UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

 

or

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to ____

 

Commission File Number 000-55319

 

Resort Savers, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

46-1993448

(State or other jurisdiction

of incorporation or organization)

 

(IRS Employer

Identification No.)

 

Level 11, Tower 4, Puchong Financial

Corporate Centre (PFCC)

Jalan Puteri 1/2, Bandar Puteri, 47100

Puchong, Malaysia

 

47100

(Address of principal executive offices)

 

(Zip Code)

 

+60 3 8600 0313

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

None

 

N/A

 

N/A

 

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 past 90 days. ☒ YES     ☐ NO

 

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 registrant was required to submit such files). ☒ YES     ☐ NO

 

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.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES     ☒ NO

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

   

As of August 18, 2020, there were 96,740,868 shares of the issuer’s common stock, par value $0.0001 per share, outstanding.

    

 

 

  

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements

F-1

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

11

 

Item 4.

Controls and Procedures

11

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings

12

 

Item 1A.

Risk Factors

12

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

12

 

Item 3.

Defaults Upon Senior Securities

12

 

Item 4.

Mine Safety Disclosures

12

 

Item 5.

Other Information

12

 

Item 6.

Exhibits

13

 

SIGNATURES

14

 

 

2

Table of Contents

  

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

INDEX TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

 

PERIOD ENDED JUNE 30, 2020

 

TABLE OF CONTENTS

 

Page

 

Consolidated Balance Sheets

F-2

 

Consolidated Statements of Operations and Other Comprehensive Income (Loss)

F-3

 

Consolidated Statements of Shareholders’ Equity

F-4

 

Consolidated Statements of Cash Flows

F-6

 

Notes to the Consolidated Financial Statements

F-7

 

 
F-1

Table of Contents

  

RESORT SAVERS, INC.

Consolidated Balance Sheets

(Unaudited)

 

 

 

 June 30,

 

 

 December 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 74,897

 

 

$ 277,629

 

Accounts receivable, net

 

 

6,414,569

 

 

 

548,281

 

Inventory

 

 

7,139,320

 

 

 

7,225,155

 

Other current assets

 

 

939,806

 

 

 

883,562

 

Total Current Assets

 

 

14,568,592

 

 

 

8,934,627

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

535,877

 

 

 

466,316

 

Goodwill

 

 

3,199,594

 

 

 

3,199,594

 

TOTAL ASSETS

 

$ 18,304,063

 

 

$ 12,600,537

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$ 7,331,810

 

 

$ 1,461,971

 

Accrued liabilities and other payables

 

 

117,825

 

 

 

85,834

 

Convertible notes, net of unamortized discounts

 

 

161,101

 

 

 

19,864

 

Loan payable

 

 

8,101

 

 

 

-

 

Due to related parties

 

 

423,566

 

 

 

253,581

 

Derivative liabilities

 

 

3,291,951

 

 

 

356,395

 

Tax payable

 

 

22,338

 

 

 

163,532

 

Total Current Liabilities

 

 

11,356,692

 

 

 

2,341,177

 

 

 

 

 

 

 

 

 

 

Convertible notes non-current, net of unamortized discounts

 

 

60,159

 

 

 

155,570

 

Loan payable - non-current

 

 

39,335

 

 

 

-

 

Deferred tax liabilities

 

 

17,216

 

 

 

18,035

 

TOTAL LIABILITIES

 

 

11,473,402

 

 

 

2,514,782

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 15,000,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Series A Preferred stock, $0.0001 par value; 1,500,000 shares designated; 1,500,000 and 0 shares issued and outstanding, respectively

 

 

150

 

 

 

-

 

Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 82,558,368 and 5,209,881 shares issued and outstanding, respectively

 

 

8,256

 

 

 

521

 

Additional paid-in capital

 

 

38,237,403

 

 

 

8,936,263

 

Subscription receivable

 

 

(24,522,000 )

 

 

-

 

Retained earnings (deficit)

 

 

(6,242,025 )

 

 

1,654,947

 

Accumulated other comprehensive loss

 

 

(651,123 )

 

 

(505,976 )

Total shareholders' equity

 

 

6,830,661

 

 

 

10,085,755

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$ 18,304,063

 

 

$ 12,600,537

 

  

The notes are an integral part of these unaudited consolidated financial statements.

  

 
F-2

Table of Contents

 

RESORT SAVERS, INC.

Consolidated Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

 

 

 

Three months ended

 

 

 Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ 4,439,890

 

 

$ 8,089,898

 

 

$ 5,365,547

 

 

$ 22,870,943

 

Cost of goods sold

 

 

4,369,059

 

 

 

7,808,756

 

 

 

5,226,626

 

 

 

21,978,146

 

Gross Profit

 

 

70,831

 

 

 

281,142

 

 

 

138,921

 

 

 

892,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,166,617

 

 

 

168,337

 

 

 

2,274,025

 

 

 

351,081

 

Professional fees

 

 

389,363

 

 

 

28,670

 

 

 

564,807

 

 

 

54,915

 

Total Operating Expenses

 

 

2,555,980

 

 

 

197,007

 

 

 

2,838,832

 

 

 

405,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from Operations

 

 

(2,485,149 )

 

 

84,135

 

 

 

(2,699,911 )

 

 

486,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

7,377

 

 

 

64,799

 

 

 

7,511

 

Interest expense

 

 

(210,504 )

 

 

(28,863 )

 

 

(286,477 )

 

 

(28,863 )

Change in fair value of derivative liabilities

 

 

(2,870,558 )

 

 

-

 

 

 

(2,959,476 )

 

 

-

 

Total Other Expense

 

 

(3,081,062 )

 

 

(21,486 )

 

 

(3,181,154 )

 

 

(21,352 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income Before Income Taxes

 

 

(5,566,211 )

 

 

62,649

 

 

 

(5,881,065 )

 

 

465,449

 

Provision for income taxes

 

 

(13,138 )

 

 

(66,410 )

 

 

(16,534 )

 

 

(197,721 )

Net (Loss) Income

 

$ (5,579,349 )

 

$ (3,761 )

 

$ (5,897,599 )

 

$ 267,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend on Series A Preferred Stock

 

 

(1,999,373 )

 

 

-

 

 

 

(1,999,373 )

 

 

-

 

Net (loss) income attributable to common stockholders

 

$ (7,578,722 )

 

$ (3,761 )

 

$ (7,896,972 )

 

$ 267,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

25,661

 

 

 

(146,305 )

 

 

(145,147 )

 

 

1,694

 

Total Comprehensive (Loss) Income

 

$ (7,553,061 )

 

$ (150,066 )

 

$ (8,042,119 )

 

$ 269,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted (Loss) Income per Common Share

 

$ (0.33 )

 

$ (0.00 )

 

$ (0.56 )

 

$ 0.05

 

Basic and Diluted Weighted Average Common Shares Outstanding

 

$ 23,070,367

 

 

$ 5,209,762

 

 

$ 14,140,124

 

 

$ 5,209,762

 

  

The notes are an integral part of these unaudited consolidated financial statements.

