NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS
Green Vision Biotechnology Corp. (formerly known as Vibe Wireless Corp., originally known as Any Translation Corp.), (the “Company”, “GVBT”), was incorporated under the laws of the State of Nevada on July 5, 2012. We were founded to be in the business of translation and interpretation. On November 12, 2015, we changed our name from Any Translation Corp. to Vibe Wireless Corp. On September 30, 2016, we changed our name from Vibe Wireless Corp. to Green Vision Biotechnology Corp.
On September 30, 2016, the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by increasing the Company’s authorized number of shares of common stock from 75 million to 750 million and increasing all of its issued and outstanding shares of common stock at a ratio of ten (10) shares for every one (1) share held. The Company’s Board of Directors approved this amendment on September 30, 2016. This stock split has been retroactively applied. The Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, Green Vision Biotechnology Corp. pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company is the sole surviving entity and changed its name to “Green Vision Biotechnology Corp.”
The investment transaction under the share exchange agreements and contractual agreements as described below (collectively the “Transaction Agreements”) was entered into, between each of the Shareholders of Lutu International Biotechnology Limited (“Lutu International”), a company incorporated under the laws of Cayman Islands and GVBT (the “Investment Transaction”) on May 12, 2017. As a result of closing the Investment Transaction, GVBT acquired part of the shares of Lutu International and assumed management of Lutu International and all its direct and indirect subsidiaries (“the Lutu Group”).
On May 12, 2017, GVBT entered into a share exchange agreement with Harcourt Capital Limited (“Harcourt”), a limited company incorporated in the British Virgin Islands, which holds 6% of the issued and outstanding shares of Lutu International; and Woodhead Investments Limited (“Woodhead”), a limited company incorporated in the British Virgin Islands, which holds 5% of the issued and outstanding shares of Lutu International (the “Minority Interest Exchange Agreement”). Under the Minority Interest Exchange Agreement, Woodhead agreed to transfer GVBT a total of 5% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Woodhead, or persons designated by Woodhead, a right to receive a total of 5 million shares of GVBT’s common stock. Under the Minority Interest Exchange Agreement, Harcourt agreed to transfer to GVBT a total of 6% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Harcourt, or persons designated by Harcourt, a right to receive a total of 6 million shares of GVBT’s common stock. The transactions under the Minority Interest Exchange Agreement were completed on May 12, 2017.
Able Lead has an outstanding loan of $4.43 million denominated in Renminbi (“RMB”) owed to an unrelated third party with its maturity date on January 22, 2018 (the “Outstanding Loan”). Shares of Lutu International held by Able Lead were offered by Able Lead as collateral to secure repayment of the Outstanding Loan.
On May 12, 2017, GVBT entered into a share exchange agreement (the “Majority Interest Exchange Agreement”) with Able Lead Holdings Limited (“Able Lead”), the 89% shareholder of Lutu International. Under the Majority Interest Exchange Agreement, Able Lead agreed to enter into a series of contractual arrangements with GVBT (collectively, the “Contractual Arrangements”) (as described below), in which GVBT assumed management control of the Lutu Group. Able Lead further agrees to deliver the shares of Lutu International to GVBT once the Outstanding Loan is fully repaid. In consideration, GVBT agrees to issue and deliver a total of 89 million shares of GVBT’s common stock to an escrow agent (issued in the name of the escrow agent or its nominee) (the “ Escrow Shares ”). The Escrow Shares shall be held in escrow for a period of one year or such period of time to be agreed by GVBT and Able Lead upon the execution of the Majority Interest Exchange Agreement. Conditional upon the full repayment of the Outstanding Loan and the release of the Security, the Escrow Shares shall be released to Able Lead in exchange for the delivery of a total of 89% of the issued and outstanding shares of Lutu International by Able Lead to GVBT. In the event that Able Lead fully repays the Outstanding Loan and causes the release of the Security, then the Escrow Shares shall be delivered to Able Lead. In the event that Able Lead cannot fully repay the Outstanding Loan (within a period of one year, or such period of time to be agreed by GVBT and Able Lead) and cause the release of the Security, then the Escrow Shares shall be delivered to transfer agent for cancellation. Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Majority Share Exchange Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements described as below. The transactions under the Majority Interest Exchange Agreement was completed on May 12, 2017.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Pursuant to an escrow agreement (the “Escrow Agreement”) entered into between Booth Udall Fuller, PLC (the “Escrow Agent”) and GVBT on May 12, 2017, the Escrow Shares shall be held by Booth Udall Fuller, PLC for a year upon the execution of the Majority Share Exchange Agreement. The Escrow Shares shall not be subject to any lien, attachment, or any other judicial process
On May 12, 2017, GVBT entered into a series of contractual agreements as described below with Lutu International Biotechnology Limited (“Lutu International”) and/or Able Lead (the “Contractual Arrangements”). Upon execution of the Contractual Arrangements, GVBT assumes management of Lutu International and its subsidiaries (the “Lutu Group”) and receives economic benefits which includes right to receive the expected residual returns and and/or obligation to absorb expected loss from the Lutu Group. Each agreement in the Contractual Arrangements constitutes valid and binding obligations of the parties of such agreements and is enforceable and valid in accordance with the laws of Cayman Islands. All agreements executed by Lutu International were duly approved by its board of directors and the Shareholders of Lutu International.
