NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS
Green Vision Biotechnology Corp. (formerly known as Vibe Wireless Corp., originally known as Any Translation Corp.), (the “Company”, “GVBT”), was incorporated under the laws of the State of Nevada on July 5, 2012. The Company was founded to be in the business of translation and interpretation. On November 12, 2015, the Company changed its name from Any Translation Corp. to Vibe Wireless Corp. On September 30, 2016, we changed our name from Vibe Wireless Corp. to Green Vision Biotechnology Corp.
On September 30, 2016, the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by increasing the Company’s authorized number of shares of common stock from 75 million to 750 million and increasing all of its issued and outstanding shares of common stock at a ratio of ten (10) shares for every one (1) share held. The Company’s Board of Directors approved this amendment on September 30, 2016. This stock split has been retroactively applied.
On the same date, September 30, 2016, the Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, Green Vision Biotechnology Corp. pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company is the sole surviving entity and changed its name to “Green Vision Biotechnology Corp.”
The investment transaction under the share exchange agreements and contractual agreements as described below (collectively the “Transaction Agreements”) was entered into, between each of the Shareholders of Lutu International Biotechnology Limited (“Lutu International”), a company incorporated under the laws of Cayman Islands and GVBT (the “Investment Transaction”) on May 12, 2017. As a result of closing the Investment Transaction, GVBT acquired part of the shares of Lutu International and assumed management of Lutu International and all its direct and indirect subsidiaries (“the Lutu Group”).
On May 12, 2017, GVBT entered into a share exchange agreement with Harcourt Capital Limited (“Harcourt”), a limited company incorporated in the British Virgin Islands, which holds 6% of the issued and outstanding shares of Lutu International; and Woodhead Investments Limited (“Woodhead”), a limited company incorporated in the British Virgin Islands, which holds 5% of the issued and outstanding shares of Lutu International (the “Minority Interest Exchange Agreement”). Under the Minority Interest Exchange Agreement, Woodhead agreed to transfer GVBT a total of 5% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Woodhead, or persons designated by Woodhead, a right to receive a total of 5 million shares of GVBT’s common stock. Under the Minority Interest Exchange Agreement, Harcourt agreed to transfer to GVBT a total of 6% of the issued and outstanding shares of Lutu International. In consideration, GVBT agreed to grant Harcourt, or persons designated by Harcourt, a right to receive a total of 6 million shares of GVBT’s common stock. The transactions under the Minority Interest Exchange Agreement were completed on May 12, 2017.
Able Lead has an outstanding loan of $4.43 million denominated in Renminbi (“RMB”) owed to an unrelated third party with its maturity date on January 22, 2018 (the “Outstanding Loan”). Able Lead is currently negotiating an extension of the Outstanding Loan to 2019 with the third party creditor. Shares of Lutu International held by Able Lead were offered by Able Lead as collateral to secure repayment of the Outstanding Loan (the “Security”)..
On May 12, 2017, GVBT entered into a share exchange agreement (the “Majority Interest Exchange Agreement”) with Able Lead, the 89% shareholder of Lutu International. Under the Majority Interest Exchange Agreement, Able Lead agreed to enter into a series of contractual arrangements with GVBT (collectively, the “Contractual Arrangements”) (as described below), in which GVBT assumed management control of the Lutu Group. Able Lead further agreed to deliver the shares of Lutu International to GVBT once the Outstanding Loan is fully repaid. In consideration, GVBT agreed to issue and deliver a total of 89 million shares of GVBT’s common stock to an escrow agent (issued in the name of the escrow agent or its nominee) (the “ Escrow Shares “). The Escrow Shares shall be held in escrow for a period of one year or such period of time to be agreed by GVBT and Able Lead upon the execution of the Majority Interest Exchange Agreement. Conditional upon the full repayment of the Outstanding Loan and the release of the Security, the Escrow Shares shall be released to Able Lead in exchange for the delivery of a total of 89% of the issued and outstanding shares of Lutu International by Able Lead to GVBT. In the event that Able Lead fully repays the Outstanding Loan and causes the release of the Security, then the Escrow Shares shall be delivered to Able Lead. In the event that Able Lead cannot fully repay the Outstanding Loan (within a period of one year, or such period of time to be agreed by GVBT and Able Lead) and cause the release of the Security, then the Escrow Shares shall be delivered to transfer agent for cancellation. Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Majority Share Exchange Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements described as below. The transactions under the Majority Interest Exchange Agreement were completed on May 12, 2017.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Pursuant to an escrow agreement (the “Escrow Agreement”) entered into between Booth Udall Fuller, PLC (the “Escrow Agent”) and GVBT on May 12, 2017, the Escrow Shares shall be held by Booth Udall Fuller, PLC for a year upon the execution of the Majority Share Exchange Agreement. The Escrow Shares shall not be subject to any lien, attachment, or any other judicial process of any creditor of GVBT, and shall be held and disbursed solely for the purposes and in accordance with the terms of the Majority Share Exchange Agreement.
