Exhibit 99.4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Fuda Gold (UK) Limited:
We have audited the accompanying balance sheet of Fuda Gold (UK) Limited (“the Company”) as of June 30, 2015 and the related statement of operations, stockholders’ equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Fuda Gold (UK) Limited, as of June 30, 2015, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting. Accordingly, we express no such opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ B F Borgers CPA PC
B F Borgers CPA PC
Lakewood, CO
September 30, 2015
FUDA GOLD (UK) LIMITED
BALANCE SHEETS
(Audited)
June 30, | ||||
2015 | ||||
Assets | ||||
Current Assets | ||||
Cash | $ | - | ||
Total Current Assets | - | |||
Total Assets | - | |||
Liabilities | ||||
Current Liabilities | ||||
Accrued Liabilities | - | |||
Total Current Liabilities | - | |||
Total Liabilities | - | |||
Stockholders' Deficit | ||||
Common stock, 10 shares authorized; 10 shares at June 30, 2015, respectively | 16 | |||
Additional paid-in capital | 76 | |||
Subscription receivables | (16 | ) | ||
Accumulated deficit | (76 | ) | ||
Total Stockholders' Deficit | - | |||
Total Liabilities and Stockholders' Deficit | $ | - |
The accompanying notes are an integral part of these financial statements
FUDA GOLD (UK) LIMITED
STATEMENT OF OPERATIONS
(Audited)
From May 20, 2015 (Inception) | ||||
to June 30, 2015 | ||||
Revenues | $ | - | ||
Cost of Sales | - | |||
Gross Margin | - | |||
Operating Expenses | ||||
General & Administrative Expenses | 76 | |||
Total Operating Expenses | 76 | |||
Loss from operations | (76 | ) | ||
Net Loss before Income Taxes | (76 | ) | ||
Income Tax Benefit | - | |||
Net Loss | $ | (76 | ) | |
Net Loss per Common Share - Basic and Diluted | $ | (8 | ) | |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 10 |
The accompanying notes are an integral part of these financial statements
FUDA GOLD (UK) LIMITED
STATEMENT OF CASH FLOWS
(Audited)
From May 20, 2015 (Inception) | ||||
to June 30, 2015 | ||||
Cash Flows from Operating Activities | ||||
Net Loss | $ | (76 | ) | |
Adjustment to reconcile net loss from operations: | ||||
Expenses paid by stockholder and contributed as capital | 76 | |||
Changes in Operating Assets and Liabilities | ||||
Net Cash Used in Operating Activities | - | |||
Effect of exchange rate changes | - | |||
Net Increase (Decrease) in Cash | - | |||
Cash at Beginning of Period | - | |||
Cash at End of Period | $ | - |
The accompanying notes are an integral part of these financial statements
FUDA GOLD (UK) LIMITED
STATEMENTS OF STOCKHOLDERS' DEFICIT
From May 20, 2015 (Inception) to June 30, 2015
(Audited)
Common Stock | Additional | Subscription | Accumulated | Total Stockholders | ||||||||||||||||||||
Shares | Amount | Paid-In Capital | Receivables | Deficit | Deficit | |||||||||||||||||||
Balance, May 20, 2015 (Inception) | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Issuance of common stock | 10 | 16 | (16 | ) | - | |||||||||||||||||||
Expenses paid by stockholder and contributed as capital | 76 | 76 | ||||||||||||||||||||||
Net (loss) for the period | (76 | ) | (76 | ) | ||||||||||||||||||||
Balance, June 30, 2015 | 10 | 16 | 76 | (16 | ) | (76 | ) | - |
The accompanying notes are an integral part of these financial statements
FUDA GOLD (UK) LIMITED
Notes to Condensed Financial Statements
NOTE 1 - NATURE OF OPERATIONS
Fuda Gold (UK) Limited (the “Company”) was incorporated on May 20, 2015 under the laws of England and Wales. The Company is established to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has no operations since inception to date. The Company will attempt to locate and negotiate with a business entity for the combination of that target company with the Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.
Use of estimates
The preparation of condensed financial statements in conformity with GAAP 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 of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and cash equivalence
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have cash or cash equivalents as of June 30, 2015.
Income Taxes
The Company is established in England and its income is subject to 20% tax rate.
Under ASC 740, "Income Taxes," deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2015, there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
Comprehensive Income (Loss)
The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 220 “Reporting Comprehensive Income”, and establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. The Company’s comprehensive income (loss) consist of net income (loss) and foreign currency translation adjustments.
Foreign Currency Translation
The functional currency of the Company is the British Pounds (“GBP”).
The reporting currency of the Company is the US Dollar (“US$”).
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.
For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.
Exchange rates used for translation as follows:
June 30, | ||||
GBP to US$ | 2015 | |||
Period end spot rate | 1.5721 | |||
Average periodic rate | 1.5550 |
Revenue recognition
The Company recognizes revenue in accordance with Financial Accounting Standards Board Accounting Standards Codification ("ASC") No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company did not generate any revenues since inception.
Fair value of financial instruments
The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the condensed financial statements (unaudited) on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the condensed financial statements (unaudited) on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
- Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3 inputs are unobservable inputs for the asset or liability.
The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.
NOTE 4 - GOING CONCERN
The Company has not yet generated any revenue since inception to date.
The Company had working capital of $0 and an accumulated deficit of $(76) as of June 30, 2015. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing from its members or other sources, as may be required. The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company's ability to do so. The condensed financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.
NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS
In August, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40), which now requires 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 within one year after the date the financial statements are issued. If conditions or events raise substantial doubt about an entity's ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management's plans, additional disclosures are required. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. These requirements were previously included within auditing standards and federal securities law, but are now included within U.S. GAAP. We are currently assessing the impact of the adoption of ASU No. 2014-15 on our financial statements and disclosures.
In June, 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity (DSE) in its entirety from current accounting guidance. We have elected early adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception. We do not believe the adoption of ASU No. 2014-10 will have significant impact on our financial statements and disclosures.
NOTE 6 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 10 shares of common stock at GBP1.00 at par value per share.
On May 20, 2015, the Company issued 10 shares of its common stock at GBP1 per share for a total of GPB10 (US$16) which remains unpaid as of June 30, 2015
The Company’s shareholder has paid expenses on behalf of the Company that are recorded as contribution to paid-in capital.
NOTE 7 – SUBSEQUENT EVENTS
On September 24, 2015, the Company executed “Agreement and plan of reorganization” agreement with Fuda Group (USA) Corporation (“Fuda”) whereby the shareholders the Company agreed to transfer to Fuda at the Closing, 10 shares of ordinary shares of the Company, GBP1.00 par value per share, in exchange for an aggregate of 50,000,000 shares of voting common stock of Fuda, $0.0001 par value per share. Upon completion of the share exchange on September 24, the Company will become a subsidiary of Fuda.