Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
o
No
x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
o
No
x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes
x
No
o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit such files). Yes
x
No
o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
o
No
x
The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2018 was $16,193,771.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: 520,976,241 shares as of May 15, 2019.
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “pursue,” “expect,” “predict,” “project,” “goals,” “strategy,” “future,” “likely,” “forecast,” “potential,” “continue,” negatives thereof or similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding future acquisition or merger targets, business strategies, macro-economic and sector-specific trends, future cash flows, financing plans, plans and objectives of management and any other statements which are not statements of historical facts.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, inability to successfully conclude acquisitions of target companies or assets which are reasonably capable of generating positive cash flow in the near future, legal and regulatory changes in the jurisdictions in which we operate, volatility or decline in our stock price, mismanagement of our subsidiaries by local managers, potential fluctuation of our quarterly and annual financial and operational results, rapid adverse changes in markets, decline in demand for our goods and services, insufficient revenues to cover our operating costs and such other factors as discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within this Annual Report on Form 10-K.
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
All references in this Annual Report on Form 10-K to the “Company,” “Resort Savers,” “RSSV,” “we,” “us” or “our” are to Resort Savers, Inc.
Part I
Item 1. Business.
Resort Savers, Inc. was incorporated in the State of Nevada on June 25, 2012. At formation, the Company was authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share (“Common Stock”), and 15,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”). On July 3, 2018, the Company’s board of directors (the “Board of Directors”) approved a change in our fiscal year end from January 31 to December 31. The Company now operates on a fiscal year ending on December 31. Resort Savers has limited cash on hand. We have sustained losses since inception and have relied solely upon the sale of our securities and loans for funding. Resort Savers has never declared bankruptcy, been in receivership, or been involved in any kind of legal proceeding.
On August 1, 2014, a change of control of the Company occurred, whereby a controlling interest in the Company was sold by Michelle LaCour, our former President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director and a former 5% stockholder, and James LaCour, our former Secretary and Director and a former 5% stockholder, to the following: (1) Zhou Gui Bin (236,733 shares at a purchase price of $0.20 per share); (2) Zhou Wei (236,733 shares at a purchase price of $0.20 per share); and (3) Zong Xin International Investment Holdings Co. LTD (“Zong Xin”) (1,636,734 shares at a purchase price of $0.20 per share). On August 11, 2014, in connection with the transfer of shares described in this paragraph, Ms. LaCour and Mr. LaCour resigned from each of their roles as officers and Directors of the Company, and they were replaced by Zhou Gui Bin as President, CEO and Director, and Zhou Wei as Treasurer, CFO, Secretary and Director.
On September 25, 2014 the Company effected a forward ten-for-one (10-for-1) stock split on its Common Stock, having the equivalent effect of issuing an additional nine shares of Common Stock for each share of Common Stock outstanding immediately prior to the effective date of the forward stock split. All share and per share information has been retroactively restated for financial presentation of prior periods.
Worx America, Inc.
From January 2015 through March 2015, the Company, by and through its wholly owned subsidiary, Xing Rui International Investment Holding Group Co., Ltd. (“Xing Rui”), acquired 20,068,750 shares of common stock (representing 20% of the issued and outstanding common stock) of Worx America, Inc. (“Worx”), a private company based in Houston, Texas, in exchange for $1,650,000 cash and 1,000,000 shares of common stock of Borneo Resource Investments Ltd. (“BRNE”) with a value of $350,000. Specifically, on January 28, 2015, the Company paid $350,000 cash in exchange for 5,403,728 common shares of Worx, on March 20, 2015, the Company paid $1,300,000 cash and transferred 1,000,000 shares of common stock of BRNE in exchange for 14,665,022 common shares of Worx. The Company accounted for this investment using the equity method, with an initial cost of $2,000,000.
Worx designs automated solutions for industrial, environmental and energy industries to improve efficiency and systems output. The Worx automated robotic tank cleaning system reduces tank cleaning time, reduces or eliminates the need for personnel to enter tanks, and may reduce the volume of solvents used to clean a tank.
A description of the products, services, principal market and distribution methods of Worx can be found within this Part I, Item 1 under the heading “Principal Products, Services and Their Markets.”
Shenzhen Amuli Industrial Development Co. Ltd.
On October 1, 2015, the Company issued 3,033,926 shares of its Common Stock to Xu Xiao Yun in exchange for sixty percent (60%) of Shenzhen Amuli Industrial Development Co. Ltd., a PRC corporation (“Amuli”). The equity of Amuli that was transferred by Xu Xiao Yun was held by Huaxin Changrong (Shenzhen) Technology Service Co., Ltd. (“Huaxin”), which was formed by Xing Rui for the purpose of holding the equity of Amuli and other PRC subsidiaries. The purchase price was valued $2,400,000.
On November 19, 2018, the Company disposed of its partial ownership interest in Amuli by causing Huaxin and Amuli to enter into a Share Purchase Agreement (the “Amuli Disposition Agreement”) with Ms. An Wenhui, a citizen of the PRC and minority shareholder of Amuli (the “Purchaser”), pursuant to which, among other things and subject to the terms and conditions contained therein, Huaxin sold its sixty percent (60%) Amuli equity stake (the “Amuli Shares”) to the Purchaser (the “Amuli Disposition”). Pursuant to the Amuli Disposition Agreement, in exchange for the Amuli Shares, the Purchaser paid to Huaxin a cash price of $1 or the equivalent thereof in Chinese Yuan (the “Purchase Price”). Our Board of Directors approved the Amuli Disposition Agreement, the Amuli Disposition and the Purchase Price, because among other reasons the Board of Directors believed that Amuli would not produce significant future income or cash flow. The Amuli Disposition Agreement contains substantially fewer representations and warranties in comparison to other agreements entered into by the Company and its subsidiaries. Additionally, the closing of the Amuli Disposition occurred contemporaneously with the signing of the Amuli Disposition Agreement, which resulted in little or no covenants or closing conditions imposed on the parties. As a result, Amuli is no longer a partially-owned subsidiary of the Company.
Amendment to Articles of Incorporation
On October 9, 2015, we amended our Articles of Incorporation to increase the maximum number of authorized shares of Common Stock to 1,000,000,000 shares. We did not amend the amount of authorized shares of Preferred Stock or par values for Common Stock or Preferred Stock.
Beijing Yandong Tieshan Oil Products Co., Ltd.
On January 29, 2016, the Company entered into an exchange agreement (the “Tieshan Oil Exchange Agreement”) with Mr. Yang Baojin (“Mr. Yang”), a citizen of the PRC, and the Company’s subsidiary Huaxin. Mr. Yang was the president and majority owner of Beijing Yandong Tieshan Oil Products Co., Ltd. (“Tieshan Oil”). Pursuant to the Tieshan Oil Exchange Agreement, the Company issued 4,800,000 shares of its Common Stock to Mr. Yang, who delivered to Huaxin an ownership interest in Tieshan Oil such that Huaxin at the time of closing owned 51% of all ownership interests in Tieshan Oil (the “Tieshan Oil Exchange”). The Company held 1,200,000 shares of its Common Stock in escrow (the “Escrow Shares”) to issue to Mr. Yang twelve months following the closing of the Tieshan Oil Exchange, in connection with the successful performance of certain covenants by Mr. Yang. The Company did not issue the Escrow Shares to Mr. Yang in connection with the Tieshan Oil Exchange.
On May 16, 2018, the Company completed its acquisition of Tieshan Oil by entering into a second share exchange agreement (the “Second Tieshan Oil Exchange Agreement”) with Mr. Yang. Pursuant to the Second Tieshan Oil Exchange Agreement, the Company, through Huaxin, agreed to acquire the remaining 49% of Tieshan Oil held by Mr. Yang, in exchange for the issuance to Mr. Yang of 16,000,000 shares of the Company’s Common Stock (the “Tieshan Oil Acquisition”). The Tieshan Oil Acquisition closed simultaneously with the execution of the Second Tieshan Oil Exchange Agreement.
Apart from the Tieshan Oil Acquisition, neither the Company nor Huaxin has a material relationship with either Mr. Yang or Tieshan Oil.
