |
Related Party Transactions [Abstract] | |
9. RELATED PARTY TRANSACTIONS | NOTE 9. RELATED PARTY TRANSACTIONS |
From time to time, the majority stockholder has loaned money to the Company, primarily to meet the non-RMB cash requirements. The loans are non-interest bearing and due on demand. The balance of $24,339 and $0 at August 31, 2014 and August 31, 2013, respectively, represents professional and legal fees incurred in the U.S. paid by this stockholder. The balance is reflected as loans from stockholder on the consolidated balance sheet. |
10_CONTINGENCIES
10. CONTINGENCIES | 12 Months Ended |
Aug. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
10. CONTINGENCIES | NOTE 10. CONTINGENCIES |
The Company did not file with the U.S. Internal Revenue Service the information report for the year ended December 31, 2013 concerning its interest in foreign bank accounts on form TDF 90-22.1, “Report of Foreign Bank and Financial Accounts” (“FBAR”). Not complying with the FBAR reporting and recordkeeping requirements will subject the Company to civil penalties up to $10,000 for each of its foreign bank accounts. The Company has not determined the amount of any penalties that may be assessed at this time and believes that penalties, if any, that may be assessed would not be material to the consolidated financial statements. |
11_CONCENTRATION_OF_CREDIT_AND
11. CONCENTRATION OF CREDIT AND BUSINESS RISKS | 12 Months Ended |
Aug. 31, 2014 | |
Risks and Uncertainties [Abstract] | |
11. CONCENTRATION OF CREDIT AND BUSINESS RISKS | NOTE 11. CONCENTRATION OF CREDIT AND BUSINESS RISKS |
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. | |
As of August 31, 2014 and 2013, no customer accounted for more than 10% of accounts receivable. There were no major customers which accounted for 10% or more of the total net revenue for the years ended August 31, 2014 and 2013. Four vendors individually accounted for more than 10% of purchases for the year ended August 31, 2014 and 2013. The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral. Credit losses have not been significant. | |
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 and effective or that it will continue. |
12_CONDENSED_FINANCIAL_INFORMA
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT | NOTE 12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT | ||||||||
Under PRC laws and regulations, the Company’s PRC subsidiary and VIE 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 subsidiary and VIE amounted to $5,236,612 and $4,292,733 as of August 31, 2014 and 2013, respectively. | |||||||||
In addition, the Company’s operations and revenues are conducted and generated in the PRC; 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 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 Company to be filed when the restricted net assets of consolidated subsidiaries and VIE’s exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the registrant’s proportionate share of net assets of its consolidated subsidiaries and VIEs (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company 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 subsidiary and VIE exceed 25% of the consolidated net assets of the Company. | |||||||||
The following condensed financial information of the Company includes the US parent only balance sheets as of August 31, 2014 and 2013, and the US parent company only statements of operations, and cash flows for the years ended August 31, 2014 and 2013: | |||||||||
Condensed Balance Sheets | |||||||||
ASSETS | August 31, | August 31, | |||||||
2014 | 2013 | ||||||||
Investment in subsidiaries and VIEs | 5,236,612 | 4,292,733 | |||||||
TOTAL ASSETS | $ | 5,236,612 | $ | 4,292,733 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Accrued expenses and other payables | $ | — | $ | — | |||||
Total liabilities | — | — | |||||||
Stockholders’ equity | |||||||||
Common stock, $0.0006 par value per share, 80,000,000 shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of August 31, 2014 and 2013, respectively | 20,638 | 19,200 | |||||||
Additional paid-in capital | 726,548 | 812,159 | |||||||
Retained earnings | 4,489,426 | 3,461,374 | |||||||
