Item
1. Financial Statements
Jin
Wan Hong International Holdings Limited
(Formerly
Karnet Capital Corp.)
FINANCIAL
REPORTS
As
of
August
31, 2017
TABLE
OF CONTENTS
Jin
Wan Hong International Holdings Limited
(Formerly
Karnet Capital Corp.)
Balance
Sheet
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31-August-
2017
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31-May-
2017
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(Unaudited)
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(Audited)
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ASSETS
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Current Assets:
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Cash
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$
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0
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$
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0
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Prepayment
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5,000
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5,000
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Total Current Assets
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5,000
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5,000
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Total Assets
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$
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5,000
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$
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5,000
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts payable
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4,865
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600
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Loan from director
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33,765
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28,238
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Total Liabilities
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$
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38,630
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$
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28,838
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Shareholders’ Equity:
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Common stock, par value $0.001; 75,000,000 shares authorized, 8,100,000 and 8,100,000 shares issued and outstanding, respectively
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8,100
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8,100
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Additional paid-in capital
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30,600
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30,600
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Accumulated deficit
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(72,330
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)
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(62,538
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)
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Total Shareholders’ Equity
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(33,630
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)
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(23,838
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)
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Total Liabilities and Shareholders’ Equity
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$
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5,000
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$
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5,000
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The
accompanying notes are an integral part of these financial statements
Jin
Wan Hong International Holdings Limited
(Formerly
Karnet Capital Corp.)
Statements
of Operations
(Unaudited)
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3 Months Ended
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3 Months Ended
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August 31, 2017
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August 31, 2016
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Revenues:
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$
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—
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$
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—
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Cost of Goods Sold
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—
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—
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Gross Margin
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—
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—
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Operating Expenses:
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General and administrative expenses
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9,792
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5,700
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Total operating expenses
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9,792
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5,700
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Net loss from operations
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(9,792
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)
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(5,700
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)
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Provision for income taxes
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—
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—
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Net Loss
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$
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(9,792
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)
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$
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(5,700
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)
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Net loss per share: basic and diluted
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$
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0.00
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$
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0.00
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Weighted average number of common shares outstanding: basic and diluted
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8,100,000
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8,100,000
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The
accompanying notes are an integral part of these financial statements
Jin
Wan Hong International Holdings Limited
(Formerly
Karnet Capital Corp.)
Statements
of Cash Flows
(Unaudited)
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3 Months Ended
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3 Months Ended
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August 31, 2017
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August 31,20 16
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Cash flows from operating activities:
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$
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$
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Net loss for the period
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(9,792
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)
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(5,700
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)
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Adjustments to reconcile net loss to net cash (used in) operating activities:
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Changes in operating assets and liabilities:
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Deposit/inventory
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—
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—
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Decrease in Accounts payable
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—
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—
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Increase in Accounts payable
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4,265
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Net cash flows used in operating activities
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(5,527
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)
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(5,700
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)
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Cash flows from investing activities
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—
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—
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Cash flows from financing activities:
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Proceeds from sale of common stock
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—
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—
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Loans from director
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5,527
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5,700
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Contributed capital
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—
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—
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Net cash flows provided by financing activities
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5,527
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5,700
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Net increase (decrease) in cash
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—
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—
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Cash, beginning of the period
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—
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—
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Cash, end of the period
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—
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—
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Supplemental Cash Flow Information:
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Interest paid
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—
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—
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Income taxes paid
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—
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—
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Supplemental disclosure of non-cash activities:
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Forgiveness of related party debt
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—
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—
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The
accompanying notes are an integral part of these financial statements
Jin Wan Hong International Holdings Limited
(Formerly Karnet Capital Corp.)
Notes to the Financial Statements
Jin Wan Hong International Holdings Limited, formerly Karnet
Capital Corp. (the “Company”) was incorporated in the State of Nevada on January 31, 2014. On January 14, 2016, Shu
Feng Lu (President and Director of the Company), Hong Xia Li, and Chen Yang took control of the Company by purchasing shares of
common stock from existing shareholders.
The Company plans to operate in tea related business in the
future. The Company’s currently maintains an office in Room 1101, Block E, Guang Hua Yuan, 2031 Bin He Nan Road, FuTian District,
Shenzhen, Guangdong, China.
The Company has generated limited revenues and incurred a loss
since inception (January 31, 2014) resulting in an accumulated deficit of $72,330 as of August 31, 2017, and further losses are
anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s ability to continue
as a going concern.
The ability to continue as a going concern is dependent upon
the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs
over the next twelve months with existing cash on hand, loans from directors and, or, the private placement of common stock.
Because of the Company’s history of losses, its independent
auditors, in the reports on the financial statements for the year ended May 31, 2017, expressed substantial doubt about the Company’s
ability to continue as a going concern. The accompanying unaudited financial statements for the period ended August 31, 2017 have
been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation
of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.
Management anticipates that the Company will be dependent, for
the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it
may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances
that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
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3.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis of Presentation
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations
of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments,
which management believes are necessary to fairly present the financial position, results of operations, stockholders’ equity
and cash flows of the Company for the period ended August 31, 2017.
Accounting Basis
The Company uses the accrual basis of accounting and accounting
principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a May 31
fiscal year end.
Unaudited Interim Financial Information
These unaudited interim consolidated financial statements have
been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange
Commission (“SEC”) that permit reduced disclosure for interim periods. In the opinion of management, all adjustments
of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows
for the periods presented have been made.
The results of operations for the interim periods presented
are not necessarily indicative of the results to be expected for the year ending May 31, 2018. These unaudited interim financial
statements should be read in conjunction with the latest Annual Financial Statements and that interim disclosures generally do
not repeat this in the annual statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 the financial statements and the reported amount
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the
original maturities of three months or less to be cash equivalents. There were no cash equivalents as of August 31, 2017.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and
cash equivalents, and amounts due to a shareholder, who is a Director and President of the Company. The carrying amount of these
financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method.
Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between
the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to
be realized.
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting
Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned.
The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably assured.
Stock-Based Compensation
We account for equity-based transactions with nonemployees under
the provisions of ASC Topic No. 505-50,
Equity-Based Payments to Non-Employees
(“ASC 505-50”). ASC 505-50 establishes
that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the
fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments
to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock,
is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments
issued as deferred stock compensation and amortize the cost over the term of the contract.
We account for employee stock-based compensation in accordance
with the guidance of FASB ASC Topic 718,
Compensation—Stock Compensation,
which requires all share-based payments
to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The fair value of the equity instrument is charged directly
to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the
Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted
earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as
of April 15, 2017.
Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting Standards Update
“ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –Disclosure of Uncertainties
about an Entity’s Ability to Continue as a Going Concern” (“Update”). Currently, there is no guidance in
U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance.
In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments
require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain
principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term
substantial
doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the
mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result
of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is
not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued
(or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending
after December 15, 2016. Early adoption is permitted.
The Company has implemented all new accounting pronouncements
that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed,
and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a
material impact on its financial position or results of operations.
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4.
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LOAN FROM SHAREHOLDERS
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As of August 31, 2017, the Company owed its President, Director,
and major shareholder, Shu Feng Lu $33,765. The total loan of $33,765 was unsecured, non-interest bearing and due on demand.
JWHI
prepaid $5,000 service fee to OTC Markets for OTC Disclosure and News Services on June 9, 2017
.
The Company has 75,000,000, $0.001 par value shares of common
stock authorized. There were no shares issued during the quarter ended August 31, 2017.
There were 8,100,000 shares of common stock issued and outstanding
as of August 31, 2017.
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7.
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COMMITMENTS AND CONTINGENCIES
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The Company neither owns nor leases any real or personal property.
Our CEO has provided use of an office without charge to the Company. There is no obligation for the officer to continue this arrangement.
Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are
involved in other business activities and most likely will become involved in other business activities in the future.
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed
its operations subsequent to August 31, 2017, through February 2nd, 2018. At the end of August 31, 2017, the Company had a prepayment
of $5,000 for OTCQB services. The prepaid expense of $5,000 was refunded by OTCQB on October 13, 2017.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Description of Business
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These
statements relate to future events or our future financial performance. These statements often can be identified by the use of
terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,”
“approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject
to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur
in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control
that could cause actual results and events to differ materially from historical results of operations and events and those presently
anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Company
Jin Wan Hong International Holdings Limited was incorporated
in the State of Nevada on January 31, 2014. On January 14, 2016, Shu Feng Lu (President and Director of the Company), Hong Xia
Li, and Chen Yang took control of the Company by purchasing shares of common stock from existing shareholders. After the transaction
our management is currently working on a new business plan and winding up the current business plan. The Company plans to operate
in tea related business in the future.
Office
Our principal executive office is located
at 1101, Block E, Guang Hua Yuan, 2031 Bin He Nan Road, Fu Tian District, Shenzhen City, China. Our CEO provides our Company with
office space at no charge.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read in conjunction with
our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward-looking statements. Our audited financial statements are stated in United States Dollars
and are prepared in accordance with United States Generally Accepted Accounting Principles.
General
Management is currently working on a new business plan and winding
up the current business plan. The Company plans on operating in tea related business in the future.
Results of Operations
We have incurred recurring losses to date. Our financial statements
have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating
to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to
continue in operation.
We expect we will require additional capital to meet our long
term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
There is no guarantee that we will be able to raise additional capital.
Three Month Period Ended August 31, 2017 Compared To Three
Month Period Ended August 31, 2016
Revenue
We recognized revenue of $0 for the three month period ended
August 31, 2017, and for the three month period ended August 31, 2016.
Operating expenses
We incurred operating expenses of $9,792 for the three month
period ended August 31, 2017 compared to $5,700 for the three month period ended August 31, 2016, due to an increase in legal expenses.
Net Losses
Our net loss for the three month period ended August 31, 2017
was $9,792 compared to a net loss of $5,700 as of the three month period ended August 31, 2016 due to an increase in legal expenses.
Liquidity and Capital Resources
As of August 31, 2017, our total assets were $5,000. Our total
liabilities were $38,630, comprised of a loan of $33,765 from Shu Feng Lu, who is the Company’s President and Director, and
payables to third parties of $4,865. As of August 31, 2016, our total assets were $0 and our total liabilities were $5,700.
Shareholders’ equity was ($33,630) as of August 31, 2017.
As of August 31, 2016, shareholder’s equity was ($5,700).
The Company has accumulated a deficit of ($72,330) as of August
31, 2017, and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about
the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon
the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs
over the next twelve months with existing cash on hand, sales, loans from directors and, or, the private placement of common stock.
Management anticipates that the Company will be dependent, for
the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it
may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances
that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
Cash Flow from Operating Activities
We have not generated positive cash flow from operating activities.
For the three month period ended August 31, 2017, net cash flow used in operating activities was ($5,527) compared to ($5,700)
for the three month period ended August 31, 2016.
Cash Flow from Investing Activities
We neither used, nor generated cash from investing activities
for the three-month period and three- month period ended August 31, 2017 and August 31, 2016.
Cash Flow from Financing Activities
For the three month period ended August 31, 2017, net cash provided
by financing activities was $5,527. The loans of $5,527 are from a shareholder of the Company, Shu Feng Lu, who is also the President
and Director of the Company. The loans are unsecured, non-interest bearing and due on demand. For the three month period ended
August 31, 2016, net cash provided by financing activities was $5,700.
Plan of Operation and Funding
We expect that working capital requirements will continue to
be funded through a combination of our existing funds, sales, loans from a director and further issuances of securities. Our working
capital requirements are expected to increase in line with the growth of our business
We have no lines of credit or other bank financing arrangements.
Generally, we have financed operations to date through the proceeds of the private placement of equity, and debt instruments. In
connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating
to:
●
Legal
and professional fees
●
Website
development
●
Purchase
of inventory
●
Marketing Campaign
We intend to finance these expenses with further issuances of
securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term
operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders.
Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not
be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we
may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially
restrict our business operations.
Off-Balance Sheet Arrangements
As of the date of this Report, 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 are
material to investors.
Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations
of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments,
which management believes are necessary to fairly present the financial position, results of operations, stockholders’ equity
and cash flows of the Company for three month period ended August 31, 2017.
Accounting Basis
The Company uses the accrual basis of accounting and accounting
principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted
a May 31 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the
original maturities of three months or less to be cash equivalents. The Company had $0 cash as of August 31, 2017.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and
cash equivalents and amounts due to shareholder. The carrying amount of these financial instruments approximates fair value due
either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial
statements.
Inventories
Inventories are stated at the lower of cost or market. Cost
is principally determined using the first-in, first out (FIFO) method. The Company had $0 in inventory as of August 31, 2017.
Depreciation, Amortization, and Capitalization
The Company records depreciation and amortization when appropriate
using both straight-line and declining balance methods over the estimated useful life of the assets (five to seven years). Expenditures
for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s
useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated
accounts and the resultant gain or loss is included in net income.
Income Taxes
Income taxes are computed using the asset and liability method.
Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates
and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are
not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 the financial statements and the reported amount
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered
or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance
with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the
Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted
earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as
of August 31, 2017.
Comprehensive Income
The Company has standards for reporting and display of comprehensive
income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement
of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and
distributions to owners. The Company has not had any significant transactions that are required to be reported in other comprehensive
income.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued
accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash
flow.