A description of the products, services, principal market and distribution methods of Tieshan Oil can be found within this Part I, Item 1 under the heading “Principal Products, Services and Their Markets.”
Abandonment of Plans to Acquire Dusun Eco Resort (2005) Sdn. Bhd.
On December 7, 2017, the Company entered into a Share Exchange Agreement (the “Dusun Exchange Agreement”) with Dusun Eco Resort (2005) Sdn. Bhd., a limited liability company registered under the laws of Malaysia (“Dusun Eco”), and the shareholders of Dusun Eco (the “Dusun Sellers”), by which the Company agreed to acquire all of the issued and outstanding stock of Dusun Eco in exchange for the issuance of 400,000,000 shares of the Company’s Common Stock. After further review of the due diligence materials related to the Exchange, our Board of Directors felt that it was in the Company’s best interest to terminate the Dusun Exchange Agreement. On February 9, 2018, the Company, Dusun Eco and the Dusun Sellers entered into a Termination of Share Exchange Agreement (the “Dusun Termination Agreement”), by which the Company, Dusun Eco and the Dusun Sellers agreed to terminate the Dusun Exchange Agreement with no legal consequence to any of the parties to the Dusun Exchange Agreement.
Entry into Share Exchange Agreement with Admall Sdn. Bhd.
On February 9, 2018, the Company entered into a Share Exchange Agreement (the “Admall Exchange Agreement”) with Admall Sdn. Bhd., a limited liability company incorporated in Malaysia (“Admall”), and each of Admall’s shareholders (collectively, the “Admall Sellers”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Company will effect an acquisition of Admall by acquiring from the Sellers all outstanding equity interests of Admall in exchange for 400,000,000 shares of Common Stock of the Company (the “Admall Acquisition”). On May 16, 2018, the Company closed the Admall Acquisition.
Concurrently with the execution of the Admall Exchange Agreement, our Board of Directors appointed Mr. Boon Jin “Patrick” Tan to be the treasurer, CFO and Director of the Company. Mr. Tan is the founder and director of Admall. Apart from the appointment of Mr. Tan as Director and officer of the Company, and the transactions pursuant to the Admall Exchange Agreement, the Company did not have a prior material relationship with Admall or any of the Admall Sellers.
A description of the products, services, principal market and distribution methods of Admall can be found within this Part I, Item 1 under the heading “Principal Products, Services and Their Markets.”
Change of Management
On February 9, 2018, concurrently with the execution of the Admall Exchange Agreement and the Dusun Termination Agreement, Zhou Gui Bin resigned from his positions as President, CEO, Secretary and Director of the Company, and Zhou Wei resigned from his positions as Treasurer, CFO and Director of the Company. The departing Directors approved, by written consent in lieu of special meeting of the Board of Directors, the appointment of Mr. Ding-Shin “DS” Chang and Mr. Boon Jin “Patrick” Tan as the new Directors of the Company and submitted such appointment for approval and ratification by the Company’s stockholders. The Company’s departing Directors also appointed Mr. Ding-Shin “DS” Chang as the Company’s President and CEO, Mr. Boon Jin “Patrick” Tan as the Company’s Treasurer and CFO, and Mr. Liang-Yu “Jacky” Chang as the Company’s Secretary, all of whom are to serve on an at-will basis until their resignation or removal by the Board of Directors.
Change in Fiscal Year End; Change to Bylaws; Reverse Stock Split; Corporate Name Change
On July 3, 2018, our Board of Directors approved a change in our fiscal year end from January 31 to December 31. The Company now operates on a fiscal year ending on December 31. The Company changed its bylaws to reflect the change in fiscal year end.
Contemporaneously with the change in fiscal year end, our Board of Directors approved a reverse one-for-thirty (1-for-30) stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and a change of corporate name from “Resort Savers, Inc.” to “SCGI Group Holding, Inc.” (the “Name Change”).
However, after further consideration of the business needs of the Company, the Board of Directors delayed the implementation of the Reverse Split and Name Change indefinitely.
Principal Products, Services and Their Markets
As described above in this Part I, Item 1, we have ownership interests in Worx, Tieshan Oil and Admall.
Worx designs automated solutions for industrial, environmental and energy industries to improve efficiency and systems output. The Worx automated robotic tank cleaning system reduces tank cleaning time, reduces or eliminates the need for personnel to enter tanks, and may reduce the volume of solvents used to clean a tank. Actual results vary from tank to tank and may involve variables including the product in the tank, physical condition of the tank such as corrosion, or amount of sludge accumulated. Worx is currently refining its product line to improve speed and efficiency, and our investment in Worx has facilitated this development. We hope to utilize this important technology for deployment into commercial markets in China and greater Asia in the future.
Tieshan Oil is principally engaged in the trading of oil, gas and lubricant products within the PRC. During the year ended December 31, 2018, one customer, who is a related party, accounted for 98% of revenues from related party. As of December 31, 2018 and 2017, one customer accounted for approximately 98% and 0% of accounts receivable, two vendors account for approximately 96% and 0% of accounts payable, respectively
Admall engages in the business of providing nutrition consultancy services and training as well as selling health products through an online store.
We are also seeking additional global investment opportunities in emerging companies with products that have potential for expanding regional and international sales and revenues.
Competitive Business Conditions and Strategy; Our Position in the Industry
Our core business is the acquisition of businesses which we believe will generate cash within an acceptable time horizon, and we primarily use our capital stock as consideration in such acquisitions. We face many competitors in the strategic investment and acquisition sector, including private equity funds, sovereign wealth and pension funds, corporate conglomerates, single family offices and multi-family offices, asset management firms, corporate acquirors which are strategically positioned in industries competitive with ours, and other small-cap public companies which primarily use equity securities to finance investments and acquisitions. In the latter category, barriers to entry are extremely low, and we face intense competition to source investment targets and to close investments. Our competitors have significantly greater financial and marketing resources than we do, including sufficient cash to pay consideration for acquisitions. There are no assurances that our efforts to compete in the marketplace will be successful or that we will continue to be able to compete with other funds, companies or other sources of capital to secure competitive acquisition targets and consummate future transactions.
Patents, Trademarks, Licenses, Agreements or Contracts
There are no aspects of our business plan which require a patent, trademark, or product license. We have not entered into any vendor agreements or contracts that give or could give rise to any obligations or concessions.
Research and Development Activities and Costs
We have spent no time on specialized research and development activities and have no plans to undertake any research or development in the future.
Number of Employees
Resort Savers, including its subsidiaries, has 20 full-time employees and we do not anticipate hiring more employees in the near future. None of our Officers and/or Directors have signed any employment agreement, or any other agreement containing provisions related to financial remuneration for services, with the Company.
Reports to Security Holders
The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports and other electronic information regarding Resort Savers, Inc. and filed with the SEC at http://www.sec.gov.
Emerging Growth Company and Smaller Reporting Company Status
Emerging Growth Company
We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period.
We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our the registration of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.07 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act.
Smaller Reporting Company
We also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $250 million. To the extent that we remain a smaller reporting company at such time as are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings, some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Resort Savers’ principal business and corporate address is Level 11, Tower 4, Puchong Financial Corporate Centre (PFCC), Jalan Puteri 1/2, Bandar Puteri, 47100 Puchong, Malaysia. The telephone number at our corporate address is +603 8600 0313. Other than this mailing address, Resort Savers as a holding company does not currently maintain any physical or other office facilities, and we do not anticipate the need for maintaining office facilities at any time in the foreseeable future. The Company pays no rent or other fees for the use of the mailing address as this address is used virtually full-time by activities of a shareholder of the Company.
We do not currently have any investments or other interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.
Item 3. Legal Proceedings.
We are not involved in any pending legal proceeding nor are we aware of any pending or threatened litigation against us.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our Common Stock is not traded on any exchange but is currently available for trading in the over-the-counter market and is quoted on the OTCQB operated by the OTC Markets Group, Inc. under the symbol “RSSV.” Trading in stocks quoted on these markets is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects.
Over the counter securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, these securities transactions are conducted through a telephone and computer network connecting dealers in stocks. Over the counter issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Trades in our Common Stock may be subject to Rule 15g-9 of the Exchange Act, which imposes requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, broker/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction before the sale.
