Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 000-21477
JV GROUP, INC.
(EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)
DELAWARE 27-0514566
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
7609 RALSTON ROAD
ARVADA, COLORADO 80002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 422-8127
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.01 PAR VALUE
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [_] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [_]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [_] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
The aggregate market value of the voting common stock held by non-affiliates of
the Registrant on September 26, 2014 was approximately $8,730 based upon the
reported closing sale price of such shares on the Over the Counter Bulletin
Board for that date.
As of September 26, 2014, there were 98,879,655 shares outstanding of which
582,013 shares were held by non-affiliates.
2
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
Part I
Item 1. Business 4
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 12
Item 2. Description of Properties 12
Item 3. Legal Proceedings 12
Item 4. Mine Safety Disclosures 12
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer 13
Purchases of Equity Securities
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition 14
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 18
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on Accounting and 18
Financial Disclosure
Item 9A. Controls and Procedures 18
Item 9B. Other Information 20
Part III
Item 10. Directors, Executive Officers and Corporate Governance 20
Item 11 Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and Management and 23
Item 13. Certain Relationships and Related Transactions and Director Independence 24
Item 14. Principal Accountant Fees and Services 25
Item 15. Exhibits and Financial Statement Schedules 25
Signatures 40
3
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in this
Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although JV Group, Inc. ("JV Group" or the "Company," which may also be
referred to as "we," "us," or "our") believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations: there can be no assurance that actual results will not differ
materially from our expectations. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those anticipated. Cautionary statements regarding the risks, uncertainties
and other factors associated with these forward-looking statements are discussed
under "Risk Factors" in this Form 10-K. You are urged to carefully consider
these factors, as well as other information contained in this Form 10-K and in
our other periodic reports and documents filed with the SEC.
PART I
ITEM 1. BUSINESS
Company History and Overview
ASPI, Inc. ("APSI") was formed in Delaware in September 29, 2008. On April 25,
2012, ASPI amended its Articles of Incorporation with the State of Delaware to
change its name from ASPI, Inc. to JV Group, Inc. ("JV Group") and to increase
its authorized capital from One Hundred Million (100,000,000) common shares to
One Billion (1,000,000,000) common shares.
We have two wholly-owned subsidiaries, Mega Action Limited ("Mega"), a British
Virgin Island Corporation, and Prestige Prime Office, Limited ("Prestige"), a
Hong Kong Special Administrative Region Corporation (JV Group and its
subsidiaries are collectively referred to as the "Company," "we," "our," or
"us.")
JV Group operates primarily as an office service provider, in Hong Kong, through
its wholly-owned subsidiary, Prestige. Prestige provides office space that is
fully furnished, equipped and staffed, located at premier addresses in central
business districts with convenient access to airports and public transportation.
Services include advanced communications system, network access, updated IT and
administrative support, as well as a full menu of business services and
facilities, such as meeting rooms and video conferencing.
Prestige Prime Office, Ltd. Acquisition
On June 30, 2010, ASPI entered into an Acquisition Agreement with Prestige Prime
Office, Ltd. Under the Agreement, ASPI acquired all of the issued and
outstanding common stock of Prestige Prime Office, LTD. ("Prestige"), a Hong
Kong Special Administrative Region Corporation. As a result of the acquisition,
Prestige became a wholly-owned subsidiary of ASPI.
In exchange for $50,000 cash and 60,000,000 restricted shares of the common
stock of ASPI, ASPI acquired 100% all of the 4,000,000 issued and outstanding
shares of the common stock of Prestige.
Prestige had one sole shareholder, Mr. Yeung Cheuk Hung. As a result of the
acquisition, Mr. Yeung became the majority shareholder of the Company holding
approximately 81.21% of the issued and outstanding common stock of the Company
at the time of the acquisition.
4
Mega Action Limited
During the year ended June 30, 2010, the Company incorporated a subsidiary, Mega
Action Limited, a BVI corporation (the "Subsidiary"). Two of the Company's
directors, Yuen Ling Look and Siu Lun Tong, act as directors of Mega Action
Limited.
In consideration of $1.00, Mega Action Limited issued the Company one share of
Mega Action Limited ("Mega"). There is only one share of Mega issued and
outstanding. Mega is a wholly owned Subsidiary of the Company. Mega operates as
a management division of the Company. Mega's operational activities are both
minimal and solely administrative in nature. Mega does not expect to recognize
revenues from its minimal administrative activities.
Leasehold Acquisition
On September 8, 2011, Prestige entered into an Agreement with Huge Earn
Investments Limited ("Huge Earn") to purchase a leasehold, as described below,
in exchange for 25,000,000 shares of the Company's restricted common stock and a
$450,000 promissory note with anticipated due date of six months from issuance.
The promissory note was due on March 1, 2012. The promissory note does not
accrue interest. Despite Prestige's default on the promissory note Huge Earn has
not entered into any extension of the promissory note or indicated a willingness
to repossess the leases.
On October 1, 2011, the existing leases with the tenants were transferred to
Prestige, as specified in the Agreement.
The leasehold is approximately 4,419 square feet and includes 24 offices and 2
conference rooms. The Agreement further provided for all furniture, equipment
and fixings to be included in the transfer. At the time of the exchange
approximately 15 offices were leased out and Huge Earn held approximately
$57,725 in deposits from these leases.
As part of the transaction and as specified in the Agreement, Prestige entered
into a new 3 year lease agreement for the space, from October 1, 2011 through
September 30, 2014. In addition, as part of the acquisition, Prestige took over
the existing leases (15 offices) between Huge Earn and its then existing
tenants.
BUSINESS
JV Group's current goal is to be a serviced office provider through its
wholly-owned subsidiary, Prestige Prime Office Ltd. in Hong Kong.
The office space provided by Prestige is fully furnished, equipped and staffed,
located at addresses in central business districts with convenient access to
airport or public transportation. Services to be provided include advanced
communication systems, network access, updated IT and administrative support, as
well as a full menu of business services and facilities, such as meeting rooms
and video conferencing.
Prestige intends to provide services that will support the growing trend of
mobile and at home working. Supporting workers at home and on the road with
services such as Virtual Office and Virtual PA, providing dedicated business
addresses as their business base, as well as mail and call handling services.
5
Executives across business sectors, geographic locations, and from every size
organization, seek to more effectively manage business risk, maximize their
financial resources, and increase their flexibility to accommodate growth and
the dynamic changes in the market.
Companies of all sizes can use the Company's solutions to reduce costs and
remove the burden of property ownership and management, but at the same time
have a workplace to suit whenever and wherever they want to work.
Market Opportunity
Cost effective
Businesses are increasingly looking at office space requirements as a strategic
component of their business plan.
Through serviced office space, clients are free to run their business without
the financial or management burden that comes with traditional office rental.
Prestige provides offices that are equipped and ready for use. All the clients
need to do is move in. Clients are not required to shop for and purchase office
equipment and furniture, make telecommunications arrangements, etc.
Flexibility
Workplace outsourcing enables companies to seize new market opportunities
because the office infrastructure is already in place, which is particularly
beneficial when businesses are setting up offices in emerging markets.
The flexible rental length, from 1 week up to 1 year, minimizes the risk and
complications of exploring a new market or business opportunities.
Gateway
Attributing to Hong Kong's location and monetary system, companies set up in
Hong Kong are provided a gateway to develop business in Mainland China. Because
of this advantage, it's expected that more and more companies will locate
businesses in Hong Kong. Prestige is able to provide flexibility and efficiency
to companies which are new to the region.
Company rightsizing
The current economic conditions have led to a chain reaction of company
downsizing in order to reduce cost. Most of the companies are left with a
minimum number of staff. These companies need an office space that can flexibly
fit their company size and budget. While the traditional rental office creates
abundant space and heavy capital commitments, compromising companies' liquidity,
the serviced office on the other hand provides an optimum office space at a
minimized cost, and the flexibility for company downsizing or company expansion.