Total stockholders’ equity | 5,236,612 | 4,292,733 | |||||||
TOTAL LIABILITIES AND | $ | 5,236,612 | $ | 4,292,733 | |||||
STOCKHOLDERS’ EQUITY | |||||||||
Condensed Statements of Operations | |||||||||
Year Ended August 31, | |||||||||
2014 | 2013 | ||||||||
Revenues | |||||||||
Share of earnings from investment in | $ | 1,032,802 | $ | 1,424,517 | |||||
subsidiaries and VIEs | |||||||||
Operating expenses | |||||||||
General and administrative | 4,750 | — | |||||||
Net income | $ | 1,028,052 | $ | 1,424,517 | |||||
Condensed Statements of Cash Flows | |||||||||
Year Ended August 31, | |||||||||
2014 | 2013 | ||||||||
Cash flows from operating activities | |||||||||
Net income | $ | 1,028,052 | $ | 1,424,517 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||||||||
Share of earnings from investment in subsidiaries and VIEs | (1,028,052 | ) | (1,424,517 | ) | |||||
Net cash (used in) operating activities | — | — | |||||||
Cash flows from financing activities | |||||||||
Advance from stockholders | — | — | |||||||
Net increase in cash | — | — | |||||||
Cash, beginning of year | — | — | |||||||
Cash, end of year | $ | — | $ | — | |||||
Basis of Presentation | |||||||||
The Company records its investment in its subsidiaries and VIEs under the equity method of accounting. Such investment is presented as “Investment in subsidiaries and VIEs” on the condensed balance sheets and shares of the subsidiaries and VIEs’ profits are presented as “Share of earnings from investment in subsidiaries and VIEs” in the condensed statements of operations. | |||||||||
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. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
BASIS OF ACCOUNTING AND PRESENTATION | BASIS OF ACCOUNTING AND PRESENTATION | ||||||||||
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting. The consolidated financial statements for the year ended August 31, 2014, include China Tianfeihong Wine, Inc., Fanwei Hengchang, Changshi Tongrong and its wholly owned subsidiary, Changshitong Consulting and its VIE, Fujian Tianfeihong. The consolidated financial statements for the year ended August 31, 2013 include Fanwei Hengchang, Changshi Tongrong and Fujian Tianfeihong, as all the other entities were not in existence at that time. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
The consolidated financial statements for the years ended August 31, 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 financial statements. | |||||||||||
All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”). | |||||||||||
RECLASSIFICATION | RECLASSIFICATION | ||||||||||
The consolidated financial statements for the period ended August 31, 2013 have been reclassified to conform to the headings and classifications used in the August 31, 2014 consolidated financial statements. | |||||||||||
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 balances of Fujian Tianfeihong have been included in the accompanying consolidated financial statements. | |||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||
TOTAL ASSETS(1) | $ | 6,175,646 | $ | 5,215,348 | |||||||
TOTAL LIABILITIES(1) | $ | 781,126 | $ | 831,849 | |||||||
(1) Total assets and liabilities of the VIE is reported net of intercompany balances that have been eliminated with the VIE consolidation. | |||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Revenue | $ | 7,469,997 | $ | 8,681,546 | |||||||
Net income (2) | $ | 990,688 | $ | 1,380,339 | |||||||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Net cash provided by operating activities | $ | 1,214,686 | $ | 1,443,575 | |||||||
Net cash (used in) investing activities | (849 | ) | — | ||||||||
Net cash provided by financing activities | 24,369 | 559,910 | |||||||||
Effect of exchange rate changes on cash | (3,837 | ) | 82,233 | ||||||||
Net increase in cash | 1,234,369 | 2,085,718 | |||||||||
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 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 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 consolidated 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 consolidated financial statements are as follows: | |||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||
