SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 2054

 

FORM 10-Q

 

(Mark One)

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

  

For the quarterly period ended September 30, 2017

 

OR

 

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the transition period from           to             

 

Commission file number 000-55068

 

HEYU LEISURE HOLIDAYS CORPORATION

(Exact name of registrant as specified in its charter)

  

Delaware		46-3601223
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

Westwood Business Center

611 South Main Street

Grapevine, Texas 76051

(Address of principal executive offices) (zip code) 

 

(+86) 592 504 9622

(Registrant’s telephone number, including area code)

 

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  ☐

 

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

Yes  ☐  No  ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ☒   No  ☐

 

 Indicate the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.

 

Class		Outstanding at November 14, 2017
Common Stock, par value $0.0001		60,001,000
Documents incorporated by reference:		None

 

 

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HEYU LEISURE HOLIDAYS CORPORATION

For the quarterly period ended September 30, 2017

 

		Page
FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016		1
Condensed Consolidated Statements of Operations for the Three and Nine months Ended September 30, 2017 and September 30, 2016 (unaudited)		2
Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2017 and September 30, 2016 (unaudited)		3
Notes to Condensed Consolidated Financial Statements (unaudited)		4 - 15

  

 

HEYU LEISURE HOLIDAYS CORPORATION

Condensed Consolidated Balance Sheets

As of September 30, 2017 and December 31, 2016

 

		Sep 30,				December 31,
		2017				2016
		(Unaudited)
ASSETS
Current assets
Cash		$	2,244			$	9,084
Inventory			422				88
Amount due from related parties			95,012				23,886
Total current assets			97,678				33,058
Other assets
Deposit, non-current			572				22,538
Prepayment			0				230
Property and leasehold improvements, net			20,789				139,526
Intangible asset			0				4,116
Total non-current assets			21,361				166,410
Total assets			119,039				199,468
LIABILITIES AND STOCKHOLDERS' (DEFICIT)/ EQUITY
Current liabilities
Account payable			24,007				23,947
Amount due to related parties			1,637,725				1,257,961
Other payables and accruals			662,543				470,058
Tax payable			42,774				40,563
Total liabilities			2,367,049				1,792,529
Stockholders' deficit
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding
Common stock, $0.0001 par value, 100,000,000 shares authorized; 60,001,000 and 60,001,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.			6,000				6,000
Additional paid-in capital			5,098,747				5,098,747
Accumulated deficit			(7,364,678	)			(6,738,047	)
Accumulated other comprehensive income			11,921				40,239
Total stockholders' deficit			(2,248,010	)			(1,593,061	)
Total liabilities and stockholders' deficit		$	119,039			$	199,468

 

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

 

 

HEYU LEISURE HOLIDAYS CORPORATION

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2017 and 2016

(Unaudited)

 

		For the three months ended								For the nine months ended
		Sep 30,				Sep 30,				Sep 30,				Sep 30,
		2017				2016				2017				2016
Revenue		$	0			$	46,978			$	5,207			$	106,247
Cost of revenue			0				69,660				64,558				253,457
Gross Loss			0				(22,682	)			(59,351	)			(147,210	)
Operating costs and expenses:
Selling expenses			0				99				0				909
General & Administrative expenses			226,633				96,851				469,154				317,559
Impairment Cost			921				0				95,720				0
Finance expenses			187				181				2,406				618
Loss before income taxes			(227,741	)			(119,813	)			(626,631	)			(466,296	)
Income tax			0				0				0				0
Net loss			(227,741	)			(119,813	)			(626,631	)			(466,296	)
Other comprehensive income
Foreign currency translation adjustments			(21,828	)			1,341				(28,318	)			5,544
Comprehensive income		$	(249,569	)		$	(118,472	)		$	(654,949	)		$	(460,752	)
Loss per share-basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.01	)
Weighted average shares-basic and diluted			60,001,000				60,001,000				60,001,000				60,001,000

 

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

 

 

HEYU LEISURE HOLIDAYS CORPORATION

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2017 and 2016

(Unaudited)

 

		For the nine months ended				For the nine months ended
		Sep 30, 2017				Sep 30, 2016
Operating activities
Net loss		$	(626,631	)		$	(466,296	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			30,210				72,779
Loss from disposal of fixed assets			671				0
Impairment of assets			95,720				0
Changes in operating assets and liabilities:
Account receivable			0				9,263
Inventory			90				1,335
Deposit			22,441				(2,934	)
Prepaid expense and prepaid rent			(176	)			1,103
Account payable			(1,015	)			8,870
Other payables			128,467				140,029
Net cash used in operating activities			(350,223	)			(235,851	)
Investing activities:
Proceeds from disposal of fixed assets			1,497				0
Purchase of property and equipment			(1,840	)			0
Net cash used in investing activities			(343	)			0
Financing activities
Repayments to related parties			(24,233	)			(7,675	)
Advances from related parties			367,529				242,917
Net cash flows provided by financing activities			343,296				235,242
Effect of exchange rate changes on cash and cash equivalent			430				(18	)
Net decrease in cash			(6,840	)			(627	)
Cash at the beginning of the year			9,084				2,762
Cash at the end of the year		$	2,244			$	2,135

 

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

 

 

HEYU LEISURE HOLIDAYS CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

NATURE OF OPERATIONS

 

Heyu Leisure Holidays Corporation (“Heyu Leisure” or “the Company”) was incorporated in July 2013 under the laws of the state of Delaware.