 

 
F-3

Table of Contents

 

RESORT SAVERS, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

 

For the Three and Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Series A Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

Retained

 

 

Other

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Subscription

receivable

 

 

Earnings

(Deficit)

 

 

Comprehensive

Loss

 

 

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2019

 

 

-

 

 

$ -

 

 

 

5,209,881

 

 

$ 521

 

 

$ 8,936,263

 

 

$ -

 

 

$ 1,654,947

 

 

$ (505,976 )

 

$ 10,085,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

(318,250 )

 

 

-

 

 

 

(318,250 )

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

(170,808 )

 

 

(170,808 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2020

 

 

-

 

 

$ -

 

 

 

5,209,881

 

 

$ 521

 

 

$ 8,936,263

 

 

$ -

 

 

$ 1,336,697

 

 

$ (676,784 )

 

$ 9,596,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for acquisition of Wandi

 

 

-

 

 

 

-

 

 

 

60,000,000

 

 

 

6,000

 

 

 

24,516,000

 

 

 

(24,522,000 )

 

 

-

 

 

 

-

 

 

 

-

 

Common stock issued for conversion of debt

 

 

-

 

 

 

-

 

 

 

1,291,868

 

 

 

129

 

 

 

394,393

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

394,522

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

9,150,000

 

 

 

915

 

 

 

222,510

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

223,425

 

Common stock issued for services - related party

 

 

1,500,000

 

 

 

150

 

 

 

4,700,000

 

 

 

470

 

 

 

2,058,754

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

2,059,374

 

Common stock issued for Settlement of debt

 

 

-

 

 

 

-

 

 

 

2,206,619

 

 

 

221

 

 

 

110,110

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

110,331

 

Beneficial conversion feature

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,999,373

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

1,999,373

 

Deemed dividend on amortization of beneficial conversion feature on Series A Preferred shares

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

(1,999,373 )

 

 

-

 

 

 

(1,999,373 )

Net loss

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

(5,579,349 )

 

 

-

 

 

 

(5,579,349 )

Other comprehensive income

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

25,661

 

 

 

25,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2020

 

 

1,500,000

 

 

$ 150

 

 

 

82,558,368

 

 

$ 8,256

 

 

$ 38,237,403

 

 

$ (24,522,000 )

 

$ (6,242,025 )

 

$ (651,123 )

 

$ 6,830,661

 

    

The notes are an integral part of these unaudited consolidated financial statements.

 

 
F-4

Table of Contents

 

RESORT SAVERS, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

 

 

For the Three and Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

Other

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Retained

Earnings

 

 

Comprehensive

Loss

 

 

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2018

 

 

5,209,881

 

 

$ 521

 

 

$ 8,936,263

 

 

$ 991,525

 

 

$ (442,798 )

 

$ 9,485,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

271,489

 

 

 

-

 

 

 

271,489

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

147,999

 

 

 

147,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2019

 

 

5,209,881

 

 

$ 521

 

 

$ 8,936,263

 

 

$ 1,263,014

 

 

$ (294,799 )

 

$ 9,904,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,761 )

 

 

-

 

 

 

(3,761 )

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(146,305 )

 

 

(146,305 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2019

 

 

5,209,881

 

 

$ 521

 

 

$ 8,936,263

 

 

$ 1,259,253

 

 

$ (441,104 )

 

$ 9,754,933

 

 

The notes are an integral part of these unaudited consolidated financial statements.

 

 
F-5

Table of Contents

 

RESORT SAVERS, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 Six Months Ended

 

 

 

 June 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ (5,897,599 )

 

$ 267,728

 

Adjustments to reconcile net loss to net cash from operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

49,457

 

 

 

46,297

 

Stock based compensation

 

 

2,282,799

 

 

 

-

 

Amortization of debt discount

 

 

248,678

 

 

 

-

 

Change in fair value of derivative liabilities

 

 

2,959,476

 

 

 

-

 

Penalty interest

 

 

15,000

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Amount due from related parties

 

 

-

 

 

 

(791,875 )

Accounts receivable

 

 

(5,903,391 )

 

 

26,068,291

 

Inventories

 

 

(90,918 )

 

 

(5,785,524 )

Other current assets

 

 

(69,246 )

 

 

(12,895 )

Accounts payable

 

 

6,056,625

 

 

 

(21,207,233 )

Deferred revenue

 

 

-

 

 

 

(5,307 )

Amount due to related parties

 

 

31,568

 

 

 

-

 

Tax payable

 

 

(138,640 )

 

 

(126,521 )

Accrued liabilities and other payable

 

 

38,019

 

 

 

1,258,458

 

Net cash used in operating activities

 

 

(418,172 )

 

 

(288,581 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(83,032 )

 

 

-

 

Net cash used in investing activities

 

 

(83,032 )

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Bank overdraft

 

 

-

 

 

 

38,756

 

Repayment of loan

 

 

(1,177 )

 

 

-

 

Proceeds from convertible notes

 

 

150,000

 

 

 

-

 

Loans from related parties

 

 

222,298

 

 

 

74,194

 

Repayments of loans from related parties

 

 

(70,574 )

 

 

(2,489 )

Net cash provided by financing activities

 

 

300,547

 

 

 

110,461

 

 

 

 

 

 

 

 

 

 

Effects on changes in foreign exchange rate

 

 

(2,073 )

 

 

(26,404 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(202,730 )

 

 

(204,524 )

Cash and cash equivalents - beginning of period

 

 

277,627

 

 

 

257,391

 

Cash and cash equivalents - end of period

 

$ 74,897

 

 

$ 52,867

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Disclosures

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ 203

 

 

$ -

 

Cash paid for income taxes

 

$ 149,500

 

 

$ 311,467

 

 

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activity:

 

 

 

 

 

 

 

 

Common stock issued for settlement of debt - related party

 

$ 110,331

 

 

$ -

 

Common stock issued for conversion of debt

 

$ 394,393

 

 

$ -

 

Beneficial conversion feature

 

$ 1,999,373

 

 

$ -

 

Derivative liability recognized as debt discount

 

$ 245,000

 

 

$ -

 

Acquisition of Motor Vehicle for hire purchase loan

 

$ 49,424

 

 

$ -

 

Subscription receivable for acquisition of Wandi

 

$ 24,522,000

 

 

$ -

 

   

The notes are an integral part of these unaudited consolidated financial statements.

