(STATED IN U.S. DOLLARS)
*: Common stock retroactively adjusted for 1 for 100 reverse stock split, effective February 17, 2017
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Yinfu Gold Corporation (the “Company”) is a Wyoming corporation incorporated on September 1, 2005 under the name Ace Lock and Security, Inc. with a fiscal year end of March 31. On March 5, 2007, the Company filed a Certificate of Amendment with the Wyoming Secretary of State to change the name to Element92 Resources Corp. and increased the authorized capital to 1,000,000,000 common shares. On August 16, 2010 the Company filed an amendment with the State of Wyoming changing its name from Element92 resources Corp. to Yinfu Gold Corporation and on November 18, 2010, the Company received a notification from the Financial Industry Regulatory Authority (“FINRA”) that the Company’s change of name to Yinfu Gold Corporation was posted as effective with FINRA. The Company was established as an exploration stage company engaged in the search for commercially viable minerals.
The Company no longer pursues opportunities related to the exploration of minerals. The name change signified that the Company has commenced working toward a major change in our business plan and business model.
Effective November 20, 2014, the Company executed a Sale and Purchase Agreement (the “Agreement”) to acquire 100% of the shares and assets of China Enterprise Overseas Investment & Finance Group Limited (“CEI”), a British Virgin Islands corporation. Pursuant to the Agreement, the Company has agreed to issue 800 million restricted common shares of the Company to the owners of CEI.
Pursuant to the Agreement, on or before January 1, 2015, CEI was to deliver to the Company, duly authorized, properly and fully executed documents in English, evidencing and confirming the sale of 100% of the shares of CEI and its assets, specifically detailing the assets and an asset valuation by a third-party valuator. The valuation report was received by the Company on January 28, 2015.
Additionally, the Agreement stated that both parties agreed that all shares issued, pursuant to the terms and conditions of the agreement, were to be issued as soon as practicable following the signing of the agreement, but all shares so issued were to be held in escrow until all terms and conditions are met.
The various terms and conditions of the Agreement were fulfilled on January 28, 2015, therefore, the share certificates representing the shares have been issued in the names of the CEI shareholders and the Agreement between the Company and CEI was closed on January 28, 2015.
On April 11, 2017, the Company acquired Yinfu Gold International Holdings Limited (“HK”), a company incorporated in Hong Kong, and HK’s subsdiary, Yinfu International Holdings Limited (“WOFE”), a wholly owned foreign enterprise incorporated in the People’s Republic of China. The acquired entities are owned by the Company’s management; therefore, the transaction has been accounted for as a business combination under common control in accordance to ASC-805-30-5, in which the assets and liabilities of HK and WOFE have been presented at their carrying values at the date of the transaction.
The accompanying comparative financial statements have been retroactively restated to combine the financial data of previously separate entities with those of the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States and presented in US dollars.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
Principles of Consolidation
The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation.
Name of Subsidiary
|
State or Jurisdiction of
Organization of Entity
|
Attributable equity interest
|
Yinfu Group Overseas Investment & Finance Limited (“BVI”)*
|
BVI
|
100%
|
Element Resources International Limited (“ERI”)**
|
Hong Kong
|
100%
|
Yinfu Group International Holdings Limited (“HK”)
|
Hong Kong
|
100%
|
Yinfu International Holdings Limited (“WOFE”)
|
P.R.C.
|
100%
|
*Previously known as China Enterprise Overseas Investment & Finance Group Limited (“CEI”).
**Disposed during the year ended March 31, 2018.
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.
Discontinued Operations
The Company follows ASC 205-20, ”Discontinued Operations,” to report for disposed or discontinued operations.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Foreign Currency Translation and Re-measurement
In accordance with ASC 830, “Foreign Currency Matters”, the Company’s foreign operations whose functional currency is not the U.S. dollar, the assets and liabilities are translated into U.S. dollars at current exchange rates. Resulting translation adjustments are reflected as other comprehensive income (loss) in stockholders’ equity. Revenue and expenses are translated at average exchange rates for the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are charged to operations as incurred. The Company had foreign currency translations loss of $12,558 and $Nil for the years ended March 31, 2018 and 2017 respectively.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
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 related party payables that it will likely incur in the near future. 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’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.
Financial Instruments
The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2018. The carrying values of our financial instruments, including, cash and cash equivalents; accounts payable and accrued expenses; and loans and notes payable approximate their fair values due to the short-term maturities of these financial instruments.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Income Taxes, Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. For the years ended March 31, 2018 and 2017, since the Company has not generated any income, no provision was made for income taxes. Further, no deferred tax assets or liabilities were recognized as at March 31, 2018 and 2017.
Net Loss Per Share of Common Stock
The Company has adopted ASC Topic 260,
“Earnings per Share,”
(“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The following table sets forth the computation of basic earnings per share, for the years ended March 31, 2018 and 2017:
|
|
Year Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Net loss – continuing operations
|
|
$
|
(349,269
|
)
|
|
$
|
(120,032
|
)
|
Net loss – discontinued operations
|
|
$
|
-
|
|
|
$
|
(150,001
|
)
|
Net loss
|
|
$
|
(349,269
|
)
|
|
$
|
(270,033
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic and diluted
|
|
|
9,917,592
|
|
|
|
9,917,592
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share – continuing operations
|
|
$
|
(0.04
|
)
|
|
$
|
(0.01
|
)
|
Basic and diluted net loss per common share – discontinued operations
|
|
$
|
-
|
|
|
$
|
(0.02
|
)
|
Basic and diluted net loss per common share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
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. There were no commitments or contingencies as of March 31, 2018 and 2017.