Consolidated balance sheet items, except for stockholders’ equity, as of the year end | 0.1625 | 0.1622 | |||||||||
Amounts included in the statements of income, | 0.1627 | 0.1599 | |||||||||
statement of changes in stockholders’ equity and | |||||||||||
statements of cash flows for the year | |||||||||||
For the years ended August 31, 2014 and 2013, foreign currency translation adjustments of $79,393 and $94,704, respectively, have been reported as other comprehensive income (loss). 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 wines to contract distributors and retail establishments. 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) the 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. 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 returns or sales discounts and allowances 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 goods sold. | |||||||||||
SHIPPING COSTS | SHIPPING COSTS | ||||||||||
Shipping costs incurred by the Company are recorded in selling and marketing expenses. Shipping costs for the years ended August 31, 2014 and 2013 were $324,261 and $368,581, 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 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 August 31, 2014 and 2013, the Company considers accounts receivable of $431,940 and $609,890, respectively, fully collectible. For the periods presented, the Company did not write off any accounts receivable as bad debts. | |||||||||||
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 periodically estimates an inventory allowance for estimated unmarketable inventories. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of August 31, 2014 and 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 price paid to acquire the asset, 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 asset categories are as follows: | |||||||||||
Computers and equipment 3 years | |||||||||||
Motor vehicles 4 years | |||||||||||
Fixture and furniture 5 years | |||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS | ||||||||||
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 August 31, 2014 and 2013, the Company had 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 August 31, 2014 and 2013, the Company does not have accruals for uncertain tax positions. | |||||||||||
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 taxes in the United States has been made as the Company had no U.S. taxable income for the years ended August 31, 2014 and 2013 because it is the Company's intention to indefinitely reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional US income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. | |||||||||||
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 the 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 years ended August 31, 2014 and 2013, advertising expense was $234,939 and $166,566, respectively. | |||||||||||
STATUTORY RESERVE FUND | STATUTORY RESERVE FUND | ||||||||||
Pursuant to the 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 the year ended August 31, 2014 and 2013, a statutory reserve of $86,730 and $133,052 was required to be allocated by the Company, respectively. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
VARIABLE INTEREST ENTITY | 31-Aug-14 | 31-Aug-13 | |||||||||
TOTAL ASSETS(1) | $ | 6,175,646 | $ | 5,215,348 | |||||||
TOTAL LIABILITIES(1) | $ | 781,126 | $ | 831,849 | |||||||
(1) Total assets and liabilities of the VIE is reported net of intercompany balances that have been eliminated with the VIE consolidation. | |||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Revenue | $ | 7,469,997 | $ | 8,681,546 | |||||||
Net income (2) | $ | 990,688 | $ | 1,380,339 | |||||||
-2 | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. | ||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Net cash provided by operating activities | $ | 1,214,686 | $ | 1,443,575 | |||||||
Net cash (used in) investing activities | (849 | ) | — | ||||||||
Net cash provided by financing activities | 24,369 | 559,910 | |||||||||
Effect of exchange rate changes on cash | (3,837 | ) | 82,233 | ||||||||
Net increase in cash | 1,234,369 | 2,085,718 | |||||||||
