Notes to the Consolidated Financial Statements
April 30, 2018
(
Unaudited
)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Resort Savers, Inc. (“we,” “us,” “our,” the “Company,” “Resort Savers” or “RSSV”) is a Nevada corporation incorporated on June 25, 2012. It is based in Shenzhen, the People’s Republic of China (the “PRC”). The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is January 31.
The Company makes investments and acquisitions into sound, transparent markets and industries throughout the world. The Company has invested in a company principally engaged in the development and production of beverages, investment in agricultural business and import and export of products in the food and beverage industry, and a company principally engaged in the trading of oil, gas and lubricant.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company prepares its financial statements in accordance with rules and regulations of the SEC and generally accepted accounting principles (“GAAP”) in the United States of America. The accompanying interim financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X and presented in US dollars.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K filed with the SEC on May 16, 2018.
Principles of Consolidation
At April 30, 2018, the principal subsidiaries of the Company were listed as follows:
Entity Name
|
|
Acquisition
Date
|
|
Ownership
|
|
|
Jurisdiction
|
|
Investments
Held By
|
|
Nature of
Operation
|
|
Fiscal
Year
|
|
Xing Rui International Investment Holding Group Co., Ltd. (“Xing Rui”)
|
|
December 22,
2014
|
|
|
100
|
%
|
|
Seychelles
|
|
Resort Savers
|
|
Holding
Company
|
|
January 31
|
|
Xing Rui International Investment Group Ltd. (“Xing Rui HK”)
|
|
December 22,
2014
|
|
|
100
|
%
|
|
Hong Kong,
the PRC
|
|
Xing Rui
|
|
Holding
Company
|
|
January 31
|
|
Huaxin Changrong (Shenzhen) Technology Service Co., Ltd. (“Huaxin”) *
|
|
August 27,
2015
|
|
|
100
|
%
|
|
the PRC
|
|
Xing Rui
|
|
Holding
Company
|
|
December 31
|
|
Shenzhen Amuli Industrial Development Company Limited (“Amuli”) *
|
|
October 1,
2015
|
|
|
60
|
%
|
|
the PRC
|
|
Huaxin
|
|
Beverage
Producer
|
|
December 31
|
|
Beijing Yandong Tieshan Oil Products Co., Ltd. (“Tieshan Oil”) *
|
|
January 29,
2016
|
|
|
51
|
%
|
|
the PRC
|
|
Huaxin
|
|
Trading of oil
products
|
|
December 31
|
|
___________________
*
|
The English names used are translated only.
|
These consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated.
Use of Estimates
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. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to U.S. dollar in accordance with ASC 830, “
Foreign Currency Matters
”.
The Company’s functional currency and reporting currency is the U.S. dollar, subsidiaries’ functional currency is the Chinese Yuan Renminbi (“CNY”) and Hong Kong Dollar (“HKD”).
The Company’s subsidiaries, whose records are not maintained in that company’s functional currency, re-measure their records into their functional currency as follows:
|
·
|
Monetary assets and liabilities at exchange rates in effect at the end of each period
|
|
|
|
|
·
|
Nonmonetary assets and liabilities at historical rates
|
|
|
|
|
·
|
Revenue and expense items at the average rate of exchange prevailing during the period
|
Gains and losses from these re-measurements were not significant and have been included in the Company’s results of operations.
The Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into U.S. dollar as follows:
|
·
|
Assets and liabilities at the rate of exchange in effect at the balance sheet date
|
|
|
|
|
·
|
Equities at historical rate
|
|
|
|
|
·
|
Revenue and expense items at the average rate of exchange prevailing during the period
|
Adjustments arising from such translations are included in accumulated other comprehensive income in shareholders’ equity.
|
|
April 30,
|
|
|
January 31,
|
|
|
|
2018
|
|
|
2018
|
|
|
|
|
|
|
|
|
Spot RMB: USD exchange rate
|
|
$
|
0.1579
|
|
|
$
|
0.1590
|
|
Average RMB: USD exchange rate
|
|
$
|
0.1584
|
|
|
$
|
0.1452-0.1528
|
|
Spot HKD: USD exchange rate
|
|
$
|
0.129
|
|
|
$
|
0.129
|
|
Average HKD: USD exchange rate
|
|
$
|
0.129
|
|
|
$
|
0.129
|
|
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company also review its accounts receivable on a timely manner. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Tieshan Oil
During the three months ended April 30, 2018, one customer, who is a related party, accounted for 100% of revenues of Tieshan Oil. During the three months ended April 30, 2017, one customer accounted for approximately 100% of revenues of Tieshan Oil.