On May 12, 2017, GVBT entered into a series of contractual agreements as described below with Lutu International and/or Able Lead (the “Contractual Arrangements”). Upon execution of the Contractual Arrangements, GVBT assumed management of Lutu International and its subsidiaries (the “Lutu Group”) and received economic benefits which includes right to receive the expected residual returns and and/or obligation to absorb expected loss from the Lutu Group. Each agreement in the Contractual Arrangements constitutes valid and binding obligations of the parties of such agreements and is enforceable and valid in accordance with the laws of Cayman Islands. All agreements executed by Lutu International were duly approved by its board of directors and the Shareholders of Lutu International.
Consulting Services Agreement
Pursuant to the exclusive consulting services agreement entered into between GVBT and Lutu International on May 12, 2017, GVBT has the exclusive right to provide to the Lutu Group general business operation services, including advice and strategic planning, as well as consulting services related to the technological research and development of bio-fertilizers. Further, GVBT owns the intellectual property rights developed or discovered through research and development, in the course of providing the consulting services, or derived from the provision of the consulting services. In consideration, Lutu International pays an annual consulting service fees to GVBT in the amount equivalent to all of Lutu International’s net profits for the relevant financial year. The term of this consulting service agreement is five (5) years from its effective date and may be terminated upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Consulting Services Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Operating Agreement
Pursuant to the operating agreement entered into between GVBT, Lutu International and Able Lead on May 12, 2017, GVBT agreed to provide guidance and instructions on the Lutu Group’s daily operations, financial management and employment issues. Able Lead agreed to designate candidates recommended by GVBT as their representatives on the boards of directors of each member of the Lutu Group. GVBT has the right to appoint senior executives of each member of the Lutu Group. In addition, GVBT agreed to guarantee the Lutu Group’s performance under any agreements or arrangements relating to the Lutu Group’s business arrangements with any third party. In consideration, Lutu International agrees that it will not, and will cause the Lutu Group not to, without the prior consent of GVBT, engage in any transactions that could materially affect their respective assets, liabilities, rights or operations, including but not limited to, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The term of this operating agreement is five (5) years from its effective date and may be extended and terminated only upon GVBT’s written confirmation prior to the expiration of this agreement.
Unless otherwise expressly agreed in writing by GVBT and Able Lead, the Operating Agreement shall be automatically terminated upon the termination of any of the agreements in the Contractual Arrangements or the Majority Interest Exchange Agreement.
Proxy Agreement
Pursuant to the proxy agreement entered into between Able Lead, Lutu International, and GVBT on May 12, 2017, Able Lead agreed to irrevocably grant a person to be designated by GVBT the right to exercise its voting rights and other rights, including the attendance of, and the voting at the shareholders’ meetings of Lutu International for and on behalf of Able Lead (or the signing of written resolutions in lieu of such meetings) in accordance with applicable laws and its articles of association, including but not limited to the appointment and voting for the directors and chairman of the board as the authorized representative of Able Lead to exercise controlling power in the Lutu Group. The proxy agreement may be terminated by joint consent of the parties or upon 7-day written notice from GVBT.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Changes Resulting from the Investment Transaction
The closing of the Investment Transaction occurred on May 12, 2017, resulting in a change of control of GVBT. Prior to closing of the Investment Transaction, GVBT had a total of 60,790,000 shares of common stock issued and outstanding. As a result of the closing of the Investment Transaction, GVBT now has a total of 160,790,000 shares of its common stock issued and outstanding, of which 60,790,000 shares, or approximately 37.8%, are owned by the previous existing shareholders of GVBT, with the balance of 100,000,000 shares, or approximately 62.2%, owned by the previous shareholders of Lutu International, with certain shares held in escrow pursuant to the Escrow Agreement.
Following the closing of the Investment Transaction, GVBT carries on the business of the Lutu Group. The Lutu Group, with its operation primarily located in the Shanxi Province of China, is engaged in the biotechnology industry, in particular, the production and distribution of bio-fertilizers. Revenues of the Lutu Group are currently generated from China.
Changes to the Board of Directors and Officers
Simultaneous with the closing of the Investment Transaction, there was a change in the officers and directors of GVBT. As authorized by the bylaws, the existing director of GVBT, Mr. Ma Wai Kin, appointed two (2) additional members to the Board of GVBT. Such members are Mr. Lam Ching Wan (also known as William Lam) and Mr. Leung Kwong Tak (also known as Dr. Michael Leung). Mr. Ma also appointed Mr. William Lam as GVBT’s Chief Executive Officer and Mr. Lo Kwok Leung as GVBT’s Chief Financial Officer. Mr. Lo Kwok Leung is not related to Dr. Michael Leung.
All members of the Board shall hold their respective offices for a term of one year from their respective dates of appointment, or until the election and qualification of their successors, and thereafter to resign as a director of GVBT. In accordance with the bylaws, officers are elected by the board of directors and serve at the discretion of the board of directors.
Accounting Treatment
The Investment Transaction is being accounted for as a reverse-merger and recapitalization. For financial reporting purposes, Lutu International is the acquirer and GVBT is the acquired company. After completion of the transaction, the assets, liabilities, operations results and cash flow of GVBT that will be reflected in the historical consolidated financial statements prior to the Investment Transaction will be those of Lutu International and its subsidiaries and will be recorded at the historical cost basis of Lutu International and its subsidiaries. Number of shares deemed to be outstanding for the period from January 1, 2017 to the acquisition date will be reflected in the balance of the common stock and paid in capital. The Company changed its fiscal year ended from January 31 to December 31.