5_FIXED_ASSETS_Tables
5. FIXED ASSETS (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
FIXED ASSETS | August 31, | August 31, | |||||||
2014 | 2013 | ||||||||
Computers and equipment | $ | 24,618 | $ | 23,732 | |||||
Motor vehicles | 148,504 | 148,269 | |||||||
Fixtures and furniture | 13,878 | 13,856 | |||||||
187,000 | 185,857 | ||||||||
Less: Accumulated depreciation | (138,887 | ) | (81,803 | ) | |||||
Fixed assets, net | $ | 48,113 | $ | 104,054 |
6_ACCRUED_LIABILITIES_AND_OTHE1
6. ACCRUED LIABILITIES AND OTHER PAYABLES (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
ACCRUED LIABILITIES AND OTHER PAYABLES | August 31, | August 31, | |||||||
2014 | 2013 | ||||||||
Accrued payroll | $ | 9,250 | $ | 9,783 | |||||
Professional fees | 47,941 | — | |||||||
Other | 15,790 | 2,256 | |||||||
Accrued liabilities and other payables | $ | 72,981 | $ | 12,039 |
7_LEASES_Tables
7. LEASES (Tables) | 12 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Leases [Abstract] | |||||||
LEASES | Period Ending | ||||||
August 31, | Amount | ||||||
2015 | $ | 48,810 | |||||
2016 | 48,810 | ||||||
2017 | 40,675 | ||||||
$ | 138,295 | ||||||
8_INCOME_TAXES_Tables
8. INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Income Tax Disclosure [Abstract] | |||||||||||
INCOME TAXES | For the year ended August 31, | ||||||||||
2014 | 2013 | ||||||||||
Current | $ | 332,871 | $ | 468,033 | |||||||
Deferred | — | — | |||||||||
$ | 332,871 | $ | 468,033 |
12_CONDENSED_FINANCIAL_INFORMA1
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||
CONDENSED FINANCIAL INFORMATION OF REGISTRANT - BALANCE SHEETS | ASSETS | August 31, | August 31, | ||||||
2014 | 2013 | ||||||||
Investment in subsidiaries and VIEs | 5,236,612 | 4,292,733 | |||||||
TOTAL ASSETS | $ | 5,236,612 | $ | 4,292,733 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Accrued expenses and other payables | $ | — | $ | — | |||||
Total liabilities | — | — | |||||||
Stockholders’ equity | |||||||||
Common stock, $0.0006 par value per share, 80,000,000 shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of August 31, 2014 and 2013, respectively | 20,638 | 19,200 | |||||||
Additional paid-in capital | 726,548 | 812,159 | |||||||
Retained earnings | 4,489,426 | 3,461,374 | |||||||
Total stockholders’ equity | 5,236,612 | 4,292,733 | |||||||
TOTAL LIABILITIES AND | $ | 5,236,612 | $ | 4,292,733 | |||||
STOCKHOLDERS’ EQUITY | |||||||||
CONDENSED FINANCIAL INFORMATION OF REGISTRANT - STATEMENTS OF OPERATION | Year Ended August 31, | ||||||||
2014 | 2013 | ||||||||
Revenues | |||||||||
Share of earnings from investment in | $ | 1,032,802 | $ | 1,424,427 | |||||
subsidiaries and VIEs | |||||||||
Operating expenses | |||||||||
General and administrative | 4,750 | — | |||||||
Net income | $ | 1,028,052 | $ | 1,424,427 | |||||
CONDENSED FINANCIAL INFORMATION OF REGISTRANT | Year Ended August 31, | ||||||||
2014 | 2013 | ||||||||
Cash flows from operating activities | |||||||||
Net income | $ | 1,028,052 | $ | 1,424,427 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||||||||
Share of earnings from investment in subsidiaries and VIEs | (1,028,052 | ) | (1,424,427 | ) | |||||
Net cash (used in) operating activities | — | — | |||||||
Cash flows from financing activities | |||||||||
Advance from stockholders | — | — | |||||||
Net increase in cash | — | — | |||||||
Cash, beginning of year | — | — | |||||||
Cash, end of year | $ | — | $ | — |
1_ORGANIZATION_Details_Narrati
1. ORGANIZATION (Details Narrative) (USD $) | 12 Months Ended | |||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 12, 2013 | Aug. 11, 2013 | |
Reverse Split Ratio | 1:06 | |||
Common Stock, Shares Outstanding | 34,396,680 | 32,000,000 | 2,396,680 | 14,380,266 |
Common Stock, Shares Authorized | 80,000,000 | 80,000,000 | 80,000,000 | |
Shares Issued for Acquisition | 32,000,000 | |||
Percentage of Ownership after Transaction | 93.03% | |||
Percentage of Net Profit Paid for Consulting Services | 95.00% | |||
United States of America, Dollars | ||||
Payment for Consulting Services | 1,627 | |||
China, Yuan Renminbi | ||||
Payment for Consulting Services | 10,000 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - VARIABLE INTEREST ENTITY (Details) (USD $) | 12 Months Ended | |||