Consulting Services Agreement
Pursuant to the exclusive consulting services agreement entered into between GVBT and Lutu International on May 12, 2017, GVBT has the exclusive right to provide to the Lutu Group general business operation services, including advice and strategic planning, as well as consulting services related to the technological research and development of bio-fertilizers. Further, GVBT owns the intellectual property rights developed or discovered through research and development, in the course of providing the consulting services, or derived from the provision of the consulting services. In consideration, Lutu International pays an annual consulting service fees to GVBT in the amount equivalent to all of Lutu International’s net profits for the relevant financial year. The term of this consulting service agreement is five (5) years from its effective date and may be terminated upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Consulting Services Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Operating Agreement
Pursuant to the operating agreement entered into between GVBT, Lutu International and Able Lead on May 12, 2017, GVBT agrees to provide guidance and instructions on the Lutu Group’s daily operations, financial management and employment issues. Able Lead agrees to designate candidates recommended by GVBT as their representatives on the boards of directors of each member of the Lutu Group. GVBT has the right to appoint senior executives of each member of the Lutu Group. In addition, GVBT agrees to guarantee the Lutu Group’s performance under any agreements or arrangements relating to the Lutu Group’s business arrangements with any third party. In consideration, Lutu International agrees that it will not, and will cause the Lutu Group not to, without the prior consent of GVBT, engage in any transactions that could materially affect their respective assets, liabilities, rights or operations, including but not limited to, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The term of this operating agreement is five (5) years from its effective date and may be extended and terminated only upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Operating Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Proxy Agreement
Pursuant to the proxy agreement entered into between Able Lead, Lutu International, and GVBT on May 12, 2017, Able Lead agrees to irrevocably grant a person to be designated by GVBT the right to exercise its voting rights and other rights, including the attendance of, and the voting at the shareholders’ meetings of Lutu International for and on behalf of Able Lead (or the signing of written resolutions in lieu of such meetings) in accordance with applicable laws and its articles of association, including but not limited to the appointment and voting for the directors and chairman of the board as the authorized representative of Able Lead to exercise controlling power in the Lutu Group. The proxy agreement may be terminated by joint consent of the parties or upon 7-day written notice from GVBT.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Changes Resulting from the Investment Transaction
The closing of the Investment Transaction occurred on May 12, 2017, resulting in a change of control of GVBT. Prior to closing of the Investment Transaction, GVBT had a total of 60,790,000 shares of common stock issued and outstanding. As a result of the closing of the Investment Transaction, GVBT now has a total of 160,790,000 shares of its common stock issued and outstanding, of which 60,790,000 shares, or approximately 37.8%, are owned by the previous existing shareholders of GVBT, with the balance of 100,000,000 shares, or approximately 62.2%, owned by the previous shareholders of Lutu International, with certain shares held in escrow.
Following the closing of the Investment Transaction, GVBT will carry on the business of the Lutu Group. The Lutu Group, with its operation primarily located in the Shanxi Province of China, is engaged in the biotechnology industry, in particular, the production and distribution of bio-fertilizers. Revenues of the Lutu Group are currently generated from China.
Changes to the Board of Directors and Officers
Simultaneous with the closing of the Investment Transaction, there was a change in the officers and directors of GVBT. As authorized by the bylaws, the existing director of GVBT, Mr. Ma Wai Kin, appointed two (2) additional members to the Board of GVBT. Such members are Mr. Lam Ching Wan (also known as William Lam) and Mr. Leung Kwong Tak (also known as Dr. Michael Leung). Mr. Ma also appointed Mr. William Lam as GVBT’s Chief Executive Officer and Mr. Lo Kwok Leung as GVBT’s Chief Financial Officer. Mr. Lo Kwok Leung is not related to Dr. Michael Leung.