Full support
In a serviced office, clients don't need to physically own, install, hire or
manage any aspect of a traditional office environment. Clients only pay for what
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is needed, as it is used. For companies serious about time and cash flow, the
serviced office concept provides the ability to focus on strategy and
operations.
Prestige provides a range of Workstyle Solutions, providing customers with the
offices, services, and products they require according to whether they are
predominantly in the office, work from home or are regular travelers.
Competition
There are approximately 50 serviced office providers in Hong Kong offering a
varying scale of services. Under the recent economy, some of the providers are
expanding to meet the increasing demand, namely SBC, set up in 1995, and
Jumpstart, set up in 2002, have 8 and 6 centers, respectively, in Hong Kong.
Prestige's Competitive Advantage
o Exclusive location and rate
The business center is located in the central business area
and Prestige can offer clients a competitive rate because of
the rental agreement with the landlord. The rate is expected
to be 10%-15% lower than the market rate.
o Professional support
From setting up an office, to holding a meeting or doing any
administrative chores, Prestige's staff makes having and
running a workplace simple. To meet new business needs, there
is constant upgrade of employees' skills as technology and new
standards evolve.
o Flexibility
Prestige offers a wide choice of contract periods. And the
clients can, without binding, upgrade the room or transfer the
office to any of our locations, without penalty.
o Cost effective
Prestige helps set up an office at the lowest cost possible.
Reserving facilities and office support services at short
notice and using them with 10-minute increments so as to avoid
the additional charges inherent of an hourly system. Clients
only pay for what they use.
o Smart technology
IP phone and Internet-based offices allow clients to work
remotely, reserve facilities and services on the Internet,
confirm invoice details online etc. There are regular update
and upgrades of the systems to meet the ever changing needs
and provide a convenient and user-friendly platform for the
customers.
o Ongoing development
Prestige works to make continuous investments to improve
efficiency and provide clients enhanced services and
innovative technology at reasonable rates.
7
BUSINESS DEVELOPMENT & FUTURE PROSPECTS
Phase-in Approach
The Company has a full plan of development that is put into place through
different phases. A phase-in approach allows the Company to stabilize cash flow.
Also, the experience from running the first center will provide the Company with
the necessary experiences that can be used to improve quality and lower costs as
it opens new centers.
The Centers
The first center (12F) is composed of Units 1211-11212, 12/F, Tower 2 at
Silvercord, No. 30 Canton Road, Tsimshatsui, which is a premier commercial
building in Hong Kong. The center is on one floor and occupies approximately
5,000 square feet. With the experience of operating the first center, Prestige
acquired a second center (10F) in the same building from Huge Earn on September
8, 2011. The second center is of approximately 5,000 square feet and consist of
Units 1006-1007, 10/F, Silvercord No. 30 Canton Road, Tsimshatsui, Hong
Kong.
The table below provides the specifics of each center at the years ended June
30, 2014 and 2013.
June 30, 2014 June 30, 2013
------------------ ------------------ ------------------- ------------------
10(F) 12(F) 10(F) 12(F)
------------------ ------------------ ------------------- ------------------
Total available space 3,975 sq ft 3,716 sq ft 3,975 sq ft 3,716 sq ft
Total leased space 2,608 sq ft 2,771 sq ft 2,525 sq ft 2,824 sq ft
Number of Tenants 14 9 14 10
Average rental rate
per square foot $81 HK$71 HK$80 HK$66
Leases expiring in 1 year* 14 9 14 10
* All other tenants have leases with one year terms.
Leases with tenants provide for monthly rental payments. Rent includes the use
of the property and services offered. Prestige is able to terminate the lease at
its discretion and without giving prior notice if the tenant has failed to pay
its rent, all other terminations require Prestige giving 30 day notice to the
tenant. If the tenant should give notice of early termination, the tenant is
required to still pay all rents due under the remaining term of the lease.
INTELLECTUAL PROPERTY
We do not hold any patents or patent applications.
EMPLOYEES
As of June 30, 2014, we had 8 employees, employed solely by our wholly-owned
subsidiary, Prestige. The Company's officers do not have employment agreements
at this time. We feel that the relations with our employees are in good
standing.
ITEM 1A. RISK FACTORS
You should be aware that there are various risks associated with our business,
and us, including the ones discussed below. You should carefully consider these
risk factors, as well as the other information contained in this Form 10-K, in
evaluating us and our business.
8
WE HAVE LIMITED WORKING CAPITAL AND LIMITED CASH FUNDS.
At June 30, 2014, we have total current assets of $62,849, of which $14,363 is
cash on hand. At June 30, 2014, we have total current liabilities of $1,835,187.
We have a working capital deficit of $1,772,338 at June 30, 2014. During the
year ended June 30, 2014, we recognized revenues of $612,441 but recognized a
net loss of $346,620.
We have limited funds, and such funds may not be adequate to carry out the
business plan. Our cash inflows from our operating activities are not enough to
cover the costs incurred by our operational activities. The ultimate success of
our business may depend upon our ability to raise additional capital. We have
investigated the availability, source, or terms that might govern the
acquisition of additional capital. If additional capital is needed, there is no
assurance that funds will be available from any source or, if available, that
they can be obtained on terms acceptable to us. If not available, our operations
will be limited to those that can be financed with its modest capital.
RISING EXPENSES AT BOTH THE PROPERTY AND THE COMPANY LEVEL COULD REDUCE OUR CASH
FLOWS.
Our serviced offices will be subject to operating risks common to offices in
general, any or all of which may reduce revenues and cash flows. If any property
is not substantially occupied or if services are being paid in an amount that is
insufficient to cover operating expenses, we could be required to expend funds
with respect to operating expenses. The serviced offices are subject to
increases in utility costs, operating expenses, insurance costs, repairs and
maintenance and administrative expenses. We could be required to pay some or all
of those costs which would reduce our income and cash available for expansion
plans.
TERMINATIONS COULD REDUCE OUR REVENUES
Our success depends upon the occupancy levels, the rental income and the
operating expenses of our properties and our company. We may be unable to fill
office space at 100% or we may lose clients as their companies expand in size
and no longer need a serviced office. These events and others could cause us to
recognize less revenue.
FLUCTUATION IN THE VALUE OF THE HONG KONG DOLLAR MAY HAVE A MATERIAL ADVERSE
EFFECT ON OUR FINANCIAL STATEMENTS.
Our operations are located in Hong Kong and as such our financial activities are
done in Hong Kong Dollars. In accordance with United States Generally Accepted
Accounting Procedures (US GAAP) our financial statements are reported in U.S.
Dollars. The value of the Hong Kong Dollar against the U.S. dollar may fluctuate
and is affected by, among other things, changes in political and economic
conditions. An appreciation of the Hong Kong dollar against the U.S. dollar
could result in foreign currency translation losses for financial reporting
purposes when we translate our Hong Kong denominated liabilities into U.S.
Dollars, as the U.S. Dollar would likely be our reporting currency.
JV GROUP IS A HOLDING COMPANY AND THERE ARE LIMITATIONS ON OUR ABILITY TO
RECEIVE DISTRIBUTIONS FROM OUR SUBSIDIARIES.
We conduct all of our operations through our wholly-owned subsidiaries and are
dependent upon dividends or other intercompany transfers of funds from our
subsidiaries to meet our obligations. Moreover, our subsidiaries are currently
limited in their ability to pay dividends or make distributions to us. We cannot
make any assurances that we will be able to fund the operations of the parent
company in such manner.
9
OUR SUCCESS DEPENDS SUBSTANTIALLY ON THE CONTINUED RETENTION OF CERTAIN KEY
PERSONNEL AND OUR ABILITY TO HIRE AND RETAIN QUALIFIED PERSONNEL IN THE FUTURE
TO SUPPORT OUR GROWTH.
