UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended May 31, 2018
☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number:000-55514
| JIN WAN HONG INTERNATIONAL HOLDINGS LIMITED |
| (Exact name of small business issuer as specified in its charter) |
| Nevada | 7385 | 30-0809134 |
(State or other jurisdiction of
incorporation or organization) | (Primary Standard Industrial Classification Number) | (IRS Employer Identification Number) |
Room 1101, Block E, Guang Hua Yuan, 2031 Bin He Nan Road FuTian District, Shenzhen City, China (Address of principal executive offices) |
+ 86 189-4831-9148 |
| (Issuer’s telephone number) |
| Common Stock |
| Securities registered under Section 12(g) of the Exchange Act |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ☐ No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | | Accelerated filer ☐ | | Non-accelerated filer ☐ | | Smaller reporting company ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $139,700 State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 8,100,000 common shares issued and outstanding as of September 5, 2018.
TABLE OF CONTENTS
PART I
Item 1. Business
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Company
Jin Wan Hong International Holding Limited (the “Company”) was incorporated in the State of Nevada on January 31, 2014 under the name Karnet Capital Corp. and changed its name to Jin Wan Hong International Holdings Limited on May 13, 2016. On January 14, 2017, Shu Feng Lu (President and Director of the Company), Hong Xia Li, and Chen Yang took control of the Company by purchasing shares of common stock from existing shareholders. After the transaction our management is currently working on a new business plan and winding up the current business plan. The Company plans to operate in tea related business(es) in China, but there is no guarantee that the Company will be successful in its endeavor.
Office
Our principal executive office is located at 1101, Block E, Guang Hua Yuan, 2031 Bin He Nan Road, Fu Tian District, Shenzhen City, China. Our CEO provides our Company with office space at no charge.
Item 1A. Risk Factors
Not applicable to smaller reporting companies.
Item 1B. Unresolved Staff Comments.
Not applicable to smaller reporting companies.
Item 2. Properties.
We do not own any real estate or other properties.
Item 3. Legal Proceedings
We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
There is a limited public market for our common shares. Our common shares are quoted on the OTC Pink Sheets at $0.10 this time and have been during the previous two years. Trading in stocks quoted on the OTC Pink Sheets is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. We cannot assure you that there will be a market in the future for our common stock.
OTC Pink Sheet securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Pink Sheet securities transactions are conducted through a telephone and computer network connecting dealers in stocks.
Holders
As of August 31, 2018, the 8,100,000 issued and outstanding shares of common stock were held by a total of three shareholders of record.
Compensation Plans
The Company has no securities authorized for issuance under equity compensation plans.
Dividends
No cash dividends were paid on our shares of common stock during the fiscal year ended May 31, 2018. We have not paid any cash dividends since January 31, 2014 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Item 6. Selected Financial Data
Not applicable to smaller reporting companies.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
General
On January 14, 2017, Shu Feng Lu, Hong Xia Li, and Chen Yang took control of the Company by purchasing shares of common stock from existing shareholders. After the transaction our management is currently working on new business plan and winding up the current business plan. The Company plans on operating in cultural related business in the future, but there are no definitive agreements in place.
Results Of Operations
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Fiscal Year Ended May 31, 2018 Compared To May 31, 2017.
Revenue
We recognized revenue of $0 for the year ended May 31, 2018 and the year ended May 31, 2017.
Operating expenses
We incurred operating expenses of $35,443 for the year ended May 31, 2018 compared to $23,838 for the year ended May 31, 2017. The increase in operating expenses was due to an increase in expenses related to reinstatement of business license and related expenditures.
Net Losses
Our net loss for the fiscal year ended May 31, 2018 was $35,443 compared to a net loss of $23,838 as of May 31, 2017 due to an increase in operating expenses and a lack of revenues.
Liquidity and Capital Resources
As of May 31, 2018, our total assets were $0. Our total liabilities were $59,281. As of May 31, 2017, our total assets were $5,000, comprised of cash and cash equivalents, due to a prepayment to OTC markets. Our total liabilities were $28,838.
Shareholders’ equity has decreased from$(23,838) as of May 31, 2017 to $(59,281) as of May 31, 2018. Deficit was due to the increase in operating expenses.
The Company has accumulated a deficit of $(97,981) as of May 31, 2018 and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with sales, loans from directors and, or, the private placement of common stock.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended May 31, 2018, net cash flows used in operating activities was $30,443 compared to $28,238 for May 31, 2017.