The SEC also has rules that regulate broker/dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00 (other than securities listed on certain national exchanges, provided that the current price and volume information with respect to transactions in that security is provided by the applicable exchange or system). The penny stock rules require a broker/dealer, before effecting a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing before effecting the transaction, and must be given to the customer in writing before or with the customer’s confirmation. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for shares of our Common Stock. As a result of these rules, investors may find it difficult to sell their shares.
Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Markets Group, since approval for our quotation on April 7, 2014. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
December 31, 2018
|
|
$
|
0.30
|
|
|
$
|
0.03
|
|
|
September 30, 2018
|
|
$
|
0.22
|
|
|
$
|
0.10
|
|
|
June 30, 2018
|
|
$
|
0.28
|
|
|
$
|
0.10
|
|
|
March 31, 2018
|
|
$
|
0.32
|
|
|
$
|
0.15
|
|
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
December 31, 2017
|
|
$
|
0.32
|
|
|
$
|
0.16
|
|
|
September 30, 2017
|
|
$
|
0.33
|
|
|
$
|
0.15
|
|
|
June 30, 2017
|
|
$
|
0.43
|
|
|
$
|
0.16
|
|
|
March 31, 2017
|
|
$
|
0.52
|
|
|
$
|
0.20
|
|
On May 15, 2019, the closing price of our Common Stock as reported by the OTC Markets was $0.2744 per share.
As of May 15, 2019, there were approximately 235 stockholders of record and an aggregate of 520,976,241 shares of our Common Stock were issued and outstanding.
Dividend Policy
The Company does not anticipate paying dividends on our Common Stock at any time in the foreseeable future. Our Board of Directors currently plans to retain any earnings for the development and expansion of the Company’s business. Any future determination as to the payment of dividends will be at the discretion of the Board of Directors and will depend on a number of factors including future earnings, capital requirements, financial conditions and such other factors as the Board of Directors may deem relevant.
Equity Compensation Plan Information
We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
The Company did not issue or sell any equity securities during our fiscal year ended December 31, 2018 or the period of time from the end of such fiscal year until the date of filing this Annual Report on Form 10-K. For a description of securities issued as consideration for the acquisition of equity interests in Worx, Amuli, Tieshan Oil and Admall, please refer to Part I, Item 1 of this Annual Report on Form 10-K.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of Common Stock or other securities during our fiscal year ended December 31, 2018.
Description of Securities and Certain Rights of Holders of Common Stock
Our authorized capital stock consists of 1,000,000,000 shares of Common Stock, and 15,000,000 shares of Preferred Stock. As of May 15, 2019, there were approximately 235 stockholders of record and an aggregate of 520,976,241 shares of our Common Stock were issued and outstanding. Holders of our Common Stock are entitled to one vote for each share on all matters submitted to a stockholder vote.
Holders of our Common Stock:
|
|
·
|
have equal ratable rights to dividends from funds legally available, therefore, when, as and if declared by our Board of Directors,
|
|
|
·
|
are entitled to share in all of our assets available for distribution to holders of Common Stock upon liquidation, dissolution or winding up of our affairs, and
|
|
|
·
|
do not have preemptive, subscription or conversion rights, and there are no redemption or sinking fund provisions or rights.
|
Holders of shares of our Common Stock do not have cumulative voting rights, meaning that the holders of the majority of the outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, and, in such event, the holders of the remaining shares will not be able to elect any of our Directors.
Historically, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Item 6. Selected Financial Data.
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
For an overview of the business of the Company, including acquisitions of equity securities of Worx, Amuli, Tieshan Oil and Admall, and changes to management and the Company’s Articles of Incorporation, please refer within this Annual Report on Form 10-K to Part I, Item 1 (“Business”).
Results of Operations
Our operations for the year ended December 31, 2018 and 2017 are outlined below:
Due to reverse acquisition accounting, the Results of operations are not comparable for 2017. Due to acquisition accounting, Admall is the accounting acquirer on May 16, 2018 (“acquisition date”), and all operating results prior to May 16, 2018, are those of Admall only. For periods after the acquisition date, results of operations are those of the Company on a consolidated basis.
Year ended December 31, 2018 compared to year ended December 31, 2017
|
|
|
Year ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
Revenue
|
|
$
|
37,070,832
|
|
|
$
|
891,875
|
|
|
$
|
36,178,957
|
|
|
Cost of Goods Sold
|
|
$
|
35,219,165
|
|
|
$
|
77,109
|
|
|
$
|
35,142,056
|
|
|
Gross Profit
|
|
$
|
1,851,667
|
|
|
$
|
814,766
|
|
|
$
|
1,036,901
|
|
|
Operating expenses
|
|
$
|
723,598
|
|
|
$
|
972,124
|
|
|
$
|
(248,526
|
)
|
|
Other income
|
|
$
|
84,670
|
|
|
$
|
163,959
|
|
|
$
|
(79,289
|
)
|
|
Net income (loss)
|
|
$
|
1,433,509
|
|
|
$
|
1,140
|
|
|
$
|
1,432,369
|
|
For the year ended December 31, 2018 and 2017 our results of operations segment, are as follows:
|
Year Ended December 31, 2018
|
|
Holding
Company
|
|
|
Oil and gas
|
|
|
Nutritional
Services
|
|
|
Health beverage - discontinued operations
|
|
|
Total
Consolidated
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
35,988,326
|
|
|
$
|
1,082,506
|
|
|
$
|
-
|
|
|
$
|
37,070,832
|
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
(34,949,798
|
)
|
|
|
(269,367
|
)
|
|
|
-
|
|
|
|
(35,219,165
|
)
|
|
Operating expenses
|
|
|
(102,186
|
)
|
|
|
(43,027
|
)
|
|
|
(578,385
|
)
|
|
|
-
|
|
|
|
(723,598
|
)
|
|
Other income (expenses)
|
|
|
(73,179
|
)
|
|
|
(17,793
|
)
|
|
|
175,642
|
|
|
|
-
|
|
|
|
84,670
|
|
|
Provision for income taxes
|
|
|
(1,653
|
)
|
|
|
(221,084
|
)
|
|
|
(14,026
|
)
|
|
|
-
|
|
|
|
(236,763
|
)
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
457,533
|
|
|
|
457,533
|
|
|
Net income (loss)
|
|
$
|
(177,018
|
)
|
|
$
|
756,624
|
|
|
$
|
396,370
|
|
|
$
|
457,533
|
|
|
$
|
1,433,509
|
|
|
Year Ended December 31, 2017
|
|
Holding
Company
|
|
|
Oil and gas
|
|
|
Nutritional Services
|
|
|
Health beverage - discontinued operations
|
|
|
Total
Consolidated
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
891,875
|
|
|
$
|
-
|
|
|
$
|
891,875
|
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
-
|
|
|
|
(77,109
|
)
|
|
|
-
|
|
|
|
(77,109
|
)
|
|
Operating expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(972,124
|
)
|
|
|
-
|
|
|
|
(972,124
|
)
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
163,959
|
|
|
|
-
|
|
|
|
163,959
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,461
|
)
|
|
|
-
|
|
|
|
(5,461
|
)
|
|
Net loss
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,140
|
|
|
$
|
-
|
|
|
$
|
1,140
|
|
Liquidity and Capital Resources
The following table provides selected financial data about our company as of December 31, 2018 and 2017, respectively.
Working Capital
The following table provides selected financial data about our company as of December 31, 2018 and 2017, respectively.
|
|
|
December 31,
|
|
|
December 31,
|
|
|
Change
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
Cash
|
|
$
|
257,391
|
|
|
$
|
2,301
|
|
|
$
|
255,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
39,865,557
|
|
|
$
|
490,045
|
|
|
$
|
39,375,512
|
|
|
Current Liabilities
|
|
$
|
34,090,839
|
|
|
$
|
414,584
|
|
|
$
|
33,676,255
|
|
|
Working Capital
|
|
$
|
5,774,718
|
|
|
$
|
75,461
|
|
|
$
|
5,699,257
|
|
As of December 31, 2017, the working capital is only that of Admall and for December 31, 2018 it is for the consolidated Company.