All members of the Board shall hold their respective offices for a term of one year from their respective dates of appointment, or until the election and qualification of their successors, and thereafter to resign as a director of GVBT. In accordance with the bylaws, officers are elected by the board of directors and serve at the discretion of the board of directors.
Accounting Treatment
The Investment Transaction is being accounted for as a reverse-merger and recapitalization. For financial reporting purposes, Lutu International is the acquirer and GVBT is the acquired company. After completion of the transaction, the assets, liabilities, operations results and cash flow of GVBT that will be reflected in the historical consolidated financial statements prior to the Investment Transaction will be those of Lutu International and its subsidiaries and will be recorded at the historical cost basis of Lutu International and its subsidiaries. The Company changed its fiscal year ended from January 31 to December 31.
Tax Treatment and SEC Filer Status: Small Business Issuer
The Investment Transaction is intended to constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization exemptions that may be available under the Code. Immediately following the Investment Transaction, the filer status of GVBT will be a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, as promulgated by SEC.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
|
·
|
a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and
|
|
|
|
|
·
|
an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes- Oxley Act of 2002.
|
We may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company, and if we do, the information that we provide to the stockholders may be different than you might get from other public companies in which you hold equity. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. The JOBS Act permits an "emerging growth company" like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim consolidated financial reporting. Accordingly, these consolidated financial statements do not include all information and footnote disclosures required for an annual set of consolidated financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows as of June 30, 2017 and for all interim periods presented herein have been reflected in these consolidated financial statements and the notes there to. Interim results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the fiscal year as a whole. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as included in the Form 8-K and 8-K/A for the year ended December 31, 2016 filed with U.S. SEC on May 12, 2017 and August 3, 2017.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The historical presentation of the consolidated financial statements includes the financial statements of LUTU INTERNATIONAL BIOTECHNOLOGY LIMITED, and its wholly-owned subsidiaries (collectively referred to herein as the “Company”). All intercompany accounts, transactions, and profits have been eliminated upon consolidation.
The following table depicts the identity of the subsidiaries:
Name of Subsidiary
|
|
Place of
Incorporation
|
|
Attributable Equity Interest %
|
|
|
Registered
Capital
|
|
Lutu International Biotechnology Limited (RTO accounting acquirer) (1)
|
|
Cayman Islands
|
|
|
100
|
|
|
USD100
|
|
Light Raise Limited (2)
|
|
BVI
|
|
|
100
|
|
|
USD 1
|
|
Hong Kong Prolific Mineral Resources Holdings Limited (3)
|
|
HKD
|
|
|
100
|
|
|
HKD 2
|
|
Shanxi Green Biotechnology Industry Company Limited (4)
|
|
PRC
|
|
|
100
|
|
|
RMB 100,000,000
|
|
Shenzhen Qianhai Lutu Supply Chain Management Company Limited (5)
|
|
PRC
|
|
|
100
|
|
|
RMB 5,000,000
|
|
Note:
|
(1)
|
Wholly owned subsidiary of Green Vision Biotechnology Corp.
|
|
(2)
|
Wholly owned subsidiary of Lutu International Biotechnology Limited
|
|
(3)
|
Wholly owned subsidiary of Light Raise Limited
|
|
(4)
|
Wholly owned subsidiary of Hong Kong Prolific Mineral Resources Holdings Limited
|
|
(5)
|
Wholly owned subsidiary of Shanxi Green Biotechnology Industry Company Limited
|
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted 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 period. Actual results could materially differ from those estimates.
Significant estimates and judgments inherent in the preparation of these consolidated financial statements include, among other things, accounting for asset impairments, allowances for doubtful accounts, depreciation and amortization, the collection of revenues from the Agricultural Cooperative.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
Economic and political risks
The Company’s operations are mainly conducted in the Hong Kong Special Administrative Region (“Hong Kong”) and the People’s Republic of China (“China”) (for the purpose of this Current Report on Form 10-Q, China does not includeHong Kong, Macau Special Administrative Region of the People's Republic of China and Taiwan (The Republic of China) and a large number of customers are located in the northern China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in Hong Kong and China, and by the general state of the economy in Hong Kong and China.