Cash Flows from Investing Activities
We neither used nor generated cash from investing activities for the fiscal year ended May 31, 2018 and May 31, 2017.
Cash Flows from Financing Activities
For the fiscal year ended May 31, 2018, net cash provided by financing activities was $30,443, due to loans from directors with no interest and are due upon demand. For the fiscal year ended May 31, 2017, net cash provided by financing activities was $28,238, due to loans from directors.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds, sales, loans from a director and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business
We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the loans from management. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to:
| ● | Legal and professional fees |
We intend to finance these expenses with further issuances of securities, debt issuances and sales. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
Material Commitments
As of the date of this Annual Report, we do not have any material commitments.
Purchase of Significant Equipment
We have not purchased any significant equipment during the last twelve months.
Off-Balance Sheet Arrangements
As of the date of this Annual Report, we do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The Company has generated limited revenues and incurred a loss since inception (January 31, 2014) resulting in an accumulated deficit of $(97,981) as of May 31, 2018 and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
Because of the Company’s history of losses, our independent auditors, in the reports on the financial statements for the year ended May 31, 2018 and May 31, 2017, expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.
Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations, stockholders’ equity and cash flows of the Company for the year ending May 31, 2018.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a May 31 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $0 of cash as of May 31, 2018.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and amounts due to shareholder. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Inventories
Inventories are stated at the lower of cost or market. Cost is principally determined using the first-in, first out (FIFO) method. The Company had $0 in inventory as of May 31, 2018.
Depreciation, Amortization, and Capitalization
The Company records depreciation and amortization when appropriate using both straight-line and declining balance methods over the estimated useful life of the assets (five to seven years). Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of May 31, 2018.
Comprehensive Income
The Company has established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any significant transactions that are required to be reported in other comprehensive income.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to smaller reporting companies.
Item 8. Financial Statements and Supplementary Data
Jin Wan Hong International Holding Limited
For the Years Ended May 31, 2018 and May 31, 2017
Table of Contents
MICHAEL GILLESPIE & ASSOCIATES, PLLC
CERTIFIED PUBLIC ACCOUNTANTS
10544 ALTON AVE NE
SEATTLE, WA 98125
206.353.5736
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Jin Wan Hong International Holding Limited.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Jin Wan Hong International Holding Limited as of May 31, 2018 and 2017 and the related statements of operations, changes in stockholder’s deficit, cash flows, and the related notes (collectively referred to as “financial statements”) for the periods then ended. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2018 and 2017 and the results of its operations and its cash flows for the periods then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #2 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note #2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC
We have served as the Company’s auditor since 2014.
Seattle, Washington
September 12, 2018
Jin Wan Hong International Holding Limited
Balance Sheet
(Audited)
| | 31-May-2018
(Audited) | | | 31-May-2017
(Audited) | |
| | | | | | | |
| ASSETS | |
| Current Assets: | | | | | | | | |
| Cash | | $ | 0 | | | $ | 0 | |
| Prepayment | | | 0 | | | | 5,000 | |
| Total Current Assets | | | 0 | | | | 5,000 | |
| | | | | | | | | |
| Total Assets | | $ | 0 | | | $ | 0 | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | | | | | | |
| Current | | | | | | | | |
| Liabilities: | | | | | | | | |
| Accounts payable | | | 600 | | | | 600 | |