If one or more of our senior executives or other key personnel are unable or
unwilling to continue in their present positions, we may not be able to replace
them easily or at all. As a result, our business may be disrupted and our
financial condition and results of operations may be materially and adversely
affected. While we depend on the abilities and participation of our current
management team generally, we have a particular reliance upon Ms. Look, our
Chief Executive Officer and Chief Financial Officer. The loss of the services of
Ms. Look for any reason could significantly impact our business and results of
operations.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE
RESOLVED FAVORABLY TO US.
Certain conflicts of interest may exist between us and our officers and
directors. Our officers and directors have other business interests to which
they devote their attention and may be expected to continue to do so although
management time should be devoted to our business. As a result, conflicts of
interest may arise that can be resolved only through exercise of such judgment
as is consistent with fiduciary duties to us.
BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THAT MAY CAUSE US TO ACT IN A MANNER
THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS WHICH COULD
CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY.
Mr. Yeung Cheuk Hung, an affiliate of the Company, owns approximately 61% of our
issued and outstanding common stock. As a result, Mr. Yeung effectively controls
all matters requiring stockholder approval, including the election of directors,
the approval of significant corporate transactions, such as mergers and related
party transactions. These insiders also have the ability to delay or perhaps
even block, by their ownership of our stock, an unsolicited tender offer. This
concentration of ownership could have the effect of delaying, deterring or
preventing a change in control of our company that you might view favorably.
LOSS OF CONTROL BY OUR STOCKHOLDERS MAY OCCUR UPON ISSUANCE OF ADDITIONAL
SHARES.
We may issue additional shares, in the future, as consideration for cash,
assets, or services out of our authorized but unissued common stock that would,
upon issuance, represent a majority of our voting power and equity. The result
of such an issuance would be those new stockholders and management would control
us, and persons unknown could replace our management at this time. Such an
occurrence would result in a greatly reduced percentage of ownership of us by
our current stockholders.
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities are currently listed on the Over the Counter Bulletin Board and
the Pink Sheets. Our shares are subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon broker-dealers who
sell such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase "accredited investors" means, in
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general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the rule
may affect the ability of broker-dealers to sell our securities and also may
affect the ability of purchasers in this offering to sell their securities in
any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules may further affect the ability of owners of Shares to sell our securities
in any market that might develop for them.
Shareholders should be aware that, according to the Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
OUR STOCK IS THINLY TRADED AND AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR
ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The shares of our common stock are thinly-traded on the OTC Bulletin Board,
meaning that the number of persons interested in purchasing our shares of common
stock at or near ask prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock
analysts, stock brokers, institutional investors and others in the investment
community that generate or influence sales volume, and that even if we came to
the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven, early stage company such as ours or purchase or
recommend the purchase of our shares of common stock until such time as we
became more seasoned and viable. As a consequence, there are periods of several
days or more when trading activity in our shares of common stock is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on Securities price. We cannot give you any assurance that a
broader or more active public trading market for our shares of Common Stock will
develop or be sustained, or that any trading levels will be sustained. Due to
these conditions, we can give investors no assurance that they will be able to
sell their shares of common stock at or near ask prices or at all if you need
money or otherwise desire to liquidate your shares of common stock of our
Company.
11
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
Shares, these Shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for six months may, under certain conditions, sell every
three months, in brokerage transactions, a number of Shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the owner has held the restricted securities for a period of
six months. A sale under Rule 144 or under any other exemption from the Act, may
have a depressive effect upon the price of the common stock in any market that
may develop.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future, due to our illiquidity and inability to support our
operations without funding from our officers, directors and shareholders. Future
cash dividends will be determined by our board of directors based upon our
earnings, financial condition, capital requirements and other relevant factors.
We cannot provide any assurances or guarantees that any agreement for financing
will not provide for restrictions on any future dividend payments, though our
existing promissory notes do not have any such provisions.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. DESCRIPTION OF PROPERTIES
Our United States mailing address is 7609 Ralston Road, Arvada, Colorado 80002.
We do not hold this property nor do we have operations at this address. The
Company does not hold any real property.
Our wholly-owned subsidiary, Prestige, operates from Silvercord, No.30 Canton
Road, Tsimshatsui, which is a premier commercial building in Hong Kong. Prestige
offices are situated in the centers discussed and described in Item 1, Business
- Business Development and Future Prospects. The centers are located on two
floors and occupy approximately 10,000 square feet. We pay an annual rental rate
of $367,324.
ITEM 3. LEGAL PROCEEDINGS
To the best of our knowledge and belief, there is no pending legal action
against the Company.
ITEM 4. MINE SAFETY DISCLOSURE.
Not Applicable.
12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the range of high and low sales prices for the
Company's common stock for each of the fiscal quarters for the past two years as
reported on the OTC Bulletin Board. These prices represent inter-dealer prices
without adjustments for mark-up, mark-down, or commission and do not necessarily
reflect actual transactions.
Our common stock's trading symbol is "ASZP."
High Low
Year Ended June 30, 2014:
September 30, 2013 $0.03 $0.01
December 31, 2013 0.02 0.01
March 31, 2014 0.03 0.01
June 30, 2014 0.02 0.02
Year Ended June 30, 2013:
September 30, 2011 $0.06 $0.0032
December 31, 2011 0.02 0.01
March 31, 2012 0.06 0.0032
June 30, 2012 0.02 0.01
Holders. As of June 30, 2014, there were approximately 130 holders of record of
the common stock. We believe that we have approximately 2,000 beneficial owners
of our common stock. In many instances, a registered stockholder is a broker or
other entity holding shares in street name for one or more customers who
beneficially own the shares.
Our transfer agent is Mountain Share Transfer, Inc., P.O. Box 191767, Atlanta,
GA 31119. Mountain Share Transfer's telephone number is 303-460-1149.
Dividends. We have not paid or declared cash distributions or dividends on our
common stock and do not intend to pay cash dividends in the foreseeable future
due to our illiquidity and inability to support operations to support our
operations without funding from our officers, directors and shareholders. Future
cash dividends will be determined by our board of directors based upon our
earnings, financial condition, capital requirements and other relevant factors.
We cannot provide any assurances or guarantees that any agreement for financing
will not provide for restrictions on any future dividend payments, though our
existing promissory notes do not have any such provisions.
Recent Sales of Unregistered Securities
We made the following unregistered sales of our securities from July 1, 2010
through June 30, 2014.
13
Date of Issuance Title of Securities Number of Shares Consideration Holder
---------------- ------------------- ---------------- ------------- ------
10/1/11 Common Stock 25,000,000 Acquisition of Choy, Po Shu
Leases Michael
Exemption From Registration Claimed
All of the sales by us of our unregistered securities were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). The
entity and individual listed above that purchased the unregistered securities
were existing shareholders, known to us and our management, through pre-existing
business relationships, as long standing business associates. The entity was
provided access to all material information, which it requested, and all
information necessary to verify such information and was afforded access to our
management in connection with the purchases. The purchaser of the unregistered
securities acquired such securities for investment and not with a view toward
distribution, acknowledging such intent to us. All certificates or agreements
representing such securities that were issued contained restrictive legends,
prohibiting further transfer of the certificates or agreements representing such
securities, without such securities either being first registered or otherwise
exempt from registration in any further resale or disposition.
ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
consolidated financial statements as of June 30, 2014, and for each of the years
in the two-year period then ended, includes a "going concern" explanatory
paragraph, that describes substantial doubt about the Company's ability to
continue as a going concern.
14
PLAN OF OPERATIONS
JV Group's strategy is to be a service office provider in the Far East through
its wholly-owned subsidiary, Prestige Prime Office Ltd. in Hong Kong.