Cash Flow
|
|
|
Year ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
Cash Flows provided by (used in) operating activities
|
|
$
|
612,496
|
|
|
$
|
(58,165
|
)
|
|
$
|
670,661
|
|
|
Cash Flows used in investing activities
|
|
$
|
54,344
|
|
|
$
|
6,681
|
|
|
$
|
47,663
|
|
|
Cash Flows used in financing activities
|
|
$
|
(110,478
|
)
|
|
$
|
-
|
|
|
$
|
(110,478
|
)
|
|
Effects on changes in foreign exchange rate
|
|
$
|
(301,272
|
)
|
|
$
|
2,293
|
|
|
$
|
(303,565
|
)
|
|
Net change in cash during period
|
|
$
|
255,090
|
|
|
$
|
(49,191
|
)
|
|
$
|
(205,899
|
)
|
Cash Flow from Operating Activities
During the year ended December 31, 2018, our Company generated $612,496 in operating activities, compared to $58,165 used in operating activities during the year ended December 31, 2017. The increase in cash provided by operation activities is primarily due to an increase in net income from the acquisition.
Cash Flow from Investing Activities
During the year ended December 31, 2018 and 2017, we had cash from investing activities of $53,344 and $6,681, respectively. For the year ended December 31, 2018, the Company received $88,738 from the business acquisition and $4,661 from disposal of property and equipment and used $587 for the purchase of property and equipment and $38,468 for disposal of subsidiary. For the year ended December 31, 2017, the Company received $8,267 from disposal of property and equipment and used $1,586 for the purchase of property.
Cash Flow from Financing Activities
During the year ended December 31, 2018, our Company used $110,478 in financing activities. For the year ended December 31, 2018, the Company received $890,732 from loans from related parties and repaid short-term loan for $934,800 and loans from related parties for $66,410.
For the year ended December 31, 2017, our Company did not have any financing activities
Plan of Operation
Since the inception of the Company, we have incurred significant losses and relied upon capital raised from affiliates and third parties. The Company makes investments and acquisitions into a diverse range of markets and industries throughout the world.
In light of our acquisitions of Tieshan Oil and Admall, we anticipate generating revenues from the operations of such entities during the next 12 months. Notwithstanding these facts, in light of our ongoing expenses, our management cannot provide any assurances that such revenue will be sufficient to cover all of our expenses or that our Company will ever operate profitably.
During the next year of operations, our officers and Directors will also provide their labor at no charge. We have hired 20 total staff across all of our subsidiaries and do not anticipate hiring any more staff in the next 12 months of operation.
We are a public entity, subject to the reporting requirements of the Exchange Act. We will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these accounting, legal and other professional costs would be a minimum of $100,000 in the next year and will be higher, in the following years, if our business volume and activity increases. Increased business activity could greatly increase our professional fees for reporting requirements and this could have a significant impact on future operating costs. The difference between having the ability to sustain our cash flow requirements over the next twelve months and the need for additional outside funding will depend on how fast we can generate sales revenue.
Limited Operating History; Need for Additional Capital
We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to the price and cost increases in supplies and services.
If we are unable to meet our needs for cash from either our operations, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to Consolidated Financial Statements” on page F-1 and included on pages F-2 through F-17, immediately following the signature page of this Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Dismissal of Anthony Kam & Associates Ltd. and engagement of WWC, Professional Corporation
On or about December 6, 2017 the Company received notification from the US Securities and Exchange Commission (“SEC”) that the Public Company Accounting Oversight Board (“PCAOB”) has revoked the registration of our previous independent registered public accounting firm, Anthony Kam & Associates Ltd. (“AKAM”). As a result of the notification, effective December 6, 2017, the Company dismissed AKAM as the Company’s auditor. Concurrently with our dismissal of AKAM, our Board of Directors approved, by unanimous consent, the engagement of WWC, Professional Corporation (“WWC”) of San Mateo, California as the independent registered public accounting firm for the Company.
The Company originally engaged AKAM on July 3, 2015. During the period from July 3, 2015 to December 6, 2017 the Company had no disagreements with AKAM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to AKAM’s satisfaction, would have caused the auditor to make reference to the subject matter of the disagreement in connection with its report. The reports of AKAM on the financial statements of our Company’s for the fiscal years ended January 31, 2017 and January 31, 2016 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the reports contained an explanatory paragraph stating that there was substantial doubt about the Company’s ability to continue as a going concern.
During our fiscal years ending January 31, 2018 and January 31, 2017, the subsequent interim periods thereto, and through December 6, 2017, the engagement date of WWC, neither the Company, nor someone on its behalf, consulted WWC regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by WWC, in either case where written or oral advice provided by WWC would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues; or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).
Dismissal of WWC, Professional Corporation and engagement of Total Asia Associates
On July 3, 2018, our Board of Directors voted, by unanimous written consent, to dismiss WWC as the auditor of the Company, and the officers of the Company delivered to WWC written notice of dismissal. During the period from December 6, 2017 to July 3, 2018, WWC did not issue a report on the financial statements containing an adverse opinion or a disclaimer of opinion, nor were any reports on the financial statements qualified or modified as to uncertainty, audit scope, or accounting principles. The reports of WWC on the financial statements of our Company for the fiscal years ended January 31, 2018 and January 31, 2017 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the reports contained an explanatory paragraph stating that there was substantial doubt about our Company’s ability to continue as a going concern. During the period from December 6, 2017 to July 3, 2018, the date of dismissal, (a) the Company had no disagreements with WWC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of WWC would have caused it to make reference to the matter in their reports and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
Concurrently with our dismissal of WWC, on July 3, 2018, our Board of Directors approved, by unanimous consent, the engagement of Total Asia Associates (“TAA”) of Kuala Lumpur, Malaysia as the new independent registered public accounting firm for the Company. During our two most recent fiscal years, the subsequent interim periods thereto, and through July 3, 2018, the engagement date of TAA, neither the Company, nor someone on its behalf, has consulted TAA regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by TAA, in either case where written or oral advice provided by TAA would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues; or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2018 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). Based upon such evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2018 based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the PCAOB were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; (4) management of subsidiary companies who do not possess a mature understanding of U.S. GAAP or U.S. securities laws; and (5) management dominated by a small group of individuals without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of December 31, 2018.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside Directors on our Board of Directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the year ended December 31, 2018 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
All Directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of the Company are appointed by the Board of Directors and hold office until their death, resignation or removal from office. The Directors and Executive Officers, their ages, positions held, and duration as such, are as follows:
|
Name
|
|
Position Held with the Company
|
|
Age
|
|
Date First Elected or Appointed
|
|
Ding-Shin “DS” Chang
|
|
President, CEO, Director
|
|
49
|
|
February 9, 2018
|
|
Boon Jin “Patrick” Tan
|
|
Treasurer, CFO, Director
|
|
48
|
|
February 9, 2018
|
|
Liang-Yu “Jacky” Chang
|
|
Secretary
|
|
43
|
|
February 9, 2018
|
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each current Director, Executive Officer and key employee of the Company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Mr. Ding-Shin “DS” Chang
has since 2016 owned and operated his own financial services company, SGCI, with offices in Paris, London, Frankfurt, Hong Kong and Beijing, providing consulting services in the areas of lease financing, term financing, project financing, investment funds, fund management, corporate restructuring, and company reorganization. In 2013, he became the Vice-Chairman at a French financial group, a listing sponsor for NYSE-Euronext. His clients included companies from different countries across the globe. He worked for 16 years as a financial specialist and corporate Director serving the IT industry. Mr. Chang’s international professional career has spanned over 25 years, and he is fluent in French, English, and Mandarin Chinese.
Dr. Boon-Jin “Patrick” Tan
founded Admall in 2015 and serves as its chairman. Mr. Tan specializes in corporate branding and identity and has many years of experience researching the human brain and cognition in the context of applied marketing, advertising and branding. Mr. Tan received the Asia Pacific Entrepreneurship Award in 2008 and has been awarded honorary degrees by Shenzhen University (China), Victoria University (Hong Kong), Carlton College (USA), California University School of International Business Studies (USA) and Sabi University (France). He was granted the honorary title of Dato’ Sri in 2016, by the Sultan of Pahang.