As of April 30, 2018, three customers accounted for approximately 100% of accounts receivable. As of January 31, 2018, two customers accounted for approximately 99% of accounts receivable. There were no significant changes of such concentrations of credit risk between April 30, 2018 and January 31, 2018.
Financial Instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, other receivable, prepaid expenses and deposits, amount due from related parties, accounts payable and accrued liabilities, short-term loan, deferred revenue and due to stockholders. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Revenue Recognition
The Company will recognize revenue from the sale of products and services in accordance with ASC 605, “Revenue Recognition.” Revenue will be recognized only when all of the following criteria are met: persuasive evidence for an agreement exists, delivery has occurred or services have been provided, the price or fee is fixed or determinable, and collection is reasonably assured.
Commitments and Contingencies
The Company follows ASC 450-20, "
Loss Contingencies,"
to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet had sufficient revenues to cover its operating cost, and requires additional capital to commence its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan to obtain such resources for the Company include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – ACCOUNTS RECEIVABLE
The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of April 30, 2018 and January 31, 2018. No bad debts were written off for the three months ended April 30, 2018 and 2017. The Company’s accounts receivable consists of only trade receivables from customers which are unrelated to the Company. Trade receivables from customers which are related to the Company are categorized in amount due from related parties (Note 14). As at April 30, 2018 and January 31, 2018, the Company had accounts receivable of $25,504,406 and $22,820,925, respectively.
Aging analysis of accounts receivable is as follows:
|
|
April 30,
|
|
|
January 31,
|
|
|
|
2018
|
|
|
2018
|
|
0 - 30 days
|
|
$
|
2,841,361
|
|
|
$
|
16,761,646
|
|
90 - 120 days
|
|
|
16,645,685
|
|
|
|
-
|
|
Over 1 year
|
|
|
6,017,360
|
|
|
|
6,059,279
|
|
|
|
$
|
25,504,406
|
|
|
$
|
22,820,925
|
|
NOTE 5 – EQUIPMENT
Property and equipment at April 30, 2018 and January 31, 2018 consist of the following:
|
|
April 30,
|
|
|
January 31,
|
|
|
|
2018
|
|
|
2018
|
|
Cost:
|
|
|
|
|
|
|
Machinery
|
|
$
|
257,394
|
|
|
$
|
259,241
|
|
Less: accumulated depreciation
|
|
|
(249,325
|
)
|
|
|
(248,661
|
)
|
Equipment, net
|
|
$
|
8,069
|
|
|
$
|
10,580
|
|
During the three months ended April 30, 2018 and January 31, 2018, the Company recorded depreciation of $2,445 and $24,892, respectively.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable and accrued liabilities consist of the followings:
|
|
April 30,
|
|
|
January 31,
|
|
|
|
2018
|
|
|
2018
|
|
Accounts payable (to third party suppliers)
|
|
$
|
1,158,356
|
|
|
$
|
1,128,965
|
|
Accrued expenses (to third party service providers)
|
|
|
83,842
|
|
|
|
100,000
|
|
Payroll payable
|
|
|
474
|
|
|
|
477
|
|
|
|
$
|
1,242,672
|
|
|
$
|
1,229,442
|
|
NOTE 7 – SHORT-TERM LOAN
There are no provisions in the Company’s bank borrowings that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business.
During the year ended January 31, 2017, the Company borrowed a loan from a money provider. The amount is denominated in Renminbi of RMB7,200,000. During the year ended January 31, 2017, the Company repaid RMB 2,200,000. The interest rate is 0.5% per month. The loan is secured by 48.83% shares of Tieshan Oil held by Mr. Yang Baojin (“Mr. Yang”). The Loan was due on October 7, 2017 and the outstanding amount of $789,500 (RMB 5,000,000) is currently in default. The Company believes that the carrying value of the equity interest in Tieshan Oil, which is a financial instrument, and which has been pledged by Mr. Yang as collateral for the loan is sufficient to underlie the loan, and the Company has not been requested to add any additional credit enhancements.
During the three months ended April 30, 2018, the Company borrowed a loan from a money provider. The Amount is RMB 1,000,000 and the loan bears 2% interest per month and due on May 6, 2018.
During the year ended April 30, 2018 and 2017, the Company borrowed $158,400 (RMB1,000,000) and incurred interest of $11,880 and $0, respectively. On April 30, 2018 and January 31, 2018, the Company had a short-term loan balance of $947,400 and $795,000, respectively.