Aug. 31, 2014 | Aug. 31, 2013 | |||
TOTAL ASSETS | $6,176,037 | $5,215,348 | ||
Revenue | 7,469,997 | 8,681,546 | ||
Net Income | 998,503 | 1,380,339 | ||
Net cash provided by operating activities | 1,216,284 | 1,443,575 | ||
Net cash (used in) investing activities | -849 | |||
Net cash provided by financing activities | 24,369 | 559,910 | ||
Effect of exchange rate changes on cash | -5,045 | 82,233 | ||
Net increase in cash | 1,234,759 | 2,085,718 | ||
Fujian Tianfeihong [Member] | ||||
TOTAL ASSETS | 6,175,646 | [1] | 5,215,348 | [1] |
TOTAL LIABILITIES | 781,126 | [1] | 831,849 | [1] |
Revenue | 7,469,997 | 8,681,546 | ||
Net Income | 990,688 | [2] | 1,380,339 | [2] |
Net cash provided by operating activities | 1,214,686 | 1,443,575 | ||
Net cash (used in) investing activities | -849 | |||
Net cash provided by financing activities | 24,369 | 559,910 | ||
Effect of exchange rate changes on cash | -3,837 | 82,233 | ||
Net increase in cash | $1,234,369 | $2,085,718 | ||
[1] | Total assets and liabilities of the VIE is reported net of intercompany balances that have been eliminated with the VIE consolidation. | |||
[2] | (2) Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to WFOE. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FOREIGN CURRECY TRANSALATION (Details) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Summary Of Significant Accounting Policies - Foreign Currecy Transalation Details | ||
Consolidated Balance sheet items, except for stockholders equity, as of the year end | 0.1625 | 0.1622 |
Amounts included in the statements of income, statement of changes in stockholders equity and statements of cash flows for the year | 16.27% | 15.99% |
2_SUMMARY_OF_SIGNIFICANT_ACCOU5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Foreign Currency Translation Adjustments | $79,393 | $94,704 |
Shipping Costs | 324,261 | 368,581 |
Accounts Receivable, Fully Collectible | 431,940 | 609,890 |
Advertising Expense | 234,939 | 166,566 |
Statutory Reserve Balance | $86,730 | $133,052 |
Internal Revenue Service (IRS) [Member] | ||
Income Tax, Graduated Rate, Minimum | 15.00% | |
Income Tax, Graduated Rate, Maximum | 35.00% | |
PRC | ||
Income Tax Rate | 25.00% | |
BVI | ||
Income Tax Rate | 0.00% | |
Computers and Equipment [Member] | ||
Estimated Useful Lives | p3y | |
Motor Vehicles | ||
Estimated Useful Lives | p4y | |
Fixture and Furniture | ||
Estimated Useful Lives | p5y |
5_FIXED_ASSETS_FIXED_ASSETS_De
5. FIXED ASSETS - FIXED ASSETS (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Fixed Assets | $187,000 | $185,857 |
Less: Accumulated depreciation | -138,887 | -81,803 |
Fixed Assets, Net | 48,113 | 104,054 |
Computers and Equipment [Member] | ||
Fixed Assets | 24,618 | 23,732 |
Motor Vehicles | ||
Fixed Assets | 148,504 | 148,269 |
Fixture and Furniture | ||
Fixed Assets | $13,878 | $13,856 |
5_FIXED_ASSETS_Details_Narrati
5. FIXED ASSETS (Details Narrative) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $57,025 | $41,620 |
6_ACCRUED_LIABILITIES_AND_OTHE2
6. ACCRUED LIABILITIES AND OTHER PAYABLES - ACCRUED LIABILITIES AND OTHER PAYABLES (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Payables and Accruals [Abstract] | ||
Accrued payroll | $9,250 | $9,783 |
Professional fees | 47,941 | |
Other | 15,790 | 2,256 |
Accrued liabilities and other payables | $72,981 | $12,039 |
7_LEASES_LEASES_Details
7. LEASES - LEASES (Details) (USD $) | Aug. 31, 2014 |
Leases [Abstract] | |
2015 | $48,810 |
2016 | 48,810 |
2017 | 40,675 |
Future Minimum Lease Payments Due | $138,295 |
7_LEASES_Details_Narrative
7. LEASES (Details Narrative) (USD $) | 12 Months Ended | 10 Months Ended | 14 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | Jun. 30, 2014 | Aug. 31, 2014 | |
Monthly Rent | $1,429 | |||
Rent Expense | 53,934 | 55,003 | ||
United States of America, Dollars | ||||
Advance Lease Payments | 43,006 | 43,006 | ||
Monthly Rent | 3,759 | 22,000 | ||
China, Yuan Renminbi | ||||
Advance Lease Payments | 264,000 | 264,000 | ||
Monthly Rent | $4,068 | $25,000 |
8_INCOME_TAXES_INCOME_TAXES_De