Mr. Liang-Yu “Jacky” Chang
specializes in investor relations in connection with initial public offerings in the United States, the People’s Republic of China and Taiwan. He has held positions with Taiwan’s Chip Hope (8084:TT) and J Touch Corporation (TPE:3584), and United States listed companies GIA Investments Corp. (OTCMKTS:GIAI) and Nownews Digital Media Technology Co. Ltd. (OTCMKTS:NDMT). From 2015 to 2017 Mr. Chang served as Vice President of Asia for Marechal & Associates Limited, and since 2017 he has served Vice President for the German company, SGCI Corporate Finance GmbH.
Employment Agreements
We have no formal employment agreements with any of our employees, Directors or officers.
Family Relationships
None.
Involvement in Certain Legal Proceedings
None of our Directors, Executive Officers, promoters or control persons has been involved in any of the following events during the past 10 years:
1. A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an Executive Officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
|
|
i.
|
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, Director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity
|
|
|
|
|
|
|
ii.
|
Engaging in any type of business practice; or
|
|
|
|
|
|
|
iii.
|
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
|
4. Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
i.
|
Any Federal or State securities or commodities law or regulation; or
|
|
|
|
|
|
|
ii.
|
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
|
|
|
|
|
|
|
iii.
|
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Exchange Act
.
Section 16(a) of the Exchange Act requires the Company’s Directors, Executive Officers and persons who own more than ten percent of a registered class of the Company’s equity securities (“10% holders”), to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, officers and 10% holders are required by SEC regulation to furnish the Company with copies of all of the Section 16(a) reports they file.
Based solely on a review of reports furnished to the Company or written representations from the Company’s Directors and Executive Officers, there are no known incidents of non-compliance for the reporting year.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. The Company will provide to any person, without charge and upon request, a copy of the code of ethics. Any such request must be made in writing to the Company at Level 11, Tower 4, Puchong Financial Corporate Centre (PFCC), Jalan Puteri 1/2, Bandar Puteri, 47100 Puchong, Malaysia.
Board and Committee Meetings
Our Board of Directors currently consists of two members, Mr. Ding-Shin “DS” Chang and Mr. Boon Jin “Patrick” Tan. The Board of Directors held no formal meetings during the year ended December 31, 2018. Until the Company develops a more comprehensive Board of Directors, all proceedings will be conducted by resolutions consented to in writing by all the Directors and filed with the minutes of the proceedings of the Directors. Such resolutions consented to in writing by the Directors entitled to vote on that resolution at a meeting of the Directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the Directors duly called and held.
Nomination Process
During the year ended December 31, 2018, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. Our Board of Directors does not have a policy with regards to the consideration of any Director candidates recommended by our shareholders. Our Board of Directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the Board of Directors considers a nominee for a position on our Board of Directors. If shareholders wish to recommend candidates directly to our Board of Directors, they may do so by sending communications to the President of our Company at the address on the cover of this Annual Report on Form 10-K.
Audit Committee
Currently the Company does not have an Audit Committee. The Company intends to appoint audit, compensation and other applicable committee members as it identifies individuals with pertinent expertise.
Audit Committee Financial Expert
Our Board of Directors does not have a member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The Company intends to appoint audit, compensation and other applicable committee members as it identifies individuals with pertinent expertise.
Item 11. Executive Compensation.
The particulars of the compensation paid to the following persons:
|
|
(a)
|
our Principal Executive Officer;
|
|
|
|
|
|
|
(b)
|
each of our two most highly compensated Executive Officers who were serving as Executive Officers at the end of the year ended December 31, 2018, and
|
|
|
|
|
|
|
(c)
|
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our Executive Officer at the end of the year ended December 31, 2018.
|
who we will collectively refer to as the named Executive Officers of the Company, are set out in the following summary compensation table, except that no disclosure is provided for any named Executive Officer, other than the Principal Executive Officers, whose total compensation did not exceed $100,000 for the respective fiscal year.
|
2018 SUMMARY COMPENSATION TABLE
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Awards
($)
|
|
|
Option Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Ding-Shin “DS” Chang,
|
|
2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
President, CEO, Director
|
|
2017
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boon Jin “Patrick” Tan,
|
|
2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Treasurer, CFO, Director
|
|
2017
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liang-Yu “Jacky” Chang,
|
|
2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Secretary
|
|
2017
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
There are no arrangements or plans in which we provide pension, retirement or similar benefits for Directors or Executive Officers. Our Directors and Executive Officers may receive share options at the discretion of our Board of Directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our Directors or Executive Officers, except that share options may be granted at the discretion of our Board of Directors.
Grants of Plan-Based Awards
There were no grants of plan-based awards during the year ended December 31, 2018.
Outstanding Equity Awards at Fiscal Year End
There were no outstanding equity awards at the year ended December 31, 2018.
Option Exercises and Stock Vested
During our fiscal year ended December 31, 2018, there were no options exercised by our named officer.
Compensation of Directors
We do not have any agreements for compensating our Directors for their services in their capacity as Directors.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for Directors or Executive Officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our Directors or Executive Officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of May 15, 2019 certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current Directors and Executive Officers as a group. Each person has sole voting and investment power with respect to the shares of Common Stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of Common Stock, except as otherwise indicated.
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of Common Stock actually outstanding on May 15, 2019. As of May 15, 2019, there were 520,976,241 shares of our company’s Common Stock issued and outstanding.
|
|
|
Amount and
|
|
|
|
|
|
|
|
Nature
|
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percentage
|
|
|
Name and Address of Beneficial Owner
|
|
Ownership
|
|
|
of Class
(1)
|
|
|
Ding-Shin “DS” Chang
(2)
|
|
|
-
|
|
|
|
-
|
|
|
Boon Jin “Patrick” Tan
(3)
|
|
|
100,000,000
|
|
|
|
19
|
%
|
|
Liang-Yu “Jacky” Chang
(4)
|
|
|
3,000,000
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive Officers as a Group (3 persons)
|
|
|
103,000,000
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
5% or greater shareholders
|
|
|
|
|
|
|
|
|
|
Hasangwangmu
(5)
|
|
|
82,000,000
|
|
|
|
16
|
%
|
|
Sanarco Life & Wellness SA
(6)
|
|
|
50,018,340
|
|
|
|
10
|
%
|
|
Wolfpack Consulting Limited
(7)
|
|
|
115,000,000
|
|
|
|
22
|
%
|
____________
|
|
(1)
|
Percentages are calculated based on 520,976,241 shares of the Company’s Common Stock issued and outstanding on May 15, 2019.
|
|
|
(2)
|
Address at 12 Rue de Lorraine 92300, Levallois-Perret, France.
|
|
|
(3)
|
Address at D-15-05 Menara Mitraland, Jalan Pju 5/1, Kota Damansara, 47810 Selangor, Malaysia.
|
|
|
(4)
|
Address at 2F, No. 63, Sec 6, Xinhai Road, Taipei, Taiwan.
|
|
|
(5)
|
Address at Room C, 15/F, Ritz Plaza, 122 Austin Road, Tsim Sha Tsui, Kowloon, Hong Kong SAR, China.
|
|
|
(6)
|
Address at 15, Rue du Fort Bourbon, Luxembourg, Luxembourg L-1249 B222894.
|
|
|
(7)
|
Address at 5720 Plover Court, Richmond, BC, Canada V7E 4K2.
|
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Revenue and Expense
During the year ended December 31, 2018 and 2017, the Company recorded revenue from related party of $32,273,533 and $0 and cost of goods sold from a related party of $34,949,798 and $0 from a related party and general and administrative expense from a related party of $14,690 and $0, respectively. As of December 31, 2018 and 2017, the Company had accounts receivable from related party of $37,055,058 and $0 and account payable to related party of $31,536,276 and $0, respectively
Due from related party
As of December 31, 2018 and 2017, the Company recorded due from related parties of $155,075 and $157,863, respectively. The loan is non-interest bearing and due on demand.
Due to related party
As of December 31, 2018 and 2017, the Company recorded due to related parties as follows. The loan is non-interest bearing and due on demand.
