| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (a)
Method
of Accounting The
Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial
statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted
accounting principles in the United States of America and have been consistently applied in the presentation of financial statements,
which are compiled on the accrual basis of accounting.
(b)
Principles
of consolidation The
accompanying consolidated financial statements which include the Company, its wholly owned subsidiaries, FIHK, Spone, Qi Ying,
and its variable interest entity, YFG, are compiled in accordance with generally accepted accounting principles in the United
States of America. All significant inter-company accounts and transactions have been eliminated in consolidation. In accordance
with FASB ASC 810, Consolidation of Variable Interest Entities, variable interest entities, or VIEs, are generally entity that
lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders
lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary
beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting
purposes. In connection with the adoption of this ASC 810, the Company concludes that YFG is a VIE and Qi Ying is the primary
beneficiary. The financial statements of YFG are then consolidated with Qi Ying's financial statements. As
of September 30, 2015, the detailed identities of the consolidating subsidiaries are as follows:
Place of Attributable Registered
Name
of Company incorporation equity
interest % capital
Financial International (Hong Kong) Holdings Company Limited Hong Kong 100% HKD 10,000,000
Spone Limited Hong Kong 100% HKD 1
Xi'an Qi Ying Bio-Tech Limited ("Qi
Ying") PRC 100% RMB 50,000
Shaanxi Yifuge Investments
and Assets Co, Ltd. PRC Variable Interest Entity, with Qi Ying as the primary beneficiary RMB 3,000,000
(c) Use of estimates The
preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America
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 financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best information available at the time the estimates
are made; however, actual results could differ materially from those estimates.
(d) Cash and cash equivalents The
Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
(e) Revenue recognition The
Company records revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the
customer is fixed or determinable, and collectability is reasonably assured. The
Company's revenue consists of management services rendered to senior homes. Service revenue is recognized when the service is
performed.
(f) Cost of revenue The
cost for providing management services is comprised of direct labor wages and purchasing cost of food for preparing meals for
the seniors.
(g) General & administrative expenses General
and administrative expenses include general overhead such as the office rental and utilities.
(h) Income taxes The
Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future
years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before
the Company is able to realize their benefits, or that future realization is uncertain. The
Company has implemented ASC Topic 740, "Accounting for Income Taxes." Income tax liabilities computed according to the
People's Republic of China (PRC) tax laws are provided for the tax effects of transactions reported in the financial statements
and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and
intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences
of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred
taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created
to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to
realize that tax benefit, or that future realization is uncertain. Effective
January 1, 2008, PRC government implemented a new 25% tax rate across the board for all enterprises regardless of whether domestic
or foreign enterprise without any tax holiday which is defined as "two-year exemption followed by three-year half exemption"
hitherto enjoyed by tax payers. As a result of the new tax law of a standard 25% tax rate, tax holidays terminated as of December
31, 2007. However, PRC government has established a set of transition rules to allow enterprises that were already participating
in tax holidays before January 1, 2008, to continue enjoying the tax holidays until they had been fully utilized. In
order to encourage enterprises to operate senior homes, PRC tax law provides a tax holiday by waiving the income tax for entities
operating in this industry. According to the Minfa (2015) No. 33 "Advice to Encourage Private Capital to Participate in the
Development of Pension Services", jointly issued by ten ministries which include the Ministry of Civil Affairs and the Ministry
of Finance of the People's Republic of China, the Company is entitled to benefit from the sales tax exemption and business tax
exemption policy. As such, the Company is not subject to income tax as of September 30, 2015.
(i) Earnings per share Basic
earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted
earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding.
Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. Dilution
is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used
to purchase common stock at the average market price during the period.
(j) Statutory reserves Statutory
reserves are referring to the amount appropriated from the net income in accordance with laws or regulations, which can be used
to recover losses and increase capital, as approved, and are to be used to expand production or operations. The Company transferred
$- and $14,024 from retained earnings to statutory reserves for the nine months period ended September 30, 2015 and the year ended
December 31, 2014, respectively. PRC laws prescribe that an enterprise operating at a profit, must appropriate, on an annual basis,
an amount equal to 10% of its profit. Such an appropriation is necessary until the reserve reaches a maximum that is equal to
50% of the enterprise's PRC registered capital.
(k) Foreign currency translation The
accompanying financial statements are presented in United States dollars. The functional currencies of the Company are the Renminbi
(RMB) and the Hong Kong Dollars (HKD). The financial statements are translated into United States dollars from the functional
currencies at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital
accounts are translated at their historical exchange rates when the capital transactions occurred.
9/30/2015 12/31/2014 9/30/2014
Period end/Year end RMB: 6.3538 6.1385 6.1534
US$ exchange rate
Average period/yearly RMB: 6.1606 6.1432 6.1457
US$ exchange rate
Period end/Year end HKD: 7.7499 7.7556 7.7649
US$ exchange rate
Average period/yearly HKD: 7.7527 7.7544 7.7540
US$ exchange rate The
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.
No representation is made that the RMB amounts could have been, or could be, converted into US Dollars at the rates used in translation.
(l) Financial Instruments The
Company's financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables,
accrued liabilities and short-term debt, have carrying amounts that approximate their fair values due to their short maturities.
ASC Topic 820, "Fair Value Measurements and Disclosures," requires disclosure of the fair value of financial instruments
held by the Company. ASC Topic 825, "Financial Instruments," defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying
amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments
and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined
as follows:
· Level 1 inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.
· Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial instrument.
· Level 3 inputs to the valuation methodology are unobservable and
significant to the fair value measurement. The
Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, "Distinguishing Liabilities
from Equity," and ASC 815. As
of September 30, 2015 and December 31, 2014, the Company did not identify any assets and liabilities whose carrying amounts were
required to be adjusted in order to present them at fair value.
At December 31, 2014:
Quoted in Significant
Active Markets Other Significant
for Identical Observable Unobservable
Assets Inputs Inputs
(Level
1) (Level
2) (Level
3) Total
Financial assets:
Cash $ 186,607 $ - $ - $ 186,607
Total financial
assets $ 186,607 $ - $ - $ 186,607
At September 30, 2015:
Quoted in Significant
Active Markets Other Significant
for Identical Observable Unobservable
Assets Inputs Inputs
(Level
1) (Level
2) (Level
3) Total
Financial assets:
Cash $ 116,827 $ - $ - $ 116,827
Total financial
assets $ 116,827 $ - $ - $ 116,827
(m) Commitments and contingencies Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it
is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
(n) Comprehensive income Comprehensive
income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.
Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive
income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.
The Company's current component of other comprehensive income includes the foreign currency translation adjustment and unrealized
gain or loss. The
Company uses FASB ASC Topic 220, "Reporting Comprehensive Income". Comprehensive income is comprised of net income and
all changes to the statements of stockholders' equity, except the changes in paid-in capital and distributions to stockholders
due to investments by stockholders. Comprehensive income for the periods ended September 30, 2015 and December 31, 2014 included
net income and foreign currency translation adjustments.
(o) Subsequent Events The
Company evaluated for subsequent events through the issuance date of the Company's financial statements.
(p) Unaudited Interim Financial Information These
unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial reporting and
the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore,
certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been
condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation
of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations
for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31,
2015.
(q) Recent accounting pronouncements In
January 2015, The FASB issued ASU No. 2015-01, "Income StatementExtraordinary and Unusual Items (Subtopic 225-20)".This
Update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income StatementExtraordinary and Unusual
Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an
event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports
its classification as an extraordinary item. Paragraph 225-20-45-2 contains the following criteria that must both be met for extraordinary
classification:
1.)
Unusual nature. The underlying event
or transaction should possess a high degree of abnormality and be of a type clearly unrelated to, or only incidentally related
to, the ordinary and typical activities of the entity, taking into account the environment in which the entity operates.
2.) Infrequency of occurrence. The underlying
event or transaction should be of a type that would not reasonably be expected to recur in the foreseeable future, taking
into account the environment in which the entity operates. If
an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary
item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from
continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share
data applicable to the extraordinary item. The
amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively
to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied
from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other
entities. The
Company has adopted ASU No. 2015-01 prospectively and has applied it to the presentation of the financial statements. In
September 2015, the FASB issued ASU 2015-16, the guidance eliminates the requirement to restate prior period financial statements
for measurement period adjustments following a business combination. The new guidance requires that the cumulative impact of a
measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment
is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement
or disclosed in the notes. The
Company is currently evaluating the impact the pronouncement will have on the Company's consolidated financial statements. As
of September 30, 2015, there are no other recently issued accounting standards not yet adopted that would or could have a material
effect on the Company's financial statements. |