Tax Treatment and SEC Filer Status: Small Business Issuer
The Investment Transaction is intended to constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization exemptions that may be available under the Code. Immediately following the Investment Transaction, the filer status of GVBT will be a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, as promulgated by SEC.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our last fiscal year, the Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
|
·
|
a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and
|
|
|
|
|
·
|
an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes- Oxley Act of 2002.
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
The Company may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of their initial public offering or such earlier time that they are no longer an emerging growth company, and if they do, the information that they provide to the stockholders may be different than you might get from other public companies in which you hold equity.
The Company would cease to be an emerging growth company if they have more than $1.0 billion in annual revenue, have more
than $700 million in market value of their ordinary shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. The JOBS Act permits an “emerging growth company” like the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for consolidated financial reporting.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The historical presentation of the consolidated financial statements includes the financial statements of LUTU INTERNATIONAL BIOTECHNOLOGY LIMITED, and its wholly-owned subsidiaries (collectively referred to herein as the “Company”). All intercompany accounts, transactions, and profits have been eliminated upon consolidation.
The following table depicts the identity of the subsidiaries:
Name of Subsidiary
|
|
Place of Incorporation
|
|
Attributable Equity Interest %
|
|
|
Registered Capital
|
|
Lutu International Biotechnology Limited (RTO accounting acquirer) (1)
|
|
Cayman Islands
|
|
|
100
|
|
|
USD100
|
|
Light Raise Limited (2)
|
|
BVI
|
|
|
100
|
|
|
USD 1
|
|
Hong Kong Prolific Mineral Resources Holdings Limited (3)
|
|
HKD
|
|
|
100
|
|
|
HKD 2
|
|
Shanxi Green Biotechnology Industry Company Limited (4)
|
|
PRC
|
|
|
100
|
|
|
RMB 100,000,000
|
|
Shenzhen Qianhai Lutu Supply Chain Management Company Limited (5)
|
|
PRC
|
|
|
100
|
|
|
RMB 5,000,000
|
|
Note:
|
(1)
|
Wholly owned subsidiary of Green Vision Biotechnology Corp.
|
|
(2)
|
Wholly owned subsidiary of Lutu International Biotechnology Limited
|
|
(3)
|
Wholly owned subsidiary of Light Raise Limited
|
|
(4)
|
Wholly owned subsidiary of Hong Kong Prolific Mineral Resources Holdings Limited
|
|
(5)
|
Wholly owned subsidiary of Shanxi Green Biotechnology Industry Company Limited
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING (CONTINUED)
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Significant estimates and judgments inherent in the preparation of these consolidated financial statements include, among other things, accounting for asset impairments, allowances for doubtful accounts, depreciation and amortization, the collection of revenues from the Agricultural Cooperative.
Economic and political risks
The Company’s operations are mainly conducted in the Hong Kong Special Administrative Region (“Hong Kong”) and the People’s Republic of China (“China”) (for the purpose of this Current Report on Form 10-Q, China does not include Hong Kong, Macau Special Administrative Region of the People's Republic of China and Taiwan (The Republic of China) and a large number of customers are located in northern China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in Hong Kong and China, and by the general state of the economy in Hong Kong and China.
The Company’s operations and customers in Hong Kong and China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong and China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Foreign Currency Translation
The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency, while its functional currency are Chinese Renminbi (RMB) and Hong Kong Dollar (HKD). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $ using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.
Below is a table with foreign exchange rates used for translation:
For the three months and year ended, (Average Rate)
|
|
Mar. 31, 2018
|
|
Dec 31, 2017
|
|
Mar. 31, 2017
|
|
Chinese Renminbi (RMB)
|
|
RMB
|
|
|
6.35819
|
|
RMB
|
|
|
6.76141
|
|
RMB
|
|
|
6.86288
|
|
United States dollar ($)
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of (Closing Rate)
|
|
Mar.
3
1
, 201
8
|
|
Dec 31,
201
7
|
|
Mar. 31,
201
7
|
|
Chinese Renminbi (RMB)
|
|
RMB
|
|
|
6.28068
|
|
RMB
|
|
|
6.62061
|
|
RMB
|
|
|
6.88280
|
|
United States dollar ($)
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months and year ended, (Average Rate)
|
|
Mar.
3
1
, 201
8
|
|
Dec 31,
201
7
|
|
Mar. 31,
201
7
|
|
Hong Kong (HKD)
|
|
RMB
|
|
|
7.82750
|
|
RMB
|
|
|
7.79197
|
|
RMB
|
|
|
7.76145
|
|
United States dollar ($)
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
|
|
|
|
|
|
As of (Closing Rate)
|
|
Mar.
3
1
, 201
8
|
|
Dec 31,
201
7
|
|
Mar. 31,
201
7
|
|
Hong Kong (HKD)
|
|
RMB
|
|
|
7.84906
|
|
RMB
|
|
|
7.80715
|
|
RMB
|
|
|
7.77000
|
|
United States dollar ($)
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
|
|
$
|
1.00000
|
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING (CONTINUED)
Revenue Recognition
The Company earns revenue by selling merchandise to end using customers primarily through distribution agent and directly to customers.
Revenue is recognized when merchandise is purchased by and delivered to the customer and confirmed and collectability is reasonably assured. Revenue from wholesale agent is recognized after goods delivered, amount fixed or determined and collectability is reasonably assured.