The Company’s operations and customers in Hong Kong and China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong and China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Foreign Currency Translation
The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency, while its functional currency are Chinese Renminbi (RMB) and Hong Kong Dollar (HKD). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $ using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.
Below is a table with foreign exchange rates used for translation:
For the six months and year ended, (Average Rate)
|
|
Jun 30, 2017
|
|
|
|
Dec 31, 2016
|
|
|
|
Jun 30, 2016
|
|
Chinese Renminbi (RMB)
|
RMB
|
|
6.85941
|
|
|
RMB
|
|
|
6.64330
|
|
|
RMB
|
|
|
6.53607
|
|
United States dollar ($)
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of (Closing Rate)
|
|
Jun
3
0
, 2017
|
|
|
|
|
Dec 31,
2016
|
|
|
|
|
Jun 30,
201
6
|
|
Chinese Renminbi (RMB)
|
RMB
|
|
6.77309
|
|
|
RMB
|
|
|
6.95566
|
|
|
RMB
|
|
|
6.64429
|
|
United States dollar ($)
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months and year ended, (Average Rate)
|
|
Jun
3
0
, 2017
|
|
|
|
|
Dec 31,
2016
|
|
|
|
|
Jun 30,
201
6
|
|
Hong Kong (HKD)
|
HKD
|
|
7.77435
|
|
|
HKD
|
|
|
7.76224
|
|
|
HKD
|
|
|
7.76747
|
|
United States dollar ($)
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of (Closing Rate)
|
|
Jun
3
0
, 2017
|
|
|
|
|
Dec 31,
2016
|
|
|
|
|
Jun 30,
201
6
|
|
Hong Kong (HKD)
|
HKD
|
|
7.80700
|
|
|
HKD
|
|
|
7.75652
|
|
|
HKD
|
|
|
7.75887
|
|
United States dollar ($)
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
|
|
|
$
|
1.00000
|
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
Revenue Recognition
The Company earns revenue by selling merchandise to end using customers primarily through distribution agent and directly to customers.
Revenue is recognized when merchandise is purchased by and delivered to the customer and confirmed and collectability is reasonably assured. Revenue from wholesale agent is recognized after goods delivered, amount fixed or determined and collectability is reasonably assured.
All revenues are shown net of estimated returns during the relevant period represented by estimated allowance for sales returns based upon historical experience.
The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.
During the three and six months ended June 30, 2017 and 2016, the provision of sales return were $ Nil respectively.
Cost of Goods Sold
Cost of goods sold includes the cost of materials, labor, and relevant manufacturing expenses.
Selling Expenses
Selling expenses include packaging and shipping costs, as well as advertising and certain expenses associated with operating the Company’s corporate headquarters.
Advertising Costs
The Company expensed all advertising costs as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $6,490 and $471 for the six months ended June 30, 2017 and 2016 respectively and $5,426 and $471 for the three months ended June 30, 2017 and 2016 respectively. Advertising expense is included in selling expense and general and administrative expenses in the accompanying consolidated statements of income.
Leases
The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company’s operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for office remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.
The Company did not have a lease that met the criteria of a capital lease. Leases that do not qualify as a capital lease are classified as an operating lease. Operating lease rental expenses included in selling, general and administrative expenses for the six months ended June 30, 2017 and 2016 were $9,862 and $10,868 respectively and for the three months ended June 30, 2017 and 2016 were $5,534 and $5,763.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
Accounts Receivable
Accounts receivable is recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is maintained for all customers based on a variety of factors, including the industry practice, the length of time the receivables are past due, significant one-time events and historical experience. The Company is selling products delivered to certain customers which are closed to Agriculture Cooperatives as defined by ASC 905 “Agriculture”. The collection cycle may be varied and depended on the growing crops cycle.
Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectability of outstanding accounts receivable. The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance. Bad debts are written off as incurred. During the quarter ended June 30, 2017 and year ended December 31, 2016, the bad debts incurred were $Nil and $Nil respectively.
Outstanding accounts balances are reviewed individually for collectability. The Company does not charge any interest income on trade receivables. Accounts balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To date, the Company has not charged off any balances as it has yet to exhaust all means of collection.
During the quarter ended June 30, 2017 and year ended December 31, 2016, the provision of doubtful debts were $Nil and $Nil respectively.