 

 
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Table of Contents

 

RESORT SAVERS, INC.

Notes to the Consolidated Financial Statements

June 30, 2020

Expressed in United States Dollars

(Unaudited)

 

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.

   

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company prepares its financial statements in accordance with rules and regulations of the U.S. Securities and Exchange Commission (SEC) and generally accepted accounting principles (“GAAP”) in the United States of America. The accompanying consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X and presented in United States dollars.

 

In the opinion of the company’s management, the accompanying unaudited interim consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the company as of June 30, 2020 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited interim consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on April 6, 2020.

 

 
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Table of Contents

 

Principles of Consolidation

 

At June 30, 2020, 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

%

 

 

 

RSSV

 

 

 

 

 

__________

*

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

 

 
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Table of Contents

 

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 six months ended June 30, 2020, one customer accounted for 99% of revenues.

 

During the six months ended June 30, 2020, one vendor accounted for 99% of purchase.

 

As of June 30, 2020 and December 31, 2019, one customer accounted for approximately 22% and 99% of accounts receivable, one vendor accounted for approximately 82% and 0% of accounts payable, respectively.

 

Admall

 

As of June 30, 2020 and December 31, 2019, one vendor accounted for approximately 16% and 91% of accounts payable, respectively.

  

 
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Table of Contents

   

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.

 

For the six months ended June 30, 2020 and 2019, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

    

 

 

 June 30,

 

 

 June 30,

 

 

 

2020

 

 

2019

 

Convertible notes

 

 

23,518,689

 

 

 

-

 

Warrant

 

 

16,890,517

 

 

 

-

 

Series A Preferred Stock

 

 

150,000,000

 

 

 

-

 

 

 

 

190,409,206

 

 

 

 

 

      

Recent Accounting Pronouncements

 

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 consolidated 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.

 

 
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Table of Contents

 

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 June 30, 2020 and December 31, 2019. As at June 30, 2020 and December 31, 2019, the Company had accounts receivable of $6,414,569 and $548,281, respectively.

      

NOTE 5 – INVENTORIES

   

Inventories at June 30, 2020 and December 31, 2019 consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Finished goods

 

$ 7,139,320

 

 

$ 7,225,155

 

    

NOTE 6 – PROPERTY AND EQUIPMENT

 

Property and equipment at June 30, 2020 and December 31, 2019 consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Cost:

 

 

 

 

 

 

Computer and software

 

$ 74,454

 

 

$ 77,995

 

Furniture and fittings

 

 

7,630

 

 

 

4,369

 

Motor Vehicles

 

 

59,481

 

 

 

-

 

Renovation

 

 

76,831

 

 

 

-

 

Office equipment

 

 

5,660

 

 

 

5,863

 

Plant and machinery

 

 

746,911

 

 

 

780,904

 

 

 

 

970,967

 

 

 

869,131

 

Less: accumulated depreciation

 

 

(435,090 )

 

 

(402,815 )

Property and equipment, net

 

$ 535,877

 

 

$ 466,316

 

  

During the six months ended June 30, 2020 and 2019, the Company recorded depreciation of $49,457 and $46,297, respectively.

  

 
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Table of Contents

 

NOTE 7–ACCRUED LIABILITIES AND OTHER PAYABLE

 

The Company’s accounts payable and accrued liabilities consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Accrued salary

 

$ 25,091

 

 

$ 18,761

 

Accrued interest

 

 

25,428

 

 

 

5,579

 

Deposit received

 

 

10,269

 

 

 

10,759

 

Other payables

 

 

57,037

 

 

 

50,735

 

 

 

$ 117,825

 

 

$ 85,834

 

 

NOTE 8 - CONVERTIBLE NOTES

    

At June 30, 2020 and December 31, 2019, convertible notes consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Convertible Notes - originated in September 18, 2019

 

$ 65,000

 

 

$ 158,000

 

Convertible Notes - originated in November 20, 2019

 

 

100,040

 

 

 

125,000

 

Convertible Notes - originated in November 22, 2019

 

 

50,108

 

 

 

55,000

 

Convertible Notes - originated in February 19, 2020

 

 

127,750

 

 

 

-

 

Convertible Notes - originated in June 1, 2020

 

 

63,000

 

 

 

-

 

Total convertible notes payable

 

 

405,898

 

 

 

338,000

 

Less: Unamortized debt discount

 

 

(184,638 )

 

 

(162,566 )

Total convertible notes

 

 

221,260

 

 

 

175,434

 

Less: current portion of convertible notes

 

 

161,101

 

 

 

19,864

 

Long-term convertible notes

 

$ 60,159

 

 

$ 155,570

 

 

For the six months ended June 30, 2020 and 2019, the interest expense on convertible notes was $37,599 and $0, and amortization of discount, including interest expense, of $248,678 and $0, respectively. As of June 30, 2020 and December 31, 2019, the accrued interest was $25,428 and $5,579, respectively.

 

Conversion

 

During the six months ended June 30, 2020, the Company converted notes with principal amounts and accrued interest of $125,603 into 1,291,868 shares of common stock. The corresponding derivative liability at the date of conversion of $268,920 was credited to additional paid in capital.

 

Convertible Notes – Issued during the year ended December 31, 2020

 

During the six months ended June 30, 2020, the Company issued a total principal amount of $175,750 convertible note for cash proceeds of $150,000. The terms of convertible note are summarized as follows:

 

 

Term: 10 months;

 

Annual interest rates: 8% or 12%;

 

Convertible at the option of the holders at any time;

 

Conversion prices are based on discounted (35% - 50% discount) lowest trading prices of the Company’s shares during various periods prior to conversion.

 

Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 20% if the conversion price is less than $$0.10. As a result, the discount rate of conversion price changed from 50% to 70% and the Company recognized the penalty of $15,000 and recorded principal amount of $15,000.

 

 
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Table of Contents

  

Convertible Notes – Issued during the year ended December 31, 2019

 

During the year ended December 31, 2019, the Company issued a total principal amount of $338,000 convertible notes for cash proceeds of $310,000. The convertible notes were also provided with a total of 112,500 warrants. The terms of convertible notes are summarized as follows:

 

 

Term: 12 months - 18 months;

 

Annual interest rates: 8% - 10%;

 

Convertible at the option of the holders at any time or 180 days from issuance.

 

Conversion prices are based on discounted (35% - 40% discount) lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price of $1.

 

The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Stock” and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.

 

The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the six months ended June 30, 2020 amounted to $333,918. $245,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $88,918 was recognized as a “day 1” derivative loss.