All revenues are shown net of estimated returns during the relevant period represented by estimated allowance for sales returns based upon historical experience.
The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.
During the three months ended March 31, 2018 and 2017, the provision of sales return were $ Nil respectively.
Cost of Goods Sold
Cost of goods sold includes the cost of materials, labor, and relevant manufacturing expenses.
Selling Expenses
Selling expenses include packaging and shipping costs, as well as advertising and certain expenses associated with operating the Company’s corporate headquarters.
Advertising Costs
The Company expensed all advertising costs as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $Nil and $1,064 for the three months ended March 31, 2018 and 2017 respectively. Advertising expense is included in selling expense and general and administrative expenses in the accompanying consolidated statements of income.
Leases
The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company’s operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for office remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.
The Company did not have a lease that met the criteria of a capital lease. Leases that do not qualify as a capital lease are classified as an operating lease. Operating lease rental expenses included in selling, general and administrative expenses for the three months ended March 31, 2018 and 2017 were $5,083 and $4,328 respectively.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable
Accounts receivable is recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is maintained for all customers based on a variety of factors, including the industry practice, the length of time the receivables are past due, significant one-time events and historical experience. The Company is selling products delivered to certain customers which are closed to Agriculture Cooperatives as defined by ASC 905 “Agriculture”. The collection cycle may be varied and depended on the growing crops cycle.
Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectability of outstanding accounts receivable. The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance. Bad debts are written off as incurred. During the quarter ended March 31, 2018 and year ended December 31, 2017, the bad debts incurred were $Nil and $Nil respectively.
Outstanding accounts balances are reviewed individually for collectability. The Company does not charge any interest income on trade receivables. Accounts balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To date, the Company has not charged off any balances as it has yet to exhaust all means of collection.
During the quarter ended March 31, 2018 and year ended December 31, 2017, the provision of doubtful debts were $Nil and $865,942 respectively.
Inventories
Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.
Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.
Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.
These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is provided over the estimated useful lives, using the straight-line method with 5% scrape value as follows:
Buildings
|
|
20 years
|
Machinery & equipment
|
|
10 years
|
Office equipment
|
|
3 years
|
Motor vehicles
|
|
4 years
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Land Use Rights
According to the laws of the PRC, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years.
Goodwill
Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles — Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.
The Company performed an annual impairment test as of the fiscal year ended December 31, 2017, and a quarter review as of the period ended March 31, 2018, and determined that the impairment loss in the amount of $nil and $nil were recorded respectively.
Long-lived Assets
The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.
The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions.
During the reporting periods, the Company performed the evaluation and there was no impairment loss.
Cash and Concentration of Credit Risk
The Company maintains cash in bank deposit accounts in Hong Kong and PRC, and considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company performs ongoing evaluations of the institution to limit its concentration risk exposure.
The Company’s customers are mainly located in the northeastern China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Retirement Benefit Plans
Full time employees of the Company in China participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation—Retirement Benefits.
The total amounts for such employee benefits which were expensed were $5,682 and $687 for the three months ended March 31, 2018 and 2017 respectively.
Income Taxes
The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.
Comprehensive income
Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other consolidated financial statements. The Company’s current component of comprehensive income is the net income and foreign currency translation adjustment.
Segment Reporting
The Company operates in one industry segment, operating manufacturing and selling of organic bio-fertilizer. ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.
Basic and diluted earnings (loss) per share
In accordance with ASC No. 260 “Earnings Per Share”, the basic earnings (loss) per common share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share is computed similarly to basic earnings (loss) per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance
FASB Simplifies Adoption of New Leases Standard for Certain Land Easements.
The FASB has issued Accounting Standards Update (ASU) No. 2018-01,
Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842,
which clarifies the application of the new leases guidance to land easements and eases adoption efforts for some land easements.
ASU 2018-01 is expected to reduce the cost of adopting the new leases standard for certain land easements. It is also an attempt to help ensure that companies can make a successful transition to the standard without compromising the quality of information provided to investors about these transactions.
Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose. Land easements are used by utility and telecommunications companies, for example, when they need to take a small strip of land, or easement, to bury wires. Not all companies have historically accounted for them as leases.
Stakeholders pointed out that the requirement to evaluate all old and existing land easements, sometimes numbering in the tens of thousands, to determine if they meet the definition of a lease under the new standard could be very costly. They also noted there would be limited benefit to applying this requirement, as many of their land easements would not meet the definition of a lease, or even if they met that definition, many of their easements are prepaid and, therefore, already are recognized on the balance sheet.
The land easements ASU addresses this by:
|
·
|
Providing an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old leases standard; and
|
|
|
|
|
·
|
Clarifying that new or modified land easements should be evaluated under the new leases standard, once an entity has adopted the new standard.
|
The FASB issued an Accounting Standards Update (ASU) that helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act.
ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.
The ASU requires financial statement preparers to disclose:
|
·
|
A description of the accounting policy for releasing income tax effects from AOCI;
|
|
|
|
|
·
|
Whether they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act; and
|
|
|
|
|
·
|
Information about the other income tax effects that are reclassified.
|
The amendments affect any organization that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP.
The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance
(continued)
FASB Issues Corrections and Improvements to Financial Instruments.