Inventories
Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.
Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.
Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.
These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is provided over the estimated useful lives, using the straight-line method with 5% scrape value as follows:
Buildings
|
|
20 years
|
Machinery & equipment
|
|
10 years
|
Office equipment
|
|
3 years
|
Motor vehicles
|
|
4 years
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
Land Use Rights
According to the laws of the PRC, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years.
Goodwill
Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles — Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.
The Company performed an annual impairment test as of the end of fiscal year 2016, and determined that an impairment loss in the amount of $nil were recorded in 2016.
Long-lived Assets
The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.
The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions.
During the reporting periods, the Company performed the evaluation and there was no impairment loss.
Cash and Concentration of Credit Risk
The Company maintains cash in bank deposit accounts in Hong Kong and PRC, and considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company performs ongoing evaluations of the institution to limit its concentration risk exposure.
The Company’s customers are mainly located in the northeastern China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.
Retirement Benefit Plans
Full time employees of the Company in China participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation—Retirement Benefits.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
The total amounts for such employee benefits which were expensed were $3,721 and $5,958 for the six months ended June 30, 2017 and 2016 and $3,034 and $2,704 respectively and for the three months ended June 30, 2017 and 2016 respectively.
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.
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 consolidated financial statements. The Company’s current component of comprehensive income is the net income and foreign currency translation adjustment.
Segment Reporting
The Company operates in one industry segment, operating manufacturing and selling of organic bio-fertilizer. ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.
Basic and diluted earnings (loss) per share
In accordance with ASC No. 260 “Earnings Per Share”, the basic earnings (loss) per common share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share is computed similarly to basic earnings (loss) per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
Recently Issued Accounting Guidance
FASB Clarifies the Definition of a Business. The FASB has issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business.
The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. They also provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable.
For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other companies and organizations, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
The FASB has issued Accounting Standards Update No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. The amendments relate primarily to the reporting by an employee benefit plan (a plan) for its interest in a master trust. A master trust is a trust for which a regulated financial institution (bank, trust company, or similar financial institution that is regulated, supervised, and subject to periodic examination by a state or federal agency) serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.
Recently Issued Accounting Guidance
(continued)
The amendments are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented. The amendments apply to reporting entities within the scope of Topic 960, Plan Accounting - Defined Benefit Pension Plans, Topic 962, Plan Accounting - Defined Contribution Pension Plans, or Topic 965, Plan Accounting - Health and Welfare Benefit Plans.
Under Topic 960, investments in master trusts are presented in a single line item in the statement of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in practice. For each master trust in which a plan holds an interest, the amendments require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively.
Topics 960 and 962 require plans to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by general type, within the plan’s financial statements. The amendments remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments.
Current U.S. GAAP does not require disclosure by plans of the master trust’s other assets and liabilities. Examples of those balances include amounts due from brokers for securities sold, amounts due to brokers for securities purchased, accrued interest and dividends, and accrued expenses. The amendments require all plans to disclose: (a) their master trust’s other asset and liability balances; and (b) the dollar amount of the plan’s interest in each of those balances.
Lastly, investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets are generally provided in both the defined benefit pension plan financial statements and the health and welfare benefit plan financial statements. Stakeholders noted that the disclosures are redundant. The amendments remove that redundancy and do not require that the investment disclosures relating to the 401(h) account assets be provided in the health and welfare benefit plan’s financial statements. The amendments will require the health and welfare benefit plan to disclose the name of the defined benefit pension plan in which those investment disclosures are provided, so that participants can easily access those statements for information about the 401(h) account assets, if needed.
The FASB has issued Accounting Standards Update (ASU) No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments apply to all employers, including not-for-profit entities, that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation — Retirement Benefits.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION (CONTINUED)
The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.
The amendments also allow only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset).
The amendments are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.
NOTE 3 – OTHER RECEIVABLES
Other receivables consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Deposits
|
|
$
|
107,025
|
|
|
$
|
101,124
|
|
Prepaid expenses
|
|
|
2,923
|
|
|
|
3,992
|
|
Advance to employee
|
|
|
3,742
|
|
|
|
1,033
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
113,690
|
|
|
$
|
106,149
|
|
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Buildings
|
|
$
|
2,952,683
|
|
|
$
|
2,877,610
|
|
Machinery & equipment
|
|
|
560,105
|
|
|
|
545,864
|
|
Office equipment
|
|
|
66,978
|
|
|
|
65,175
|
|
Motor vehicles
|
|
|
147,011
|
|
|
|
143,273
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
3,726,777
|
|
|
|
3,631,922
|
|
Less: accumulated depreciation and impairment charges
|
|
|
(648,672
|
)
|
|
|
(514,473
|
)
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment, net
|
|
$
|
3,078,105
|
|
|
$
|
3,117,449
|
|
The depreciation expenses for the six months ended June 30, 2017 and 2016 were $119,267 and $129,343 respectively.