 

On February 9, 2015, Heyu Leisure Holiday Corp. (“Heyu Leisure” or the “Group” or the “Registrant”) merged with Heyu Capital Ltd (“Heyu Capital”), a corporation existing under the laws of Hong Kong (Special Administrative Region of the PRC). Pursuant to the merger, the Registrant acquired all of the outstanding common shares of Heyu Capital through the issuance of common shares of the Registrant to the shareholders of Heyu Capital.

 

As a result of the Merger and pursuant to the Resolution, Heyu Capital has become a wholly-owned subsidiary of the Registrant and the Registrant issued shares of its common stock to shareholders of Heyu Capital at a rate of 1,000 shares of the Registrant’s common stock for all Heyu Capital common share. Immediately prior to the Merger, the Registrant had 60,000,000 shares of common stock outstanding.

 

Following the Merger, the Registrant has 60,001,000 shares of common stock outstanding after the share exchange and the issuance of 1,000 common shares to the shareholder of Heyu Capital.

 

The transaction has been accounted for as a business combination under a method similar to the pooling-of-interest method (“Pooling-of-Interest”) as the Registrant and Heyu Capital are both under common control with by our majority shareholder. In accordance with Accounting Standards Codification (“ASC”) 805-50-25, it indicated that the financial statements of the receiving entity shall report results of operations for the period in which the transfer occurs as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period. Results of operations for that period will thus comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Further in 805-50-45-5, indicated that the financial statements and financial information presented for prior years also shall be retrospectively adjusted to furnish comparative information. All adjusted financial statements and financial summaries shall indicate clearly that financial data of previously separate entities are combined.

 

The operating entity- Wujiaer Hotel Co., Ltd (“Wujiaer”) has been acquired via Xiamen Heyu Hotel Management Co (“Xiamen Heyu”) on January 25, 2014. As a result of the acquisition, Xiamen Heyu has become its immediate holding company, Heyu Capital becomes its intermediate holding company and the Registrant has become an ultimate holding company of Wujiaer.

 

In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, We evaluate each investment in a business to determine if we should account for the investment as a cost-basis investment, an equity investment, a business combination or a common control transaction. An investment in which we do not have a controlling interest and which we are not the primary beneficiary but where we have the ability to exert significant influence is accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805, Business Combinations, we record the assets acquired and liabilities assumed at our estimate of their fair values on the date of the business combination. Our assessment of the estimated fair value of each of these can have a material effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct impact on the amount to recognize as goodwill, which is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of the expected use of the asset, the expected cost to extinguish a liability or our expectations related to the timing and the successful completion of the integration of the business. Such estimates are inherently difficult and subjective and can have a material impact on our financial statements.

 

Wujiaer hotel terminated its operation in April 2017. The Company decides to terminate the operation of Wujiaer Hotel is because the streets around the hotel is under renovation and will last over one year thus causing slow business for the hotel. The Company is currently actively looking and negotiating another hotel. As of the report date, the Company has not found any interested hotel. The Company believes that once future acquisition of hotel completes the Company will improve its operation results and cash flow.

  

 

ORGANIZATIONAL STRUCTURE

 

The following diagram illustrates our corporate and ownership structure, the place of formation and the ownership interests of our subsidiaries as of September 30, 2017 after the acquisition.

  

 

 

BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the period ended December 31, 2016 as filed with the SEC.

  

BASIS OF CONSOLIDATION

 

The consolidated financial statements include the financial statements of our company and its subsidiaries. All significant transactions and balances between our company and its subsidiaries have been eliminated upon consolidation.

 

A subsidiary is an entity in which our company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, and has the power to cast a majority of votes at meetings of the board of directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.

 

 

ASC 810 “Consolidation”, which provides guidance on the identification of and financial reporting for entities over which control is achieved through means other than voting interests, requires certain variable interest entities to be consolidated by the primary beneficiary of the entity.

 

The Company evaluates our business relationships such as those with franchisees to identify potential variable interest entities. Generally, these businesses qualify for the business scope exception under the consolidation guidance. Therefore, we have concluded that consolidation of any such entities is not appropriate for the periods.