The office space provided is fully furnished, equipped and staffed, located at
premier addresses in central business districts with convenient access to
airports or public transportation. Services include advanced communication
system, network access, updated IT, and world-class administrative support, as
well as a full menu of business services and facilities, such as meeting rooms
and video conferencing.
Prestige intends to provide services that will support the growing trend of
mobile and at home working. Supporting workers at home and on the road with
services such as Virtual Office and Virtual PA, providing dedicated business
addresses as their business base, as well as mail and call handling services.
The Company will need substantial additional capital to support its budget. The
Company has no committed source for any funds as of date hereof. In the event
funds cannot be raised when needed, the Company may not be able to carry out its
business plan, may never achieve sales or royalty income, and could fail in
business as a result of these uncertainties.
At June 30, 2014, we have total current assets of $62,849, of which $14,363 is
cash on hand. At June 30, 2014, we have total current liabilities of $1,835,187.
We have a working capital deficit of $1,772,338 at June 30, 2014. The Company
will need substantial additional capital to support its continuing operations.
The Company has had minimal revenues. The Company has no committed source for
any funds as of the date hereof. In the event funds cannot be raised when
needed, the Company may not be able to continue to carry out its business plan,
may never be able to grow its revenues and operations, and could fail in
business as a result of these uncertainties.
The Company may borrow money to finance its future operations, although it does
not currently contemplate doing so. Any such borrowing will increase the risk of
loss to the investor in the event the Company is unsuccessful in repaying such
loans.
The independent registered public accounting firm's report on the Company's
financial statements as of June 30, 2014, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
RESULTS OF OPERATIONS
For the Year Ended June 30, 2014 Compared to the Year Ended June 30, 2013
During the years ended June 30, 2014 and 2013, we recognized revenues of
$612,441 and $669,742 from our service office operations. The decrease of
$57,301 is a result of the fluctuation in clients. During the year ended June
30, 2014 and 2013, we incurred cost of revenues of $82,618 and $80,587,
respectively. During the years ended June 30, 2014 and 2013, we recognized
resulting gross profits of $529,823 and $589,155, respectively. The resulting
decrease in gross profits is a result of the decrease in revenues and an
increase in cost of revenues.
During the year ended June 30, 2014, we incurred operational expenses of
$877,277. During the year ended June 30, 2013, we incurred $1,068,490 in
15
operational expenses. The decrease of $191,293 was a result of a decrease of
$68,320 in depreciation and amortization expense, a decrease of $22,726 in
general and administrative expenses and a $100,167 decrease in rents and rates
over the prior period.
During the year ended June 30, 2014, we incurred a net loss of $346,620. During
the year ended June 30, 2013, we incurred a net loss of $479,335. The decrease
of $132,715 was a result of the decrease of $57,301 in revenues combined with a
$191,293 decrease in operational expenses, as discussed above.
LIQUIDITY
At June 30, 2014, we had total current assets of $62,849 consisting of $14,363
in cash and cash equivalents and $48,486 in prepaid expenses and other assets.
At June 30, 2014, we had total liabilities of $1,835,187, all current. Total
liabilities included $125,102 in accounts payable, $25,039 in accrued
liabilities, $146,047 in client prepayments, $452,790 in note payables and
$1,086,209 in advances from related parties.
During the year ended June 30, 2014, we used funds of $80,642 in our operational
activities. During the year ended June 30, 2014, we recognized a net loss of
$346,620, which was adjusted for depreciation of $138,170, amortization expense
of $34,203 and loss on fixed assets written off $871. During the year ended June
30, 2014, we used funds of $80,642 in our operational activities. During the
year ended June 30, 2013, we incurred a net loss of $479,335 which was adjusted
for depreciation of $152,404 and amortization expense of $88,596.
During the year ended June 30, 2014, we used $11,562 to acquire computer and
office equipment. During the year ended June 30, 2013, we used $6,352 to acquire
computer equipment.
During the year ended June 30, 2014, we received $101,831 from our financing
activities. During the year ended June 30, 2013, we received $195,722 from our
financing activities.
During the years ended June 30, 2014 and 2013, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$91,154 and $181,105, respectively, to support the operations of Prestige.
During the year ended June 30, 2014, the Company paid Mr. Hung, $27,154 on the
funds owed. The Company owes him $917,555 and $853,876 as of June 30, 2014 and
June 30, 2013, respectively. Such funds are unsecured, bear no interest, and are
due on demand.
During the years ended June 30, 2014 and 2013, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $37,831 and $50,916,
respectively to the Company and Mega to support operations. Ms. Look is owed
$168,654 and $124,853 as of June 30, 2014 and June 30, 2013, respectively. Such
funds are unsecured, bear no interest, and are due on demand.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements nor do we have any
unconsolidated subsidiaries.
Short Term
On a short-term basis, we generate limited revenues, which are not sufficient to
cover operations. Based on our limited operating history in the service office
industry, we will continue to have insufficient revenue to satisfy current and
recurring liabilities for the near future. For short term needs we will be
dependent on receipt, if any, of offering proceeds.
16
Capital Resources
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year,
substantial capital will be needed to pay for working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
EFFECTS OF INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our results or financial condition.
CRITICAL ACCOUNTING POLICIES
Foreign Currency Translation
The financial statements of JV Group's wholly-owned subsidiaries, Prestige and
Mega are measured using the local currency (the Hong Kong Dollar (HK$)) as the
functional currency. Assets and liabilities of Prestige and Mega are translated
at exchange rates as of the balance sheet date. Revenues and expenses are
translated at average rates of exchange in effect during the period. The
resulting cumulative translation adjustments have been recorded as a component
of comprehensive income (loss), included as a separate item in stockholders'
equity.
The Company is exposed to movements in foreign currency exchange rates. In
addition, the Company is subject to risks including adverse developments in the
foreign political and economic environment, trade barriers, managing foreign
operations and potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a material negative impact on the
Company's financial condition or results of operations in the future.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
Stock-Based Compensation
Beginning January 1, 2006, the Company adopted the provisions of and accounts
for stock-based compensation using an estimate of value in accordance with the
fair value method. Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting period.
The Company elected the modified-prospective method, under which prior periods
17
are not revised for comparative purposes. The valuation method applies to new
grants and to grants that were outstanding as of the effective date and are
subsequently modified.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our financial statements and supplementary data are included herein commencing
on page 27.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures (as defined in
Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) that is designed to
provide reasonable assurance that information that is required to be disclosed
is accumulated and communicated to management timely.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and our Chief
Financial Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report.
Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are not effective
in timely alerting them to material information required to be disclosed in the
our periodic filings with the SEC. The determination the disclosure controls and
procedures are not effective, was based upon the factors disclosed below that
have lead management to determine that its internal control over financial
reporting are not effective.
Management's Annual Report On Internal Control Over Financial Reporting
Our management, including the Chief Executive Officer and Chief Financial
Officer is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the
supervision of, our principal executive and principal financial officers and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
18
o Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use of disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial
reporting as of June 30, 2014. Based on this assessment, management believes
that as of June 30, 2014, our internal control over financial reporting is not
effective based on those criteria.
Specifically, management's evaluation identified the following material
weaknesses, which existed as of June 30, 2014:
(1) Financial Reporting Systems: We did not maintain a fully integrated
financial consolidation and reporting system throughout the period and
as a result, extensive manual analysis, reconciliation and adjustments
were required in order to produce financial statements for external
reporting purposes.
(2) Segregation of Duties: We do not currently have a sufficient
complement of technical accounting and external reporting personal
commensurate to support standalone external financial reporting under
public company or SEC requirements. Specifically, the Company did not
effectively segregate certain accounting duties due to the small size
of its accounting staff, and maintain a sufficient number of
adequately trained personnel necessary to anticipate and identify
risks critical to financial reporting and the closing process. In
addition, there were inadequate reviews and approvals by the Company's
personnel of certain reconciliations and other processes in day-to-day
operations due to the lack of a full complement of accounting staff.