NOTE 8 - STOCKHOLDERS’ EQUITY
The capitalization of the Company consists of the following classes of capital stock as of January 31, 2018:
Preferred Stock
The Company has authorized 15,000,000 shares of preferred stock with a par value of $0.0001 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. No shares of preferred stock have been issued.
Common Stock
On October 9, 2015, the authorized number of shares of the Company’s common stock was increased from 100,000,000 shares to 1,000,000,000 shares.
The Company now has authorized 1,000,000,000 shares of common stock with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
During the three months ended April 30, 2018, there were no issuance of common stock.
As at April 30, 2018 and January 31, 2018, the Company had 74,976,241 common shares issued and outstanding.
The Company has no stock option plan, warrants or other dilutive securities.
Additional Paid-In Capital
During the three months ended April 30, 2018, related parties contributed additional paid-in capital in the amount of $40,800, to fund operating expenses.
NOTE 9 – RELATED PARTY TRANSACTIONS
Revenue, receivable and prepaid expenses
During the three months ended April 30, 2018 and 2017, the Company generated revenue from one related party of $2,457,205 and one related party of $13,847,006, respectively, which were related companies under common control with the Company.
At April 30, 2018 and January 31, 2018, the Company had amount due from related parties of $0 and $1,567,238, respectively. As of January 31, 2018, it consists of prepaid expenses of $1,567,238. All the related companies were customers of the Company and were under common control with the Company.
Accounts payable, other liabilities and loans
At April 30, 2018 and January 31, 2018, the Company had accounts payable and accrued liabilities of $18,516,996 and $17,514,842 to three and four related companies under common control with the Company, respectively.
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.
During the three months ended April 30, 2018 and 2017, the Company received $40,800 and $0 advances from various directors and shareholders, respectively. At April 30, 2018 and January 31, 2018, the Company owed $12,695 and $12,695 to a director of the Company, $5,203 and $5,203 to a director of Xing Rui HK, $19,234 and $19,368 to directors of Huaxin, $140,949 and $141,931 to directors of Amuli and $50,595 and $50,948 to shareholders of Amuli, for vendor payments made by those directors.
The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.
As of April 30, 2018 and January 31, 2018, Due to related parties consist of the follows;
|
|
April 30,
|
|
|
January 31,
|
|
|
|
2018
|
|
|
2018
|
|
Accounts payable
|
|
$
|
18,507,018
|
|
|
$
|
17,490,485
|
|
Accrued liabilities
|
|
|
9,978
|
|
|
|
24,357
|
|
Loan from related parties
|
|
|
228,676
|
|
|
|
230,145
|
|
|
|
$
|
18,745,672
|
|
|
$
|
17,744,987
|
|
Employment
The Company does not have employment contracts with its key employees, including the controlling shareholders who are officers of the Company.
Contribution
During the three months ended April 30, 2018 and 2017, related parties, who are shareholders of the Company, forgave debt, in the amount of $40,800 and $833, respectively for payments made on behalf of the Company for operating expenses. The amount has been recognized as a contribution to capital.
NOTE 10 – COMMITMENTS AND CONTINGENCIES
On August 23, 2016, Amuli entered into a lease agreement for office space in Shenzhen city, Guangdong Province, P.R.C. commencing on August 23, 2016 for a three-year lease term. The monthly rental expense is approximately $6,762 (RMB 42,526).
As of January 31, 2018, the outstanding lease commitments are:
Year 1
|
|
$
|
81,140
|
|
Year 2
|
|
|
47,332
|
|
|
|
$
|
128,472
|
|
NOTE 11 - SEGMENTED INFORMATION
At April 30, 2018, the Company operates in two industry segments, health beverage and oil and gas, and one geographic segment, China, where majority current assets and equipment are located.