Advertising Costs
The Company follows ASC 720, “Advertising Costs,” and expenses costs as incurred. No advertising costs were incurred for the years ended March 31, 2018 and 2017.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. See note 6.
Revenue Recognition
The Company will recognize revenue from the sale of products and services in accordance with ASC 605,
“Revenue Recognition.”
However, the Company will recognize revenue only when all of the following criteria have been met:
|
i)
|
Persuasive evidence for an agreement exists;
|
|
ii)
|
Service has been provided;
|
|
iii)
|
The fee is fixed or determinable; and,
|
|
iv)
|
Collection is reasonably assured.
|
Recent Accounting Pronouncements
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. Effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for:
|
·
|
Public business entities for reporting periods for which financial statements have not yet been issued.
|
|
·
|
All other entities for reporting periods for which financial statements have not yet been made available for issuance.
|
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.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
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.
Management has considered all other 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 established an ongoing source of revenues sufficient 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. As of March 31, 2018, the Company had an accumulated deficit of $1,171,294 and net loss of $349,269 and net cash used in operations of $276,517 for the year ended March 31, 2018. Losses have principally occurred as a result of the substantial resources required for the operating of the two new wholly owned subsidiaries. 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 – STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
Effective December 8, 2014, the Company increased the authorized capital from 1,000,000,000 common shares to 3,000,000,000 common shares. 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.
On February 6, 2015, the Company issued 1.2 billion restricted common shares of the Company to the owners of EFI for acquiring 100% ownership of EFI. The 1.2 billion restricted common shares were held in escrow, and were cancelled on September 22, 2015.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
On November 9, 2016, the Company filed a Schedule 14C with Securities and Exchange Commission for the 1 for 100 Reverse Stock Split. On February 16, 2017, the Company received a notification from the Financial Industry Regulatory Authority (“FINRA”) that the Company’s application for reverse stock split was approved by FIRNA and the market effective date was February 17, 2017. The post-split total shares outstanding is 9,917,592 shares with the fractional shares rounded down to the next whole share.
As of March 31, 2018 and March 31, 2017, the Company has 9,917,592 shares of common stock issued and outstanding.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
NOTE 5 – SHORT-TERM LOAN
Ms. Wu, Fengqun is the lender of the loan. The fixed interest is $100 per annum. The term of borrowing is 1 year. The interest and the principal of the loan is to be repaid on June 30, 2018. The loan is not secured by any collateral. As of March 31, 2018, the short-term loan was $177,458.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the year ended March 31, 2018, Mr. Jiang, Libin, the President and a director of the Company, had advanced the Company $193,615 for operating expenses. These advances have been formalized by non-interest bearing demand notes.
During the year ended March 31, 2017, Mr. Jiang, Libin had advanced the Company $87,875 for operating expenses. These advances have been formalized by non-interest bearing demand notes.
As of March 31, 2018, the Company owed $487,358 and $407,662 to Mr. Tsap, Wai Ping, the former President of the Company (the “Former President”) and Mr. Jiang, Libin respectively.
As of March 31, 2017, the Company owed $487,358 and $214,047 to the Former President and Mr. Jiang, Libin respectively.
During the year ended March 31, 2018, no shares were issued to related parties.
NOTE 7–DISCONTINUED OPERATIONS
The Company originally intended to be involved in the exploration of minerals in the People’s Republic of China (the “PRC”). Based on management’s analysis of the current operations, expected growth, and opportunities in the sector, during the year ended March 31, 2015, the Company has determined to discontinue operations related to the Company’s subsidiary Element Resources International Limited (“ERI”), based in Hong Kong.
Based on the analysis of the management, the current assets from discontinued operations are deemed to be unrecoverable. Thus, management decided to write off the current assets from discontinued operations, i.e. $150,001 for the year ended March 31, 2017.
Yinfu Gold Corporation
Notes to Audited Consolidated Financial Statements
(Stated in U.S. Dollars)
During the year ended March 31, 2018, the Company disposed ERI. No gain or loss was recognized as a result of the disposal.
The following presents the financial information of the discontinued subsidiary of the Company, Element Resources International Limited.
|
|
As of
|
|
|
As of
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
Total liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
For the Year Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
General and administrative
|
|
|
-
|
|
|
|
150,001
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
-
|
|
|
$
|
(150,001
|
)
|
|
|
For the Year Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
-
|
|
|
$
|
-
|
|
Net cash provided by investing activities
|
|
$
|
-
|
|
|
$
|
-
|
|
Net cash provided by financing activities
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE 7 – CORRECTION OF ERROR
The Company has discovered errors in recording certain recapitalization transaction during the year ended March 31, 2015, in which a negative net capital was recognized as a result of the transaction with CEI (note 1). The Company reevaluated the entry and believe that the capital account should be adjusted to accurately reflect the Company’s capitalization. As a result, the company reclassified the presentation of the capital accounts by recording the capital deficiency as accumulated deficit. The Company has rectified this error and, since the correction only involves a reclassification within the capital accounts, there was no impact on the Company’s financial position and result of operations. The detail of the adjustment is reflected in the statement of changes in shareholders’ deficiency.
NOTE 8 - 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.