8. INCOME TAXES - INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Current | $332,871 | $468,033 |
Deferred | ||
Income Taxes | $332,871 | $468,033 |
9_RELATED_PARTY_TRANSACTIONS_D
9. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Related Party Transactions [Abstract] | ||
Due to Related Party | $24,339 | $0 |
10_CONTINGENCIES_Details_Narra
10. CONTINGENCIES (Details Narrative) (USD $) | Aug. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | $10,000 |
12_CONDENSED_FINANCIAL_INFORMA2
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - BALANCE SHEETS (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 |
ASSETS | |||
TOTAL ASSETS | $6,176,037 | $5,215,348 | |
Stockholders equity | |||
Common stock, $0.0006 par value per share, 80,000,000 shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of August 31, 2014 and 2013, respectively | 20,638 | 19,200 | |
Additional paid-in capital | 726,548 | 812,159 | |
Retained earnings | 3,865,318 | 3,003,080 | |
Total stockholders equity | 5,377,222 | 4,383,499 | 2,340,606 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | 6,176,037 | 5,215,348 | |
Parent Company [Member] | |||
ASSETS | |||
Investment in subsidiaries and VIEs | 5,236,612 | 4,292,733 | |
TOTAL ASSETS | 5,236,612 | 4,292,733 | |
LIABILITIES AND STOCKHOLDERS EQUITY | |||
Accrued expenses and other payables | |||
Total liabilities | |||
Stockholders equity | |||
Common stock, $0.0006 par value per share, 80,000,000 shares authorized; 34,396,680 and 32,000,000 shares issued and outstanding as of August 31, 2014 and 2013, respectively | 20,638 | 19,200 | |
Additional paid-in capital | 726,548 | 812,159 | |
Retained earnings | 4,489,426 | 3,461,374 | |
Total stockholders equity | 5,236,612 | 4,292,733 | |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | $5,236,612 | $4,292,733 |
12_CONDENSED_FINANCIAL_INFORMA3
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - STATEMENTS OF OPERATION (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Operating expenses | ||
General and administrative | $298,548 | $295,841 |
Net income | 998,503 | 1,380,339 |
Parent Company [Member] | ||
Revenues | ||
Share of earnings from investment in subsidiaries and VIEs | 1,032,802 | 1,424,517 |
Operating expenses | ||
General and administrative | 4,750 | |
Net income | $1,028,052 | $1,424,517 |
12_CONDENSED_FINANCIAL_INFORMA4
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash flows from operating activities | ||
Net income | $998,503 | $1,380,339 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Net cash (used in) operating activities | 1,216,284 | 1,443,575 |
Cash flows from financing activities | ||
Cash, beginning | 3,994,502 | 1,908,784 |
Cash, end | 5,229,261 | 3,994,502 |
Parent Company [Member] | ||
Cash flows from operating activities | ||
Net income | 1,028,052 | 1,424,517 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Share of earnings from investment in subsidiaries and VIEs | 1,032,802 | 1,424,517 |
Net cash (used in) operating activities | ||
Cash flows from financing activities | ||
Advance from stockholders | ||
Net increase in cash | ||
Cash, beginning | ||
Cash, end |
12_CONDENSED_FINANCIAL_INFORMA5
12. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Details Narrative) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||
Restricted Net Assets | $5,236,612 | $4,292,733 |
Uncategorized_Items
Uncategorized Items | ||||
[us-gaap_AccountsPayableCurrent] | 788,588 | 682,030 | ||
[us-gaap_AccountsPayableOtherCurrent] | 9,783 | 9,250 | ||
[us-gaap_AccountsPayableRelatedPartiesCurrent] | 31,222 | 16,401 | ||
[us-gaap_AccountsReceivableNetCurrent] | 609,890 | 431,940 | ||
[us-gaap_AccruedLiabilitiesAndOtherLiabilities] | 24,339 | |||
[us-gaap_AdvancesOnInventoryPurchases] | 45,670 | |||
[us-gaap_AssetsCurrent] | 5,111,294 | 6,127,533 | ||
[us-gaap_CashAndCashEquivalentsAtCarryingValue] | 3,994,502 | 5,228,870 | ||
[us-gaap_InventoryNet] | 461,232 | 375,750 | ||
[us-gaap_LiabilitiesCurrent] | 2,256 | 63,731 | ||
[us-gaap_NoncurrentAssets] | 104,054 | 48,113 | ||
[us-gaap_PrepaidExpenseCurrent] | 40,625 | |||
[us-gaap_PrepaidTaxes] | 50,348 | |||
[us-gaap_TaxesPayableCurrent] | 1,311,322 | [Footnote-01] | 941,154 | [Footnote-01] |