We believe that our weaknesses in internal control over financial reporting and
our disclosure controls relate in part to the fact that we are a small reporting
business with limited personnel. Management and the Board of Directors believe
that the Company would need to allocate additional human and financial resources
to address these matters. Which at this time the Company does not have the
financial capability to remediate. Management can give no assurances that it
will ever be able to remediate such material weaknesses.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC to
provide only management's report in this annual report.
Changes in Internal Control Over Financial Reporting
During our most recent fiscal quarter, there has been no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)
19
under the Securities Exchange Act) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
As of June 30, 2014, our directors and officers were:
NAME AGE POSITION
Yuen Ling Look 47 President, Chief Executive Officer,
Chief Financial Officer and Director
Siu Fong Kelly Yeung 45 Director
Siu Lun Tong 52 Director
YUEN LING LOOK
Ms. Look was appointed the Chief Executive Officer, President, Chief Financial
Officer and director of the Company on November 9, 2009. Ms. Look is also a
manager of both Mega and Prestige.
Ms. Look has been employed by La Jacques Fashion Limited for over ten years.
Currently, she is the Chief Administrator, responsible for the accounting and
administrative work. La Jacques Fashion Limited is a garment trading company.
She was educated in Hong Kong and earned a diploma in Business Administration in
1991 from Hong Kong Shue Yan University (formerly called Shue Yan College). She
also completed the Certificate Stage of Association of Chartered Certified
Accountants in 1999.
Ms. Look was appointed to the Board of Directors not only for her business
management experience, but also due to her accounting background.
SIU FONG KELLY YEUNG
Ms. Yeung was appointed a director of the Company on November 9, 2009.
Ms. Yeung graduated from the Primary school in Hong Kong. She then went to
United Kingdom for further studies. In 1988, she finished at Level O. After
graduation, she immediately joined and participated in the operations of
restaurants. She has almost twenty years experience in the beverage industry.
She has been running her own restaurant for over ten years.
Ms. Yeung brings to the Board of Directors both her business experience, but
also her experience and skills in business management.
20
SIU LUN TONG
Mr. Tong was appointed a director of the Company on November 9, 2009.
Mr. Tong has been employed by Asian Alliance Garment Limited for more than 15
years. Currently, he is the production manager of Asian Alliance Garment
Limited. At Asian Alliance Garment Limited, he specializes in management and
control of factories and quality. Sportswear and jeans are the main lines of the
company's business.
Mr. Tong brings to the Board of Directors both her business experience, but also
her experience and skills in business management.
COMMITTEES OF THE BOARD OF DIRECTORS
In the ordinary course of business, the board of directors maintains a
compensation committee and an audit committee. At this time, the Company's board
of directors as a whole serves as its compensation committee and audit
committee. The Company's board of directors has determined that none of the
directors sitting on the audit committee qualify as a financial expert.
The primary function of the compensation committee is to review and make
recommendations to the board of directors with respect to the compensation,
including bonuses, of our officers.
The functions of the audit committee are to review the scope of the audit
procedures employed by our independent auditors, to review with the independent
auditors our accounting practices and policies and recommend to whom reports
should be submitted, to review with the independent auditors their final audit
reports, to review with our internal and independent auditors our overall
accounting and financial controls, to be available to the independent auditors
during the year for consultation, to approve the audit fee charged by the
independent auditors, to report to the board of directors with respect to such
matters, and to recommend the selection of the independent auditors.
In the absence of a separate audit committee our Board of Directors functions as
the audit committee and performs some of the same functions of an audit
committee, such as recommending a firm of independent certified public
accountants to audit the annual financial statements; reviewing the independent
auditors independence, the financial statements and their audit report; and
reviewing management's administration of the system of internal accounting
controls.
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts, and corporate opportunity
involved in participation with such other business entities. While each officer
and director of our business is engaged in business activities outside of our
business, they devote to our business such time as they believe to be necessary.
21
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Officers and
Directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors, and greater than 10% shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of such reports received, and representations
from certain reporting persons, we believe that, during the fiscal year ended
June 30, 2014, all Section 16(a) filing requirements applicable to our officers,
directors and greater than 10% beneficial owners had not been filed in
compliance with all applicable requirements. Further the Company is aware that
greater than 10% beneficial owners Top Growth Holdings Group, Inc., Mr. Yeung
Cheuk Hung and Mr. Po Shu Michael Choy had also not complied with the Section
16(a) filing requirements.
CODE OF ETHICS
Due to the limited scope of our current operations, we have not adopted a
corporate code of ethics that applies to our principal executive officer,
principal accounting officer, or persons performing similar function.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to its sole officer for the fiscal years ended June 30, 2014,
2013 and 2012 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Name & Salary Bonus awards awards compensation earnings compensation Total
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------- ------- ---------- ------- --------- --------- --------------- --------------- -------------- ---------
Yuen Ling 2014 $-0- $-0- $ -0- $ -0- $ -0- $-0- $-0- $-0-
Look 2013 $-0- $-0- $ -0- $ -0- $ -0- $-0- $-0- $-0-
2012 $-0- $-0- $ -0- $ -0- $ -0- $-0- $-0- $-0-
Ms. Look does not have a compensation agreement with the Company at this time.
22
EMPLOYMENT AND CONSULTING AGREEMENTS
There were no employment contracts or consulting agreements with our directors
or officers during the fiscal year ended June 30, 2014.
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended June 30, 2014:
Fees Nonqualified
earned or Non-equity deferred
paid in Stock Option incentive compensation All other
Name cash awards awards ($) plan earnings compensation Total
($) ($) compensation ($) ($) ($)
($)
--------------------- ----------- ---------- ----------- --------------- ---------------- --------------- ------------
Yuen Ling Look $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Siu Fong Kelly $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Siu Lun Tong $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of June 30, 2014, by:
o each person who is known by JV Group to own beneficially more than 5%
of the Company's outstanding common stock,
o each of the Company's named executive officers and directors, and
o all executive officers and directors as a group.
Shares of common stock not outstanding but deemed beneficially owned by virtue
of the right of an individual to acquire the shares of common stock within 60
days are treated as outstanding only when determining the amount and percentage
of common stock owned by such individual. Except as noted below the table, each
person has sole voting and investment power with respect to the shares of common
stock shown.
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES OUTSTANDING(4)
---------------------------------------- ------ --------------
Yuen Ling Look (2)
President and Director 13,108,000 13.25%
Top Growth Holdings Group, Inc. (2) 13,108,000 13.25%
23
Siu Fong Kelly Yeung 0 0%
Siu Lun Tong 0 0%
Yeung Cheuk Hung (3) 60,000,000 60.67%
Po Shu Michael Choy 25,000,000 25.28
All executive officers and directors as
a group, 3 people. 13,108,000 13.25%
(1) The above officers and directors' address is c/o JV Group, Inc. 7609
Ralston Road, Arvada, Colorado 80002.
(2) Ms. Look is the beneficial owner of Top Growth Holdings Group, Inc., which
holds 13,108,000 shares of the Company's common stock.
(3) Mr. Hung is a manager of Prestige, the Company's wholly-owned subsidiary.
(4) Based on 98,879,655 shares of the Company's common stock issued and
outstanding at June 30, 2014.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
During the years ended June 30, 2014 and 2013, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$91,154 and $181,105, respectively, to support the operations of Prestige.
During the year ended June 30, 2014 and 2013, the Company paid Mr. Hung, $27,154
and $36,298 on the funds owed. The Company owes him $917,555 and $853,876 as of
June 30, 2014 and 2013, respectively. Such funds are unsecured, bear no
interest, and are due on demand.
During the years ended June 30, 2014 and 2013, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $37,831 and $50,916,
respectively to Mega and the Company to support operations. Ms. Look is owed
$168,654 and $124,853 as of June 30, 2014 and 2013, respectively. Such funds are
unsecured, bear no interest, and are due on demand.
On September 8, 2011, Prestige entered into an Agreement with Huge Earn
Investments Limited ("Huge Earn") to purchase certain leaseholds in exchange for
25,000,000 of shares of the Company's restricted common stock and a $450,000
promissory note with anticipated due date of six months from issuance. At the
direction of Huge Earn, the promissory note and the shares were issued to Po Shu
Michael Choy, making him an affiliate of the Company. The promissory note was
due on March 1, 2012. At the time of this filing, the promissory note is still
outstanding. The promissory note does not accrue interest.
Director Independence
Our board of directors undertook its annual review of the independence of the
directors and considered whether any director had a material relationship with
us or our management that could compromise his ability to exercise independent
judgment in carrying out his responsibilities. As a result of this review, the
board of directors affirmatively determined that Ms. Yeung and Mr. Tong are each
"independent" as such term is used under the rules and regulations of the
Securities and Exchange Commission. Ms. Ling, as Chief Executive Officer and
Chief Financial Officer of the Company, is not considered to be "independent."
24
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
GENERAL. De Joya Griffith, LLC ("De Joya") is the Company's independent
registered public accounting firm. The Company's Board of Directors has
considered whether the provisions of audit services are compatible with
maintaining De Joya's independence. The engagement of our independent registered
public accounting firm was approved by our board of directors functioning as our
audit committee prior to the start of the audit of our consolidated financial
statements for the year ended June 30, 2014.
The following table represents aggregate fees billed to the Company for the
years ended June 30, 2014 and 2013.
Year Ended June 30,
2014 2013
----------------------------- ----------------------------
Audit Fees $27,250 $27,950
Audit-related Fees $0 $0
Tax Fees $0 $0
All Other Fees $0 $0
----------------------------- ----------------------------
Total Fees $27,250 $27,950
All audit work was performed by the auditors' full time employees.
It is the role of the Audit Committee, or in the absence of an audit committee,
the Board of Directors, to consider whether, and determine that, the auditor's
provision of non-audit services would be compatible with maintaining the
auditor's independence.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS
The following documents are filed as a part of this Report.
(i) Exhibits.
The following is a complete list of exhibits filed as part of this Form 10-K.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
21.1 Subsidiaries of the Registrant
31.1 Certification of Chief Executive and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
32.1 Certification of Principal Executive and Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
25
101.INS XBRL Instance Document (1)
101.SCH XBRL Taxonomy Extension Schema Document (1)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
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(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is
not subject to liability under these sections.
26
Office Locations
----------------
Las Vegas, NV
New York, NY
Pune, India
Beijing, China
De Joya Griffith, LLC
Certified public Accountants and Consultants
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
JV Group, Inc. and subsidiaries
We have audited the accompanying consolidated balance sheets of JV Group, Inc.
and subsidiaries, (the "Company") as of June 30, 2014 and 2013 and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the years then ended. JV Group, Inc.'s management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over the
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of JV Group, Inc. and
subsidiaries as of June 30, 2014 and 2013 and the result of its operations and
its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered losses from
operations, which raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ De Joya Griffith, LLC
placeCityHenderson, StateNevada
October 6, 2014
--------------------------------------------------------------------------------
2580 Anthem Village Dr. o Henderson, NV o 89052
Telephone (702) 563-1600 o Facsimile (702) 920-8049
www.dejoyagriffith.com
27
JV GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in USD)
(Audited)
June 30,
2014 2013
-----------------------------
ASSETS
Current assets
Cash and cash equivalents $ 14,363 $ 4,774
Prepaid expenses and other current assets 48,486 56,517
-----------------------------
Total current assets 62,849 61,291
Property and equipment, net of $571,371 and $439,455
accumulated depreciation, respectively 190,523 317,756
-----------------------------
Intangible assets, net of $311,905 and $277,486
accumulated amortization, respectively 8,551 42,721
-----------------------------
Total assets $ 261,923 $ 421,768
=============================
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 125,102 99,561
Accrued liabilities 25,039 5,307
Prepayments, clients 146,047 106,617
Notes payable 452,790 452,439
Advances, related parties 1,086,209 984,600
-----------------------------
Total current liabilities 1,835,187 1,648,524
Total liabilities 1,835,187 1,648,524
-----------------------------
Stockholders' deficit
Preferred stock, $0.01 par value: 25,000,000 shares authorized, no shares - -
issued and outstanding.
Common stock, $0.01 par value: 1,000,000,000 shares authorized 988,797 988,797
98,879,655 shares issued and outstanding at
June 30, 2014 and June 30, 2013
Other comprehensive income 5,904 5,792
Accumulated deficit (2,567,965) (2,221,345)
-----------------------------
Total stockholders' deficit (1,573,264) (1,226,756)
-----------------------------
Total liabilities and stockholders' deficit $ 261,923 $ 421,768
=============================
See accompanying notes to consolidated financial statements.
28
JV GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013
(Amounts in US Dollars)
(Audited)
June 30,
2014 2013
----------------------------
Revenue $ 612,441 $ 669,742
Cost of revenue 82,618 80,587
----------------------------
Gross profit 529,823 589,155
Operating expenses
General and administrative 356,005 378,731
Rent and rates 348,899 449,066
Amortization 34,203 88,596
Depreciation 138,170 152,097
----------------------------
Total operating expenses 877,277 1,068,490
----------------------------
Loss from operations (347,454) (479,335)
Other income (expense)
Interest and other income 1,705 -
Loss on disposal of furniture (871) -
----------------------------
Total other income (expense) 834 -
----------------------------
Net loss $ (346,620) $ (479,335)
============================
Other comprehensive income
Foreign currency translation adjustment 112 779
----------------------------
Total comprehensive loss $ (346,508) $ (478,556)
============================
Loss per common share- basic: $ (0.$0) (0.00)
============================
Weighted average common shares outstanding:
Basic 98,879,655 98,879,655
============================
See accompanying notes to consolidated financial statements.
29
JV GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(Amounts in USD)
(Audited)
Accumulated
Preferred Stock Common Stock Accumulated Comprehensive
Shares Amount Shares Amount Deficit Profit / (Loss) Total
------------- ----------- ------------- ---------- -------------- ------------ ---------------
Balance, June 30, 2012 - - 98,879,655 $ 988,797 $ (1,742,010) $ 5,013 $ (748,200)
Foreign currency translation - - - - - 779 779
Net loss - - - - (479,335) - (479,335)
------------- ----------- ------------- ---------- -------------- ------------ ---------------
Balance, June 30, 2013 - - 98,879,655 $ 988,797 $ (2,221,345)$ 5,792 $ (1,226,756)
Foreign currency translation - - - - - 112 112
Net loss - - - - (346,620) - (346,620)
------------- ----------- ------------- ---------- -------------- ------------ ---------------
Balance, June 30, 2014 - - 98,879,655 $ 988,797 $ (2,567,965)$ 5,904 $ (1,573,264)
============= =========== ============= ========== ============== ============ ===============
See accompanying notes to consolidated financial statements.