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Loan from director
|
|
$
|
1,022,775
|
|
|
$
|
-
|
|
|
Loan from related parties
|
|
|
92,930
|
|
|
|
136,070
|
|
|
|
|
$
|
1,115,705
|
|
|
$
|
136,070
|
|
Contribution
During the year ended December 31, 2018, related parties, who are shareholders of the Company, forgave debt, in the amount of $58,450 for payments made on behalf of the Company for operating expenses. The amount has been recognized as a contribution to capital.
Director Independence
The Company does not have a separately designated nominating committee of our Board of Directors. None of our directors is deemed to be independent, as such term is defined in the listing standards of The Nasdaq Stock Market, Inc. (“Nasdaq”).
Item 14. Principal Accounting Fees and Services.
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Audit Fees
|
|
$
|
45,000
|
|
|
$
|
50,000
|
|
|
Audit Related Fees
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Tax Fees
|
|
$
|
-
|
|
|
$
|
-
|
|
|
All Other Fees
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Total
|
|
$
|
45,000
|
|
|
$
|
50,000
|
|
Our Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the Board of Directors either before or after the respective services were rendered.
Our Board of Directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
Notes to the Consolidated Financial Statements
December 31, 2018 and 2017
Expressed in United States Dollars
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Resort Savers, Inc. (“we,” “us,” “our,” the “Company,” “Resort Savers” or “RSSV”) is a Nevada corporation incorporated on June 25, 2012. It is based in Shenzhen, the People’s Republic of China (the “PRC”). The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is December 31.
The Company makes investments and acquisitions into sound, transparent markets and industries throughout the world. The Company is principally engaged in the trading of oil, gas and lubricant, as well as an agricultural business and provides nutrition consultancy services and training as well as selling health products through an online store.
Admall Share Exchange and Recapitalization
Admall Sdn. Bhd.
On May 16, 2018, the Company closed the acquisition of Admall Sdn. Bhd., a limited liability company incorporated in Malaysia (“Admall”) by way of share exchange (the “Admall Acquisition”). The Company effected the Admall Acquisition pursuant to the terms of that certain Share Exchange Agreement (the “Admall Agreement”), dated February 9, 2018, by and between the Company, Admall, and Mr. Boon Jin “Patrick” Tan, an individual who prior to the closing of the Admall Acquisition held 100% of the outstanding equity interests of Admall. See Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on February 9, 2018, which is incorporated herein by reference, for a detailed description of the Admall Agreement.
At the closing of the Admall Acquisition, the Company acquired 100% of the outstanding equity interests of Admall from Mr. Tan, and the Company issued 400,000,000 shares of its common stock, par value $0.0001 per share (“Common Stock”) to Mr. Tan, which at the time of closing represented approximately 81.47% of the Company’s issued and outstanding Common Stock. As a result, Mr. Tan became a stockholder of the Company and Admall became a wholly-owned subsidiary of the Company. For federal income tax purposes, the Admall Acquisition was intended to qualify as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.
For financial accounting purposes, the Admall Agreement has been accounted for as a reverse acquisition by Admall and resulted in a recapitalization of the Company, with Admall being the accounting acquirer and the Company as the acquired entity. The consummation of the Admall Agreement resulted in a change of control of RSSV. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, Admall, and have been prepared to give retroactive effect to the reverse acquisition completed on May 16, 2018 and represent the operations of Admall.
As a result of the above, these consolidated financial statements represent Admall as the accounting acquirer (legal acquiree) and RSSV, from May 16, 2018 forward, as the accounting acquiree (legal acquirer), and the legal capital stock (number and type of equity interests issued) is that of RSSV, the legal parent, in accordance with guidance on reverse acquisitions accounted for as a business combination. Therefore, the Company recognized goodwill of $3,199,594.
Change in Fiscal Year
On July 3, 2018, our Board of Directors approved a change in our Fiscal Year End from January 31 to December 31, and the Company’s bylaws were immediately amended subsequent to the decision. The Company now operates on a fiscal year ending on December 31.
Reverse Stock Split
On July 3, 2018, our Board of Directors approved a reverse one-for-thirty (1-for-30) stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock. The Reverse Split will have no effect on the number of authorized Common Stock of the Company, nor will it effect the authorized or issued and outstanding shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), since the Company has no shares of Preferred Stock issued or outstanding. The management of the Company has delayed indefinitely the implementation of the Reverse Split and Name Change and submission of the same to the Financial Industry Regulatory Authority (“FINRA”) for review. No adjustments have been made to the financial statements as a result of the Reverse Split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States and presented in US dollars.
The amounts shown in these financial statements for periods prior to May 16, 2018 are those of Admall. For the period from May 16, 2018 through December 31, 2018, the amounts shown in these financial statements are the consolidated results of the Company including its wholly owned subsidiary, Admall.
Principles of Consolidation
At December 31, 2018, the principal subsidiaries of the Company were listed as follows:
|
Entity Name
|
|
Acquisition
Date
|
|
Ownership
|
|
|
Jurisdiction
|
|
Investments
Held By
|
|
Nature of
Operation
|
|
Fiscal
Year
|
|
|
Admall Sdn. Bhd.
|
|
May 16,
2018
|
|
100%
|
|
|
Malaysia
|
|
RSSV
|
|
Nutritional
Services
|
|
December
31
|
|
|
Xing Rui International Investment Holding Group Co., Ltd. (“Xing Rui”)
|
|
December 22,
2014
|
|
100%
|
|
|
Seychelles
|
|
RSSV
|
|
Holding
Company
|
|
January
31
|
|
|
Xing Rui International Investment Group Ltd. (“Xing Rui HK”)
|
|
December 22,
2014
|
|
100%
|
|
|
Hong Kong,
the PRC
|
|
Xing Rui
|
|
Holding
Company
|
|
January
31
|
|
|
Huaxin Changrong (Shenzhen) Technology Service Co., Ltd. (“Huaxin”) *
|
|
August 27,
2015
|
|
100%
|
|
|
the PRC
|
|
Xing Rui
|
|
Holding
Company
|
|
December
31
|
|
|
Beijing Yandong Tieshan Oil Products Co., Ltd. (“Tieshan Oil”) *
|
|
January 29,
2016
|
|
51%
|
|
|
the PRC
|
|
Huaxin
|
|
Trading of oil
products
|
|
December
31
|
|
|
|
|
May 16,
2018
|
|
49%
|
|
|
|
|
|
|
|
|
|
|
__________
|
*
|
The English names used are translated only.
|
These consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to U.S. dollars in accordance with ASC 830, “
Foreign Currency Matters
”.
The Company’s functional currency and reporting currency is the U.S. dollar, and our subsidiaries’ functional currency is the Chinese Yuan Renminbi (“CNY”), Malaysian Ringgit (“MYR”) and Hong Kong Dollar (“HKD”).
The translate its records into U.S. dollar as follows:
|
|
·
|
Assets and liabilities at the rate of exchange in effect at the balance sheet date
|
|
|
·
|
Equities at historical rate
|
|
|
·
|
Revenue and expense items at the average rate of exchange prevailing during the period
|
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company also reviews its accounts receivable in a timely manner. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Tieshan Oil
During the year ended December 31, 2018, one customer, who is a related party, accounted for 98% of revenues from related party.
As of December 31, 2018, one customer accounted for approximately 98% of accounts receivable and two vendors accounted for approximately 96% of accounts payable, respectively.
Financial Instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, prepaid expenses and deposits, amount due from related parties, accounts payable and accrued liabilities, short-term loan, deferred revenue and due to related parties. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Inventory
Inventories, consisting of raw material, are primarily accounted for using the first-in-first-out (“FIFO”) method of accounting. Inventories are measured at the lower of cost and net realizable value. The Company estimates the net realizable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Company’s products, the Company might be required to reduce the value of its inventories.
Property and equipment
Fixed assets are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:
|
Computer and software
|
|
5 years
|
|
Furniture and fittings
|
|
6 years
|
|
Office equipment
|
|
4 years
|
|
Plant and machinery
|
|
5 ~ 10 years
|
|
Renovation
|
|
3.3 years
|
Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.
