UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended September 30, 2014

 

OR

 

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______ to __________

 

COMMISSION FILE NUMBER: 000-55181

 

JISHANYE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware	46-1992903
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)

 

7F., No.247, Minsheng 1st Rd.

Xinxing Dist., Kaohsiung City 800

Taiwan Republic of China

(Address of principal executive offices)

 

+88672223733

 

(Registrant’s Telephone Number, Including Area Code)

 

3F., No.10, Yuanxi 2nd Rd.,

Pingtung Agricultural Biotechnology Park,

Changzhi Township, Pingtung 908,

Taiwan, Republic of China

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

 

Large Accelerated Filer     ¨	Non-Accelerated Filer     ¨
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

 

As of October 31, 2014, there are a total of 12,500,001 shares of common stock issued and outstanding.

 

TABLE OF CONTENTS 

 

PART I.  FINANCIAL INFORMATION			1
ITEM 1.		CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	1
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	8
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	10
ITEM 4.		CONTROLS AND PROCEDURES	11
PART II. OTHER INFORMATION			12
ITEM 1.		LEGAL PROCEEDINGS	12
ITEM 1A.		RISK FACTORS	12
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	12
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES	12
ITEM 4.		MINE SAFETY DISCLOSURES	12
ITEM 5.		OTHER INFORMATION	12
ITEM 6.		EXHIBITS	12
		SIGNATURES	13

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described under Part 1 Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

 

Forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report, or that we filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.

 

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

OTHER PERTINENT INFORMATION

 

References in this report to “we,” “us,” “our” and the “Company” and words of like import  refer to Jishanye, Inc., and its subsidiaries.

 

References to Taiwan refer to Taiwan, Republic of China.

 

Our business is conducted in Taiwan using NTD, the currency of Taiwan, and our financial statements are presented in United States dollars (“USD” or “$”).   In this report, we refer to assets, obligations, commitments and liabilities in our financial statements in USD.   These dollar references are based on the exchange rate of NTD to USD, determined as of a specific date.   Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of USD which may result in an increase or decrease in the amount of our obligations (expressed in USD) and the value of our assets, including accounts receivable (expressed in USD).

 

 

 

   

PART I.  FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Balance Sheets

(Unaudited)

 

		September 30,				December 31,
		2014				2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	19,948			$	4,184
Inventory			777				-
Prepaid expenses			1,529				-
Other receivables			-				7,611
Total current assets			22,254				11,795
Property and equipment, net of accumulated depreciation			-				27,456
TOTAL ASSETS		$	22,254			$	39,251
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expense		$	73,425			$	2,522
Accrued expense-related party			573				-
Total current liabilities			73,998				2,522
Loan payable-related party			149,500				149,500
TOTAL LIABILITIES			223,498				152,022
STOCKHOLDERS' DEFICIT:
Common stock, $0.0001 par value; 100,000,000 shares authorized, 12,500,001 shares issued and outstanding			1,250				1,250
Additional paid-in capital			98,750				98,750
Accumulated other comprehensive income (loss)			(302	)			84
Accumulated deficit			(300,942	)			(212,855	)
Total stockholders' deficit			(201,244	)			(112,771	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	22,254			$	39,251

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Statements of Operations

and Comprehensive Loss

(Unaudited)

 

		Three Months				Three Months				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Revenues		$	325			$	2,714			$	18,110			$	24,123
Cost of revenues			128				2,928				784				12,228
Gross profit			197				(214	)			17,326				11,895
Operating expenses:
Selling			-				30,005				-				48,984
General and administrative			34,041				21,054				103,969				98,240
Total operating expenses			34,041				51,059				103,969				147,224
Loss from operations			(33,844	)			(51,273	)			(86,643	)			(135,329	)
Other income (expense):
Other income (expense)			-				(1,356	)			107				(801	)
Loss from sale of property and equipment			-				-				(1,551	)			-
Interest income			-				-				-				57
Total other income (expense)			-				(1,356	)			(1,444	)			(744	)
Net loss			(33,844	)			(52,629	)			(88,087	)			(136,073	)
Other comprehensive income (loss)
Foreign currency translation income (loss)			(483	)			420				(386	)			(2,078	)
Comprehensive loss		$	(34,327	)		$	(52,209	)		$	(88,473	)		$	(138,151	)
Weighted average common shares outstanding:
Basic and diluted			12,500,001				12,500,001				12,500,001				12,500,001
Loss per common share:
Basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.01	)			(0.01	)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

JISHANYE, INC. AND SUBSIDIARY

(Formerly Yambear Bio-Tech, Inc.)