| Loan from director | | | 58,681 | | | | 28,238 | |
| | | | | | | | | |
| Total Liabilities | | $ | 59,281 | | | | 28,238 | |
| | | | | | | | | |
| Shareholders’ Equity: | | | | | | | | |
| Common stock, par value $0.001; 75,000,000 shares authorized, 8,100,000 and 8,100,000 shares issued and outstanding, respectively | | | 8,100 | | | | 8,100 | |
| Additional paid-in capital | | | 30,600 | | | | 30,600 | |
| Accumulated deficit | | | (97,981 | ) | | | (62,538 | ) |
| | | | | | | | | |
| Total Shareholders’ Equity | | | (59,281 | ) | | | (23,838 | ) |
| | | | | | | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 0 | | | $ | 5,000 | |
The accompanying notes are an integral part of these financial statements
Jin Wan Hong International Holding Limited
Statements of Operations
(Audited)
| | | 12 Months Ended | | | 12 Months Ended | |
| | | May 31, 2018 | | | May 31, 2017 | |
| | | | | | | |
| Revenues: | | $ | — | | | $ | — | |
| Cost of Goods Sold | | | — | | | | — | |
| Gross Margin | | | — | | | | — | |
| | | | | | | | | |
| Operating Expenses: | | | | | | | | |
| General and administrative expenses | | | 35,443 | | | | 23,838 | |
| Total operating expenses | | | 35,443 | | | | 23,838 | |
| Net loss from operations | | | (35,443 | ) | | | (23,838 | ) |
| Provision for income taxes | | | — | | | | — | |
| Net Loss | | $ | (35,443 | ) | | $ | (23,838 | ) |
| Net loss per share: basic and diluted | | $ | 0.00 | | | $ | 0.00 | |
| Weighted average number of common shares outstanding: basic and diluted | | | 8,100,000 | | | | 8,100,000 | |
The accompanying notes are an integral part of these financial statements
Jin Wan Hong International Holding Limited
Statement of Stockholders’ Equity (Deficit)
(Audited)
| | | | | | | | | | | | | | | | |
| | | Common Stock | | | Additional Paid in Capital | | | Accumulated Deficit | | | Total Stockholders’ Equity | |
| | | Shares | | | Amount | | | | | | | |
| | | | | | | | | | | | | | | | |
| Balance, May 31, 2016 | | | 8,100,000 | | | $ | 8,100 | | | $ | 30,600 | | | $ | (38,700 | ) | | $ | 0 | |
| Net loss for the year ended May 31, 2017 | | | | | | | | | | | | | | | (23,838 | ) | | | (23,838 | ) |
| Balance, May 31, 2017 | | | 8,100,000 | | | $ | 8,100 | | | $ | 30,600 | | | $ | (62,538 | ) | | $ | (23,838 | ) |
| Net loss for the year ended May 31, 2018 | | | | | | | | | | | | | | | (35,443 | ) | | | (35,443 | ) |
| Balance, May 31, 2018 | | | 8,100,000 | | | $ | 8,100 | | | $ | 30,600 | | | $ | (97,981 | ) | | $ | (59,281 | ) |
The accompanying notes are an integral part of these financial statements
Jin Wan Hong International Holding Limited
Statements of Cash Flows
(Audited)
| | | 12 Months Ended | | | 12 Months Ended | |
| | | 31-May-18 | | | 31-May-17 | |
| | | | | | | | | |
| Cash flows from operating activities: | | | | | | | | |
| Net loss for the period | | $ | (35,443 | ) | | $ | (23,238 | ) |
| Adjustments to reconcile net loss to net cash (used in) operating activities: | | | | | | | | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Deposit/inventory | | | — | | | | — | |
| Prepayment | | | 5,000 | | | | (5,000 | ) |
| Increase/Decrease in Accounts payable | | | — | | | | 600 | |
| Net cash flows used in operating activities | | | (30,443 | ) | | | (28,238 | ) |
| | | | | | | | | |
| Cash flows from investing activities | | | — | | | | — | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from sale of common stock | | | — | | | | — | |
| Loans from director | | | 30,443 | | | | 28,238 | |
| Contributed capital | | | — | | | | — | |
| Net cash flows provided by financing activities | | | 30,443 | | | | 28,238 | |
| | | | | | | | | |
| Net increase (decrease) in cash | | | 0 | | | | 0 | |
| Cash, beginning of the period | | | 0 | | | | 0 | |
| Cash, end of the period | | $ | 0 | | | $ | 0 | |
| | | | | | | | | |
| Supplemental Cash Flow Information: | | | | | | | | |
| Interest paid | | $ | — | | | $ | — | |
| Income taxes paid | | | — | | | | — | |
| Supplemental disclosure of non-cash activities: | | | | | | | | |
| Forgiveness of related party debt | | | — | | | | — | |
The accompanying notes are an integral part of these financial statements
Jin Wan Hong International Holding Limited
Notes to the Financial Statements
May 31, 2018
(Audited)
Jin Wan Hong International Holding Limited, formerly Karnet Capital Corp. (the “Company”) was incorporated in the State of Nevada on January 31, 2014. On January 14, 2017, Shu Feng Lu (President and Director of the Company), Hong Xia Li, and Chen Yang took control of the Company by purchasing shares of common stock from existing shareholders.