Accounting for the impairment of long-lived assets
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the year ended December 31, 2018 and 2017, the Company did not impair any long-lived assets.
Revenue Recognition
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
|
|
·
|
identify the contract with a customer;
|
|
|
·
|
identify the performance obligations in the contract;
|
|
|
·
|
determine the transaction price;
|
|
|
·
|
allocate the transaction price to performance obligations in the contract; and
|
|
|
·
|
recognize revenue as the performance obligation is satisfied.
|
Deferred Revenue
The company has entered into agreements where the services to be performed extends beyond the current operating cycle. For these agreements, the company records a long-term obligation and recognizes revenue over the period of the agreement as the services are rendered.
Deferred revenue at December 31, 2018 and 2017, was $56,416 and $163,418, respectively.
Income Taxes and Deferred Taxes
Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity or other comprehensive income.
Deferred tax is recognized using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognized for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Earnings Per Share of Common Stock
The Company has adopted ASC Topic 260,
”Earnings per Share,”
(“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee’s obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2016-02 will have on the Company’s financial statements.
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 3 - GOING CONCERN
The Company’s financial statements are prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet had sufficient revenues to cover its operating cost, and requires additional capital to commence its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – ACCOUNTS RECEIVABLE
The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of December 31, 2018 and 2017. As at December 31, 2018 and 2017, the Company had accounts receivable of $38,165,057 and $129,435, respectively and trade receivables from customers which are related to the Company of $37,055,058 are included in accounts receivable.
NOTE 5 – INVENTORIES
Inventories at December 31, 2018 and 2017 consist of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Finished goods
|
|
$
|
1,245,759
|
|
|
$
|
124,343
|
|
NOTE 6 – PLANT AND EQUIPMENT
Plant and equipment at December 31, 2018 and 2017 consist of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Cost:
|
|
|
|
|
|
|
|
Computer and software
|
|
$
|
77,157
|
|
|
$
|
93,893
|
|
|
Furniture and fittings
|
|
|
4,322
|
|
|
|
39,969
|
|
|
Office equipment
|
|
|
5,186
|
|
|
|
42,799
|
|
|
Plant and machinery
|
|
|
773,618
|
|
|
|
738,662
|
|
|
Renovation
|
|
|
-
|
|
|
|
48,978
|
|
|
|
|
|
860,283
|
|
|
|
964,301
|
|
|
Less: accumulated depreciation
|
|
|
(308,735
|
)
|
|
|
(204,023
|
)
|
|
Plant and equipment, net
|
|
$
|
551,548
|
|
|
$
|
760,278
|
|
During the year ended December 31, 2018 and 2017, the Company recorded depreciation of $106,315 and $101,353, respectively.
During the year ended December 31, 2018 and 2017, the Company acquired assets of $587 and $1,586, respectively, and sold assets for $4,661 and $8,267, respectively and recorded loss on sales of assets of $31,836 and $6,537, respectively.
During the year ended December 31, 2018 and 2017, the Company recorded an impairment loss of $65,476 and $0, respectively.
NOTE 7 –ACCRUED LIABILITIES AND OTHER PAYABLE
The Company’s accrued liabilities and other payable consists of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Accrued expenses
|
|
$
|
45,000
|
|
|
$
|
35,121
|
|
|
Deposit received
|
|
|
-
|
|
|
|
308
|
|
|
Other payables
|
|
|
50,549
|
|
|
|
22,959
|
|
|
|
|
$
|
95,459
|
|
|
$
|
58,388
|
|
NOTE 8 – SHORT-TERM LOAN
There are no provisions in the Company’s bank borrowings that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business.
The interest rate is 0.5% per month. The loan is secured by 48.83% shares of Tieshan Oil held by Mr. Yang Baojin (“Mr. Yang”). The Loan was due on October 7, 2017. The Company believes that the carrying value of the equity interest in Tieshan Oil, which is a financial instrument, and which has been pledged by Mr. Yang as collateral for the loan is sufficient to underlie the loan, and the Company has not been requested to add any additional credit enhancements.
During the year ended December 31, 2018, the Company repaid $934,800 (RMB 6,000,000). On December 31, 2018 and 2017, the Company had a short-term loan balance of $0.
NOTE 9 – CONVERTIBLE NOTE
On May 21, 2018, the Company issued the convertible note of $100,000 with a conversion price of one-third of one cent to the related party to repay related party contribution. The convertible note is non-bearing interest and due on May 21, 2019. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $100,000.
On May 30, 2018, the note was fully converted into 30,000,000 shares of common stock.
During the year ended December 31, 2018 and 2017, the Company recognized amortization of discount of $100,000, $0, respectively.
NOTE 10 - STOCKHOLDERS’ EQUITY
The capitalization of the Company consists of the following classes of capital stock as of September 30, 2018:
Preferred Stock
The Company has authorized 15,000,000 shares of preferred stock with a par value of $0.0001 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. No shares of preferred stock have been issued.
Common Stock
The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
During the year ended December 31, 2018, the Company issued 30,000,000 shares of common stock for conversion of debt of $100,000.
During the year ended December 31, 2017, there were no issuances of common stock.
As at December 31, 2018 and 2017, the Company had 520,976,241 and 400,000,000 common shares issued and outstanding.
The Company has no stock option plan, warrants or other dilutive securities.
Additional Paid-In Capital
During the year ended December 31, 2018 and 2017, related parties contributed additional paid-in capital in the amount of $58,450 and $0, respectively, to fund operating expenses and related party contribution of $100,000 was cancelled (see Note 11).
NOTE 11 – RELATED PARTY TRANSACTIONS
Revenue and Expense
During the year ended December 31, 2018 and 2017, the Company recorded revenue from related party of $32,273,533 and $0 and cost of goods sold from a related party of $34,949,798 and $0 from a related party and general and administrative expense from a related party of $14,690 and $0, respectively. As of December 31, 2018 and 2017, the Company had accounts receivable from related party of $37,055,058 and $0 and account payable to related party of $31,536,276 and $0, which is included in accounts payable, respectively
Due from related party
As of December 31, 2018 and 2017, the Company recorded due from related parties of $155,075 and $157,863, respectively. The loan is non-interest bearing and due on demand.
Due to related party
As of December 31, 2018 and 2017, the Company recorded due to related parties as follows. The loan is non-interest bearing and due on demand.
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Loan from director
|
|
$
|
1,022,775
|
|
|
$
|
-
|
|
|
Loan from related parties
|
|
|
92,930
|
|
|
|
136,070
|
|
|
|
|
$
|
1,115,705
|
|
|
$
|
136,070
|
|
Contribution
During the year ended December 31, 2018, related parties, who are shareholders of the Company, forgave debt, in the amount of $58,450 for payments made on behalf of the Company for operating expenses. The amount has been recognized as a contribution to capital.
During the year ended December 31, 2018, $100,000 originally recorded as a contribution to capital was cancelled and recorded as a convertible note payable (Note 9).
NOTE 12 – INCOME TAXES
The Company operates in the United States and its wholly-owned subsidiaries operate in Malaysia, Hong Kong and China and files tax returns in these jurisdictions.
Income (loss) from continuing operations before income tax expense (benefit) is as follows:
|
|
|
For the Year Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Tax jurisdiction from:
|
|
|
|
|
|
|
|
United States
|
|
$
|
(165,692
|
)
|
|
$
|
-
|
|
|
Foreign
|
|
|
1,378,431
|
|
|
|
6,601
|
|
|
Loss before income taxes
|
|
$
|
1,212,739
|
|
|
$
|
6,601
|
|
Income tax provision is as follows:
|
|
|
For the Year Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Tax jurisdiction from:
|
|
|
|
|
|
|
|
United States
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Foreign
|
|
|
236,763
|
|
|
|
5,461
|
|
|
Provision for income taxes
|
|
$
|
236,763
|
|
|
$
|
5,461
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
NOL carryforwards
|
|
|
|
|
|
|
|
United States
|
|
$
|
13,795
|
|
|
$
|
-
|
|
|
Foreign
|
|
|
4,161
|
|
|
|
|
|
|
Total
|
|
|
22,117
|
|
|
|
-
|
|
|
Less: valuation allowance
|
|
|
(22,117
|
)
|
|
|
-
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
United States
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Foreign
|
|
|
40,349
|
|
|
|
78,414
|
|
|
Total
|
|
|
40,349
|
|
|
|
78,414
|
|
|
Current deferred tax liabilities
|
|
|
-
|
|
|
|
-
|
|
|
Long-term deferred tax liabilities
|
|
$
|
40,349
|
|
|
$
|
78,414
|
|
The expected approximate income tax rate for 2018 and 2017, for United States is 21% for (2018), Hong Kong is 16.5%, the PRC is 25%, and Malaysia is 18%. The total income tax benefit differs from the expected income tax benefit principally due to the valuation allowance recorded against the deferred tax assets which are principally comprised of net operating losses (“NOLs”) and deferred tax liabilities.