  

BUSINESS COMBINATIONS

 

U.S. GAAP requires that business combinations be accounted for under the acquisition purchase method. From January 1, 2009, the Company adopted ASC 805 “Business Combinations”. Following this adoption, the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, the fair value of the non-controlling interests and the acquisition date fair value of any previously held equity interest in the acquired over (ii) the fair value of the identifiable net assets of the acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the entity acquired, the difference is recognized directly in the statements of operations. 

 

The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections and the assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets and forecasted life cycle and forecasted cash flows over that period. Although the Company believes that the assumptions applied in the determinations that the Company has made are reasonable based on information available at the date of acquisition, actual results may differ from the forecasted amounts and the difference could be material.

 

USE OF ESTIMATES

 

The preparation of unaudited consolidated financial statements in conformity with 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

REVENUE RECOGNITION

 

Revenue from leased hotel is derived from hotel operations, mainly including the rental of rooms, food and beverages sales from leased hotels. Revenue is recognized when rooms are occupied and food and beverage are sold. Persuasive evidence of an arrangement, fixed price, and service delivered and collection reasonably assured.

  

ACCOUNT RECEIVABLE, NET

 

Accounts receivables mainly consist of amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers.

 

INVENTORIES

 

Inventories mainly consist of food and beverages, small appliances, bedding and daily consumables. Small appliances, bedding and daily consumables replacement are expensed when used.

 

 

PROPERTY AND LEASEHOLD IMPROVEMENTS, NET

 

Property and leasehold improvements, net are stated at cost less accumulated depreciation and amortization. The renovations, betterments and related expenses incurred during the construction are capitalized. Depreciation and amortization of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows:

 

Leasehold improvements			5-10 years
Furniture, fixtures and equipment			3-5 years

  

Construction in progress represents leasehold improvements under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. The useful live for leasehold improvement is shorter of the term of the lease or the estimated useful lives of the assets.

 

IMPAIRMENT OF LONG-LIVED ASSETS

 

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. Impairment expenses for long-lived assets amounted to $91,647 and $0 for the nine months ended September 30, 2017 and 2016, respectively. Impairment expenses for long-lived assets amounted to $0 and $0 for the three months ended September 30, 2017 and 2016, respectively. The impairment expense is caused by the discontinued operation of Wujiaer Hotel in April 2017.

 

BUSINESS TAX AND RELATED TAXES

 

The Company is subject to business tax, education surtax and urban maintenance and construction tax on the services provided in the PRC. Such taxes are primarily levied based on revenue at applicable rates and are recorded as a reduction of revenue.

 

INCOME TAX

 

The Company has implemented certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertain tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. The Company adopted the provisions of ASC 740 and have analyzed filing positions in each PRC jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified the PRC as our “major” tax jurisdiction. Generally, the Company remains subject to PRC examination of our income tax returns annually.

 

The Company believes that our income tax positions and deductions will be sustained by an audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, the Company did not record a cumulative effect adjustment, related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

 

INTANGIBLE ASSETS

 

Intangible assets with definite useful lives, representing software, are amortized over their estimated useful lives of 5 years using the straight-line method, which represents the economic benefit pattern of the intangible assets.

 

The Company evaluates its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. Impairment expenses for intangible assets amounted to $4,072 and $0 for the nine months ended September 30, 2017 and 2016, respectively. Impairment expenses for intangible assets amounted to $0 and $0 for the three months ended September 30, 2017 and 2016, respectively. The impairment expense is caused by the discontinued operation of Wujiaer Hotel in April 2017.

 

LEASE

 

A lease of which substantially all the benefits and risks incidental to ownership remain with the lessor is classified as an operating lease. The Company is currently classified it as operating lease.

 

CONCENTRATION OF RISK

 

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality banking institutions. The Company didn’t have cash balances in excess of the Federal Deposit Insurance Corporation limit as of September 30, 2017 and December 31, 2016, respectively. And the Company periodically evaluates the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

 

FAIR VALUE

 

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3 inputs are unobservable inputs for the asset or liability.

 

The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred.

 

FOREIGN CURRENCY TRANSLATION

 

The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company located in the Hong Kong and PRC are maintained in their local currency, the Renminbi (“RMB”) and Hong Kong Dollar (“HKD”), which are the functional currency of these entities.

  

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Retained earnings and equity are translated using the historical rate. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income.

 

 

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

  

		September 30,  2017		December 31, 2016		September 30, 2016
Period-end spot rate		US $1=RMB 6.6389		US $1=RMB 6.9437		US $1=RMB 6.6704
Average rate		US $1=RMB 6.8046		US $1=RMB 6.6430		US $1=RMB 6.5783

 

COMPREHENSIVE INCOME (LOSS) 

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income requires that all items are required to be recognized under current accounting standards as components of comprehensive loss are reported in a financial statement that is displayed with the same prominence as other financial statements. For the periods presented, the Company’s comprehensive loss includes net loss and foreign currency translation adjustments and is presented in the statements of operations and comprehensive loss. 