Segment assets and liabilities as of April 30, 2018 and January 31, 2018 were as follows:
April 30, 2018
|
|
Holding Company
|
|
|
Health beverage
|
|
|
Oil and gas
|
|
|
Total Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
975
|
|
|
$
|
96,025
|
|
|
$
|
25,548,821
|
|
|
$
|
25,645,821
|
|
Non-current assets
|
|
|
-
|
|
|
|
-
|
|
|
|
1,987,856
|
|
|
|
1,987,856
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
154,336
|
|
|
|
546,321
|
|
|
|
20,570,489
|
|
|
|
21,271,146
|
|
Net assets (liabilities)
|
|
$
|
(153,361
|
)
|
|
$
|
(450,296
|
)
|
|
$
|
6,966,188
|
|
|
$
|
6,362,531
|
|
January 31, 2018
|
|
Holding Company
|
|
|
Health beverage
|
|
|
Oil and gas
|
|
|
Total Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
5,192
|
|
|
$
|
98,151
|
|
|
$
|
24,411,842
|
|
|
$
|
24,515,185
|
|
Non-current assets
|
|
|
-
|
|
|
|
-
|
|
|
|
1,990,367
|
|
|
|
1,990,367
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
145,316
|
|
|
|
531,184
|
|
|
|
19,412,315
|
|
|
|
20,088,815
|
|
Net assets (liabilities)
|
|
$
|
(140,124
|
)
|
|
$
|
(433,033
|
)
|
|
$
|
6,989,894
|
|
|
$
|
6,416,737
|
|
Segment revenue and net loss for the three months ended April 30, 2018 and January 31, 2018 were as follows:
Three Months Ended April 30, 2018
|
|
Holding
Company
|
|
|
Health
beverage
|
|
|
Oil
and gas
|
|
|
Total
Consolidated
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,457,205
|
|
|
$
|
2,457,205
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,420,516
|
)
|
|
|
(2,420,516
|
)
|
Operating expenses
|
|
|
(54,173
|
)
|
|
|
(20,324
|
)
|
|
|
(11,576
|
)
|
|
|
(86,073
|
)
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,880
|
)
|
|
|
(11,880
|
)
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,242
|
)
|
|
|
(2,242
|
)
|
Net income (loss)
|
|
$
|
(54,173
|
)
|
|
$
|
(20,324
|
)
|
|
$
|
10,991
|
|
|
$
|
(63,506
|
)
|
Three Months Ended April 30, 2017
|
|
Holding Company
|
|
|
Health beverage
|
|
|
Oil and gas
|
|
|
Total
Consolidated
|
|
Revenue
|
|
$
|
2,614
|
|
|
$
|
-
|
|
|
$
|
13,847,005
|
|
|
$
|
13,849,619
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,855,902
|
)
|
|
|
(13,855,902
|
)
|
Operating expenses
|
|
|
(5,500
|
)
|
|
|
(24,501
|
)
|
|
|
(57,128
|
)
|
|
|
(87,129
|
)
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(2,886
|
)
|
|
$
|
(24,501
|
)
|
|
$
|
(66,025
|
)
|
|
$
|
(93,412
|
)
|
NOTE 12 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.
On May 21, 2018, the Company entered into a Convertible Note Purchase Agreement (the “NPA”) with NYJJ (Hong Kong) Limited, a Hong Kong corporation (“NYJJ”). Pursuant to the NPA, NYJJ loaned the Company $100,000, and the Company issued to NYJJ a note convertible into Common Stock of the company at the price of one-third of a cent (1/3 of $0.01) (the “Note”). Subsequent to the closing of the NPA and the issuance of the Note, NYJJ converted the Note into 30,000,000 shares of Common Stock of the Company, which represents approximately 5.76% of the Company’s outstanding Common Stock.
Acquisition of Beijing Yandong Tieshan Oil Products Co., Ltd
On May 16, 2018, the Company entered into a Share Exchange Agreement (the “Tieshan Oil Agreement”) with Mr. Yang, president and owner of 49% of Tieshan Oil. Pursuant to the Tieshan Oil Agreement and subject to the terms and conditions contained therein, the Company, through Huaxin, agreed to acquire 49% of Tieshan Oil held by Mr. Yang, in exchange for the issuance to Mr. Yang of 16,000,000 shares of the Company’s common stock. The acquisition closed simultaneously with the execution of the Agreement.
Acquisition of Admall Sdn. Bhd.
On May 16, 2018, the Company closed the acquisition of Admall Sdn. Bhd., a limited liability company incorporated in Malaysia (“Admall”) by way of share exchange (the “Admall Acquisition”). The Company effected the Admall Acquisition pursuant to the terms of that certain Share Exchange Agreement, dated February 9, 2018, by and between the Company, Admall, and Mr. Boon Jin “Patrick” Tan, an individual who prior to the closing of the Admall Acquisition held 100% of the outstanding equity interests of Admall.
At the closing of the Admall Acquisition, the Company acquired 100% of the outstanding equity interests of Admall from Mr. Tan, and the Company issued 400,000,000 shares of Common Stock to Mr. Tan, which at the time of closing represented approximately 81.47% of the Company’s outstanding Common Stock (after taking account of shares issued to Mr. Yang in connection with the Tieshan Oil Acquisition). As a result, Mr. Tan became a stockholder of the Company and Admall became a wholly-owned subsidiary of the Company.