The Company’s currently operates in Room 1101, Block E, Guang Hua Yuan, 2031 Bin He Nan Road, FuTian District, Shenzhen, Guangdong, China. The Company plans to operate in tea related business(es) in China, but there is no guarantee that the Company will be successful in its endeavor.
The Company has generated limited revenues and incurred a loss since Inception (January 31, 2014) resulting in an accumulated deficit of $97,981 as of May 31, 2018 and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and, or, the private placement of common stock.
Because of the Company’s history of losses, its independent auditors, in the reports on the financial statements for the year ended May 31, 2018, expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying audited financial statements for the twelve months period ended May 31, 2018 have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
| 3. | SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations, stockholders’ equity and cash flows of the Company for the twelve month period ended May 31, 2018.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a May 31 fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. There were no cash equivalents as of May 31, 2018.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and amounts due to a shareholder/director . The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
| 4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Stock-Based Compensation
We account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50,Equity-Based Payments to Non-Employees(“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718,Compensation—Stock Compensation,which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of May 31, 2018 or May 31, 2017.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“Update”). Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the termsubstantial doubt,(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after May 31, 2018. Early adoption is permitted.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
As of May 31, 2018, the Company owed its President, Director, and major shareholder, Shu Feng Lu $58,681. The total loan of $58,681 was unsecured, non-interest bearing and due on demand.
There was no prepayment as of May 31, 2018.
| 7. | COMMITMENTS AND CONTINGENCIES |
The Company neither owns nor leases any real or personal property. An officer has provided offices without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to May 31, 2018 through September 12, 2018. There is no subsequent event through September 12, 2018.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A Controls and Procedures
Management’s Annual Report on Internal Controls over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of May 31, 2018 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of May 31, 2018, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
| 1. | We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
| 2. | We did not maintain appropriate cash controls – As of May 31, 2018, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts. |
| 3. | We did not implement appropriate information technology controls – As at May 31, 2018, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors. |
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of May 31, 2018 based on criteria established in Internal Control- Integrated Framework issued by COSO.
Although our Company is unable to meet the standards under COSO because of the limited funds available to a company of our size and stage of development, we are committed to improving our financial organization. As funds become available, we will undertake to: (1) create a position to segregate duties consistent with control objectives, (2) increase our personnel resources and technical accounting expertise within the accounting function (3) appoint one or more outside directors to our board of directors who shall be appointed to the audit committee of our Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and (4) prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of May 31, 2018, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors And Executive Officers
The name, age and titles of our officers and directors are as follows:
| | | | | |
Name and Address of Executive Officer and/or Director | | Age | | Position |
Shu Feng Lu | | 44 | | President, Director, and Chairman of the Board |
| | | | | |
Teng Fei Ma | | 28 | | CEO, CFO, Secretary, and Treasurer |
Shu Feng Lu President, Director, and Chairman of the Board
Mr. Lu graduated from Xin Yang Guang Bo Dian Shi University in China. Since 2011, Mr. Lu is the Chairman of He Nan Jin Wan Hong Shi Ye Company Limited, a company which produces tea products.
Teng Fei Ma CEO, CFO, Secretary, and Treasurer
Mr. Ma graduated from Henan Industrial University in China. From 2009 to 2012, he served as an Admin Manager for Xing Tai Life Insurance Company Limited in China. From 2012 to 2014, he was a training manager for Qian Hai Life Insurance Company Limited in China. From 2014 to 2015 Mr. Ma was the IPO Department Head for the Qian Hai Stock Exchange in China. Since 2015 Mr. Ma has been serving as the General Manager of Shenzhen Qian Hai Jin Wan Hong Asset Management Company Limited in China
Audit Committee
We do not have an audit committee nor an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than ten percent of our common stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the fiscal year ended May 31, 2018, each of the following persons filed a report that was late: Mr. Lu, Mr. Ma, Hongxia Li and Chen Yang .
Code of Ethics
The Company has not yet adopted a Code of Ethics, as it is in the development stages and intends on implementing one if the Company can successfully commence operations.
Item 11. Executive Compensation
Summary Compensation Table
Name and
principal
position | Year | Salary
($) | Bonus
($) | Stock awards
($) | Option awards
($) | Non-equity
incentive plan compensation
($) | Change in pension value and nonqualified deferred compensation
earnings
($) | All other compensation
($) | Total
($) |
| | | | | | | | | | |
| Shu Feng Lu (President) | 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| | 2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | | |
| Teng Fei Ma (CEO, CFO) | 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| | 2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
There are no current employment agreements between the Company and its officers. There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
The Company does not have a Compensation Committee. Given the size of the Company, the board of directors serves in such capacity.