  

NOTE 9 – WARRANTS

 

A summary of activity regarding warrants issued as follows:

 

 

 

Warrants Outstanding

 

 

 

 

 

 

Weighted

Average

 

 

 

Shares

 

 

Exercise Price

 

 

 

 

 

 

 

 

Outstanding, December 31, 2019

 

 

116,500

 

 

$ 1.67

 

Granted

 

 

-

 

 

 

-

 

Reset feature

 

 

16,774,017

 

 

 

0.012

 

Exercised

 

 

-

 

 

 

-

 

Forfeited/canceled

 

 

-

 

 

 

-

 

Outstanding, June 30, 2020

 

 

16,890,517

 

 

$ 0.012

 

 

During the year ended December 31, 2019, the Company issued warrants with convertible notes. Each warrant is immediately exercisable into one share of common stock at a price ranging from $1.25 to $5.00 per share. The warrants will expire on the three (3) year anniversary of the issuance date. As a result of the reset features, the warrants increased by 16,774,017 for the period ended June 30, 2020, and the total warrants exercisable into 16,890,517 shares of common stock at a weighted average exercise price of $0.012 per share as of June 30, 2020. The reset feature of warrants was effective at the time that a separate convertible instrument with lower exercise price was issued. We accounted for the issuance of the Warrants as a derivative. (See Note 12). 

 

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2020.

 

Warrants Outstanding

 

 

Warrants Exercisable

 

Number of

 

 

Contractual life

 

 

 

 

Number of

 

 

 

Shares

 

 

(in years)

 

 

Exercise Price

 

 

Shares

 

 

Exercise Price

 

 

10,175,010

 

 

 

2.39

 

 

$ 0.012

 

 

 

10,175,010

 

 

$ 0.012

 

 

6,715,507

 

 

 

2.40

 

 

$ 0.012

 

 

 

6,715,507

 

 

$ 0.012

 

 

 
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Table of Contents

  

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at June 30, 2020 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). The intrinsic value of the warrants as of June 30, 2020 is $1,234,950.

 

NOTE 10 – DERIVATIVE LIABILITIES

 

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of June 30, 2020. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the June 30, 2020 and December 31, 2019:

 

 

 

Six Months Ended

 

 

Year ended

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Expected term

 

 0.39 - 2.40 years

 

 

 0.89 - 3.00 years

 

Expected average volatility

 

268% - 368

%

 

 175% - 272

%

Expected dividend yield

 

 

-

 

 

 

-

 

Risk-free interest rate

 

0.15% - 1.47

%

 

 1.55% - 1.62

%

 

The following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2020:

 

Fair Value Measurements Using Significant Observable Inputs (Level 3)

 

 

 

 

 

Balance - December 31, 2019

 

$ 356,395

 

Addition of new derivatives recognized as debt discounts

 

 

245,000

 

Addition of new derivatives recognized as loss on derivatives

 

 

88,918

 

Settled on issuance of common stock

 

 

(268,920 )

Gain on change in fair value of the derivative

 

 

2,870,558

 

Balance - June 30, 2020

 

$ 3,291,951

 

 

The following table summarizes the loss on derivative liability included in the income statement for the six months ended June 30, 2020 and 2019, respectively.

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

Day one loss due to derivative liabilities on convertible notes

 

$ 88,918

 

 

$ -

 

Loss on change in fair value of the derivative liabilities

 

 

2,870,558

 

 

 

-

 

 

 

$ 2,959,476

 

 

$ -

 

  

 
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Table of Contents

 

NOTE 11 - STOCKHOLDERS’ EQUITY

 

The capitalization of the Company consists of the following classes of capital stock as of June 30, 2020:

 

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.

 

Series A Preferred Stock

 

The Company is designated to issue 1,500,000 shares of Series A Preferred Stock at a par value of $0.0001. The Series A Preferred Stock shall have liquidation preference over any other class of stock and voting rights on the basis of one hundred votes for each shares of Series A Preferred Stock. The Preferred Stock can be converted to common stock, at a conversion rate of 100 common shares for each preferred stock. The Company evaluated the conversion feature and concluded that it did not qualify as a derivative transaction. The Company evaluated the convertible preferred stock under FASB ACS 470-20-30 and recorded a beneficial conversion feature of $1,999,373 as deemed dividend.

 

During the six months ended June 30, 2020, the Company issued 1,500,000 shares of Series A Preferred Stock to our office for compensation valued at $1,999,373.

 

As at June 30, 2020 and December 31, 2019, the Company had 1,500,000 and 0 preferred shares issued and outstanding.

 

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 six months ended June 30, 2020, the Company issued 137,448,487 shares of common stock as follows;

 

 

1,291,868 shares for conversion of debt of $125,603

 

 

 

 

60,000,000 shares valued at $24,522,000 for acquisition of Wandi

 

 

 

 

9,350,000 shares valued at $223,445 for services

 

 

 

 

4,500,000 shares to related parties valued at $59,981 for services

 

 

 

 

2,206,619 shares to a related party for settlement of debt of $110,331

  

As at June 30, 2020 and December 31, 2019, the Company had 82,558,368 and 5,209,881 common shares issued and outstanding.

 

Subscription receivable

 

On February 24, 2020 the Company entered into a Purchase Agreement (the “Agreement”) with Mr. Liu FaKuan (“Seller”), the sole owner of Henan Wandi Mining Product Development Co., Ltd. (“Wandi”), a corporation organized in the People’s Republic of China (“PRC”), pursuant to which the Company will effect an acquisition of Wandi by acquiring from the Seller all outstanding equity interests of Wandi. Wandi owns 49% of a coal mine known as You Zhou Shenhuo Kuanfa Mining Company Ltd., (the “Mine”), with Zhengshou Yshong Coal Industry Co., Ltd. (a State-owned enterprise) owning the remaining 51% of the Mine.

 

Pursuant to the Agreement, the Company issued 60,000,000 restricted common shares of stock of the Company to the Seller, valued at $24,522,000.  The obligations of the parties to complete the acquisition is subject to the fulfillment (or, in some cases waiver) of due diligence and certain closing conditions.  Upon closing of the acquisition Seller shall transfer to Company 100% of the issued and outstanding equity interests of Wandi, which will then become a wholly owned subsidiary of the Company.

 

As of June 30, 2020, the Company does not have control of Wandi. As a result, the Company determined not to consolidate Wandi and recorded share issuance for acquisition of Wandi as a subscription receivable for $24,522,000, until the common shares of Wandi are delivered.

  

NOTE 12 – RELATED PARTY TRANSACTIONS

 

Due to related party

 

As of June 30, 2020 and December 31, 2019, the Company recorded due to related parties as follows. The loan is non-interest bearing and due on demand.