  

LOSS PER COMMON SHARE

 

Earnings (loss) per share is calculated in accordance with Accounting Standards Codification (“ASC”) 260 Earnings per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of common shares and dilutive common share equivalents. Dilutive common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

 

 

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows”. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4)Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

  

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory”, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

 

In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. The amendments affect reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. Specifically, the amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the Effective Date”, which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will be effective for the Company’s fiscal year beginning January 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue versus Net)”, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing”, which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and Practical Expedients”, which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”, which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. Preliminarily, we plan to adopt Topic 606 in the first quarter of our fiscal 2018 using the retrospective transition method, and are continuing to evaluate the impact our pending adoption of Topic 606 will have on our consolidated financial statements. The Company’s current revenue recognition policies are generally consistent with the new revenue recognition standards set forth in ASU 2014-09. Potential adjustments to input measures are not expected to be pervasive to the majority of the Company’s contracts. While no significant impact is expected upon adoption of the new guidance, the Company will not be able to make that determination until the time of adoption based upon outstanding contracts at that time.

 

 

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. 

   

NOTE 2 – PROPERTY AND EQUIPMENT, NET

 

Property and equipment, net consist of the following:

 

		As of September 30, 2017 (Unaudited)				As of December 31, 2016
Cost:
Leasehold improvement		$	460,594			$	440,376
Furniture, fixtures and equipment			134,386				133,640
Total Cost:			594,980				574,016
Less: Accumulated depreciation			(480,256	)			(434,490	)
Net value before Impairment			114,724				139,526
Less: Impairment			(93,935	)			-
Total:		$	20,789			$	139,526

 

Depreciation expense was $30,082 and $87,265 for the nine months ended September 30, 2017 and September 30, 2016, respectively. Depreciation expense was $1,961 and $27,846 for the three months ended September 30, 2017 and September 30, 2016, respectively.

 

During the nine months ended September 30, 2017, the Company sold property and equipment at net cost of $2,168 for cash of $1,497. Loss of $671 was booked.

 

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. Impairment expenses for long-lived assets amounted to $91,647 and $0 for the nine months ended September 30, 2017 and 2016, respectively. Impairment expenses for long-lived assets amounted to $0 and $0 for the three months ended September 30, 2017 and 2016, respectively. The impairment expense is caused by the discontinued operation of Wujiaer Hotel in April 2017.

 

 

NOTE 3 – INTANGIBLE ASSETS

 

Intangible assets includes the following:

 

		As of September 30, 2017 (Unaudited)				As of December 31, 2016
Cost:
Trademark		$	678			$	648
Software use right			7,200				6,884
Total Cost:			7,878				7,532
Less: Accumulated depreciation			(3,704	)			(3,416	)
Net value before impairment			4,174				4,116
Less: Impairment			(4,174	)			-
Total:		$	-			$	4,116

 

Amortization expenses amounted to $128 and $511 for the nine months ended September 30, 2017 and 2016, respectively. Amortization expenses amounted to $0 and $182 for the three months ended September 30, 2017 and 2016, respectively.

 

NOTE 4 – DEPOSIT, NON-CURRENT

 

		As of September 30, 2017 (Unaudited)				As of December 31,  2016
Deposit for lease of the hotel building		$	-			$	22,538
Deposit for lease		$	572			$	-

 

$22,538 was deposited for the lease of Wujiaer hotel building. The Company lost the lease due to it stopped paying the lease since March 2017. According to the lease agreement, deposit was taken by the landlord. In addition, the lease agreement specifies that the Company need to pay six months rent if the Company terminates lease before the lease agreement ends. The Company accrued six months lease expenses.

 

$572 was deposited for the lease of a dorm for Xiamen Heyu. The Company leased a dorm with a monthly fee of $411.50 and with a term from July 27, 2017 to July 26, 2018. 

 

The long term deposits are not within the scope of the accounting guidance regarding interests on receivables and payables, because they are intended to provide security for the counterparty to the office rental agreements. Therefore, the deposits are recorded at costs.

  

NOTE 5 – OTHER PAYABLE

   

		As of September 30, 2017 (Unaudited)				As of December 31, 2016
Payroll Payable		$	199,678			$	171,515
Rent Payable			452,365				261,418
Audit Payable			10,500				37,125
Total:		$	662,543			$	470,058

 

 

NOTE 6 – COMMITMENT

 

Operating lease commitment

 

The Company has entered into lease agreement for a leased hotel which it operates. Such lease is classified as operating lease.