The FASB has issued Accounting Standards Update (ASU) No. 2018-03,
Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,
that clarifies the guidance in ASU No. 2016-01,
Financial Instruments—Overall (Subtopic 825-10)
, as follows:
|
·
|
Issue 1: Equity Securities without a Readily Determinable Fair Value— Discontinuation
.
The amendment clarifies that an entity measuring an equity security using the measurement alternative may change its measurement approach to a fair value method in accordance with Topic 820,
Fair Value Measurement
, through an irrevocable election that would apply to that security and all identical or similar investments of the same issuer. Once an entity makes this election, the entity should measure all future purchases of identical or similar investments of the same issuer using a fair value method in accordance with Topic 820.
|
|
|
|
|
·
|
Issue 2: Equity Securities without a Readily Determinable Fair Value— Adjustments
. The amendment clarifies that the adjustments made under the measurement alternative are intended to reflect the fair value of the security as of the date that the observable transaction for a similar security took place.
|
|
|
|
|
·
|
Issue 3: Forward Contracts and Purchased Options
. The amendment clarifies that remeasuring the entire value of forward contracts and purchased options is required when observable transactions occur on the underlying equity securities.
|
|
|
|
|
·
|
Issue 4: Presentation Requirements for Certain Fair Value Option Liabilities
. The amendment clarifies that when the fair value option is elected for a financial liability, the guidance in paragraph 825-10- 45-5 should be applied, regardless of whether the fair value option was elected under either Subtopic 815-15,
Derivatives and Hedging— Embedded Derivatives
, or 825-10,
Financial Instruments
— Overall.
|
|
|
|
|
·
|
Issue 5: Fair Value Option Liabilities Denominated in a Foreign Currency
.
The amendments clarify that for financial liabilities for which the fair value option is elected, the amount of change in fair value that relates to the instrument-specific credit risk should first be measured in the currency of denomination when presented separately from the total change in fair value of the financial liability. Then, both components of the change in the fair value of the liability should be remeasured into the functional currency of the reporting entity using end-of-period spot rates.
|
|
|
|
|
·
|
Issue 6: Transition Guidance for Equity Securities without a Readily Determinable Fair Value
. The amendment clarifies that the prospective transition approach for equity securities without a readily determinable fair value in the amendments in ASU No. 2016-01 is meant only for instances in which the measurement alternative is applied. An insurance entity subject to the guidance in Topic 944,
Financial Services— Insurance
, should apply a prospective transition method when applying the amendments related to equity securities without readily determinable fair values. An insurance entity should apply the selected prospective transition method consistently to the entity’s entire population of equity securities for which the measurement alternative is elected.
|
For public business entities, ASU 2018-03 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt ASU 2018-03 until the interim period beginning after June 15, 2018, and public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt these amendments before adopting the amendments in ASU 2016-01. For all other entities, the effective date is the same as the effective date in ASU 2016-01.
All entities may early adopt ASU 2018-03 for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they have adopted ASU 2016-01.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Guidance
(continued)
FASB Adds SEC Guidance to the Codification on the Tax Cuts and Jobs Act.
The FASB has issued Accounting Standards Update (ASU) No. 2018-05,
Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.
ASU 2018-05 amends certain SEC material in Topic 740 for the income tax accounting implications of the recently issued
Tax Cuts and Jobs Act
(Act).
ASU 2018-05 adds the following guidance, among other things, to the FASB Accounting Standards Codification™ regarding the Act:
|
·
|
Question 1:
If the accounting for certain income tax effects of the Act is not completed by the time a company issues its financial statements that include the reporting period in which the Act was enacted, what amounts should a company include in its financial statements for those income tax effects for which the accounting under Topic 740 is incomplete?
|
|
|
|
|
·
|
Answer 1:
In a company’s financial statements that include the reporting period in which the Act was enacted, a company must first reflect the income tax effects of the Act in which the accounting under Topic 740 is complete. These completed amounts would not be provisional amounts. The company would then also report provisional amounts for those specific income tax effects of the Act for which the accounting under Topic 740 will be incomplete but a reasonable estimate can be determined. For any specific income tax effects of the Act for which a reasonable estimate cannot be determined, the company would not report provisional amounts and would continue to apply Topic 740 based on the provisions of the tax laws that were in effect immediately prior to the Act being enacted. For those income tax effects for which a company was not able to determine a reasonable estimate (such that no related provisional amount was reported for the reporting period in which the Act was enacted), the company would report provisional amounts in the first reporting period in which a reasonable estimate can be determined.
|
|
|
|
|
·
|
Question 2:
If an entity accounts for certain income tax effects of the Act under a measurement period approach, what disclosures should be provided?
|
|
|
|
|
·
|
Answer 2:
The staff believes an entity should include financial statement disclosures to provide information about the material financial reporting impacts of the Act for which the accounting under Topic 740 is incomplete, including:
|
|
a)
|
Qualitative disclosures of the income tax effects of the Act for which the accounting is incomplete;
|
|
|
|
|
b)
|
Disclosures of items reported as provisional amounts;
|
|
|
|
|
c)
|
Disclosures of existing current or deferred tax amounts for which the income tax effects of the Act have not been completed;
|
|
|
|
|
d)
|
The reason why the initial accounting is incomplete;
|
|
|
|
|
e)
|
The additional information that is needed to be obtained, prepared, or analyzed in order to complete the accounting requirements under Topic 740;
|
|
|
|
|
f)
|
The nature and amount of any measurement period adjustments recognized during the reporting period;
|
|
|
|
|
g)
|
The effect of measurement period adjustments on the effective tax rate; and
|
|
|
|
|
h)
|
When the accounting for the income tax effects of the Act has been completed.