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Loan from directors

 

$ 406,119

 

 

$ 142,480

 

Loan from related party

 

 

17,447

 

 

 

111,101

 

 

 

$ 423,566

 

 

$ 253,581

 

 

 
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Table of Contents

 

NOTE 13 - SEGMENTED INFORMATION

 

At June 30, 2020, the Company operates in three industry segments, health beverage, oil and gas and mining, and two geographic segments, Malaysia and China, where majority current assets and equipment are located.

 

Segment assets and liabilities as of June 30, 2020 and December 31, 2019 were as follows:

 

June 30, 2020

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

$ 80,310

 

 

$ 12,293,464

 

 

$ 2,194,818

 

 

$ 14,568,592

 

Non-current assets

 

 

3,199,594

 

 

 

-

 

 

 

535,877

 

 

 

3,735,471

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

3,689,373

 

 

 

6,043,111

 

 

 

1,624,208

 

 

 

11,356,692

 

 Long term liabilities

 

 

60,159

 

 

 

-

 

 

 

56,551

 

 

 

116,710

 

Net assets

 

$ (469,628 )

 

$ 6,250,353

 

 

$ 1,049,936

 

 

$ 6,830,661

 

   

December 31, 2019

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

$ 198,916

 

 

$ 6,413,082

 

 

$ 2,322,629

 

 

$ 8,934,627

 

Non-current assets

 

 

3,199,594

 

 

 

-

 

 

 

466,316

 

 

 

3,665,910

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

594,891

 

 

 

168,739

 

 

 

1,577,547

 

 

 

2,341,177

 

Long term liabilities

 

 

-

 

 

 

-

 

 

 

18,035

 

 

 

18,035

 

Net assets

 

$ 2,803,619

 

 

$ 6,244,343

 

 

$ 1,193,363

 

 

$ 10,241,325

 

 

Segment revenue and net income (loss) for the three and six months ended June 30, 2020 and 2019 were as follows: 

 

Six Months Ended June 30, 2020

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 5,303,166

 

 

$ 62,381

 

 

$ 5,365,547

 

Cost of goods sold

 

 

-

 

 

 

(5,166,080 )

 

 

(60,546 )

 

 

(5,226,626 )

Operating expenses

 

 

(2,659,638 )

 

 

(22,509 )

 

 

(156,685 )

 

 

(2,838,832 )

Other income (expenses)

 

 

(3,245,753 )

 

 

-

 

 

 

64,599

 

 

 

(3,181,154 )

Provision for income taxes

 

 

-

 

 

 

(16,534 )

 

 

-

 

 

 

(16,534 )

Net income (loss)

 

$ (5,905,391 )

 

$ 98,043

 

 

$ (90,251 )

 

$ (5,897,599 )

   

 
F-16

Table of Contents

   

Six Months Ended June 30, 2019

 

Holding

Company

 

 

Oil

and gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 22,720,499

 

 

$ 150,444

 

 

$ 22,870,943

 

Cost of goods sold

 

 

-

 

 

 

(21,895,396 )

 

 

(82,750 )

 

 

(21,978,146 )

Operating expenses

 

 

(32,136 )

 

 

(36,431 )

 

 

(337,429 )

 

 

(405,996 )

Other income (expenses)

 

 

-

 

 

 

(28,863 )

 

 

7,511

 

 

 

(21,352 )

Provision for income taxes

 

 

-

 

 

 

(197,721 )

 

 

-

 

 

 

(197,721 )

Net income (loss)

 

$ (32,136 )

 

$ 562,088

 

 

$ (262,224 )

 

$ 267,728

 

 

Three Months Ended June 30, 2020

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 4,420,255

 

 

$ 19,635

 

 

$ 4,439,890

 

Cost of goods sold

 

 

-

 

 

 

(4,362,036 )

 

 

(7,023 )

 

 

(4,369,059 )

Operating expenses

 

 

(2,484,050 )

 

 

(11,563 )

 

 

(60,367 )

 

 

(2,555,980 )

Other expenses

 

 

(3,080,862 )

 

 

-

 

 

 

(200 )

 

 

(3,081,062 )

Provision for income taxes

 

 

-

 

 

 

(13,138 )

 

 

-

 

 

 

(13,138 )

Net income (loss)

 

$ (5,564,912 )

 

$ 33,518

 

 

$ (47,955 )

 

$ (5,579,349 )

  

Three Months Ended June 30, 2019

 

Holding

Company

 

 

Oil

and gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 8,055,696

 

 

$ 34,202

 

 

$ 8,089,898

 

Cost of goods sold

 

 

-

 

 

 

(7,776,670 )

 

 

(32,086 )

 

 

(7,808,756 )

Operating expenses

 

 

(26,449 )

 

 

(15,597 )

 

 

(154,961 )

 

 

(197,007 )

Other income (expenses)

 

 

-

 

 

 

(28,863 )

 

 

7,377

 

 

 

(21,486 )

Provision for income taxes

 

 

-

 

 

 

(66,410 )

 

 

-

 

 

 

(66,410 )

Net income (loss)

 

$ (26,449 )

 

$ 168,156

 

 

$ (145,468 )

 

$ (3,761 )

 

NOTE 14 - SUBSEQUENT EVENTS

 

Subsequent to June 30, 2020, and through August 18, 2020, the Company issued 14,182,500 shares of common stock per conversion notices from convertible noteholders. 

  

 
F-17

Table of Contents

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q 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 including but not limited to the People’s Republic of China (“PRC”) and Malaysia, the sustained trade- and investment-related tension between the United States and the PRC, 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 throughout this Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q.

 

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.

 

Available Information

 

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports and other information with the SEC. The SEC maintains an internet site that contains reports and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

 

Quarterly Highlights

 

On February 24, 2020 the Company entered into a Purchase Agreement (the “Agreement”) with Mr. Liu FaKuan (“Seller”), the sole owner of Henan Wandi Mining Product Development Co., Ltd. (“Wandi”), a corporation organized in the People’s Republic of China (“PRC”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Company will effect an acquisition of Wandi by acquiring from the Seller all outstanding equity interests of Wandi (the “Acquisition”). Wandi owns 49% of a coal mine known as You Zhou Shenhuo Kuanfa Mining Company Ltd., (the “Mine”), together with Zhengzhou Yuzhong Coal Industry Co., Ltd. (a State-owned enterprise), which owns 51% of the coal mine. Notwithstanding these ownership interests, Wandi is entitled to 100% of the performance derived from the operation of the Mine. Pursuant to the Agreement, in exchange for all of the outstanding shares of Wandi, the Company issued 60,000,000 restricted common shares of stock of the Company to the Seller.

   

 
3

Table of Contents

 

The Closing of the Agreement has not occurred as of the date of this filing on Form 10-Q. Subject to the successful completion of the due diligence of both parties, the Company anticipates final closing of the Agreement in the third quarter of 2020.