 

As of September 30, 2017, the Company had only one leased hotel with the area of 3,000 square meters in operation, namely Wu JiaEr Hotel, which is located at 4F, Lotus Building, No 194 Jiahe Road, Siming District, Xiamen, China. Under lease arrangement, for the year of 2017, the company pays a monthly rental rate of RMB 148,500 (approximately $21,600). The lease was signed October 1, 2013 for a term of twelve years and is set to expire September 30, 2025. $22,538 was deposited for the lease of Wujiaer hotel building. The Company lost the lease due to it stopped paying the lease since March 2017. According to the lease agreement, deposit was taken by the landlord. In addition, the lease agreement specifies that the Company need to pay six months rent if the Company terminates lease before the the lease agreement ends. The Company accrued six months lease expenses.

 

The Company leases an office in Danyuan 10, District C, Floor 6, Building 32, Shiding Road, Siming District, Xiamen City, Fujian Province. The lease was commenced and used from July 13, 2016 and expired on July 12, 2017. The monthly rent is RMB 21,000.00 (approximately $3,050). 

 

The Company leased a dorm with a monthly fee of $411.50 and with a term from July 27, 2017 to July 26, 2018. 

 

Lease expenses amounted to $193,928 and $193,039 for the nine months ended September 30, 2017 and 2016, respectively. Lease expenses amounted to $45,908 and $69,102 for the three months ended September 30, 2017 and 2016, respectively. 

 

Future minimum lease payments is $4,115 during one year after September 30, 2017.

 

NOTE 7 – GOING CONCERN

 

The Company sustained a net loss $626,631 and $466,296 during the nine months ended September 30, 2017 and 2016, respectively. The Company has sustained operating losses of $7,364,678 since inception. Working capital amounted to $(2,269,371) and $(1,759,471) as of September 30, 2017 and December 31, 2016, respectively. The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional financing from its stockholders and / or other third parties.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.

 

 

NOTE 8 – STOCKHOLDER’S EQUITY/(Deficit)

 

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. 

 

The Company redeemed an aggregate of 20,000,000 of the then 20,000,000 shares of outstanding stock at a redemption price of $.0001 per share for an aggregate redemption price of $2,000.

  

James Cassidy and James McKillop, both directors of the Company and the then president and vice president, respectively, resigned such directorships and all offices of the Company. Neither Messrs. Cassidy nor McKillop retain any shares of the Company’s common stock. 

 

Ban SiongAng was named as Sole Director of the Company and serves as its Chief Executive Officer. On January 14, 2014, the Company issued 1,000,000 shares of its common stock at par representing 100% of the then total outstanding 1,000,000 shares of common stock. 

 

On August 8, 2014, the Company issued additional 59,000,000 shares of its common stock at par value for an aggregated amount of $5,900 in cash. Accordingly, the total outstanding of common stock is 60,000,000 shares as at September 30, 2014. These securities cannot be sold, transferred or otherwise disposed of by any investor to any other person or entity unless subsequently registered under the Securities Act of 1933, as amended, and under applicable law of the state or jurisdiction where sold, transferred or disposed of, unless such sale, transfer or disposition shall qualify under an allowed exemption to such registration. 

 

Hung Seng Tan is appointed as the Executive Director and Guan Chuan Tan is appointed as the Director of the Company during the period. Ban SiongAng is appointed as Managing Director and serves as Chief Executive Officer subsequent to the appointment of new Directors.

 

On February 9, 2015, Heyu Leisure Holiday Corp. (“Heyu Leisure” or the “Company” or the “Registrant”) merged with Heyu Capital Ltd (“Heyu Capital”), a corporation existing under the laws of Hong Kong (Special Administrative Region of the PRC). Pursuant to the merger, the Company acquired all of the outstanding common shares of Heyu Capital through the issuance of common shares of the Company to the shareholders of Heyu Capital. 

 

As a result of the Merger and pursuant to the Resolution, Heyu Capital has become a wholly-owned subsidiary of the Company and the Company issued shares of its common stock to shareholders of Heyu Capital at a rate of 1,000 shares of the Registrant’s common stock for all Heyu Capital common share. Immediately prior to the Merger, the Registrant had 60,000,000 shares of common stock outstanding. 

 

Following the Merger, the Company has 60,001,000 shares of common stock outstanding after the share exchange and the issuance of 1,000 common shares to the shareholder of Heyu Capital.

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. Those related parties are controlled by Ang Ban Siong and who is served as the Director of the companies.

  

Amount due from related parties are related to the advances to stockholder/ related companies was $95,012 and $23,886 for September 30, 2017 and December 31 2016, respectively. These receivables are interest free, due on demand and without collateral.

 

Amount due to a related party is comprised of the advances from the stockholder/ related companies for working capital of the group as of $1,638,569 and $1,257,961, respectively as of September 30, 2017 and December 31, 2016, respectively. These payables are interest free, due on demand and without collateral.