Consolidated Statements of Cash Flows

(Unaudited)

 

		Nine Months				Nine Months
		Ended				Ended
		September 30,				September 30,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(88,087	)		$	(136,073	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			493				5,464
Loss from sale of property and equipment			1,551				-
Changes in operating assets and liabilities:
Accounts receivable			-				3,271
Other receivables			7,611				(699	)
Inventory			(777	)			11,794
Deposits			-				6,899
Prepaid expenses			(1,529	)			-
Other assets			-				(4,712	)
Accounts payable and accrued expense			67,710				855
Accrued expense-related party			573				-
Advances from customers			-				(1,089	)
Other payables			-				1,016
Net cash used in operating activities			(12,455	)			(113,274	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property and equipment			-				(48,512	)
Payments for purchase of intangible assets			-				(1,730	)
Proceeds from sales of property and equipment			29,673				-
Net cash provided by (used in) investing activities			29,673				(50,242	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable-related party			-				149,500
Net cash provided by financing activities			-				149,500
Effect of exchange rate changes on cash and cash equivalents			(1,454	)			(1,471	)
NET INCREASE (DECREASE) IN CASH			15,764				(15,487	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			4,184				16,302
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	19,948			$	815
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

JISHANYE, INC. AND SUBSIDARY

(Formerly Yambear Bio-Tech, Inc.)

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1 - Organization and Basis of Presentation

 

Jishanye, Inc. (formerly Yambear Bio-Tech, Inc.) (the “Company” or “Jishanye”) was incorporated in the State of Delaware on April 12, 2012. On October 25, 2013, the Company amended its Certificate of Incorporation to change the Company's name to "Jishanye, Inc." which was approved by the Board on October 24, 2013. The Company, through its subsidiary is engaged in selling enzymes products to public consumers in Taiwan. In addition, beginning in June 2014 we began to provide funeral management services to consumers across Taiwan, and intend to expand business operations by offering death care management consultancy services to small and medium-sized enterprises of Taiwan, Hong Kong and mainland China in the future. The Company’s goal is to establish an international brand on death care management consultancy services with high quality and name recognition.  

 

The unaudited consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes. The results for the three and nine months ended September 30, 2014, are not necessarily indicative of the results to be expected for the year ending December 31, 2014.

  

Note 2 - Going Concern

 

The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate continuation of the Company as a going concern. As of September 30, 2014, the Company has accumulated deficit of $300,942. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Major shareholders will continue to fund the Company until it is able to sustain positive cash flows from operations. 

  

Note 3 - Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements were prepared in conformity with US GAAP. The Company’s functional currency is the New Taiwanese Dollar (“NTD”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Jishanye and its wholly-owned subsidiary, Jishanye (Taiwan), Inc. All significant intercompany transactions and balances were eliminated in consolidation.

 

Foreign Currency

 

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Specific estimates include the collectability of accounts receivable and the valuation of inventory, Actual results could differ from those estimates.

 

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in hand and in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

 

Inventory

 

Inventory is stated at the lower of cost or market, using the average cost method. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. As of September 30, 2014, the Company has finished goods purchased from third party of $777.

 

Property and Equipment

 

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated life of the asset.

 

Income Taxes

 

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized

 

Revenue Recognition

 

Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Service revenue is recognized when persuasive evidence of an arrangement exists, service has provided, the fee is fixed or determinable, and collectability is probable. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

   

Sales represent the invoiced value of products, net of value-added tax (“VAT”). All of the Company’s products sold in Taiwan are subject to a value-added tax of 5% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government.

  

Basic and Diluted Earnings (Loss) Per Common Share

 

Basic earnings per share is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no options, warrants or other instruments convertible into common stock outstanding during the nine months ended September 30, 2014 and 2013, therefore basic and diluted loss per share are the same.