|
ASU 2018-05 is effective upon inclusion in the FASB Codification.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3. GOING CONCERN
As of March 31, 2018 and December 31, 2017, the Company has an accumulated deficit of $5,116,433 and $4,883,120 respectively, and its current liabilities exceed its current assets resulting in negative working capital of $9,359,206 and $9,029,045 respectively. In view of the matters described above, recoverability of a major portion of the recorded asset amounts and realization of the portion of current liabilities into revenue shown in the accompanying balance sheets are dependent upon continued operations of the Company, which in turn are dependent upon the Company’s ability to raise additional financing and to succeed in its future operations. The Company may need additional cash resources to operate during the upcoming 12 months, and the continuation of the Company may be dependent upon the continuing financial support of investors and/or stockholders of the Company. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing (i) additional funding which would enhance capital employed; and (ii) strategic partners which would increase revenue bases or reduce operation expenses. Management believes that the above actions will allow the Company to continue its operations throughout this fiscal year.
NOTE 4. OTHER RECEIVABLES
Other receivables consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Deposits
|
|
$
|
115,451
|
|
|
$
|
108,930
|
|
Prepaid expenses
|
|
|
1,529
|
|
|
|
82
|
|
Advance to employee
|
|
|
28,368
|
|
|
|
43,013
|
|
|
|
|
|
|
|
|
|
|
Less: Allowance for doubtful debts
|
|
|
(111,701
|
)
|
|
|
(105,967
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
33,647
|
|
|
$
|
46,058
|
|
NOTE 5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following:
|
|
March 31,
2018
|
|
|
December 31
,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Buildings
|
|
$
|
3,184,177
|
|
|
$
|
3,020,685
|
|
Machinery & equipment
|
|
|
604,463
|
|
|
|
573,427
|
|
Office equipment
|
|
|
72,781
|
|
|
|
68,495
|
|
Motor vehicles
|
|
|
106,230
|
|
|
|
100,775
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
3,967,651
|
|
|
|
3,763,382
|
|
Less: accumulated depreciation and impairment charges
|
|
|
(852,710
|
)
|
|
|
(750,221
|
)
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment, net
|
|
$
|
3,114,941
|
|
|
$
|
3,013,161
|
|
The depreciation expenses for the three months ended March 31, 2018 and 2017 were $61,167 and $59,651 respectively.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 6. INTANGIBLE ASSETS
Intangible assets consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Land use rights
|
|
$
|
1,281,614
|
|
|
$
|
1,205,819
|
|
Software system
|
|
|
1,398
|
|
|
|
1,326
|
|
Less – accumulated amortization
|
|
|
(358,114
|
)
|
|
|
(333,647
|
)
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
$
|
924,898
|
|
|
$
|
883,488
|
|
The amortization expenses of land use rights and software systems for the three months ended March 31, 2018 and 2017 were $6,331 and $5,971 respectively.
Future amortization of land use rights and software systems is as follows:
Years ending December 31,
|
|
Amount
|
|
2018
|
|
$
|
19,224
|
|
2019
|
|
|
25,632
|
|
2020
|
|
|
25,632
|
|
2021
|
|
|
25,632
|
|
2022
|
|
|
25,632
|
|
Thereafter
|
|
|
803,146
|
|
|
|
|
|
|
Total
|
|
$
|
924,898
|
|
NOTE 7. INVENTORIES
Inventories consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Raw material
|
|
$
|
112,210
|
|
|
$
|
110,841
|
|
Work in progress
|
|
|
-
|
|
|
|
7,044
|
|
Finished goods
|
|
|
135,847
|
|
|
|
139,988
|
|
Goods on consignment
|
|
|
34,725
|
|
|
|
20,213
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
282,782
|
|
|
$
|
278,086
|
|
NOTE 8. CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
Sales:
Customer
|
|
As at
Mar
ch
3
1
, 201
8
|
|
|
As at December 31, 201
7
|
|
A
|
|
$
|
22,628
|
|
|
|
43
|
%
|
|
$
|
33,022
|
|
|
|
24
|
%
|
B
|
|
|
21,707
|
|
|
|
41
|
%
|
|
|
32,255
|
|
|
|
24
|
%
|
C
|
|
|
-
|
|
|
|
-
|
%
|
|
|
26,632
|
|
|
|
20
|
%
|
D
|
|
|
-
|
|
|
|
-
|
%
|
|
|
14,914
|
|
|
|
11
|
%
|
E
|
|
|
-
|
|
|
|
-
|
%
|
|
|
13,316
|
|
|
|
10
|
%
|
Total
|
|
$
|
44,335
|
|
|
|
84
|
%
|
|
$
|
120,139
|
|
|
|
89
|
%
|
Purchases:
Supplier
|
|
As at
Mar
ch
3
1
, 201
8
|
|
|
As at December 31, 201
7
|
|
AA
|
|
$
|
4,640
|
|
|
|
50
|
%
|
|
$
|
41,882
|
|
|
|
49
|
%
|
BB
|
|
|
3,498
|
|
|
|
38
|
%
|
|
|
17,549
|
|
|
|
21
|
%
|
CC
|
|
|
725
|
|
|
|
8
|
%
|
|
|
11,849
|
|
|
|
14
|
%
|
DD
|
|
|
441
|
|
|
|
4
|
%
|
|
|
5,203
|
|
|
|
6
|
%
|
EE
|
|
|
-
|
|
|
|
-
|
%
|
|
|
2,444
|
|
|
|
3
|
%
|
Total
|
|
$
|
9,304
|
|
|
|
100
|
%
|
|
$
|
78,927
|
|
|
|
93
|
%
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 9. OTHER PAYABLES
Other payables consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Payables to employees
|
|
$
|
33,299
|
|
|
$
|
5,826
|
|
Miscellaneous
|
|
|
42,033
|
|
|
|
41,450
|
|
|
|
|
|
|
|
|
|
|
Total other payables
|
|
$
|
75,332
|
|
|
$
|
47,276
|
|
NOTE 10. LOSS PER SHARE
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants and stock options outstanding (using the treasury method). The following table sets forth the computation of basic and diluted net income per common share:
The following table sets forth the computation of basic and diluted net income per common share:
Period ended March 31,
|
|
March 31,
2018
|
|
|
March 31,
2017
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share
|
|
$
|
(233,313
|
)
|
|
$
|
(196,964
|
)
|
Weighted-average shares of common stock outstanding in computing net loss per common stock
|
|
|
|
|
|
|
|
|
Basic
|
|
|
160,790,000
|
|
|
|
100,000,000
|
|
Diluted
|
|
|
160,790,000
|
|
|
|
100,000,000
|
|
Basic loss per share of common stock
|
|
|
(0.15)cents
|
|
|
|
(0.20)cents
|
|
Diluted loss per share
|
|
|
(0.15)cents
|
|
|
|
(0.20)cents
|
|
NOTE 11. AMOUNT DUE FROM / TO RELATED PARTIES
The details for amount due to related parties were as follows:
Amount as at
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Holmsun Capital Limited (a) (b)
|
|
|
5,359,345
|
|
|
|
5,300,859
|
|
|
|
$
|
5,359,345
|
|
|
$
|
5,300,859
|
|
(a)
|
Common director, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited
|
(b)
|
Common shareholder, LEUNG Kwong Tak of operating subsidiary Lutu International Biotechnology Limited
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 12. INCOME TAXES
The Company and its subsidiaries have no operation in United States, Cayman Islands and British Virgin Islands, and are not subject to any domestic income tax. Therefore, no domestic income tax of United States, Cayman Islands and British Virgin Islands are paid in the quarter ended March 31, 2018 and year ended December 31, 2017.
Hong Kong Prolific Mineral Resources Holdings Limited was incorporated in Hong Kong and is subjected to Hong Kong profits tax rate of 16.5% for the three months ended March 31, 2018 and 2017. Income tax (reversal) expense amounted to $Nil for the quarter ended March 31, 2018 and year ended December 31, 2017.
A reconciliation of the provision for income taxes with amounts determined by applying the Hong Kong profit rate of 16.5% to income before income taxes is as follows:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Profit (Loss) before income tax
|
|
$
|
(90,457
|
)
|
|
$
|
(333,619
|
)
|
Temporary Difference
|
|
|
-
|
|
|
|
-
|
|
Permanent Difference
|
|
|
-
|
|
|
|
-
|
|
Taxable loss
|
|
$
|
(90,457
|
)
|
|
$
|
(333,619
|
)
|
Hong Kong Profits Tax rate
|
|
|
16.5
|
%
|
|
16.5
|
%
|
Current tax credit
|
|
$
|
14,925
|
|
|
$
|
55,047
|
|
Less: Valuation allowance
|
|
|
(14,925
|
)
|
|
|
(55,047
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended March 31, 2018 and year ended December 31, 2017.
Shanxi Green Biotechnology Industry Company Limited and Shenzhen Qianhai Lutu Supply Chain Management Company Limited were incorporated in the PRC and are subjected to income taxes under the current laws of the PRC. The EIT rate of PRC was 25% for the quarter ended March 31, 2018 and year ended December 31, 2017.
Profit (loss) before income tax of $(142,857) and $(1,272,919) for the quarter ended March 31, 2018 and year ended December 31, 2017 respectively, were attributed to operations in China. The income tax expenses consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Profit (Loss) before income tax
|
|
$
|
(142,857
|
)
|
|
$
|
(1,272,919
|
)
|
Temporary Difference
|
|
|
-
|
|
|
|
-
|
|
Permanent Difference
|
|
|
-
|
|
|
|
-
|
|
Taxable loss
|
|
$
|
(142,857
|
)
|
|
$
|
(1,272,919
|
)
|
China Enterprise Income Tax rate
|
|
|
25
|
%
|
|
|
25.0
|
%
|
Current tax credit
|
|
$
|
35,714
|
|
|
$
|
318,230
|
|
Less: Valuation allowance
|
|
|
(35,714
|
)
|
|
|
(318,230
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
No deferred tax has been provided as there are no material temporary differences arising during the quarter ended March 31, 2018 and year ended December 31, 2017.
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 13. SEGMENT INFORMATION
FASB Accounting Standard Codification Topic 280 (ASC 280) “Segment Reporting” establishes standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.
In the quarter ended March 31, 2018 and year ended December 31, 2017, the Company is regarded as a single operating segment, being engaged in the manufacturing of bio-fertilizer. This principal activity and geographical market are substantially based in China, accordingly, no operating or geographical segment information are presented.
NOTE 14. COMPREHENSIVE INCOME
Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of income and are recorded directly into a separate section of shareholders’ equity on the consolidated balance sheets. Comprehensive income and its components consist of the following:
Period and Year Ended
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Net loss
|
|
$
|
(233,313
|
)
|
|
$
|
(1,683,170
|
)
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
49,883
|
|
|
|
86,565
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(183,430
|
)
|
|
$
|
(1,596,605
|
)
|
NOTE 15. COMMITMENTS AND CONTINGENCIES
Operating Leases
Certain of our real properties are operated under lease agreements. Rental expense under operating leases was as follows:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Rent expense
|
|
$
|
5,083
|
|
|
$
|
17,986
|
|
|
|
|
|
|
|
|
|
|
Total rent expense, net
|
|
$
|
5,083
|
|
|
$
|
17,986
|
|
Annual minimum payments under operating leases are as follows:
Years Ended December 31,
|
|
Minimum Lease
Payment
|
|
|
|
|
|
2018
|
|
|
14,015
|
|
2019
|
|
|
10,122
|
|
|
|
|
|
|
Total
|
|
$
|
24,137
|
|
GREEN VISION BIOTECHNOLOGY CORP.
AND SUBSIDIARIES
NOTES TO
UNAUDITED
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 16. RELATED PARTY TRANSACTIONS
The Board must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.
The following table listed the transaction with related party for the quarter ended March 31, 2018 and 2017:
|
|
March 31,
2018
|
|
|
Dec 31,
2017
|
|
Consultancy fee paid to KM International Property Consultants Limited
|
|
$
|
12,649
|
|
|
$
|
62,115
|
|
|
|
|
|
|
|
|
|
|
Consultancy fee, net
|
|
$
|
12,649
|
|
|
$
|
62,115
|
|
Mr. Ma Wai Kin, Chief Operation Officer and Director of the Company, has a 100% ownership interest in KM International Property Consultants Limited (“KM”). The main transaction between the Company and KM is the consulting service regarding the marketing activities of GVBT provided by KM.
NOTE 17. LEGAL PROCEEDINGS
Civil case with Mr. Yao Gui Mu
Yao Gui Mu (“the Plaintiff”), former operation manager of the subsidiary in Shanxi, Shanxi Green Biotechnology Industry Company Limited (“the Shanxi Subsidiary”), brought a lawsuit against the Shanxi Subsidiary, in the District People’s Court of Jin Zhong City, Yu Ci District. The subject dispute of the lawsuit concerns an unsettled current account balance of $141,550 (RMB900,000) which was claimed to be a loan advanced to the Company by the Plaintiff. Together with the subject dispute, the Plaintiff also claimed the relevant interest was RMB513,100 calculated from November 6, 2012 to August 15, 2017 with 1% monthly interest rate. The Company’s PRC lawyer had submitted a Statement of Defense on November 23, 2017 to The District People’s Court of Yuci District, Jin Zhong City (“the Court”). A court hearing was held on December 5, 2017. Upon the request by the Court, Shanxi Subsidiary provided supplemental evidence to the Court on January 16, 2018. Shanxi Subsidiary is awaiting notice for a second hearing from the Court.
For the relevant interest of RMB513,100 claimed by the Plaintiff, there is no evidence showing that it is more likely not that the Company will be liable for the said interest. Hence, no provision was made as at March 31, 2018.
Criminal investigation regarding a potential fraud with one of its former customers
Management of the Company suspects that there was a potential fraud committed in the sales made to one of its previous customers. Management reported to the local police of Yuci District, Jinzhong City, Shanxi Province, China about the said potential fraud. The Bureau of Public Security of Yuci District officially undertook the case and initiated investigation procedures on September 11, 2017. Management has been informed that the case is currently under criminal investigation by relevant authorities. As the receivable amount regarding the sales to aforementioned customer was long outstanding and it is uncertain that the amount can be settled, the Company has made a provision of doubtful debt regarding the amount receivables of $748,907 (RMB4,703,640) as at March 31, 2018.[THIS DOESN’T MATCH WHAT WAS STATED IN Note 2]
Criminal investigation against one of GVBT’s former employee
Management of the Company suspects that one of its former senior staff may have committed the offence of “unlawfully taking possession of company property through taking advantage of his position” under his employment with the Company. Management reported to the local police of Yuci District, Jinzhong City, Shanxi Province, China about the said potential fraud on October 10, 2017. The Bureau of Public Security of Yuci District officially undertook its case and initiated investigation procedures on 28 January 2018. Management has been informed that the case is currently under criminal investigation by relevant authorities in China.
NOTE 18. SUBSEQUENT EVENT
Management has evaluated all activities and concluded that there was no other subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements". These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.