 

NOTE 10 – SUBSEQUENT EVENTS 

  

Management has evaluated subsequent events through November 15, 2017, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2017 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, Subsequent Events.

 

  

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

 

The following discussion should be read in conjunction with our audited consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

 

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the software industry, the success of our product development, marketing and sales activities, vigorous competition in the software industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

 

Overview

 

Heyu Leisure Holidays Corporation (the “Company”) was incorporated on July 2, 2013 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

 

On January 14, the Company issued 1,000,000 shares of its common stock at par representing 100% of the then total outstanding 1,000,000 shares of common stock.

 

On August 8, 2014, the Company issued additional 59,000,000 shares of its common stock at par. Accordingly, the total outstanding of common stock is 60,000,000 shares as at 30 September 2014.

 

Hung Seng Tan is appointed as the Executive Director and Guan Chuan Tan is appointed as the Director of the Company during the period. Ban Siong Ang is appointed as Managing Director and serves as Chief Executive Officer subsequent to the appointment of new Directors.

 

On February 9, 2015, Heyu Leisure Holiday Corp. (“Heyu Leisure” or the “Company” or the “Registrant”) merged with Heyu Capital Ltd (“Heyu Capital”), a corporation existing under the laws of Hong Kong (Special Administrative Region of the PRC). Pursuant to the merger, the Company acquired all of the outstanding common shares of Heyu Capital through the issuance of common shares of the Company to the shareholders of Heyu Capital.

 

As a result of the Merger and pursuant to the Resolution, Heyu Capital has become a wholly-owned subsidiary of the Company and the Company issued shares of its common stock to shareholders of Heyu Capital at a rate of 1,000 shares of the Registrant’s common stock for all Heyu Capital common share. Immediately prior to the Merger, the Registrant had 60,000,000 shares of common stock outstanding.

 

Following the Merger, the Company has 60,001,000 shares of common stock outstanding after the share exchange and the issuance of 1,000 common shares to the shareholder of Heyu Capital.

 

The Company specializes in managing and operating hotel chains in China via selected mergers, acquisitions and joint ventures, with a focus on providing a full range of services to its hotels and amenities to their guests.

 

The Company plans to establish hotel chains synonymous with in-house leisure, and to meet the needs of business and recreational travelers alike. To achieve this goal, the Company intends to be among the first budget hotels in the world to offer a wide variety of mobile office options in each of its hotels, including conference facilities, audio/video equipment, Internet access and staff that can help plan and conduct guests’ meetings.

 

 

The Company also plans to offer select complimentary beverages and other services to hotel guests. The Company will also offer memberships for Heyu Hotel leisure clubs. Club members will be entitled to complimentary drinks, food and other services when they visit club facilities.

 

The operating entity- Wujiaer Hotel Co., Ltd (“Wujiaer”) has been acquired via Xiamen Heyu Hotel Management Co (“Xiamen Heyu”) on January 25, 2014. As a result of the acquisition, Xiamen Heyu has become its immediate holding company, Heyu Capital becomes its intermediate holding company and the Registrant has become an ultimate holding company of Wujiaer.

 

Wujiaer hotel terminated its operation in April 2017. The Company is currently in the process of effectuating plans to own and operate a new hotel development that the Company expects will conform to the specifications set forth in its business model.

 

Potential Revenue

 

The Company expects to earn potential revenue from licensing its brand name, initial and ongoing management fees and hotel leisure club membership sales. The Company also receives revenue from its hotels based on the number of room rented each day. The rate of occupancy is directly correlated to profitability.

 

The Company’s revenue contribution is mainly from the source of the customers as listed in below categories:

 

1) Online Booking Business

2) Traveling Agent

3) General walk in customer

 

Alternative Financial Planning

 

The Company has no alternative financial plans at the moment. If the Company is not able to generate increased revenues and profits and/or successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to expand its business plan or strategy over the next two years will be jeopardized.

 

Results of Operations for three months ended September 30, 2017 and September 30, 2016

 

		For the three month ended September 30,
		2017				2016
Revenue		$	-			$	46,978
Cost of revenue			-				(69,660	)
Operating costs and expenses			(227,416	)			(97,131	)

 

The revenue decreased from $46,978 to $0 from the three months ended September 30, 2016 to the three months ended September 30, 2017. These decreases resulted primarily due to that the Company terminated its hotel operation in April 2017. The Company decides to terminate the operation of Wujiaer Hotel is because the streets around the hotel is under renovation and will last over one year thus causing slow business for the hotel. The Company is currently actively looking and negotiating another hotel. As of the report date, the Company has not found any interested hotel. The Company believes that once future acquisition of hotel completes the Company will improve its operation results and cash flow.

 

The decrease in cost of revenue is consistent with the decrease of revenue from the three months ended September 30, 2016 to September 30, 2017, respectively. The cost of revenue consists of water, electricity, rental and related taxes of hotel.

 

 

The Company operating expenses increased from $97,131 to $227,741 from the three months ended September 30, 2016 to September 30, 2017. The increase in operating expense was mainly due to increased lease expenses and offset by decreased general & administrative expenses due to ceased operation of Wujiaer Hotel. The increased lease expense in three months ended September 30, 2017 is due to in September the Company accrued six months lease expense as termination penalty according to the lease termination terms. 

 

Results of Operations for nine months ended September 30, 2017 and September 30, 2016

 

		For the nine month ended September 30,
		2017				2016
Revenue		$	5,207			$	106,247
Cost of revenue			(64,558	)			(253,457	)
Operating costs and expenses			(567,280	)			(319,086	)

 

The revenue decreased from $106,247 to $5,207 from the nine months ended September 30, 2016 to the nine months ended September 30, 2017. These decreases resulted primarily due to that the Company terminated its hotel operation in April 2017. The Company decides to terminate the operation of Wujiaer Hotel is because the streets around the hotel is under renovation and will last over one year thus causing slow business for the hotel. The Company is currently actively looking and negotiating another hotel. As of the report date, the Company has not found any interested hotel. The Company believes that once future acquisition of hotel completes the Company will improve its operation results and cash flow.

 

The decrease in cost of revenue is consistent with the decrease of revenue from the nine months ended September 30, 2016 to September 30, 2017, respectively. The cost of revenue consists of water, electricity, rental and related taxes of hotel.

 

The Company operating expenses increased from $319,086 to $567,280 from the nine months ended September 30, 2016 to September 30, 2017. The increase in operating expense was mainly due to impairment expenses of $95,720 and increased rent expense. The increased lease expense in nine months ended September 30, 2017 is due to in September the Company accrued six months lease expense as early termination penalty according to the lease termination terms.  

 

Liquidity and Capital Resources

 

Working Capital

 

		As at September 30, 2017				As at December 31, 2016
Total current assets		$	97,678			$	33,058
Total current liabilities			2,367,049				1,792,529
Working capital (deficit)			(2,269,371	)			(1,759,471	)

 

As of September 30, 2017 and December 31, 2016, total current assets were $97,678 and $33,058, respectively. The increase is mainly due to increase in amount due from related parties.

 

As of September 30, 2017 and December 31, 2016, total current liabilities were $2,367,049 and $1,792,529, respectively. The increase is mainly from the advances from related parties, which paid for daily hotel operation expenses and staff salaries during the period.

 

 

The Company had negative working capital of $2,269,371 and an accumulated deficit of $7,364,678 as of September 30, 2017. The Company’s continuation as a going concern is dependent on our ability to develop profitable operations, and / or obtain additional financing from its stockholders and / or other third parties. The Company decides to terminate the operation of Wujiaer Hotel is because the streets around the hotel is under renovation and will last over one year thus causing slow business for the hotel. The Company is currently actively looking and negotiating another hotel. As of the report date, the Company has not found any interested hotel. The Company believes that once future acquisition of hotel completes the Company will improve its operation results and cash flow. 

 

Cash Flows

 

		For nine months ended September 30, 2017				For nine months ended September 30, 2016
Net cash used in operating activities		$	(350,223	)		$	(235,851	)
Net cash (used in) investing activities			(343	)			-
Net cash provided by financing activities			343,296				235,242
Effect of exchange rate changes on cash and cash equivalent			430				(18	)
Net change in cash			(6,840	)			(627	)

 

For the nine months ended September 30, 2017 and 2016, $350,223 and $235,851 were used in operating activities, respectively. The $114,372 increase in the net cash used operating activities for the nine months ended September 30, 2017 compared to the same period 2016 primarily resulted from $160,335 more net loss, $42,569 more depreciation and amortization expense, $11,562 less increase in other payables, $9,885 less increase in accounts payable, $9,263 more increase in accounts receivable, and offset by impairment loss of $95,720 and $25,375 less increase in deposit.   

  

For the nine months ended September 30, 2017 and 2016, $343 and $0 was used in investing activities, the increase is due to $1,840 purchase of property and equipment and due to proceeds of $1,497 cash received from disposal of property and equipment.

 

For the nine months ended September 30, 2017 and 2016, $343,296 and $235,242 was provided by financing activities, respectively. The increase was due to more borrowings from related parties. 

 

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and staff and raising capital. Accordingly, the Company is considered to be in the development stage. The continuation as a going concern is dependent on management’s ability to develop profitable operations, and/or obtain additional financing from its stockholders and/or other third parties.

 

The Company’s proposed activities will necessitate significant uses of capital beyond 2017. The Company is currently actively looking and negotiating another hotel. As of the report date, the Company has not found any interested hotel. The Company believes that once future acquisition of hotel completes the Company will improve its operation results and cash flow.

 

There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

 

 

As we continue development and identify specific commercialization opportunities, we will focus on those markets and opportunities for which we might be able to get external funding through joint venture agreements, strategic partnerships, or other direct investments.

 

We have no significant contractual obligations or commercial commitments not disclosed in our consolidated interim financial statements including the footnotes to the financial statements as of this date.

 

Critical Accounting Policies

 

Please refer to Note 1 in Notes to Condensed Consolidated Financial Statements.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.”

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

-

Information not required to be filed by Smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosures and Procedures

 

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company’s principal executive officer (who is also the principal financial officer).

 

Based upon that evaluation, he believes that the Company’s disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

This Quarterly 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 Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly Report.

 

Changes in Internal Controls

 

Although the Company has effected a change in control, the Company remains, as it was previously, a development stage company under the direct control of its officers. There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the nine months period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

 

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

 

During the past three years, the Company has issued common shares pursuant to Section 4(2) of the Securities Act of 1933 as follows:

 

(1)

On July 9, 2013, 10,000,000 shares of common stock were issued to Tiber Creek Corporation for total consideration paid of $1,000.00. Subsequently, in January 2014, the Registrant redeemed an aggregate of 10,000,000 of these shares for the redemption price of $1,000.00. On July 9, 2013, 10,000,000 shares of common stock were issued to MB Americus, LLC for total consideration paid of $1,000.00. Subsequently, in January 2014, the Registrant redeemed an aggregate of 10,000,000 of these shares for the redemption price of $1,000.00

 

(2)	On January 13, 2014, 1,000,000 shares of common stock were issued by the Registrant to Ban Siong Ang pursuant to a change of control in the Registrant. The aggregate consideration paid for these shares was $100.

 

(3)

From July 1, 2014 through September 1, 2014, 59,000,000 shares of common stock were issued by the Registrant to the shareholders named below pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities. Each of these transactions was issued as part of the private placement of securities by the Registrant in which no underwriting discounts or commissions applied to any of the transactions set forth below. The Registrant conducted such private placement offering in order to build a base of shareholders and establish relationships with a variety of shareholders. Tiber Creek Corporation did not assist the Registrant in conducting the offering.

 

		Shares Owned
Name		Number				Percentage
Ban Siong Ang			46,389,604				77	%
Tiang Lee Ng			4,272,419				7	%
Hooi Pheng Ang			254,569				*
Teik Kui Ang			651,854				*
Xin Chen			109,354				*
Tek Mun Chin			340,000				*
ShuHui Dai			257,416				*
XieMing Fan			66,000				*
HaiBin Gao			80,000				*
Boon Hong Haw			2,000,000				3.3	%
JianShu Huang			60,000				*
QingQiang Li			42,854				*
EnYu Lin			70,000				*
FenJin Lin			40,000				*
Wee Lee Sim			60,000				*

 

 

		Shares Owned
Name		Number				Percentage
Swiss Teo Swee Kiong			103,064				*
Guan Chuan Tan			300,000				*
Hang Kiang Tan			60,000				*
Hung Seng Tan			1,484,423				2.5	%
Hup Teong Tan			90,000				*
Kwee Huwa Tan			349,550				*
Lan Tan			78,209				*
Lee Hiang Tan			97,355				*
XiaoDi Rao			153,709				*
ShuYing Wang			105,354				*
MeiMei Weng			147,355				*
Kean Heong Wong			76,203				*
XiuHua Xian			200,000				*
MeiJiao Xu			166,354				*
ZhuEn Xu			50,000				*
TaoYing Yang			241,098				*
ZhenYu Zeng			180,354				*
DeZhao Zhang			100,000				*
XiuMei Zheng			525,355				*
BingRen Zhong			408,387				*
MeiYun Zhong			119,064				*
WenJin Zhong			121,354				*
XingEn Zhong			84,710				*
XingHua Zhong			65,032				*

  

(4)	On February 9, 2015, pursuant to the stock-for-stock acquisition of Heyu Capital Ltd, the Registrant issued 1,000 shares of Common stock to Ban Siong Ang.

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

Not applicable. 

 

ITEM 5. OTHER INFORMATION

 

(a)

Not applicable.

 

(b)

Item 407(c)(3) of Regulation S-K:

 

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

ITEM 6. EXHIBITS

 

(a)		Exhibits
31		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of the Chief Executive Officer and 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

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	HEYU LEISURE HOLIDAYS CORPORATION
	By:	/s/ Ban Siong Ang
		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Ban Siong Ang
		Chief Executive Officer (Principal Executive Officer)
	Dated:	November 14, 2017

 

 

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