The depreciation expenses for the three months ended June 30, 2017 and 2016 were $59,616 and $62,372 respectively.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 5 – INTANGIBLE ASSETS
Intangible assets consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Land use rights
|
|
$
|
1,188,439
|
|
|
$
|
1,158,222
|
|
Software system
|
|
|
1,296
|
|
|
|
1,263
|
|
Less – accumulated amortization
|
|
|
(314,252
|
)
|
|
|
(294,504
|
)
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
$
|
875,483
|
|
|
$
|
864,981
|
|
The amortization expenses of land use rights and software systems for the six months ended June 30, 2017 and 2016 were $11,913 and $12,539 respectively.
The amortization expenses of land use rights and software systems for the three months ended June 30, 2017 and 2016 were $5,942 and $6,273 respectively.
Future amortization of land use rights and software systems is as follows:
Years ending December 31,
|
|
Amount
|
|
2017
|
|
$
|
11,884
|
|
2018
|
|
|
23,769
|
|
2019
|
|
|
23,769
|
|
2020
|
|
|
23,769
|
|
2021
|
|
|
23,769
|
|
Thereafter
|
|
|
768,523
|
|
|
|
|
|
|
Total
|
|
$
|
875,483
|
|
NOTE 6 – INVENTORIES
Inventories consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Raw material
|
|
$
|
65,655
|
|
|
$
|
87,862
|
|
Finished goods
|
|
|
214,865
|
|
|
|
144,114
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
280,520
|
|
|
$
|
231,976
|
|
NOTE 7 – CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
Sales:
Customer
|
|
As at June 30, 2017
|
|
|
As at December 31, 2016
|
|
A
|
|
$
|
28,994
|
|
|
|
28
|
%
|
|
$
|
820,900
|
|
|
|
64
|
%
|
B
|
|
|
13,121
|
|
|
|
13
|
%
|
|
|
74,128
|
|
|
|
6
|
%
|
C
|
|
|
12,596
|
|
|
|
12
|
%
|
|
|
70,875
|
|
|
|
6
|
%
|
D
|
|
|
11,371
|
|
|
|
11
|
%
|
|
|
-
|
|
|
|
-
|
%
|
E
|
|
|
10,497
|
|
|
|
11
|
%
|
|
|
-
|
|
|
|
-
|
%
|
Total
|
|
$
|
76,579
|
|
|
|
75
|
%
|
|
$
|
965,903
|
|
|
|
76
|
%
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 7 – CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS (CONTINUED)
Purchases:
Supplier
|
|
As at June 30, 2017
|
|
|
As at December 31, 2016
|
|
AA
|
|
$
|
17,153
|
|
|
|
58
|
%
|
|
$
|
232,614
|
|
|
|
56
|
%
|
BB
|
|
|
5,086
|
|
|
|
17
|
%
|
|
|
83,988
|
|
|
|
20
|
%
|
CC
|
|
|
3,721
|
|
|
|
13
|
%
|
|
|
32,403
|
|
|
|
8
|
%
|
DD
|
|
|
2,389
|
|
|
|
8
|
%
|
|
|
16,921
|
|
|
|
4
|
%
|
EE
|
|
|
1,041
|
|
|
|
4
|
%
|
|
|
11,628
|
|
|
|
3
|
%
|
Total
|
|
$
|
29,390
|
|
|
|
100
|
%
|
|
$
|
377,554
|
|
|
|
91
|
%
|
NOTE 8 –OTHER PAYABLES
Other payables consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Payables to employees
|
|
$
|
174,709
|
|
|
$
|
162,153
|
|
Miscellaneous
|
|
|
22,820
|
|
|
|
21,059
|
|
|
|
|
|
|
|
|
|
|
Total other payables
|
|
$
|
197,529
|
|
|
$
|
183,212
|
|
NOTE 9 – LOSS PER SHARE
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants and stock options outstanding (using the treasury method). The following table sets forth the computation of basic and diluted net income per common share:
The following table sets forth the computation of basic and diluted net income per common share:
Years Ended December 31,
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share
|
|
$
|
(448,072
|
)
|
|
$
|
(357,404
|
)
|
Weighted-average shares of common stock outstanding in computing net loss per common stock
|
|
|
|
|
|
|
|
|
Basic
|
|
|
116,792,818
|
|
|
|
100,000,000
|
|
Diluted
|
|
|
116,792,818
|
|
|
|
100,000,000
|
|
Basic loss per share of common stock
|
|
$
|
(0.38
|
)cents
|
|
$
|
(0.36
|
)cents
|
Diluted loss per share
|
|
$
|
(0.38
|
)cents)
|
|
$
|
(0.36
|
)cents
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 10 – AMOUNT DUE FROM / TO RELATED PARTIES
The details for amount due from / to related parties were as follows:
December 31,
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Amount due from related parties:
|
|
(unaudited)
|
|
|
(audited)
|
|
Well Supreme Limited (c)
|
|
$
|
-
|
|
|
$
|
207,825
|
|
China Mineral Resources Holdings Limited (a) (c)
|
|
|
9,082
|
|
|
|
9,141
|
|
Shanxi Lukun Mining Technology Co., Ltd (a)
|
|
|
805,986
|
|
|
|
1,119,750
|
|
Isparta Holdings Limited (a) (b) (c)
|
|
|
437,390
|
|
|
|
477,417
|
|
|
|
$
|
1,252,458
|
|
|
$
|
1,814,133
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
June 30,
201
7
|
|
|
December 31,
201
6
|
|
|
|
(
un
audited)
|
|
|
(audited)
|
|
Amount due to related parties:
|
|
|
|
|
|
|
|
|
Shanxi Chengkai Mining Technology Co., Ltd (a)
|
|
$
|
1,266,136
|
|
|
$
|
1,234,520
|
|
Hong Kong Prolific Mineral Technologies Ltd (a)
|
|
|
1,508,262
|
|
|
|
1,518,078
|
|
Pilot Sunshine Limited (a) (c)
|
|
|
5,124
|
|
|
|
5,157
|
|
Able High Holdings Limited (a) (b) (c)
|
|
|
2,379,901
|
|
|
|
2,780,449
|
|
Hong Kong Prolific Eco-Technology Limited (a)
|
|
|
55,040
|
|
|
|
55,398
|
|
Holmsun Capital Limited (a) (b)
|
|
|
390,608
|
|
|
|
393,150
|
|
Hui & Lam Solicitors LLP (c)
|
|
|
9,265
|
|
|
|
21,380
|
|
Maycrown Capital Limited (a) (b)
|
|
|
396,819
|
|
|
|
399,401
|
|
View Strong Limited (a) (b) (c)
|
|
|
11,528
|
|
|
|
11,603
|
|
MA Wai Kin (d)
|
|
|
50,000
|
|
|
|
-
|
|
|
|
$
|
6,072,683
|
|
|
$
|
6,419,136
|
|
____________
(a)
|
Common director, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited
|
(b)
|
Common shareholder, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited
|
(c)
|
Common director LAM Ching Wan of the Company
|
(d)
|
President, Secretary, Treasurer and director of the Company
|
NOTE 11 – INCOME TAXES
The Company and its subsidiaries have no operation in United States, Cayman Islands and British Virgin Islands, and are not subject to any domestic income tax. Therefore, no domestic income tax of United States, Cayman Islands and British Virgin Islands are paid in the quarter ended June 30, 2017 and year ended December 31, 2016.
Hong Kong Prolific Mineral Resources Holdings Limited was incorporated in Hong Kong and is subjected to Hong Kong profits tax rate of 16.5% for the six and three months ended June 30, 2017 and 2016. Income tax (reversal) expense amounted to $Nil for the quarter ended June 30, 2017 and year ended December 31, 2016.