30
JV GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2014 and 2013
(Amounts in USD)
(Audited)
2014 2013
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (346,620) $ (479,335)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 138,170 152,404
Amortization 34,203 88,596
Loss on Disposal of assets 871 -
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 8,031 (378)
Accounts payable and accrued liabilities 45,273 38,434
Prepayments from clients 39,430 4,494
---------------------------
Total cash flow used in operating activities (80,642) (195,785)
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of assets (11,562) (6,352)
- -
---------------------------
Total cash flow used in investing activities (11,562) (6,352)
CASH FLOW FROM FINANCING ACTIVITIES
Advances from officers and directors 128,985 232,020
Payments on advances from officers and directors (27,154) (36,298)
---------------------------
Total cash flow provided by financing activities 101,831 195,722
Effect of exchange rate changes on cash (38) 782
---------------------------
NET CHANGE IN CASH 9,589 (5,633)
CASH AT BEGINNING OF YEAR 4,774 10,407
---------------------------
CASH AT END OF YEAR $ 14,363 $ 4,774
===========================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ 401 $ -
---------------------------
Cash paid for income tax $ - $ -
---------------------------
See accompanying notes to consolidated financial statements.
31
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
NOTE 1 - BUSINESS AND BASIS OF PRESENTATION
Company History
ASPI, Inc. ("APSI") was formed in Delaware in September 29, 2008. On April 25,
2012, ASPI filed an amendment to its Certificate of Incorporation to change its
name from ASPI, Inc. to JV Group, Inc. ("JV Group.") In addition, at that time,
JV Group increased the number of authorized common shares from One Hundred
Million (100,000,000) shares to One Billion (1,000,000,000) shares.
Business
JV Group operates primarily as an office service provider through its
wholly-owned subsidiary, Prestige Prime Office, Limited ("Prestige"). Prestige
provides office space that is fully furnished, equipped and staffed, located at
premier addresses in central business districts with convenient access to
airport or public transportation. Services include advanced communication
systems, network access, updated IT, and world-class administrative support, as
well as a full menu of business services and facilities, such as meeting rooms
and video conferencing.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of JV
Group, Inc., a Delaware corporation, its wholly-owned subsidiaries, Mega Action
Limited ("Mega"), a British Virgin Island Corporation, and Prestige, a Hong Kong
Special Administrative Region Corporation (JV Group and its subsidiaries are
collectively referred to as the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the 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 periods. Actual results could differ from those
estimates.
Judgments and estimates of uncertainties are required in applying the Company's
accounting policies in certain areas. The following are some of the areas
requiring significant judgments and estimates: a) Going concern; and b)
Depreciable life for property, plant and equipment and intangible assets. The
relevant amounts could be adjusted in the near term if experience differs from
current estimates.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity
of three months or less to be cash equivalents. Cash and cash equivalents
include demand deposits and money market funds carried at cost which
approximates fair value. The Company maintains its cash in institutions insured
by the Federal Deposit Insurance Corporation ("FDIC").
32
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
Foreign Currency Translation
The financial statements of JV Group's wholly-owned subsidiaries, Prestige and
Mega are measured using the local currency (the Hong Kong Dollar (HK$) is the
functional currency). Assets and liabilities of Prestige and Mega are translated
at exchange rates as of the balance sheet date. Revenues and expenses are
translated at average rates of exchange in effect during the period. The
resulting cumulative translation adjustments have been recorded as a component
of comprehensive income (loss), included as a separate item in the statement of
operations.
The Company is exposed to movements in foreign currency exchange rates. In
addition, the Company is subject to risks including adverse developments in the
foreign political and economic environment, trade barriers, managing foreign
operations, and potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a material negative impact on the
Company's financial condition or results of operations in the future.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset
or paid upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on
assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition, the fair
value of liabilities should include consideration of non-performance risk
including our own credit risk.
In addition to defining fair value, the standard expands the disclosure
requirements around fair value and establishes a fair value hierarchy for
valuation inputs. The hierarchy prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the
market. Each fair value measurement is reported in one of the three levels which
is determined by the lowest level input that is significant to the fair value
measurement in its entirety. These levels are:
Level 1 - inputs are based upon unadjusted quoted prices for identical
instruments traded in active markets.
Level 2 - inputs are based upon significant observable inputs other
than quoted prices included in Level 1, such as quoted prices for
identical or similar instruments in markets that are not active, and
model-based valuation techniques for which all significant assumptions
are observable in the market or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
Level 3 - inputs are generally unobservable and typically reflect
management's estimates of assumptions that market participants would
use in pricing the asset or liability. The fair values are therefore
determined using model-based techniques that include option pricing
models, discounted cash flow models, and similar techniques.
The carrying value of the Company's financial assets and liabilities which
consist of cash, prepaid expenses and other current assets, accounts payable,
accrued liabilities, prepayments and advances from related parties in
management's opinion approximate their fair value due to the short maturity of
such instruments. These financial assets and liabilities are valued using Level
3 inputs, except for cash which is at Level 1. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
exchange, or credit risks arising from these financial instruments.
33
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally on the straight-line method over the
estimated useful life of each type of asset which ranges from three to five
years. Major improvements are capitalized, while expenditures for repairs and
maintenance are expensed when incurred. Upon retirement or disposition, the
related costs and accumulated depreciation are removed from the accounts, and
any resulting gains or losses are credited or charged to income.
Intangible Asset
On September 8, 2011, the Company entered into an Agreement to purchase certain
leaseholds and as a result recognized certain intangibles, such as customer
lists. These intangible assets are being amortized over a weighted average
period of 1.7 years at a rate of HK$1,953,870 per year. At June 30, 2014 and
2013, accumulated amortization was translated to equal US$311,905 and US$277,486
respectively and amortization expense for the years ended June 30, 2014 and 2013
was US$34,203 and US$88,596 respectively.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur in accordance with FASB ASC 605 "Revenue Recognition" ("ASC
605"). The Company recognizes revenue from its office service operations.
Clients pay a monthly fee and such fees are recognized at that time.
Advertising
The Company put advertisements on local newspaper and the internet in order to
attract potential customers. It is recognized as expense when it occurs. The
Company paid $13,774 and $15,283 as advertising cost for the years ended June
30, 2014 and 2013, respectively.
Net Loss per Common Share
Basic net loss per common share is calculated by dividing total net loss
applicable to common shares by the weighted average number of common and common
equivalent shares outstanding during the period. For the years ended June 30,
2014 and 2013, there were no potential common equivalent shares used in the
calculation of weighted average common shares outstanding as the effect would be
anti-dilutive.
Impairment of Long Lived Assets
Long-lived assets are reviewed for impairment in accordance with the applicable
FASB standard, "Accounting for the Impairment or Disposal of Long- Lived
Assets." Under the standard, long-lived assets are tested for recoverability
whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. An impairment charge is recognized for the amount, if
any, when the carrying value of the asset exceeds the fair value.
34
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
Stock-Based Compensation
Beginning January 1, 2006, the Company adopted the provisions of and accounts
for stock-based compensation using an estimate of value in accordance with the
fair value method. Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting period.
The Company elected the modified-prospective method, under which prior periods
are not revised for comparative purposes. The valuation method applies to new
grants and to grants that were outstanding as of the effective date and are
subsequently modified.
Other Comprehensive Income (Loss)
The Company recognizes unrealized gains and loss on the Company's foreign
currency translation adjustments as components of other comprehensive income
(loss).
Income Taxes
Provisions for income taxes represents actual or estimated amounts payable on
tax return filings each year. Deferred tax assets and liabilities are recorded
for the estimated future tax effects of temporary differences between the tax
basis of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carry forwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustments to the tax
provision or benefit in the period of enactment.
FASB ASC 740, "Income Taxes" ("ASC 740") addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under ASC 740, the Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position would be measured
based on the largest benefit that has a greater than 50% likelihood of being
realized upon ultimate settlement. ASC 740 also provides guidance on
de-recognition of income tax assets and liabilities, classification of current
and deferred tax assets and liabilities, and accounting for interest and
penalties associated with tax positions. As of June 30, 2014 and 2013, the
Company does not have a liability for any uncertain tax positions.
The income tax laws of various jurisdictions in which the Company operates are
summarized as follows:
United States
JV Group is subject to United States tax at 35%. No provision for
income tax in the United States has been made as the Company had no
U.S. taxable income for the years ended June 30, 2014 and 2013.