The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company provided a full valuation allowance against its deferred tax assets as of December 31, 2018 and 2017. This valuation allowance reflects the estimate that it is more likely than not that the net deferred tax assets may not be realized.
The Company has approximately $190,000 of U.S. and foreign carryforwards, the tax effect of which is approximately $22,000 as of December 31, 2018.
The U. S. NOL carryforwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company has not performed a study to determine if the NOL carryforwards are subject to these Section 382 limitations. In addition, the Company has foreign NOLs. The Company is still evaluating the impact of a change in stock ownership and the potential limitation of foreign NOLs.
A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company has recorded a full valuation allowance of $22,117 and $0 for deferred tax assets existing as of December 31, 2018 and 2017, respectively. The valuation allowance as of December 31, 2018 and 2017 is attributable to NOL carryforwards in the United States and foreign jurisdictions.
NOTE 13 - SEGMENTED INFORMATION
At September 30, 2018, the Company operates in two industry segments, health beverage and oil and gas, and two geographic segments, Malaysia and China, where majority current assets and equipment are located.
Segment assets and liabilities as of December 31, 2018 and 2017 were as follows:
|
December 31, 2018
|
|
Holding
Company
|
|
|
Oil and Gas
|
|
|
Nutritional
Services
|
|
|
Health beverage - Discontinued Operation
|
|
|
Total
Consolidated
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
3,545
|
|
|
$
|
38,020,730
|
|
|
$
|
1,841,282
|
|
|
$
|
-
|
|
|
$
|
39,865,557
|
|
|
Non-current assets
|
|
|
1,219,807
|
|
|
|
1,981,195
|
|
|
|
550,140
|
|
|
|
-
|
|
|
|
3,751,142
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
167,010
|
|
|
|
32,703,644
|
|
|
|
1,220,185
|
|
|
|
-
|
|
|
|
34,090,839
|
|
|
Long term liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
40,349
|
|
|
|
-
|
|
|
|
40,349
|
|
|
Net assets (liabilities)
|
|
$
|
1,056,342
|
|
|
$
|
7,298,281
|
|
|
$
|
1,130,888
|
|
|
$
|
-
|
|
|
$
|
9,485,511
|
|
|
December 31, 2017
|
|
Holding
Company
|
|
|
Health
Beverage
|
|
|
Oil and
Gas
|
|
|
Nutritional
Services
|
|
|
Total
Consolidated
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
490,045
|
|
|
$
|
490,045
|
|
|
Non-current assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
760,278
|
|
|
|
760,278
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
414,584
|
|
|
|
414,584
|
|
|
Long term liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
78,414
|
|
|
|
78,414
|
|
|
Net assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
757,325
|
|
|
$
|
757,325
|
|
Segment revenue and net loss for the year ended December 31, 2018 and 2017 were as follows:
|
Year Ended December 31, 2018
|
|
Holding
Company
|
|
|
Oil and Gas
|
|
|
Nutritional
Services
|
|
|
Health Beverage - Discontinued Operations
|
|
|
Total
Consolidated
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
35,988,326
|
|
|
$
|
1,082,506
|
|
|
$
|
-
|
|
|
$
|
37,070,832
|
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
(34,949,798
|
)
|
|
|
(269,367
|
)
|
|
|
-
|
|
|
|
(35,219,165
|
)
|
|
Operating expenses
|
|
|
(102,186
|
)
|
|
|
(43,027
|
)
|
|
|
(578,385
|
)
|
|
|
-
|
|
|
|
(723,598
|
)
|
|
Other income (expenses)
|
|
|
(73,179
|
)
|
|
|
(17,793
|
)
|
|
|
175,642
|
|
|
|
-
|
|
|
|
84,670
|
|
|
Provision for income taxes
|
|
|
(1,653
|
)
|
|
|
(221,084
|
)
|
|
|
(14,026
|
)
|
|
|
-
|
|
|
|
(236,763
|
)
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
457,533
|
|
|
|
457,533
|
|
|
Net income (loss)
|
|
$
|
(177,018
|
)
|
|
$
|
756,624
|
|
|
$
|
396,370
|
|
|
$
|
457,533
|
|
|
$
|
1,433,509
|
|
|
Year Ended December 31, 2017
|
|
Holding
Company
|
|
|
Oil and Gas
|
|
|
Nutritional
Services
|
|
|
Health Beverage -Discontinued Operations
|
|
|
Total
Consolidated
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
891,875
|
|
|
$
|
-
|
|
|
$
|
891,875
|
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
-
|
|
|
|
(77,109
|
)
|
|
|
-
|
|
|
|
(77,109
|
)
|
|
Operating expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(972,124
|
)
|
|
|
-
|
|
|
|
(972,124
|
)
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
163,959
|
|
|
|
-
|
|
|
|
163,959
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,461
|
)
|
|
|
-
|
|
|
|
(5,461
|
)
|
|
Net loss
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,140
|
|
|
$
|
-
|
|
|
$
|
1,140
|
|
NOTE 14 – DISCONTINUED OPERATIONS
On November 19, 2018, the Company entered into the share purchase agreement to sell 60% of the total issued and outstanding equity of Shenzhen Amuli Industrial Development Co. Ltd. (“Amuli”). In exchange for the shares, the Company received a purchase price of $1 (7 Chinese Yuan). The Purchaser shall become the majority equity owner of the Amuli and the Company shall have no further interest in Amuli.
During the year ended December 31, 2018, the Company recorded a gain on disposal of $464,305. The disposal of Amuli qualified as a discontinued operation of the Company and accordingly, the Company has excluded results of Amuli’s operations from its Consolidated Statements of Operations and Comprehensive Loss to present this business in discontinued operations.
The following table shows the results of operations of Amuli for the year ended December 31, 2018 and 2017 which are included in the loss from discontinued operations:
|
|
|
For the Year Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Revenue
|
|
$
|
1,916
|
|
|
$
|
-
|
|
|
General and administrative
|
|
|
(52,876
|
)
|
|
|
-
|
|
|
Total Other Income Expenses
|
|
|
(8
|
)
|
|
|
-
|
|
|
Loss from discontinued operations
|
|
$
|
(50,968
|
)
|
|
$
|
-
|
|
The following table summarizes the carrying amounts of the assets and liabilities held for sale as of November 19, 2018,
|
|
|
November 19,
|
|
|
|
|
2018
|
|
|
Cash and cash equivalents
|
|
$
|
38,468
|
|
|
Accounts receivable
|
|
|
4,736
|
|
|
Total Current assets
|
|
|
43,204
|
|
|
Total Assets
|
|
$
|
43,204
|
|
|
|
|
|
|
|
|
Accrued liabilities and other payable
|
|
$
|
457,190
|
|
|
Total Current Liabilities
|
|
$
|
457,190
|
|
|
Total Liabilities
|
|
$
|
457,190
|
|
|
|
|
|
|
|
|
Net assets and liabilities
|
|
$
|
(413,986
|
)
|
|
Consideration received on disposal
|
|
|
1
|
|
|
Recycling of accumulated other comprehensive income
|
|
|
(71,482
|
)
|
|
Contribution by related party
|
|
|
(10,480
|
)
|
|
Non-contorting interest
|
|
|
(12,554
|
)
|
|
Gain on disposal
|
|
$
|
508,501
|
|
NOTE 15 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure