| Note 2 - 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, JJS, 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 JJS is a VIE and Qi Ying is the primary
beneficiary. The financial statements of JJS are then consolidated with Qi Ying's financial statements. As
of June 30, 2016, 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) Hong
Kong 100% HKD
Holdings
Company Limited 10,000,000
Spone
Limited Hong
Kong 100% HKD
1
Xi'an
Qi Ying Senior Living, Inc PRC 100% RMB
50,000
("Qi
Ying")
Shaanxi
Jinjiangshan Senior Living PRC Variable
Interest Entity, with Qi Ying as the primary beneficiary RMB
Management
Co. Ltd 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 June 30, 2016. (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 $15,208 from retained earnings to statutory reserves for the six-months ended June 30, 2016 and the year ended December
31, 2015, respectively. PRC laws prescribe that an enterprise operating at a profit, must appropriate, on an annual basis, an
amount equal to 10% of its profit. Such an appropriation is necessary until the reserve reaches a maximum that is equal to 50%
of the enterprise's PRC registered capital. (k)
Foreign currency translation The
accompanying financial statements are presented in United States dollars. The functional currencies of the Company are the Renminbi
(RMB) and the Hong Kong Dollars (HKD). The financial statements are translated into United States dollars from the functional
currencies at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital
accounts are translated at their historical exchange rates when the capital transactions occurred.
6/30/2016 12/31/2015 6/30/2015
Period
end/Year end RMB: 6.6433 6.4907 6.0888
US$
exchange rate
Average
period/yearly RMB: 6.5354 6.2175 6.1128
US$
exchange rate
Period
end/Year end HKD: 7.7586 7.7504 7.7519
US$
exchange rate
Average
period/yearly HKD: 7.7670 7.7521 7.7535
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 June 30, 2016 and December 31, 2015, 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
June 30, 2016: Quoted
in Active Significant
Markets Other Significant
for
Identical Observable Unobservable
Assets Inputs Inputs
(Level
1) (Level
2) (Level
3) Total
Financial
assets:
Cash $ 90,564 $ - $ - $ 90,564
Total
financial assets $ 90,564 $ - $ - $ 90,564
At
December 31, 2015: Quoted
in Active Significant
Markets Other Significant
for
Identical Observable Unobservable
Assets Inputs Inputs
(Level
1) (Level
2) (Level
3) Total
Financial
assets:
Cash $ 42,166 $ - $ - $ 42,166
Total
financial assets $ 42,166 $ - $ - $ 42,166 (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 June 30, 2016 and 2015 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 consolidated 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, 2016. (q)
Recent accounting pronouncements On
January 5, 2016, the FASB issued ASU 2016-01 "Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities", which amends the guidance in U.S. GAAP on the classification and measurement
of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity's accounting
related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair
value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated
with the fair value of financial instruments. The new standard is effective for fiscal years and interim periods within those
fiscal years beginning after December 15, 2017. On
February 25, 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)", its new standard on accounting for leases. ASU
2016-02 introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying
principles of the new lessor model with those in ASC 606, the FASB's new revenue recognition standard (e.g., those related to
evaluating when profit can be recognized). Furthermore,
the ASU addresses other concerns related to the current leases model. For example, the ASU eliminates the requirement in current
U.S. GAAP for an entity to use bright-line tests in determining lease classification. The standard also requires lessors to increase
the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The new model
represents a wholesale change to lease accounting. As a result, entities will face significant implementation challenges during
the transition period and beyond, such as those related to:
· Applying
judgment and estimating.
· Managing
the complexities of data collection, storage, and maintenance.
· Enhancing
information technology systems to ensure their ability to perform the calculations necessary for compliance with reporting
requirements.
· Refining
internal controls and other business processes related to leases.
· Determining
whether debt covenants are likely to be affected and, if so, working with lenders to avoid violations.
· Addressing
any income tax implications. The
new guidance will be effective for public business entities for annual periods beginning after December 15, 2018 (e.g., calendar
periods beginning on January 1, 2019), and interim periods therein. On
March 15, 2016, the FASB issued ASU 2016-07 "InvestmentsEquity Method and Joint Ventures (Topic 323): Simplifying
the Transition to the Equity Method of Accounting", which simplifies the equity method of accounting by eliminating the requirement
to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an
increase in the level of ownership interest or degree of influence. Consequently, when an investment qualifies for the equity
method (as a result of an increase in the level of ownership interest or degree of influence), the cost of acquiring the additional
interest in the investee would be added to the current basis of the investor's previously held interest and the equity method
would be applied subsequently from the date on which the investor obtains the ability to exercise significant influence over the
investee. The ASU further requires that unrealized holding gains or losses in accumulated other comprehensive income related to
an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the
investment qualifies for the equity method. The
guidance in the ASU is effective for all entities for fiscal years beginning after December 15, 2016, including interim periods
within those fiscal years; early adoption is permitted for all entities. Entities are required to apply the guidance prospectively
to increases in the level of ownership interest or degree of influence occurring after the ASU's effective date. Additional transition
disclosures are not required upon adoption. On
March 17, 2016, the FASB issued ASU 2016-08 "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net)", which amends the principal-versus-agent implementation guidance and illustrations
in the Board's new revenue standard (ASU 2014-09). The FASB issued the ASU in response to concerns identified by stakeholders,
including those related to (1) determining the appropriate unit of account under the revenue standard's principal-versus-agent
guidance and (2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard's
control principle. Among other things, the ASU clarifies that an entity should evaluate whether it is the principal or the agent
for each specified good or service promised in a contract with a customer. As defined in the ASU, a specified good or service
is "a distinct good or service (or a distinct bundle of goods or services) to be provided to the customer." Therefore,
for contracts involving more than one specified good or service, the entity may be the principal for one or more specified goods
or services and the agent for others. The
ASU has the same effective date as the new revenue standard (as amended by the one-year deferral and the early adoption provisions
in ASU 2015-14). In addition, entities are required to adopt the ASU by using the same transition method they used to adopt the
new revenue standard. On
March 30, 2016, the FASB issued ASU 2016-09 "CompensationStock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting", which simplifies several aspects of the accounting for employee share-based payment transactions
for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding
requirements, as well as classification in the statement of cash flows. The
ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual
reporting periods. The
Company is currently evaluating the impact that the pronouncements will have on the Company's consolidated financial statements. As
of June 30, 2016, 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. |