BVI
Mega is incorporated in BVI and is governed by the income tax laws of
BVI. According to current BVI income tax law, the applicable income tax
rate for the Company is 0%.
35
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
Hong Kong
Prestige is incorporated in Hong Kong. Pursuant to the income tax laws
of Hong Kong, the Company is subject to the tax rate 16.5%.
Recent Accounting Pronouncements
There were various other accounting standards and interpretations issued in 2014
and 2013, none of which are expected to have a material impact on the Company's
financial position, operations, or cash flows.
NOTE 3 - GOING CONCERN
The Company's financial statements for the years ended June 30, 2014 and 2013
have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company reported a net loss of $346,620 for the year ended June
30, 2014 and an accumulated deficit of $2,567,965 at June 30, 2014. At June 30,
2014, the Company had total current assets of $62,849 and total current
liabilities of $1,835,187 for a working capital deficit of $1,772,338.
The Company's ability to continue as a going concern may be dependent on the
success of management's plan discussed below. The financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
To the extent the Company's operations are not sufficient to fund the Company's
capital requirements, the Company may attempt to enter into a revolving loan
agreement with financial institutions or attempt to raise capital through the
sale of additional capital stock or through the issuance of debt. At the present
time, the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
During the 2014 fiscal year, the Company intends to continue its efforts in
growing its office service operations.
36
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
NOTE 4 - PROPERTY AND EQUIPMENT
At June 30, 2014 and June 30, 2013, Property and Equipment consisted of:
June 30, June 30,
2014 2013
-------------------- ---------------------
Furniture and Fixtures $ 598,782 $ 593,536
Office Equipment 138,410 138,284
Computer Equipment 24,701 25,391
-------------------- ---------------------
761,894 757,211
Accumulated Depreciation (571-371) (439,455)
-------------------- ---------------------
Total $ 190,523 $ 317,756
==================== =====================
Property and equipment held by Prestige have an original cost basis valued in
Hong Kong Dollars. During the year ended June 30, 2014, computer equipment and
office equipment increased by $11,562 due to the purchases of equipment. During
the same period, Prestige disposed of computer and office equipment at a loss of
$871. Other changes in value are a result of foreign currency exchange
differences. During the years ended June 30, 2014 and 2013, depreciation expense
was $138,170 and $152,097 respectively.
NOTE 5 - ADVANCES, RELATED PARTIES
On September 8, 2011, the Company entered into an Agreement to purchase certain
leaseholds from an unrelated third party in exchange for 25,000,000 shares of
the Company's restricted common stock and a $450,000 promissory note. The
$450,000 promissory note has a term of nine months and therefore became due on
March 1, 2012. The promissory note does not accrue interest. At June 30, 2014,
the promissory note is still outstanding and includes an additional $2,790 to
account for exchange rate differences. The note is now considered in default
status however the creditor has made no demands for repayment.
During the years ended June 30, 2014 and June 30, 2013, Mr. Hung, the manager of
Prestige and the majority shareholder of the Company, advanced funds of $90,171
and $181,105 respectively, to support the operations of Prestige. During the
years ended June 30, 2014 and 2013, the company paid Mr. Hung $27,154 and
$36,298 respectively, of the funds owed. The Company owes him $917,556 and
$853,876 as of June 30, 2014 and June 30, 2013, respectively. Such funds are
unsecured, bear no interest, and are due on demand.
During the year ended June 30, 2014 and, 2013, Ms. Look, an officer and director
of the Company and manager of Mega, advanced additional funds of $38,814 and
$50,916 respectively to both the Company and its subsidiary Mega. She is owed
$168,653 and $130,724 as of June 30, 2014 and June 30, 2013, respectively. Such
funds are unsecured, bear no interest, and are due on demand.
37
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
NOTE 6 - PREPAYMENTS, CLIENTS
Clients pay a deposit on the Company's provided services upon entering into a
lease agreement with the Company. These deposits are recognized by the Company
as a corresponding liability. At June 30, 2014 and June 30, 2013, the Company
had $146,047 and $106,617, respectively in prepayment liabilities.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Prestige operates from Silvercord, No.30 Canton Road, Tsimshatsui, which is a
premier commercial building in Hong Kong. The center is located on two floors
and occupies approximately 10,000 square feet. We paid $348,899 and $449,065 for
the lease of our center for the years ended June 30, 2014 and 2013,
respectively. The Company's minimum annual rent rate for the following two years
are:
Fiscal Year Ended
June 30, Annual Rent
-------- -----------
2015 $158,286
2016 $247,083
NOTE 8 - STOCKHOLDERS' DEFICIT
The authorized capital stock of the Company is 1,000,000,000 shares of common
stock with a $0.01 par value and 25,000,000 shares of preferred stock with a par
value of $0.01 per share. At June 30, 2014 and 2013, the Company had 98,879,655
shares of its common stock issued and outstanding and no shares of preferred
stock issued and outstanding.
During the years ended June 30, 2014 and June 30, 2013, the Company did not
issue any shares of its common stock.
During the year ended June 30, 2012, the Company issued 25,000,000 shares of its
common stock valued at $250,000 in connection with the acquisition of certain
leases.
NOTE 9 - TAXES
The Company is subject to foreign and domestic income taxes. The Company has had
no income, and therefore has paid no income tax.
As of June 30, 2014 and 2013, the Company had a net operating loss (NOL)
carryforward of approximately $2,344,656 and $1,998,036. The NOL carryforward
begins to expire in various years through 2032. Because management is unable to
determine that it is more likely than not that the Company will realize the tax
benefit related to the NOL carryforward, by having taxable income, a valuation
allowance has been established at June 30, 2014 and 2013 to reduce the tax
benefit asset value to zero.
Components of net deferred tax assets, including a valuation allowance, are as
follows at June 30:
38
JV GROUP, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Amounts in USD)
(Audited)
June 30,
2014 2013
------------------- ----------------
Deferred tax assets:
Foreign deferred tax assets: 187,042 144,105
Federal deferred tax assets: 148,146 126,539
Valuation allowance (335,188) (270,644)
------------------- ----------------
Total deferred tax assets: $ - $ -
The valuation allowance for deferred tax assets as of June 30, 2014 and 2013 was
$335,188 and $270,644, respectively. In assessing the recovery of the deferred
tax assets, management considers whether it is more likely than not that some or
all of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income in
the periods in which those temporary differences become deductible. Management
considers the scheduled reversals of future deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. As
a result, management determined it was more likely than not the deferred tax
assets would not be realized as of June 30, 2014 and 2013, and recorded a full
valuation allowance.
Reconciliation between the statutory rate and the effective tax rate is as
follows at June 30, 2014 and 2013:
Federal statutory tax rate 35.0%
Foreign and U.S. tax rate differential (18.5)%
Permanent difference and other (16.5)%
--------------------------
Effective tax rate 0.0%
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated it activities subsequent to the year ended June 30,
2014 through September 24, 2014 and has determined that it is in the Company's
best interests to terminate its lease for floor 10F. With mutual agreement,
the landlord has agreed to not renew the lease for floor 10F. The lease for
floor 10F expired on September 30, 2014.
39
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JV GROUP, INC.
Date: October 6, 2014 By: /s/ Yuen Ling Look
-------------------------------------------
Yuen Ling Look, President,
Chief Executive Officer and
Chief Financial Officer
(Principal Accounting Officer)
In accordance with the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Dated: October 6, 2014
JV GROUP, INC.
By: /s/ Yuen Ling Look
-------------------------------------------
Yuen Ling Look, Director
By: /s/ Siu Fong Kelly Yeung
-------------------------------------------
Siu Fong Kelly Yeung, Director
By: /s/ Siu Lun Tong
-------------------------------------------
Siu Lun Tong, Director
4