A reconciliation of the provision for income taxes with amounts determined by applying the Hong Kong profit rate of 16.5% to income before income taxes is as follows:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Profit (Loss) before income tax
|
|
$
|
(147,749
|
)
|
|
$
|
(453,066
|
)
|
Temporary Difference
|
|
|
-
|
|
|
|
-
|
|
Permanent Difference
|
|
|
-
|
|
|
|
-
|
|
Taxable loss
|
|
$
|
(147,749
|
)
|
|
$
|
(453,066
|
)
|
HongKongProfitsTaxrate %
|
|
|
16.5
|
%
|
|
|
16.5
|
%
|
Current tax credit
|
|
$
|
24,379
|
|
|
$
|
74,756
|
|
Less: Valuation allowance
|
|
|
(24,379
|
)
|
|
|
(74,756
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 11 – INCOME TAXES (CONTINUED)
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended June 30, 2017 and year ended December 31, 2016.
Shanxi Green Biotechnology Industry Company Limited and Shenzhen Qianhai Lutu Supply Chain Management Company Limited were incorporated in the PRC and are subjected to income taxes under the current laws of the PRC. The EIT rate of PRC was 25% for the quarter ended June 30, 2017 and year ended December 31, 2016.
Profit (loss) before income tax of $(287,435) and $(484,914) for the quarter ended June 30, 2017 and year ended December 31, 2016 respectively, were attributed to operations in China. The income tax expenses consisted of the following:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Profit (Loss) before income tax
|
|
$
|
(287,435
|
)
|
|
$
|
(484,914
|
)
|
Temporary Difference
|
|
|
-
|
|
|
|
-
|
|
Permanent Difference
|
|
|
-
|
|
|
|
-
|
|
Taxable loss
|
|
$
|
(287,435
|
)
|
|
$
|
(484,914
|
)
|
China Enterprise Income Tax rate
|
|
|
25
|
%
|
|
|
25.0
|
%
|
Current tax credit
|
|
$
|
71,859
|
|
|
$
|
121,229
|
|
Less: Valuation allowance
|
|
|
(71,859
|
)
|
|
|
(121,229
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended June 30, 2017 and year ended December 31, 2016.
NOTE 12 – SEGMENT INFORMATION
FASB Accounting Standard Codification Topic 280 (ASC 280) “Segment Reporting” establishes standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.
In the quarter ended June 30, 2017 and year ended December 31, 2016, the Company is regarded as a single operating segment, being engaged in the manufacturing of bio-fertilizer. This principal activity and geographical market are substantially based in China, accordingly, no operating or geographical segment information are presented.
NOTE 13 – COMPREHENSIVE INCOME
Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of income and are recorded directly into a separate section of shareholders’ equity on the consolidated balance sheets. Comprehensive income and its components consist of the following:
Years Ended December 31,
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Net loss
|
|
$
|
(448,072
|
)
|
|
$
|
(1,049,897
|
)
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
70,369
|
|
|
|
(122,997
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(377,703
|
)
|
|
$
|
(1,172,894
|
)
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Operating Leases
Certain of our real properties is operated under lease agreements. Rental expense under operating leases was as follows:
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Rent expense
|
|
$
|
9,862
|
|
|
$
|
17,890
|
|
|
|
|
|
|
|
|
|
|
Total rent expense, net
|
|
$
|
9,862
|
|
|
$
|
17,890
|
|
Annual minimum payments under operating leases are as follows:
Years Ended December 31,
|
|
Minimum Lease
Payment
|
|
|
|
|
|
2017
|
|
$
|
8,660
|
|
2018
|
|
|
17,319
|
|
2019
|
|
|
9,381
|
|
|
|
|
|
|
Total
|
|
$
|
35,360
|
|
NOTE 15 - GOING CONCERN
As of June 30, 2017 and December 31, 2016, the Company has an accumulated deficits of $3,648,022 and $3,199,950 respectively, and its current liabilities exceed its current assets resulting in negative working capital of $7,846,556 and $7,333,603 respectively. In view of the matters described above, recoverability of a major portion of the recorded asset amounts and realization of the portion of current liabilities into revenue shown in the accompanying balance sheets are dependent upon continued operations of the Company, which in turn are dependent upon the Company's ability to raise additional financing and to succeed in its future operations. The Company may need additional cash resources to operate during the upcoming 12 months, and the continuation of the Company may be dependent upon the continuing financial support of investors and/or stockholders of the Company. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing (i) additional funding which would enhance capital employed; and (ii) strategic partners which would increase revenue bases or reduce operation expenses. Management believes that the above actions will allow the Company to continue its operations throughout this fiscal year.
NOTE 16 – SUBSEQUENT EVENT
Management has evaluated all activities and concluded that there was no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements". 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.