 

On May 28, 2020, Resort Savers, Inc. (the "Company") filed a Certificate of Amendment with the Nevada Secretary of State, whereby the Company changed its name to Phoenix Rising Companies, pursuant to and in accordance with Nevada Revised Statutes §78.390. Consistent with this Amendment to the Articles of Incorporation, the Company is preparing and shall file an application for name change and new trading symbol with FINRA.

 

The Company anticipates that the name change and new trading symbol will be approved by FINRA in the third quarter of 2020. At such time as the Company is assigned a new trading symbol, we will make a subsequent announcement.

 

During the first quarter of 2020, the Company has also been exploring the acquisition of 100% ownership in a European business entity (the ‘Target Entity”) with assets and products that control the spread of infectious viral and bacterial diseases. The Target Entity owns patents for proprietary technologies that cover both disinfecting solutions and delivery systems, presently markets and sells products in Europe and South America, has an existing revenue stream, and owns over 25 patents among its assets. On May 13, 2020, the Company issued a press release describing the execution of a term sheet to acquire 100% of the Target Entity. Subject to the completion of due diligence and closing terms, the Company anticipates final closing on this acquisition during the third or fourth quarter of 2020.

 

COVID-19 Impacts and Effects

 

COVID-19, a viral pandemic, has affected the international community, public health, and financial markets throughout the world. Similarly, this public health crisis has impacted the Company, its operations, and the results of those business activities. Due to the location of the Company’s segmented business activities—in China and Malaysia—the virus has had a significant impact as it reportedly began spreading from Southeast Asia.

 

During these unprecedented times, our priority has been, and continues to be, the health, safety and sustainability of our employees, customers, communities, and our marketplace. We have responded quickly to the crisis to drive as much business as possible to e-commerce and telecommunication portals. We will continue to support the local communities and our customers that are struggling with this uncertain and difficult time period.

 

For the six months ended June 30, 2020, like most businesses, we experienced a swift change in customer behavior during February and March when the pandemic took hold throughout China and Malaysia. Initially, we observed a decrease in business activity in both of our operational segments as news of the pandemic upended typical routines and there was considerable uncertainty about what day-to-day life would be like.

 

Overview

 

Resort Savers, Inc. was incorporated in the State of Nevada on June 25, 2012. At June 30, 2020, the Company was authorized to issue 1,000,000,000 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”). The Company now operates on a fiscal year ending on December 31. Resort Savers has limited cash on hand at present. The Company has never declared bankruptcy, been in receivership, or been involved in any kind of legal proceeding.

 

 
4

Table of Contents

 

Shares

 

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.

 

On June 30, 2020, the closing price of our Common Stock as reported by the OTC Markets was $0.0854 per share.

 

As of June 30, 2020, there were approximately 244 stockholders of record and an aggregate of 82,558,368 shares of our Common Stock were issued and outstanding.

 

Plan of Operation

 

Since inception, the Company has 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 operations of Tieshan Oil and Admall, we anticipate generating additional revenues from the operations of these 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.

 

Results of Operations

 

Management’s Discussion and Analysis of Consolidated Results of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements included herein. In addition, you are urged to read this report in conjunction with the risk factors described herein.

 

Our operations for the three and six months ended June 30, 2020 and 2019 are outlined below:

 

 
5

Table of Contents

 

Three months ended June 30, 2020 compared to three months ended June 30, 2019

   

 

 

Three months ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 4,439,890

 

 

$ 8,089,898

 

 

$ (3,650,008 )

Cost of goods sold

 

$ 4,369,059

 

 

$ 7,808,756

 

 

$ (3,439,697 )

Gross profit

 

$ 70,831

 

 

$ 281,142

 

 

$ (210,311 )

Operating expenses

 

$ 2,555,980

 

 

$ 197,007

 

 

$ 2,358,973

 

Other expense

 

$ (3,081,062 )

 

$ (21,486 )

 

$ (3,059,576 )

Provision for income taxes

 

$ 13,138

 

 

$ 66,410

 

 

$ (53,272 )

Net loss

 

$ (5,579,349 )

 

$ (3,761 )

 

$ (5,575,588 )

     

The revenue for the three months ended June 30, 2020 decreased by $3,650,008 to $4,439,890 compared with the same period in 2019. The decrease is mainly due to the effects of COVID-19 causing a decrease in sales in this period.

 

Cost of goods sold for the three months ended June 30, 2020 decreased by $3,439,697 to $4,369,059 compared with the same period in 2019. The decrease is mainly due to the effects of COVID-19 causing a decrease in revenue in this period.

 

Other expense for the three months ended June 30, 2020 increased by $3,059,576 to $3,081,062 compared with the same period in 2019. The increase is mainly due to the interest expense and change in fair value of derivative liabilities related to convertible notes.

 

Net loss for the three months ended June 30, 2020 was $5,579,349 compared to net loss of $3,761 in the same period in 2019. The change is mainly due to an increase in operating expenses and other expense.

  

For the three months ended June 30, 2020 and 2019 our results of operations segment, are as follows:

 

Three Months Ended June 30, 2020

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 4,420,255

 

 

$ 19,635

 

 

$ 4,439,890

 

Cost of goods sold

 

 

-

 

 

 

(4,362,036 )

 

 

(7,023 )

 

 

(4,369,059 )

Operating expenses

 

 

(2,484,050 )

 

 

(11,563 )

 

 

(60,367 )

 

 

(2,555,980 )

Other income (expenses)

 

 

(3,080,862 )

 

 

-

 

 

 

(200 )

 

 

(3,081,062 )

Provision for income taxes

 

 

-

 

 

 

(13,138 )

 

 

-

 

 

 

(13,138 )

Net income (loss)

 

$ (5,564,912 )

 

$ 33,518

 

 

$ (47,955 )

 

$ (5,579,349 )

    

Three Months Ended June 30, 2019

 

Holding

Company

 

 

Oil

and gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 8,055,696

 

 

$ 34,202

 

 

$ 8,089,898

 

Cost of goods sold

 

 

-

 

 

 

(7,776,670 )

 

 

(32,086 )

 

 

(7,808,756 )

Operating expenses

 

 

(26,449 )

 

 

(15,597 )

 

 

(154,961 )

 

 

(197,007 )

Other income (expenses)

 

 

-

 

 

 

(28,863 )

 

 

7,377

 

 

 

(21,486 )

Provision for income taxes

 

 

-

 

 

 

(66,410 )

 

 

-

 

 

 

(66,410 )

Net income (loss)

 

$ (26,449 )

 

$ 168,156

 

 

$ (145,468 )

 

$ (3,761 )

 

 
6

Table of Contents

 

Holding Company

 

Operating expense mainly consists of professional fees for ongoing regulatory requirements and compensation for our management. The increase in operating expense is primarily due to an increase in our management fee.