Director Compensation
Directors are not compensated for serving on the Board of Directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of August 31, 2018 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officers. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown. Except as stated below, the address for each person listed in the table is care of the Company.
| | | | | | | | |
| Title of Class | | Name and Address of
Beneficial Owner | | Amount and Nature of
Beneficial Ownership | | Percentage
(1) | |
| Directors and Executive Officers | | | | | | | |
| Common Stock | | Shu Feng Lu (2) | | 6,700,000 | | 82.72 | % |
| Common Stock | | Teng Fei Ma (3) | | 0 | | — | |
| All Directors and Executive Officers as a Group (2 People) | | | | 6,700,000 | | 82.72 | % |
| | | | | | | | |
| 5% or Greater Beneficial Owners | | | | | | | |
| Common Stock | | Hongxia Li (4) | | 687,000 | | 8.48 | % |
| Common Stock | | Chen Yang (5) | | 710,000 | | 8.77 | % |
| (1) | The percent of class is based on 8,100,000 shares of common stock issued and outstanding as of the date of this annual report. |
| (2) | Shu Feng Lu is the President and Director of the Company. |
| (3) | Teng Fei Ma is the CEO and CFO of the Company. |
| (4) | Address for Hongxia Li is Heshangqiao Zhen, Fanlou Cun Yizu, Changge City, Henan Province, China 461599. Ms. Li is the sister of Shu Feng Lu, the President and Director of the Company |
| (5) | Address for Chen Yang is Building 1, Unit 2, #8 Yuanheshangzhu Building, Xincheng District, Huhuhaote City, Nei Monggol Province, China 010011. |
Item 13. Certain Relationships and Related Transactions, and Director Independence
During the year ended May 31, 2018, we had not entered into any transactions with our officers or director, or persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two fiscal years.
Item 14. Principal Accountant Fees and Services
| Principal Accounting Fees & Services | | 2018 | | | 2017 | |
| Audit Fees | | $ | 10,850 | | | $ | 9,845 | |
| Audit Related Fees | | | 1,908 | | | | 500 | |
| Tax Fees | | | 0 | | | | 0 | |
| All Other Fees | | | 0 | | | | 0 | |
| Total Fees | | $ | 12,758 | | | $ | 10,345 | |
Audit Fees
These amounts include fees for professional services rendered in auditing our financial statements set forth in our Forms 10-K for the years ended May 31, 2018 and 2017 year-end audit and the reviews of our quarterly financial statements set forth in our Forms 10-Q in 2017 and 2017.
Audit-Related Fees
These amounts consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” These fees were for professional services incurred in connection with accounting consultations and consultation regarding financial accounting and reporting standards.
Tax Fees
These amounts consisted of fees for services including tax compliance and the preparation of tax returns and tax consultation services.
PART IV
Item 15. Exhibits, Financial Statements Schedules
(a)(1) Index to consolidated Financial Statements
The Financial Statements listed in the Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K. See Part II, Item 8, “Financial Statement and Supplementary Data.”
(a)(2) Financial Statement Schedules
Other financial statement schedules for the years ended May 31, 2018 and 2017 have been omitted since they are either not required, not applicable, or the information is otherwise included in the consolidated financial statements or the notes to consolidated financial statements.
(a)(3) Exhibits
The Exhibits listed in the accompanying Exhibit Index are attached and incorporated herein by reference and filed as part of this report.
The following exhibits are included as part of this report by reference:
| 101.INS | | XBRL Instance Document. |
| | | |
| 101.SCH | | XBRL Taxonomy Extension Schema Documents. |
| | | |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| | | |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| | | |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
| | | |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
Item 16. Form 10–K Summary.
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in China on August 31, 2018.
JIN WAN HONG INTERNATIONAL HOLDINGS LIMITED
| By: | | /s/Teng Fei Ma | |
| Name: | | Teng Fei Ma | |
| Title: | | Chief Executive Officer, Chief Financial Officer |
| | | (Principal Executive, Financial and Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | | Title | | Date |
| | | | | |
| | | | | |
| Shu Feng Lu | | President, Director | | |
| | | | | |
| | | | | |
| Teng Fei Ma | | CEO, CFO | | |