 

Subsequent Events

 

The Company’s management reviewed all material events from September 30, 2014 through the issuance date of these financial statements for disclosure consideration.

 

 

Note 4 - Related Party Transactions

 

Loan Payable

 

In 2013, the Company issued a promissory note to a shareholder for $149,500. The promissory note is interest free and is due on demand. As of September 30, 2014, the entire balance was outstanding.

 

Employment Agreement

 

Pursuant to an employment agreement between the Company and Hsin-Lung Lin dated September 1, 2012, Hsin-Lung earns a salary of NTD32,000 (approximately $1,102) per month to serve as Chief Financial Officer of the Company. The employment agreement is for an indefinite term. Either party may terminate the agreement with at least 30 days prior notice. On September 15, 2014, the Board appointed Mei-Chun Lin to serve as new Chief Financial Officer of the Company. Hsin-Lung Lin will continue to serve as a member of the Company’s Board of Directors.

 

Operating Expenses

 

In 2014, Hsin-Lung Lin paid health and labor insurances expenses of NTD17,462 (approximately $573) on behalf of the Company.

 

Note 5 - Sale of Property and Equipment

 

On January 2014, the Company sold a vehicle to a third party for cash of $25,219. Additionally, the Company received $4,454 from the third party for reimbursement to the dealer. Net book value of the vehicle on the selling date was $26,965. The Company recorded a loss of $1,551 on disposal of the vehicle, and other comprehensive loss from the effect of exchange rate changes was $190.

 

Note 6 - Business Segments

 

The Company is made up of two operation segments: Death Care and Enzyme. Before June 2014, the Company was engaged in selling enzymes products to public consumers in Taiwan. Beginning in June 2014, the Company began providing death care management consultancy services to consumers across Taiwan.

 

The balance sheets as of September 30, 2014 and December 31, 2013 and the income statement information for the three months ended and nine months ended September 30, 2014 and 2013 of each segment is presented in US Dollars as follows:

 

		September 30, 2014																December 31, 2013
		Death Care				Enzyme				Corporate				Total				Death Care				Enzyme				Corporate				Total
Current Assets		$	-			$	777			$	21,477			$	22,254			$	-			$	-			$	11,795			$	11,795
Fixed Assets			-				-				-				-				-				-				27,456				27,456
Total assets		$	-			$	777			$	21,477			$	22,254			$	-			$	-			$	39,251			$	39,251
Current Liabilities		$	393			$	3,095			$	70,510			$	73,998			$	-			$	2,098			$	424			$	2,522
Long-Term Liabilities			-				-				149,500				149,500				-				-				149,500				149,500
Intercompany			(14,148	)			114,709				(100,561	)			-				-				92,828				(92,828	)			-
Stockholders' Equity (Deficit)			13,755				(117,027	)			(97,972	)			(201,244	)			-				(94,926	)			(17,845	)			(112,771	)
Total Liabilities and Stockholders' Equity (Deficit)		$	-			$	997			$	21,477			$	22,254			$	-			$	-			$	39,251			$	39,251

  

 

		Three Months Ended September 30, 2014																Three Months Ended September 30, 2013
		Death Care				Enzyme				Corporate				Total				Death Care				Enzyme				Corporate				Total
Revenues		$	-			$	325			$	-			$	325			$	-			$	2,714			$	-			$	2,714
Cost of Revenues			-				128				-				128				-				2,928				-				2,928
Gross Profit							197								197				-				(214	)			-				(214	)
Operating Expenses			2,428				6,543				25,070				34,041				-				40,532				10,527				51,059
Other Expenses			-				-				-				-				-				-				1,356				1,356
Net Loss		$	(2,428	)		$	(6,346	)		$	(25,070	)		$	(33,844	)		$	-			$	(40,746	)		$	(11,883	)		$	(52,629	)

 

 

		Nine Months Ended September 30, 2014																Nine Months Ended September 30, 2013
		Death Care				Enzyme				Corporate				Total				Death Care				Enzyme				Corporate				Total
Revenues		$	16,600			$	1,510			$	-			$	18,110			$	-			$	24,123			$	-			$	24,123
Cost of Revenues			-				784				-				784				-				12,228				-				12,228
Gross Profit			16,600				726				-				17,326				-				11,895				-				11,895
Operating Expenses			2,795				22,877				78,297				103,969				-				98,104				49,120				147,224
Other Expenses			-				-				1,444				1,444				-				-				744				744
Net Income (Loss)		$	13,805			$	(22,151	)		$	(79,741	)		$	(88,087	)		$	-			$	(86,209	)		$	(49,864	)		$	(136,073	)

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read this Management’s Discussion and Analysis in conjunction with the Consolidated Financial Statements and the related notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

 

Overview

 

We were incorporated in the State of Delaware on April 12, 2012 under the name “Yambear Bio-Tech, Inc.” On October 24, 2013, we changed our corporate name to “Jishanye, Inc.” Through our subsidiary we are engaged in selling enzymes products to public consumers in Taiwan. Beginning in June 2014 the Company began providing death care management consultancy services to consumers across Taiwan.

 

The Company currently provides death care consultancy services to consumers across Taiwan. Our goal is to offer death care management consultancy services to small and medium-sized enterprises of Taiwan, Hong Kong and mainland China and establish an international brand with high quality and name recognition.

 

The Company will provide a variety of death care management consultancy services which cover the purchase of cemetery property, funeral and cemetery merchandises and funeral services. In addition, the Company is capable of offering consultancy services for pre-arranged funeral and pre-arranged death care contracts.

 

Going Concern

 

The consolidated financial statements included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation as a going concern. We have an accumulated deficit of $300,942 since exception, and have incurred non-recurring revenue. These conditions raise substantial doubt as to our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Major shareholders will continue to fund the Company until it is able to sustain positive cash flows from operations.

 

Results of Operations

 

Comparison of the three months ended September 30, 2014 and 2013

 

Revenues. For the three months ended September 30, 2014 and 2013, we had revenue of $325 and $2,714, respectively. The decrease was mainly due to decrease in sales of our enzyme products in 2014.

 

Cost of revenues. For the three months ended September 30, 2014 and 2013, we had cost of revenues of $128 and $2,928, respectively. The decrease was a direct result of the decrease in sales of enzyme products.

 

Selling expenses. For the three months ended September 30, 2014 and 2013, we had selling expense of $0 and $30,005, respectively. The decrease was due to a revision in our business plan where we stopped spending funds to promote the original enzyme business.

 

General and administrative expenses. For the three months ended September 30, 2014 and 2013, we had general and administrative expenses of $34,041 and $21,054, respectively. The increase was due to the increase of professional service fees for SEC filing.

 

Net loss. For three months period ended September 30, 2014 and 2013, our net loss was $33,844 and $52,629, respectively. The decrease was due to a revision in our business plan where we stopped spending funds to promote original enzyme business in 2014.

 

Comparison of the nine months ended September 30, 2014 and 2013

 

Revenues. For the nine months ended September 30, 2014 and 2013, we had revenue of $18,110 and $24,123, respectively. The decrease was due to combination of the significant decrease in sales of our enzyme products in 2014, partially offset by an increase in consulting revenue of $16,600 generated by the Company as result of our new line of death care management consulting business.

 

Cost of revenues. For the nine months ended September 30, 2014 and 2013, we had cost of revenues of $784 and $12,228, respectively. The decrease was a direct result of the decrease in sales of enzyme products.

 

Selling expenses. For the nine months ended September 30, 2014 and 2013, we had selling expense of $0 and $48,984, respectively. The decrease was due to a revision in our business plan where the Company stopped spending funds to promote the original enzyme business.

 

General and administrative expenses. For the nine months ended September 30, 2014 and 2013, we had general and administrative expenses of $103,969 and $98,240, respectively. The increase was due to the increase of professional service fees for filing.

 

Net loss. For nine months period ended September 30, 2014 and 2013, our net loss was $88,087 and $136,073, respectively. The decrease was a combination of increasing consulting revenues and the Company spending less in costs and selling expenses.

 

Liquidity and Capital Resources

 

On July 16, 2012, we raised $100,000 from the sale of 12,500,001 shares of our common stock and we received $149,500 from the issuance of a loan payable that were used to fund our operations in 2013. As of September 30, 2014, we had cash on hand of $19,948.

 

We used $12,455 and $113,274 of cash in our operations for the nine months ended September 30, 2014 and 2013, respectively, the decrease is mainly attributable to our scaling down of the enzyme selling business.

 

We received $29,673 and used $50,242 of cash in investing activities for the nine months ended September 30, 2014 and 2013, respectively. The change is due to the sale of Company property and equipment in 2014 and the purchase of property and equipment in 2013.

 

We received $0 and $149,500 of cash in financing activities for the nine months ended September 30, 2014 and 2013, respectively. The decrease was due to not having any financing activities for the nine-month period ended September 30, 2014.

 

We plan to fund our operations from loans from our major shareholders and plan to raise equity capital by offering shares of our common stock to investors.

 

On January 15, 2013, our prior Chief Executive Officer, Chief Financial Officer and Chairman of the Board, Mr. Lin Hsin-Lung, extended a loan in the amount of $149,500 to the Company. The loan is due on demand and has no interest obligations. On September 15, 2014, the Board appointed Mei-Chun Lin to serve as new Chief Financial Officer of the Company. Hsin-Lung Lin will continue to serve as a member of the Company’s Board of Directors. 

 

The estimated budget for 2014 is as follows:

 

Salaries and benefits		$	40,000
Management overhead			5,783
Professional fees			90,000
General overhead			15,750
Total		$	151,533

  

We believe we will be able to raise the necessary capital to carry out our business plan, but there is no guarantee that we will be able to do so.

 

Stock Acquisition by Chief Executive Officer

 

On October 23, 2014, Chun-Hao Chang, the Company’s Chairman of the Board of Directors, Chief Executive Officer and President, completed the purchase of 1,200,000 shares of the Company’s common stock for a purchase price of $5,000 from Yambear Holding Limited in a private transaction. As a result of the stock purchase Chun-Hao Chang holds approximately 9.6% of the Company’s common stock.

 

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

 

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Foreign Currency

 

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income (“OCI”).

 

Revenue Recognition

 

Our revenue recognition policies comply with SEC Staff Accounting Bulletin 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of ours exists and collectability is reasonably assured. We provide sales incentive such as buy a dozen and get one free. We recognize the cost of the free product at the time of sale. We do not provide unconditional return or any other sales incentives. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

 

Sales represent the invoiced value of products, net of value-added tax (“VAT”). All of our products sold in Taiwan are subject to a value-added tax of 5% of the gross sales price. This VAT may be offset by VAT paid by us on raw materials and other materials included in the cost of producing the finished product. We record VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as we act as an agent for the government.

 

JOBS Act

 

We are an “emerging growth company” as defined in the recently-enacted JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not “emerging growth companies.” As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain reporting and disclosure requirements, which may make our future public filings different than that of other public companies.

 

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

We will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a “large accelerated filer” as defined under the federal securities laws.

  

Recent Accounting Pronouncements

 

The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s financial statements.

 

Off-Balance Sheet Arrangements

 

None.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not Applicable.

 

 

ITEM 4. INTERNAL CONTROLS OVER FINANCIAL REPORTING.

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2014 and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective due to the material weaknesses, which is that we did not sufficiently segregate duties over incompatible functions at our corporate headquarters.

 

Changes in internal control over financial reporting

 

During the three months ended September 30, 2014, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

  

  

PART II.  OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS.

 

Not applicable

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

N/A.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS

 

(a)           Exhibits:

  

Exhibit
Number		Description of Exhibit
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1*		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

    

*The certification attached as Exhibits 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

  

 

  

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 14, 2014	By:	/s/ Chun-Hao Chang
	Name:	Chun-Hao Chang
	Its:	Chief Executive Officer
		(Principal Executive Officer)

 

Date: November 14, 2014	By:	/s/ Mei-Chun Lin
	Name:	Mei-Chun Lin
	Its:	Chief Financial Officer
		(Principal Financial and Accounting Officer)