   

Other income mainly consists of interest expense and change in fair value of derivative liability from convertible notes.

    

 

 

Three months ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Operating expenses

 

$ (2,484,050 )

 

$ (26,449 )

 

$ (2,457,601 )

Other income

 

$ (3,080,862 )

 

$ -

 

 

$ (3,080,862 )

Net income

 

$ (5,564,912 )

 

$ (26,449 )

 

$ (5,538,463 )

    

Oil and Gas

 

 

 

Three months ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 4,420,255

 

 

$ 8,055,696

 

 

$ (3,635,441 )

Cost of goods sold

 

$ (4,362,036 )

 

$ (7,776,670 )

 

$ 3,414,634

 

Gross profit

 

$ 58,219

 

 

$ 279,026

 

 

$ (220,807 )

Operating expenses

 

$ (11,563 )

 

$ (15,597 )

 

$ 4,034

 

Other income

 

$ -

 

 

$ (28,863 )

 

$ 28,863

 

Provision for income taxes

 

$ (13,138 )

 

$ (66,410 )

 

$ 53,272

 

Net income

 

$ 33,518

 

 

$ 168,156

 

 

$ (134,638 )

 

The decrease in revenue is primarily due to the COVID-19 lockdown. The decrease in cost of goods sold is primarily due to a decrease in revenue. The percentage of gross profit decreased from 3.5% in 2019 to 1.3% in 2020.

 

Nutritional Services

 

 

 

Three months ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 19,635

 

 

$ 34,202

 

 

$ (14,567 )

Cost of goods sold

 

$ (7,023 )

 

$ (32,086 )

 

$ 25,063

 

Gross profit

 

$ 12,612

 

 

$ 2,116

 

 

$ 10,496

 

Operating expenses

 

$ (60,367 )

 

$ (154,961 )

 

$ 94,594

 

Other income (expense)

 

$ (200 )

 

$ 7,377

 

 

$ (7,577 )

Provision for income taxes

 

$ -

 

 

$ -

 

 

$ -

 

Net income (loss)

 

$ (47,955 )

 

$ (145,468 )

 

$ 97,513

 

 

The decrease in revenue is primarily due to the COVID-19 lockdown. The decrease in cost of goods sold is primarily due to a decrease in revenue.

 

Six months ended June 30, 2020 compared to six months ended June 30, 2019

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 5,365,547

 

 

$ 22,870,943

 

 

$ (17,505,396 )

Cost of Goods Sold

 

$ 5,226,626

 

 

$ 21,978,146

 

 

$ (16,751,520 )

Gross profit

 

$ 138,921

 

 

$ 892,797

 

 

$ (753,876 )

Operating expenses

 

$ 2,838,832

 

 

$ 405,996

 

 

$ 2,432,836

 

Other expense

 

$ (3,181,154 )

 

$ (21,352 )

 

$ (3,159,802 )

Provision for income taxes

 

$ (16,534 )

 

$ (197,721 )

 

$ 181,187

 

Net income (loss)

 

$ (5,897,599 )

 

$ 267,728

 

 

$ (6,165,327 )

  

 
7

Table of Contents

 

The revenue for the six months ended June 30, 2020 decreased by $17,505,396 to $5,565,547 compared with the same period in 2019. The decrease is mainly due to the effects of COVID-19 causing a decrease in sales in this period.

 

Cost of goods sold for the six months ended June 30, 2020 decreased by $16,751,520 to $5,226,626 compared with the same period in 2019. The decrease is mainly due to the effects of COVID-19 causing a decrease in Revenue in this period.

 

Other expense for the six months ended June 30, 2020 increased by $3,159,802 to $3,181,154 compared with the same period in 2019. The increase is mainly due to  interest expense and change in fair value of derivative liabilities related to convertible notes.

 

Net loss for the six months ended June 30, 2020 was $5,897,599 compared to net income of $267,728 in the same period in 2019. The change is mainly due to an increase in operating expenses and other expense.

 

For the six months ended June 30, 2020 and 2019 our results of operations segment, are as follows:

 

Six Months Ended June 30, 2020

 

Holding

Company

 

 

Oil and

gas

 

 

Nutritional

 Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 5,303,166

 

 

$ 62,381

 

 

$ 5,365,547

 

Cost of goods sold

 

 

-

 

 

 

(5,166,080 )

 

 

(60,546 )

 

 

(5,226,626 )

Operating expenses

 

 

(2,659,638 )

 

 

(22,509 )

 

 

(156,685 )

 

 

(2,838,832 )

Other income (expenses)

 

 

(3,245,753 )

 

 

-

 

 

 

64,599

 

 

 

(3,181,154 )

Provision for income taxes

 

 

-

 

 

 

(16,534 )

 

 

-

 

 

 

(16,534 )

Net income (loss)

 

$ (5,905,391 )

 

$ 98,043

 

 

$ (90,251 )

 

$ (5,897,599 )

    

Six Months Ended June 30, 2019

 

Holding

Company

 

 

Oil

and gas

 

 

Nutritional

Services

 

 

Total

Consolidated

 

Revenue

 

$ -

 

 

$ 22,720,499

 

 

$ 150,444

 

 

$ 22,870,943

 

Cost of goods sold

 

 

-

 

 

 

(21,895,396 )

 

 

(82,750 )

 

 

(21,978,146 )

Operating expenses

 

 

(32,136 )

 

 

(36,431 )

 

 

(337,429 )

 

 

(405,996 )

Other income (expenses)

 

 

-

 

 

 

(28,863 )

 

 

7,511

 

 

 

(21,352 )

Provision for income taxes

 

 

-

 

 

 

(197,721 )

 

 

-

 

 

 

(197,721 )

Net income (loss)

 

$ (32,136 )

 

$ 562,088

 

 

$ (262,224 )

 

$ 267,728

 

 

Holding Company

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Operating expenses

 

$ (2,659,638 )

 

$ (32,136 )

 

$ (2,627,502 )

Other expense

 

$ (3,245,753 )

 

$ -

 

 

$ (3,245,753 )

Net loss

 

$ (5,905,391 )

 

$ (32,136 )

 

$ (5,873,255 )

    

Operating expense mainly consists of professional fees for ongoing regulatory requirements and compensation for our management. The increase in operating expense is primarily due to an increase in our management fee.

 

Other income mainly consists of interest expense and change in fair value of derivative liability from convertible notes.

 

 
8

Table of Contents

  

Oil and Gas

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 5,303,166

 

 

$ 22,720,499

 

 

$ (17,417,333 )

Cost of goods sold

 

$ (5,166,080 )

 

$ (21,895,396 )

 

$ 16,729,316

 

Gross profit

 

$ 137,086

 

 

$ 825,103

 

 

$ (688,017 )

Operating expenses

 

$ (22,509 )

 

$ (36,431 )

 

$ 13,922

 

Other income (expense)

 

$ -

 

 

$ (28,863 )

 

$ 28,863

 

Provision for income taxes

 

$ (16,534 )

 

$ (197,721 )

 

$ 181,187

 

Net income

 

$ 98,043

 

 

$ 562,088

 

 

$ (464,045 )

 

The decrease in revenue is primarily due to the COVID-19 lockdown. The decrease in cost of goods sold is primarily due to a decrease in revenue. The percentage of gross profit decreased from 3.6% in 2019 to 2.6% in 2020.

 

Nutritional Services

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Revenue

 

$ 62,381

 

 

$ 150,444

 

 

$ (88,063 )

Cost of goods sold

 

$ (60,546 )

 

$ (82,750 )

 

$ 22,204

 

Gross profit

 

$ 1,835

 

 

$ 67,694

 

 

$ (65,859 )

Operating expenses

 

$ (156,685 )

 

$ (337,429 )

 

$ 180,744

 

Other income (expense)

 

$ 64,599

 

 

$ 7,511

 

 

$ 57,088

 

Provision for income taxes

 

$ -

 

 

$ -

 

 

$ -

 

Net income (loss)

 

$ (90,251 )

 

$ (262,224 )

 

$ 171,973

 

 

The decrease in revenue is primarily due to the COVID-19 lockdown. The decrease in cost of goods sold is primarily due to a decrease in revenue.

 

Liquidity and Capital Resources

 

The following tables provide selected financial data about our company as of June 30, 2020 and December 31, 2019, respectively.

 

Working Capital

 

 

 

June 30,

 

 

December 31,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Cash

 

$ 74,897

 

 

$ 277,629

 

 

$ (202,732 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

$ 14,568,592

 

 

$ 8,934,627

 

 

$ 5,633,965

 

Current Liabilities

 

$ 11,356,692

 

 

$ 2,341,177

 

 

$ 9,015,515

 

Working Capital

 

$ 3,211,900

 

 

$ 6,593,450

 

 

$ (3,381,550 )

  

 
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The decrease in working capital was primarily attributed an increase in current liabilities offset by an increase in current assets. The increase in current assets was primarily attributed to an increase in accounts receivable. The increase in current liabilities was primarily attributed to an increase in accounts payable and other liabilities and derivative liability.

 

Cash Flow

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

Cash Flows used in operating activities

 

$ (418,172 )

 

$ (288,581 )

 

$ (129,591 )

Cash Flows used in investing activities

 

$ (83,032 )

 

$ -

 

 

$ (83,032 )

Cash Flows provided by financing activities

 

$ 300,547

 

 

$ 110,461

 

 

$ 190,086

 

Effects on changes in foreign exchange rate

 

$ (2,073 )

 

$ (26,404 )

 

$ 24,331

 

Net change in cash during period

 

$ (202,730 )

 

$ (204,524 )

 

$ 1,794

 

  

Cash Flow from Operating Activities

  

During the six months ended June 30, 2020, our Company used $418,172 in operating activities, compared to $288,581 used in operating activities during the six months ended June 30, 2019. The increase in cash used in operation activities is primarily due to a net loss in 2020.

 

Cash Flow from Investing Activities

  

 During the six months ended June 30, 2020, we used $83,032 in purchase of property and equipment. During the six months ended June 30, 2019, we used no cash for investing activities.

   

Cash Flow from Financing Activities

   

During the six months ended June 30, 2020 and 2019, our Company received $300,547 and $110,461 in financing activities, respectively. For the six months ended June 30, 2020, the Company received $150,000 from convertible notes and $222,298 from loans from related parties, and repaid loans from related parties for $70,574 and hire purchase loan of $1,177. For the six months ended June 30, 2019, the Company received $38,756 from bank overdraft and $74,194 from loans from related parties and repaid loans from related parties for $2,489.

    

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.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

  

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.

  

 
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Table of Contents

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Smaller reporting companies are not required to provide the information required by this item. 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.

 

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were ineffective as of June 30, 2020. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

We believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

 

Inherent Limitations - Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the period ended June 30, 2020, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

   

 
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Table of Contents

  

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors

 

As a “smaller reporting company,” we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

   

During the six months ended June 30, 2020, the Company issued 1,500,000 shares of Series A Preferred Stock to our CEO for compensation valued at $1,999,373.

   

During the six months ended June 30, 2020, the Company issued 77,348,487 shares of common stock as follows;

 

 

1,291,868 shares for conversion of debt of $125,603

 

 

 

 

60,000,000 shares valued at $24,422,000 for the acquisition of Wandi 

 

 

 

 

9,350,000 shares valued at $223,445 for services

 

 

 

 

4,500,000 shares to related parties valued at $59,981 for services

 

 

 

 

2,206,619 shares to a related party for settlement of debt of $110,331

  

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

   

On February 24, 2020 the Company entered into a Purchase Agreement (the “Agreement”) with Mr. Liu FaKuan (“Seller”), the sole owner of Henan Wandi Mining Product Development Co., Ltd. (“Wandi”), a corporation organized in the People’s Republic of China (“PRC”), pursuant to which the Company will effect an acquisition of Wandi by acquiring from the Seller all outstanding equity interests of Wandi. Wandi owns 49% of a coal mine known as You Zhou Shenhuo Kuanfa Mining Company Ltd., (the “Mine”), with Zhengshou Yshong Coal Industry Co., Ltd. (a State-owned enterprise) owning the remaining 51% of the Mine.

 

Pursuant to the Agreement, the Company issued 60,000,000 restricted common shares of stock of the Company to the Seller.  The obligations of the parties to complete the acquisition is subject to the fulfillment (or, in some cases waiver) of due diligence and certain closing conditions.  Upon closing of the acquisition Seller shall transfer to Company 100% of the issued and outstanding equity interests of Wandi, which will then become a wholly owned subsidiary of the Company.

    

 
12

Table of Contents

  

Item 6. Exhibits

 

Exhibit

Number

 

Description

31.1*

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

 

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

 

Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*

 

Interactive Data File

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

__________

*

Filed herewith.

**

Deemed furnished and not filed.

 

 
13

Table of Contents

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

RESORT SAVERS, INC.

 

(Registrant)

 

 

 

Dated: August 19, 2020

/s/ DS Chang

 

Ding-Shin “DS” Chang

 

President, Chief Executive Officer and Director

 

(Principal Executive Officer)

 

 
14

 

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